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Lord Bassam of Brighton: My Lords, I am sure it would be much better to encourage graffiti artists to produce more mainstream art. I am not aware that a large number of graffiti artists are incarcerated within the prison estate. It is often felt that we lock up people unnecessarily. The favourite example which is given is that of fine defaulters. As of today of a prison population of some 64,000 just 56 are fine defaulters.

Lord Allen of Abbeydale: My Lords, notwithstanding what has been said about rehabilitation and education, does the Minister agree that there will always be prisoners who, on leaving prison, will return to society embittered against authority; or perhaps having learned new ways of committing crime from fellow prisoners; or who may have become drug addicts during their time inside, all of whom are likely to reoffend? Is not that how prison works in a rather unattractive way?

Lord Bassam of Brighton: My Lords, the noble Lord contributes to an important and interesting aspect of the debate. Of course there will be prisoners who feel embittered as a result of being in prison. Our task, and that of any government, must be to try to make that

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experience as positive as possible. We should never give up on this issue. As regards drugs and prison, we have now had some considerable success in reducing the quantity of drugs used in prison. Over the past two years we have reduced drugs found through mandatory drugs testing from 24 per cent to 14 per cent. I believe that that will have a desirable long-term impact on reconviction rates.

The Lord Bishop of Bristol: My Lords, in light of the Prison Service targets for purposeful activity, will the Minister join me in congratulating Bristol prison on achieving 23.05 hours per prisoner per week during April--despite the plethora of bank holidays? More importantly, will the Government support and encourage the development of community prison chaplaincy as a contribution to a diminution in reoffending, especially among short-term prisoners and those on remand?

Lord Bassam of Brighton: My Lords, the efforts of the staff at that prison are obviously to be congratulated. The more hours of purposeful activity that can be encouraged, the better for all prisoners. Of course we support the prison chaplaincy in all its work. It has a considerable and highly desirable impact on the lives of prisoners and is much appreciated by all.

Lord Mackay of Ardbrecknish: My Lords, is the Minister aware and not embarrassed by the fact that I agree with his reply to the noble Lord, Lord Dholakia and others, in respect of the alternative to prison for persons who commit serious crimes? I welcome the Minister's conversion to the views of my right honourable and learned friend Michael Howard that prison works. It does, because convicted persons cannot reoffend while they are in prison.

Lord Bassam of Brighton: My Lords, we have heard that response before. I congratulate the noble Lord on agreeing with me.

Baroness Linklater of Butterstone: My Lords, is the Minister aware that the fastest increase in the prison population is accounted for by children and young people of 17 years of age and below? That is also the group with the highest reoffending rate, of 80 per cent and more. Does the Minister believe that those figures can justify the claim that prison works for that group?

Lord Bassam of Brighton: My Lords, prison will always be a necessity. If people commit serious offences, they must expect that prison will be an option. However, we need to make the time they spend in prison useful and valuable, and trust that will make a meaningful contribution--so that when individuals leave prison or young offender institutions, they are better fitted to entering the world of work--which I believe makes a strong contribution to ensuring that offenders do not commit more convictable offences.

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National Insurance: Employers' Contributions

3.12 p.m.

Baroness Castle of Blackburn asked Her Majesty's Government:

    What reductions they have proposed in the employers' national insurance contribution, when these have taken or will take effect, and by how much they will reduce the National Insurance Fund.

Lord McIntosh of Haringey: My Lords, as announced by the Chancellor of the Exchequer, the rate of employers' secondary Class 1 national insurance contributions will be reduced from 12.2 per cent to 11.9 per cent in April 2001, and from 11.9 per cent to 11.8 per cent in April 2002. As a result of those changes, employers' contributions to the fund will reduce by around £1 billion and £350 million respectively.

Baroness Castle of Blackburn: Does not the Minister think that is a scandal? It is not the Government who are giving the employers a sweetener but pensioner contributors, because the National Insurance Fund will shrink by £1.35 billion. The Government say, "We can't afford an earnings link. Look what it would cost. Contributions would have to go up". Would they? If only the Government would stop using pensioners' insurance contributions, as has happened over the years, to sweeten the taxes that they are levying on employers.

Lord McIntosh of Haringey: My Lords, the short answer to my noble friend is that I do not think that it is a scandal. It would be a mistake to think that such a change in a very large fund is "defrauding"--my noble friend used that word last November--pensioners. Pension entitlement has not been taken away by the changes to national insurance contributions. Neither a surplus nor a deficit in the National Insurance Fund determines how much is available for pensioners; otherwise, if there were a shortfall in the fund, as in 1993-94, it might be suggested that pensions ought to be cut. I do not think that my noble friend would agree with that being done.

Lord Tomlinson: My Lords, will my noble friend explain why some 81 million national insurance numbers are currently in use? Can he give some indication of how many of those numbers involve neither an employer's nor an employee's contribution? Does he agree that any reform of the national insurance system should involve the allocation of national insurance numbers--whose proliferation only seems to be of benefit to potential fraudsters?

Lord McIntosh of Haringey: My Lords, as Professor Joad used to say, it all depends what one means by "in use". Many more national insurance numbers have been issued than there are persons who have them for legitimate purposes. That does not necessarily mean

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that the other numbers are being used fraudulently. However, the availability and potential misuse of national insurance numbers is a problem that the Treasury is addressing.

Lord Goodhart: My Lords, does the Minister agree that employers' national insurance contributions are a straightforward employment tax? Would it not be better to move away from taxes on employment--which we wish to encourage--to taxes on the use of non-renewable resources and on environmental pollution?

Lord McIntosh of Haringey: My Lords, I am glad the noble Lord asked that question. As I was responding literally to the previous question, I was not able to say that the first reduction in employers' national insurance contributions in April 2001 is to ensure that the climate change levy is neutral in its effect on industry as a whole; and that the second, smaller reduction in April 2002 will ensure that the aggregates levy is neutral in its effect on industry as a whole. Both are desirable environmental objectives. Although I do not agree with the noble Lord's wider generalisation, I hope that he agrees that those two reductions argue in support of his concern for the environment.

Baroness Castle of Blackburn: Does not the Minister's reply and the comments made by others opposite mean that the Government are not treating state insurance as an insurance system at all? It is thought not to matter and is to be left to wither on the vine. As Mr Michael Portillo said when he was Financial Secretary to the Treasury a short while ago, it becomes nugatory. The Labour manifesto stated that a Labour Government would make the basic state pension the foundation of their pensions provision. Now they are admitting that it does not matter: "It is expendable. A fund doesn't mean a fund. We can allow it to continue to diminish". This is not the first cut. The Tories cut it. They would. They do not believe in state insurance. I thought that this Government did. May we take it from the Minister's reply that he is giving us a guarantee today that there will be no further cuts in employers' contributions?

Lord McIntosh of Haringey: My Lords, I am not responsible for what the Conservative Party says in government or in opposition; I certainly do not subscribe to the views that my noble friend attributes to them. The present Government have not in any way cut the state basic pension. It has been continued on the same basis since 1980. The effect of all government policies over the whole of this Parliament will mean that an extra £6.5 billion is available to pensioners, compared with the smaller figure of £4.5 billion that would be available if my noble friend's proposal to restore earnings-related pensions had been followed.

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3.19 p.m.

Lord Carter: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Symons of Vernham Dean will, with the leave of the House, repeat a Statement that is being made in another place on Sierra Leone. The Statement is likely to be taken following discussion of Amendment No. 105 to the Child Support, Pensions and Social Security Bill.

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