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Lord Stoddart of Swindon: My Lords, before the Minister goes on to Part II, can she explain why the Government are introducing the penalty of withdrawal of a driving licence from absent parents

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who do not pay maintenance? The object of a driving licence is to ensure that people who drive have passed a relevant test. In my view--in many people's view, I should have thought--the withdrawal of a licence should not be used as a penalty for non-payment of this kind of maintenance or any other. Can the Minister explain? Will this carry on and be applied to all kinds of other crimes or misdemeanours?

Baroness Hollis of Heigham: My Lords, I cannot predict whether it will or will not apply to other kinds of crimes and misdemeanours, to quote my noble friend. We are seeking to introduce this provision at the moment because fathers who can and should pay maintenance are not doing so. For many of them, a gaol sentence is perhaps too heavy; and some of the other penalties--for example, restraint of goods or garnishee orders on their estates--take a very long time to kick in.

We have looked at the experience of other countries. The latest statistics that I have seen show that in 1996 in the state of Texas some 17 or so licences were impounded--those figures may now have increased--but something like 26 million dollars extra flowed to children. In other words, it was not the taking away of licences that got the money flowing to children; it was the threat of taking away the driving licences that got the money flowing to children. That is what we want to ensure. If we have had real difficulty in some cases in getting a father who can pay to face up to his responsibilities, at the end of the day if the threat of removal of a driving licence ensures that he addresses his responsibilities for the first time, I am confident that I shall have the support of my noble friend.

I move to Part II of the Bill which deals with our reform of pensions. If we do nothing, one in three persons will be dependent on means-tested benefit in retirement by 2050. Our pension strategy will put pensions on a sound, sustainable and affordable footing for the future. Everyone who can save for retirement should do so, but not all have that opportunity. Last summer we legislated for stakeholder pension schemes to provide 5 million moderate earners without access to an occupational scheme with a suitable savings vehicle, through a funded pension scheme.

The reforms in this Bill go further. The measures in the Bill will help 4.5 million low-paid earners, 2 million carers and 2 million long-term disabled people with broken work records. These groups have the least opportunity to save for retirement. Generally speaking, they do not have sufficient earnings to make saving via a personal pension worth while. The state earnings-related pension scheme does not do much for them either because it is earnings related. So, if one does not earn very much, one does not get very much when one retires. Too many people now are headed for a life on low income in old age because they are unable to build up a decent second pension. Women are especially disadvantaged.

We are providing the extra help that these groups need by reforming SERPS through the introduction of the state second pension. For some people, this will

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quadruple the amount of additional pension to which they will be entitled. For example, under SERPS, someone earning the equivalent of £6,000 a year over a working life will get £14 a week on top of their basic state pension. Under the state second pension, it will be £54 a week--four times as much. That is a major shift in resources to those earning less than £9,500, to those with interrupted careers, those who have disabilities or who have been carers.

This extra help will be provided by changing the way in which the additional pension is calculated. First, everyone earning above the lower earnings limit but less than £9,500 in any year will be treated as if they had earned £9,500 for the purposes of calculating their additional pension. If they were earning £4,000 or £6,000 or £8,000, their state second pension would be calculated as though they were earning £9,500. That is why this reform is so redistributive towards those who are less well off. Secondly, the rate at which the additional pension accrues on this £9,500 will double to 40 per cent. This higher accrual rate will apply to earnings up to £9,500 for all earners. To ensure that the extra help is targeted on lower earnings, the extra benefits of the state second pension will taper away on earnings between £9,500 and £21,000, with someone earning in excess of £21,600 receiving exactly what they do now under SERPS.

Low earners--those earning under £9,500--gain the most: someone earning £6,000 will see their additional pension go up 400 per cent. Moderate earners gain on a sliding scale. The position of high earners is unchanged. Low and moderate earners on contracted-out pension schemes will also benefit from this extra help through a combination of national insurance rebates and state second pension top-up payments.

For the first time, carers and long-term disabled people with broken work records will receive help to build an additional pension. The state second pension will treat them as if they had earned £9,500 in each relevant year. That adds up to about £1 a week in extra pension for each qualifying year. For a couple retiring in 25 years' time, one of whom spent a lifetime working for low earnings while the other spent years caring, the state second pension will give them nearly £30 a week more on their pension. They will stay clear of the minimum income guarantee for 15 years after that.

The second stage of the state second pension will be a flat-rate scheme. It will be introduced when stakeholder pensions have become established and will apply only to those who have a significant part of their working life remaining. In stage two, everyone will be treated as if they had earnings of £9,500. This will provide a strong incentive for moderate and higher earners to contract out as rebates will remain earnings related. This reflects our policy of encouraging those who can to provide for their own retirement.

To conclude on this section, the state second pension is the next stage of the Government's strategy for pensions. The stakeholder pensions introduced in last year's Bill will ensure that all those able to save for their retirement have access to a suitable, funded, safe, secure, portable and transparent pension. Under this

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Bill, the state second pension will ensure that those least able to survive can also build a decent income in retirement. The minimum income guarantee, winter fuel payments and free TV licences are among a range of measures designed to provide the extra support that today's pensioners need now. These reforms will achieve our goal of shifting the balance from 60 per cent state pension provision/40 per cent funded provision to the reverse: 60 per cent funded/40 per cent state pension provision.

Part III of the Bill includes our proposals relating to community punishments. Every year about one in four offenders who are given community sentences--of the 130,000 or so in all--are brought before the courts for failing to comply. Failure to comply with the terms of a community sentence demonstrates an offender's unwillingness to make reparation for the offences committed; yet many of these offenders continue to claim benefits from society as a right. They are prepared to meet the conditions of entitlement to benefit when there is something they want from the state; they are not prepared to meet the conditions of their community sentence when the state requires something from them.

We intend to extend the conditions for receiving benefits to link benefit payment to compliance with a community sentence. We shall pilot this in a small number of areas to evaluate the effects on offenders' behaviour and to test operational arrangements before extending the proposals across the country. In the pilot schemes, we propose to withdraw or reduce jobseeker's allowance, income support and training allowances for four weeks for offenders who are referred back to court by the Probation Service for breaching their community sentence. The courts and the Probation Service will warn offenders at the outset that they will lose benefit if they do not comply; offenders will be warned again after one unacceptable failure to attend. This will send a clear message to offenders that rights have to be matched by responsibilities. There will be no sanction imposed if those responsibilities are taken seriously and offenders comply with the terms of their sentence.

Finally, the Bill contains further measures, including reform of the system of appeals for war pensions covering provision about appointments to pensions appeal tribunals. Those appointments, and appointments to other tribunals referred to in this Bill--unified appeal tribunals for housing benefit and council tax benefit, other social security matters and child support, the Pensions Ombudsman and OPRA--are included in the arrangements regarding tenure of office which my noble and learned friend the Lord Chancellor announced last Wednesday.

The Bill also reforms the rules governing occupational and personal pensions to support the Government's aim of encouraging employers to provide pension schemes and employees to join them, so it strengthens the role of trustees.

We promised to reform the welfare state. This Bill contains a radical package of measures that provide the next step in building a welfare state fit for the

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21st century, founded on fairness and opportunity. It is fair to children who miss out under the current system of child support and are therefore, as the children of lone parents, among the poorest in our land. More than 1 million children will get a fair deal from the child support measures in the Bill. It is the children who matter. The Bill is fair to the low paid, carers and long-term disabled people with broken work records, who now miss out on a decent second pension. The state second pension will provide a decent income in retirement for more than 18 million people. The Bill is also fair to those who are prepared to meet their responsibilities to society, by demanding better conduct from those who do not. With pleasure, I commend the Bill to the House.

Moved, That the Bill be now read a second time.--(Baroness Hollis of Heigham.)

3.30 p.m.

Lord Higgins: My Lords, as is often the case on social security Bills, I must immediately declare an interest as a chairman and trustee of an occupational pension scheme.

Last year the social security Bill which came before us was effectively five Bills in one. The Bill now before us is really at least three Bills in one. One might regard that as progress but I do not think that that is the case. It is quite wrong for Bills to be produced covering a variety of subjects where there is little if any relationship between one part and another. For example, the link between the child support provisions and the pensions provisions, apart from the fact that they are dealt with by the same department, is virtually non-existent. Therefore, we shall have a heavy load of work ahead of us if we are to give the Bill the scrutiny which it deserves.

As the noble Baroness pointed out, the first part of the Bill is concerned with the Child Support Agency and its reform. Anyone who, like me, served in the previous Parliament cannot do other than believe that there is need for reform. I spent an unbelievable amount of time on individual cases and frequently dealt with people who showed a degree of bitterness which I found surprising. I refer in particular to the wives in the second family who were determined not to have any money pass from the second family back to the children of the first marriage. That degree of bitterness created difficult situations. Just when one thought that the whole matter was on an even keel, that the case would be solved and progress would be made, the agency made a mistake which put back the whole matter to square one. Therefore I view with great sympathy what the Government are now proposing. Having said that, we have considerable reservations about a number of aspects of those proposals.

On one point the Minister and noble Lords on this side of the House are certainly agreed: we do not think that the right answer is to take the matter back to the courts. The reason the problem arose in the first place was the tendency of the courts to award the matrimonial home to the mother and assume that the

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state system would support the children thereafter. That is one of the reasons why it was felt necessary to introduce the original Child Support Agency. Progress has been made since then. In the previous Parliament the Select Committee of the other place, under the chairmanship of Frank Field, came forward with proposals which resulted in some improvement. At all events, we are now to have a system which runs two formulae side by side--the old system and the new system. That will create a considerable problem in the transitional period. We can agree with the Minister that it is a good idea--indeed, it is essential--to have more emphasis on enforcement and less on gathering information. There are also a number of aspects in the final part of the Bill which deserve attention.

On the very first page of the Bill there is a declaration by the Minister on the European Convention on Human Rights. It states:

    "In my view the provisions of the Child Support, Pensions and Social Security Bill are compatible with Convention rights".

There is widespread concern as to whether Clause 61, which deals with the loss of benefit for breach of a community order, conforms with the Human Rights Act or indeed conforms with our international obligations regarding human rights. My noble friend Lord Windlesham is concerned on this point and a number of noble Lords on the other side of the House may wish to express their concerns. I shall not say more on that subject at this stage, but my noble friend Lord Astor of Hever may also wish to comment on it when he comes to speak.

Part II of the Bill deals with pensions and the introduction of the state second pension. Last year we had trouble because we were discussing the stakeholder pension when we did not know what was going to happen about the second pension. Now we are a little more in the dark about the stakeholder pension--

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