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Lord St John of Bletso: My Lords, would the Minister agree that Zimbabwe is effectively being run by the military, more specifically Emmerson Mnangagwa,

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the ministry of police and the intelligence agencies, particularly Mr Chihuri, and therefore the forthcoming rerun is going to be a complete farce? Will the Minister elaborate on what discussions there have been with the African Union with respect to those on the sanctions list? What actions are Her Majesty's Government taking to prevent their children being educated here in Britain?

Lord Malloch-Brown: My Lords, I have heard the same reports as the noble Lord about the increased influence of the individuals that he names and, indeed, of others. We are tracking the situation. President Mugabe exhibits every sign of still being in charge, but it is enormously important that he—or whoever else is now running the country—runs free and fair elections. If that does not occur, not just Britain but all of us will want to revisit the range of sanctions in force against that country.

Cluster Munitions

3 pm

Lord Elton asked Her Majesty’s Government:

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, as the Prime Minister made clear, we are delighted to have played a leading role in bringing about the new draft convention, which was adopted in Dublin on 30 May. That convention will be open for signature on 3 December in Oslo. We are studying the text to see if legislation is needed before we can ratify. We have taken a significant step towards implementing its norms by withdrawing from service, as of last Friday, all the UK’s cluster munitions. We believe that the new convention will help to make the world a safer place.

Lord Elton: My Lords, I thank the Minister for his robust and welcome Answer, and I acknowledge the key role that the Government’s diplomatic representatives and, indeed, the Prime Minister have played in bringing about the result in Dublin. The Minister knows that the treaty will not come into force until 30 countries have signed it. In view of that, and of the near certainty that legislation will be needed to enable us to ratify, will the Government arrange business in both Houses of Parliament so that that legislation is taken through in record time, bringing forward the moment when the treaty will begin to save lives?

Lord Malloch-Brown: My Lords, I thank the noble Lord and others in this House who have worked so hard for the moment that we face today. I reconfirm that this is an example of where this House, and the Questions that it asks of Ministers, can be so influential in important policy changes.

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We ourselves withdrew these weapons as of last Friday, and plan to sign the treaty in Oslo in December. The noble Lord is right that actual ratification will have to wait until both Houses have approved the legal arrangements, but I certainly commit—and I am sure that my noble friend the Leader of the House will agree—to move that forward as speedily as possible.

Lord Wallace of Saltaire: My Lords, we on these Benches congratulate the Government on signing the treaty, but we understand that there are some problems to be sorted out, both about American cluster weapons stored in bases in this country and about joint actions—in places such as Afghanistan—between British and American forces, whose aircraft will carry cluster bombs. Will the Minister explain how, since the United States has not signed the treaty, those delicate issues will be arranged?

Lord Malloch-Brown: My Lords, the noble Lord is correct that discussions are, indeed, under way with the United States. Those will be at the level of Secretaries of Defence and of Secretaries of State in the coming days, to make sure that we are on the same page. The short answer is that while, in the coming period, the US may if it so wishes continue to keep these weapons in its bases, there is an eight-year period during which they will need to be eliminated. The reading of the treaty indicates that there are overriding political reasons to expect that there will be no such weapons on British territory at the end of that eight-year period. That includes other people’s bases situated on our territory.

Lord Dubs: My Lords, I warmly congratulate the Government on their decision to ban cluster munitions. I was in Dublin at the time, and I am aware that that decision had a significant influence on some other countries that were wavering a bit. They were persuaded by the robustness of the Government’s decision, and on that day the Prime Minister was the most popular Prime Minister in Dublin. Will the Government continue to keep Parliament and this House informed on the progress made in decommissioning those weapons and in seeking to persuade other countries—those which did not sign, particularly our American friends—to do likewise?

Lord Malloch-Brown: My Lords, my right honourable friend the Prime Minister made it clear in his statement last week that we would seek to persuade all other countries to sign up to this treaty, which we wish to be universal and supported across the country. I have no doubt that he will be delighted to hear of his popularity in Dublin.

Lord Howell of Guildford: My Lords, I join in thanking Ministers, my noble friend Lord Elton and others for their persistence in bringing about this most welcome advance. However, following his comments about the United States, will the Minister explain how its position will affect us directly? I understand there are large stockpiles of US cluster bombs on British soil. Will the US be required to remove those immediately,

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or will we have to wait until it comes round to signing the treaty? Is there a great transition period ahead about which we have not been told?

Lord Malloch-Brown: My Lords, as I said in answer to an earlier question, all countries which are signatories to the treaty have an eight-year period in which to decommission and destroy these weapons. The assumption is that at the end of that eight-year period, as the treaty reads, even a country such as the US, were it not a signatory, would no longer be able to keep such weapons on UK territory.

Baroness Tonge: My Lords, when the land mines treaty was ratified, the cynics among us quickly realised that cluster bombs had taken their place. Is there any weapon planned to take the place of cluster bombs?

Lord Malloch-Brown: My Lords, I can assure those in the House whose only concern about the decommissioning of this weapon is whether it will leave a hole in the British arsenal that a weapon called the BSFM will provide the same functional purpose in warfare that the cluster bomb was intended to provide—that is, piercing tanks and other heavy armour—without having the same indiscriminate, damaging effect on civilians. Cluster bombs have a large number of submunitions within a single shell—last year we decommissioned one which had 600 submunitions within a single weapon—but the BSFM, which is to replace these weapons, is different in three critical regards and therefore does not meet the Dublin treaty definition. First, it has only two submunitions; secondly, not only does it self-destruct but if it were not to do so, it would deactivate because of a battery mechanism within it; and, thirdly, it is much larger and therefore not a risk to children, who were thought to have picked up the cluster bombs considering them toys. The strong lobby at Dublin is satisfied that the BSFM is a weapon which serves the pure military purpose of protecting against tanks in warfare without damage to civilians.

Pensions Bill

3.08 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I beg to move that this Bill be now read a second time.

Together with the changes to the state pension in the Pensions Act 2007, this Bill represents the most radical reform to the pensions landscape since Lloyd George enacted the first state pension a century ago. It seeks to tackle undersaving by individuals and underprovision in the private pensions market. It will enable millions more to save for a better retirement, benefiting millions of low-paid workers, especially women, by giving them a pension for the first time. It will allow millions of those who do save the benefits of employer contributions for the first time.

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The Bill is built around progressive values. It removes inequalities so that low income or lack of understanding will no longer be barriers to saving for the future. It promotes social justice, enabling millions more to realise their aspirations in retirement and to lead an active and more dignified later life. It builds on our reforms from last year, creating the basis for equality for women and carers, and with a more generous state pension linked to earnings.

Since 1997 we have relentlessly sought to alleviate pensioner poverty and rebuild confidence in pensions. This year we are spending £75 billion on our pensioners, £12 billion a year more than if we had continued the policies of the previous Government. Our policies have targeted support at the poorest, lifting more than 1 million out of relative poverty and more than 2 million out of absolute poverty. As a result, pensioner incomes have risen across the board with the poorest benefiting the most, so that today old age is no longer a proxy for poverty.

Today, though, we need to go further. The challenges posed by our ageing society mean that we need to look ahead not in years at a time but in decades. When the first state pension was introduced a century ago, there was just one pensioner for every 10 people of working age. Today there are only four people of working age to every pensioner, and by 2050 that will fall to just two.

In 1908, pensions were an insurance against the risk of old age; today they are a necessity for the certainty of old age. With longer, healthier retirements, people’s aspirations and expectations are increasing. However, too few people currently save for retirement. More than 40 per cent of working-age employees are not saving at all, and that is even more pronounced among the young, with only one in seven aged between 20 and 24 saving compared to about half of those aged over 35.

The Bill forms the second part of the Turner package of reforms to UK pensions. The first part, the Pensions Act 2007, created a simpler, fairer and more generous state pension. It addressed the historic inequalities faced by women and carers and committed us to restoring the link to earnings broken by the previous Government. The 2007 Act enables restoration in 2012 or by the end of the next Parliament. That means that by 2050 the basic state pension will be worth twice as much as it would have been otherwise.

The Bill will build on that Act, reforming private pension provision to encourage more people to save. The linchpin of these reforms is a requirement for employers to automatically enrol eligible jobholders who are not in a qualifying pension scheme into an automatic enrolment scheme. Jobholders will be enrolled from the first day they become eligible, but they will have the right to opt out. The term “jobholder” is defined widely and includes agency workers.

The Bill places a duty on employers to pay contributions at least equal to 3 per cent of earnings of an individual between £5,035 and £33,540 in 2006-07 earnings terms. We believe that automatic enrolment will change the equation; instead of inertia preventing saving, it will result in saving. Having a pension will

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become the default position. While automatic enrolment creates the presumption to save, the employer contribution gives individuals a clear incentive to save. For most, their money will be matched pound for pound by a combination of contributions from their employer and the state through tax relief.

The Bill provides for the Pensions Regulator to have overall responsibility for the compliance regime. It also introduces new employment rights that will protect workers from unfair treatment if they decide not to opt out of pension saving and measures to deter employers from encouraging or forcing workers to opt out. We are proposing to strengthen these provisions by bringing forward an amendment introducing a prohibition on inducements to opt out.

For those employers who do not already offer an adequate scheme, Chapter 4 of Part 1 gives the Secretary of State the power to establish a pension scheme. The new pension scheme, or personal accounts, will be targeted where the need is greatest—low to median earners with limited access currently to good quality occupational pension provision—providing a simple, easy-to-understand product with low charges. Personal accounts will be a trust-based scheme, procured by the Government but run independently of Government for the benefit of members.

Chapter 5 broadens the remit of the Personal Accounts Delivery Authority to take forward the implementation work for this scheme. The size and nature of the personal accounts scheme presents a number of challenges in developing a viable strategy. We cannot take decisions on the best approach until PADA has been given the powers, through the Bill, to complete the design of the scheme and engage with private-sector suppliers. However, we are clear that any strategy will need to deliver low charges for members; be consistent with our intentions for the scheme to be self-financing in the long term; be commercially viable; and comply with EU state-aid rules. We do not want to unfairly advantage this scheme. Indeed, the broadened remit of PADA requires it to have due regard to a number of principles, embedded in which is the focus on the target group and being complementary to existing provision.

It is important that these reforms are designed to complement, rather than replace, existing employer provision. That is why the Bill includes a number of measures discouraging employers with good schemes from levelling down. Employers with existing good schemes will be encouraged to continue offering them via a straightforward qualification test. We propose a ban on transfers between existing pension schemes and personal accounts, and an annual contribution limit of £3,600 in terms of 2005 earnings. Further, we are helping employers to adjust to the new minimum contribution requirements over a three-year period.

This Bill has engendered considerable debate around savings incentives and the impact of means-tested benefits. This is not a new issue; nor is it created by this Bill. Our reforms to the basic state pension and the state second pension will help to reduce means- testing and provide a solid foundation for private saving.

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The measures in the Bill will further improve incentives to save. Millions of workers—many for the first time—will see their pension contributions matched pound for pound through employer contributions and tax relief. The majority of those who are auto-enrolled can expect to benefit from having saved, including those on benefits. We recognise the need for well-informed discussion and evaluation of savings incentives, and have therefore established a government-led work programme to consider this issue. We also recognise that individuals will need access to relevant and accurate information when they are auto-enrolled, but do not believe that they will need regulated advice or, in most cases, extensive guidance.

The UK still has strong private pension provision. In 2005, the value of pension funds in the UK was approaching £1 trillion, about two-thirds of GDP. We recognise the decline in defined-benefit pension schemes. It is a steady decline that has occurred since the mid-1960s, and is not confined to the UK. We want to send a clear message to employers with good pension schemes: “We want you to continue”.

The present regulatory system governing occupational pensions has grown incrementally over the past 30 years. It is now, by common consent, lengthy, complicated and hard to understand. That is why we announced a rolling deregulatory review and why, in this Bill, we are determined to reduce legislative burdens on employers, while recognising the balance needed to protect members’ interests. We will reduce the revaluation cap on pensions which build up in the future from 5 per cent to 2.5 per cent. We will repeal the requirements relating to safeguarded rights, removing a layer of particular complexity for scheme administrators. As a further measure to support existing provision, following clarification from the European Commission, we are bringing forward amendments to enable automatic enrolment into qualifying workplace personal pensions. This is an important and growing market and these amendments will enable WPPs to take advantage of the benefits of auto-enrolment.

While supporting the existing pensions market, we must not lose sight of the continuing need to protect scheme members. We recognise the importance of innovation in the pensions buyout market, but we must also be alive to the emerging risks posed by particular business models. That is why we are consulting on changes to the anti-avoidance powers of the Pensions Regulator. Following the outcome of the consultation, we may bring forward amendments to the regulator’s powers.

Changes to the Pension Protection Fund are provided for in the Bill, especially to enable compensation to be shared on divorce or dissolution of a civil partnership. We are seeking to allow members of the Pension Protection Fund who are terminally ill to claim a lump sum, bringing this into line with the practice of the financial assistance scheme.

We will also bring forward amendments to ensure that the historic settlement reached on the financial assistance scheme can extend to certain schemes that formerly fell between the PPF and FAS and, consistent with that settlement, an extension of the current restriction on annuitisation.

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There are other important matters in the Bill which I am sure we will have the opportunity to consider in Committee. They include easement of pension credit arrangements for those aged 75 or over, consolidation of accrued rights under the succession of earnings-related state schemes and provisions to enable pensions paid under the Pensions (Polish Forces) Scheme to be paid to those who are now resident in Poland.

I have already mentioned some of the amendments that we plan to bring forward, but there are a number of other government amendments that we wish to table as soon as possible. The bulk of them are drafting amendments designed further to clarify the legislation rather than change our intended policy. I am pleased to announce that we will bring forward amendments to comply with all of the recommendations made by the Delegated Powers and Regulatory Reform Committee last month.

Noble Lords may have seen the announcement last week that we intend to share data with energy companies to help tackle fuel poverty. In this Bill, we therefore intend to bring forward amendments to allow the controlled sharing of data with energy companies.

We are also pleased to bring forward an amendment to help those resettled in Britain through Kindertransport during the 1930s. Changes to their UK national insurance records will allow the German authorities to recalculate their entitlement. I am committed to tabling government amendments at the earliest opportunity to enable noble Lords to take a considered view.

The Bill has been the subject of an exceptional consensus. There has rightly been debate about the details and I do not doubt that there will be more in your Lordships’ House. The Government have sought to play their part—for instance, over savings incentives—and have listened to the debate and mapped a way forward. From the TUC to the CBI, Age Concern, NAPF, EEF, Which?, EHRC, ABI, PPI and others, we have seen a mature understanding of the long-term issues at stake. There is a pressing need for these reforms. One of the pensions commissioners, Professor John Hills, stated in January this year:

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