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Lord Higgins: My Lords, if the noble Baroness will allow me, as I pointed out, it is being cut from both ends. Not only are people not getting benefits to which they have contributed but also, under some clauses of the Bill, people will now be getting benefits who have not contributed when there were previous contributed benefits.

Baroness Hollis of Heigham: My Lords, the noble Lord is therefore saying that he regrets the fact that people who are currently on SDA will in future be entitled to IB--the sort of constituency that the noble Lord, Lord Rix, represents. They are the people who are currently not on a contributory benefit, who will in future be entitled to IB. The noble Lord, Lord Higgins, has just been deploring that. That is what he said; that is what he means. I am sorry, my Lords, that is the group of people which will in the future enjoy a benefit equivalent to contributions, though they have not paid them, namely those who have, for example, severe learning difficulties and have therefore not been able to store up contributory benefits by virtue of being in work.

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The other group will be carers. If the noble Lord wishes to say that carers, too, should not have an entitlement to things like a state second pension or continuing entitlement to IB, he should take this opportunity to tell the House that he objects to our proposals to help severely disabled young people and carers. They are the two areas into which we are extending benefits that were formerly contribution based. I am sorry that he regrets both of those developments.

Lord Higgins: My Lords, the noble Baroness has totally misinterpreted what I said. I was referring to the clauses relating to national insurance contributions and so on. But we can go into this at Committee stage.

A noble Lord: Playing both ends against the middle?

Baroness Hollis of Heigham: My Lords, so am I; precisely that. As I have said, it is not true that we are reducing the contributory principle or indeed that we are increasing means testing. It is certainly true that means testing increased under his government. Something like 16 per cent of social security expenditure was means tested back in 1979. When his government left office, it had risen to 34 per cent of the total social security budget. We expect that 34 per cent of the budget to be reduced to something like 32 per cent by 2002. His government were responsible for doubling the proportion that was means tested. Under this Government, that proportion has been reduced primarily because non-contributory, non-means-tested benefits, such as DLA, have grown in demand even though we have not done as we would have wished and been able to encourage all those entitled to it to claim it.

Nor do I like the kind of language which talks about increasing dependency. Traditionally, the dependents on the social security system were women. We are encouraging women to acquire their own entitlement through their own rather than their husbands' rights. The fact that three-quarters of all women are now in work and that the vast majority of them build up an entitlement because they are above the LEL means that those women will be able to enjoy benefits in their own right. They were traditionally the groups that we talked about in terms of benefit dependency.

Moving on to some of the detailed points raised on individual aspects of the Bill, the first set of contributions was about the issue of the single work focus gateway. I was delighted to hear my noble friend Lady Crawley welcome these proposals. The noble Lord, Lord Russell, as I would have expected, asked me a series of very detailed questions as to how they would work. He had misgivings, firstly, about exemptions from the requirement for interview. We are not introducing category exemptions. We are responding to people individually. What clearly matters is that all people, including those who may never work, should still have access to information about the benefits and support services to which they are entitled. If they cannot come into the office, we will visit them in their homes to ensure that they get the information to which they as individuals are entitled relating to their understanding of

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the benefits system and the opportunities available to them. The noble Lord, Lord Swinfen, also asked about travel requirements. If people have transport difficulties, we will contact them in their homes. We are also exploring in some locations a mobile phone service and telephone linkages. We want to be imaginative and I hope that your Lordships will help us to develop that point.

The noble Lord, Lord Swinfen, asked us whether, in terms of the interviews, people would be free to bring in an advocate. Yes, they will be. I had not considered the question of the travel costs of the advocate, but we will have a look at it and see what we think should be done about it. The noble Lord also asked about what would happen to those who are mentally ill. We recognise that for some people with mental illness it would be appropriate to waive or defer the requirement for an interview, but for others, even those with mental illness, it may be right to try to help them, possibly with the attendance of a friend, a family member or an advocate, to sort out the benefits that they are entitled to and ensure that their welfare needs are properly identified. We see this as an opportunity for help and not for harassment.

The noble Earl, Lord Russell, and the noble Lord, Lord Addington, asked what we could do to help people who are illiterate--not just people suffering from dyslexia but who are illiterate. If a person fails to attend for an interview because he does not understand the requirement--for example, on grounds of illiteracy--that would almost certainly constitute good cause and therefore questions of censure would not arise. Equally, we have made a commitment that where any such issues do arise, if we cannot make telephone contact with people who should be responding to us, we will go for home visits to try to make sure that we have not lost someone through the system--whether it be a woman who has left home in fear of violence, or someone who belongs to an ethnic community and is reluctant to come into a benefits office, or someone suffering from mental illness. We would seek to visit them, if appropriate, rather than expect them to visit us. We want this to be helpful.

Perhaps I may move on to the issues raised on pensions. Several noble Lords, including the noble Lord, Lord Higgins, the noble Earl, Lord Buckinghamshire, and the noble Lord, Lord Goodhart, asked whether the 1 per cent charges would be too low to offer advice. I was glad to have the support of the noble Lord, Lord Goodhart. It is clearly in the interests of the organisations to try to push that up on stakeholder pensions but many schemes can be provided with 1 per cent advice. We think that it will be a challenging but realistic target. We want information to be circulated to people. We are working with the Financial Services Authority to do so. We believe that a 1 per cent figure is realistic and challenging and will be our best way of ensuring good value.

I was asked whether stakeholder pensions will come under trustee law. Yes, but we are willing to look at other forms of governance provided that they offer similar or equal protection to that of trustee law. We will continue to discuss this issue with the organisations.

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The noble Lords, Lord Freeman and Lord Goodhart, asked whether it would be possible to run stakeholder pensions with other pensions. We are consulting on that and we are reflecting in the light of the responses to the Green Paper. The question is obviously tax treatment. It is a matter for quite complicated discussion with the Inland Revenue as well. But it is being reflected upon. The Government have not closed their mind to it.

I am not quite sure why the noble Lord, Lord Freeman, thought that employers would close occupational pensions, unless it was for the reason advanced by the noble Lord, Lord Goodhart, that stakeholder pensions would now be so much more attractive that they would not bother. The employers I have met and talked to regard good occupational pensions as a way of attracting and keeping good quality staff. I am confident that they will continue to do so. I certainly do not expect them to close down a scheme on the grounds of stakeholder costs, because no costs are involved for the employer. It will be run not by the employer but by the trustees and appropriate organisations.

The noble Lord, Lord Goodhart, asked about compulsion. There is already considerable compulsion within the second tier system. One either has to have NICs rebated into a scheme or be in SERPS. Our difficulty is that those who do not pay tend to be those who for the most part cannot afford to pay, with the possible exception of the self-employed who tend to regard their business as their pension. So we are hoping that the attractiveness of the stakeholder pension will induce people to come within that scheme, particularly the self-employed. But it is precisely because those who are low paid cannot afford to pay to produce the kind of pot to which my noble friend Lady Turner referred that we will also be developing state second pensions.

Lord Goodhart: My Lords, I am most grateful to the Minister for giving way. Is it not the case that one of the big advantages of having compulsion would be that it would be possible to require employers to make a proper contribution towards the stakeholder pension and not merely the 3 per cent that they would have to pay on the present system?

Baroness Hollis of Heigham: My Lords, I suspect that is one of the reasons why many organisations are opposed to compulsion. However, it is certainly something that we have been considering. That is still an open question, particularly when it comes to some of the more detailed regulations. At the moment the consensus is that those with over £20,000 can look after themselves; those with between £9,000 and £20,000 will be offered the alternative to the SERPS scheme that currently exists; and we shall have to help those with below £9,000 through to a state second pension. That is the way in which our strategy is developing.

The noble Lord, Lord Blackwell praised the Tory basic pension plus. Rather like the privatisation of British Rail, it was a scheme which, as far as I can recall, sought to throw an awful lot of taxpayers' and Exchequer money at a scheme that was essentially a privatised pension to no great advantage to its recipients. Therefore, it is not one that I would want to recommend.

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The noble Earl, Lord Buckinghamshire, made many detailed points about pensions. I shall write to him as many are highly technical points.

Given the time, I want to move on to the issue of pension sharing. The noble Baroness, Lady Fookes, asked me whether it will work. I am confident that it will. We have consulted widely, and I think for the first time ever we published a draft Bill as the basis for that consultation, so we have the breadth of experience of consultation and the support of the industry. I am sure that there will be some teething problems that we have not anticipated, but we have put a huge amount of work into the consultation because we realise that we are breaking new ground.

The noble Lord, Lord Goodhart, asked whether we could arrange for such a provision to be retrospective. I believe that there are problems. His solution is an ingenious one and we shall have a look at it. However, I have to say that the broad position of the Government is that legislation should not be retrospective. Incidentally, that was the mistake made by the Child Support Agency. I think it unlikely that we shall be able to pursue his position, but we shall certainly have a look at it.

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