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Lord Haskel: My Lords, I thank the noble Lord for giving way. Does he not agree that the reason for the complexity is because people's lives are now much more complicated? This complexity is really the way in which people can move from one pension scheme to another as their circumstances change in their working life.

Lord Astor of Hever: My Lords, I am sure we shall debate that point endlessly in Committee.

During the Conservative Party's time in office, pensioner income rose. Since coming to power, this Government have attacked pensioners' savings. This

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April's measly 75p increase in the basic state pension has been combined with such measures as the abolition of ACT dividend tax credit, and the abolition of PEPs and TESSAs. The proportion of national wealth spent on pensioners is less under this Government than under the last.

The minimum income guarantee will be a massive disincentive for lower earners to save, which hardly equates to a government that preaches the virtues of self-reliance and employment. They admit that an individual will have to work (or care) for 49 years and earn above the national insurance lower earnings limit in order to have an income above the MIG level. That is a blatant disincentive to employees.

I turn briefly to Part III of the Bill and specifically Clause 61. I make clear that we strongly oppose this clause, as do many other noble Lords who emphatically condemned it. We heard a powerful speech from my noble friend Lord Windlesham, who speaks with all his knowledge on the penal system, his authority as a former chairman of the Parole Board and his experience as a Minister in the Home Office. My noble friend made some important points which I shall not repeat. However, I feel that we must have a full response from the Minister tonight and some assurance that the Government will think again.

The noble Baroness, Lady Kennedy of The Shaws, also spoke on this subject, mentioning a possible breach of the Human Rights Act. Furthermore, I understand that the National Association of Probation Officers believes that the proposals for the removal or reduction of benefits from offenders who breach community court orders breach the Act she mentioned, and the United Nations Convention on Human Rights. I should be grateful if the Minister could clarify the position in that regard, particularly in view of what my noble friend Lord Higgins said in relation to the Explanatory Notes.

With regard to Part IV and NICs, we are concerned that the Government are imposing yet another stealth tax on business by extending national insurance liability to benefits in kind. The Government's approach seems to be, "If it is taxable, it is NICable"; and they are nicking another £225 million through that provision.

Social security and welfare reform generally have been hailed as an area in which the Government will think the unthinkable in order to put the national interests first. But the gap between rhetoric and reality has been considerable. We on this side accept the need for a range of reforms to ensure that we meet the challenges of the 21st century both socially and financially. These measures from the Government will go no way to meet such challenges and it will be for their successors to deliver, which we shall.

7.10 p.m.

Baroness Hollis of Heigham: My Lords, I want to begin by quoting my noble friend Lord Haskel, and not for the reasons your Lordships might think. He was right to describe the Bill as an attack on poverty. It is an attack on the poverty of children and

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pensioners. It is an attack on poverty among children because we know that those who are poor in our society are the children of mothers who are not in work and where the child is not receiving maintenance. It is an attack on poverty among pensioners because we know that poor pensioners are primarily older, often widows who have no occupational pension on which to draw. For the longer term, we hope that the moves we are making on state second pensions and stakeholder pensions will resolve that problem. However, we have issues which must be addressed now. Therefore, my noble friend was right in saying that the Bill is about poverty.

I shall begin, as did your Lordships, by reflecting on the structure of the Bill and dealing with the comments on the Child Support Agency. I was pleased that the principles of our actions were welcomed by my noble friend Lady Crawley, the noble Baroness, Lady Fookes, and the noble Lords, Lord Higgins and Lord Astor. I was particularly pleased by the tribute that the noble Baroness, Lady Fookes, felt able to pay to the staff. They have had a most difficult time. Unlike any other government officials who have a one-to-one relationship with a client wanting a benefit, a passport or whatever, the CSA staff have been the lightning-rod in all kinds of marital disputes between warring partners. If he gains, she loses and if she gains, he loses. I know of stories of staff who have received razor blades, excrement and so on in the post. They have had to do a difficult job with heroism and grace, and I was delighted that the noble Baroness paid tribute to them. From everything I have seen of their work, I can endorse that.

The Conservative Front Bench in both opening and winding-up speeches made points, which I take, about the difficulties in running two schemes side by side and about the issue of phasing. I agree; we thought long and hard about the matter. It was a question of trying to assess the risk of a "big bang" approach on a new IT system or of trying to phase in implementation by taking new cases first--those which come in during the first year--and taking existing cases as and when we are confident that the IT system is robust and that we are achieving the speed and accuracy of assessment that we believe the new system will allow us to generate. We had to choose between those two aspects, but everything we have learnt about government over the past 10 or 20 years has suggested how unwise it is to go for a "big bang" if an alternative is available. We believe that there is.

The noble Lord, Lord Astor, suggested that the problem was compounded by the fact that we are phasing in the system over a number of years. Someone currently receiving £30 which must rise to £60, or someone receiving £60 which must fall to £30, will not see the change overnight; it will be phased. If the mother is in receipt of WFTC, he would like to phase if he is a loser but would like immediately to move to the new assessment if he is a winner. The reverse is true for his former partner.

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We believe that, on balance, it is right to phase. At the core of our concern is the possibility that if he were asked to pay more on the same level of income overnight, his finances would be thrown into real hardship. We believed that it was therefore right to phase. We are talking about a period of five years and we can discuss that, but we believe that it strikes the right balance between the conflicting and sometimes warring interests of the two partners and the need not to throw his finances into disarray by imposing possibly a substantially different assessment overnight when he has only the same level of income and pre-existing commitments.

I was asked why we are not taking into account the income of the parent with care. First, we believe that the parent with care--it is usually the mother--is meeting her responsibility for the care of the child because the child, by living with her, enjoys her standard of income. Her contribution is coming, so to speak, in kind because the child is living in her household. His contribution is coming in cash because he does not. If it were an intact family, both would be contributing in much the same way.

The first point is philosophical: she is already contributing. The second point is practical and administrative: 96 per cent of parents with care have incomes of less than £100 a week. Only 500 on our casebook of 1.2 million have incomes over £500 a week. At that point, they might be expected to be making a realistic financial contribution. So for the sake of 500 or 1,000, we should have to assess the income of every parent with care and, as was suggested by the noble Lord, the income of her new partner, which means that we must also assess the partner of the non-resident father. Instead of assessing only the father, we should have to make four assessments: the parent with care, her new partner, the non-resident father and his new partner. If that were to be done, instead of seeking three pieces of information, we should have to seek 30 or 40 in order to get an accurate assessment. In that case, noble Lords would be reimporting back into our simple formula some of the complexity that has made the existing agency impossible successfully to administer. Therefore, philosophically, it is not right; administratively, it would be a nightmare; and it is not worth it.

It was said that we are not treating second families fairly. On the contrary, most second families will see a lower assessment and a more generous treatment of children in second families, including the non-biological children who are treated in exactly the same way as the biological children of the non-resident parent. There will be no first and second-class children in our system either between first and second families or within a second family. Therefore, I hope that on reflection the noble Lord will think his remarks in that respect not justified.

The noble Lords, Lord Higgins and Lord Astor, and the noble Earl, Lord Russell, spoke of the courts. The noble Earl and I have a philosophical difference about them. I believe that the previous court system failed children. I believe that that was accepted by the noble Lord, Lord Higgins, and the noble Baroness, Lady

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Fookes. It was unfair in its incidence; it was ineffective in collection and it was adversarial in style. What do you say to a child when he sees his father going to a court to try to reduce the amount of maintenance he should pay? What kind of message are you sending to a child when he sees his father taking on that role?

The system was unfair in its incidence. We know that in 1988, on average earnings of £140 a week with three children, 25 per cent of all fathers were paying less than £15 a week in maintenance and that 25 per cent were paying more than £40 a week. That was on identical finances and with an identical number of children. The system was a lottery; it was unfair; it was not effective and it was adversarial. We believe that it would be wrong to return to it.

I do not mean to be unfair to the noble Earl, Lord Russell--if I am, I apologise--but I listened carefully to his speech and noted that he made much of his concerns about the unfairness to fathers. I do not believe that at any point he mentioned the well-being of children in our reforms of the CSA. That was significant.

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