Welfare Reform and Pensions Bill

HC Deb 23 February 1999 vol 326 cc214-91

[Relevant documents: The Fifth Report from the Social Security Committee, Session 1997–98, on Pensions on Divorce (HC 869) and the Government's Response thereto (HC 146 of Session 1998–99.]

Order for Second Reading read.

Mr. Deputy Speaker (Sir Alan Haselhurst)

I should inform the House that Madam Speaker has selected the amendment in the name of the Leader of the Opposition, and that Madam Speaker has imposed a 10-minute limit on Back-Bench speeches.

5.32 pm

The Secretary of State for Social Security (Mr. Alistair Darling)

I beg to move, That the Bill be now read a Second time.

The Bill marks another step in our modernisation of the welfare state to ensure that it can meet the needs of the next 50 years. Across Government, we are taking action to tackle the causes of social and economic failure. We are investing £40 billion extra in health and education, reforming the tax and benefit system to make work pay and tackling the scandal of poverty pay with the first ever national minimum wage. We are also helping 6.5 million families with the biggest ever rise in child benefit. In short, we are taking action today to deal with immediate problems, but our central objective is to confront the causes of social and economic failure in the future.

In this last year of the 20th century-50 years after the start of the welfare state—it is a scandal that a child can still be born poor, live poor and then die poor. We are tackling the poverty of expectation that leaves a generation of children expecting nothing better for themselves than a lifetime on benefit. We know too well the effect that years of unemployment can have on individuals. It demoralises them, and it is debilitating. That is why we need a radical change in culture, both for individuals and for Government. We are tackling the poverty of opportunity that allows people to be written off, or, sometimes, to write themselves off.

The Bill is an essential part of our strategy. Benefits alone cannot tackle this failure. It is easy for the Government to send out a giro, but a giro will not get anyone a job, or improve their skills. Benefits can, of course, treat the symptoms of poverty, but they cannot tackle its causes. Complacency—an acceptance of social and economic failure as part of the natural order of things—would be a betrayal of the generations that follow us. We are determined to act, to make a difference and to be judged on our actions.

Today, we take reform a step further in four key areas. It may be helpful to the House if I set out how I intend to deal with the Bill.

First, we are introducing a radical package of measures to keep people in touch with the labour market, including the single gateway and the new employment zones. Secondly, we are modernising disability benefits so that they will provide more help for disabled people in greatest need, as well as providing opportunities for disabled people who want to work.

Thirdly, we are modernising and extending entitlement to bereavement benefits to help families with children who need it most. Fourthly, we are starting the process of pension reform, to ensure that the system provides security in retirement for future pensioners and allows pension sharing on divorce.

In addition, the Bill provides for a number of other measures, including a new housing benefit pilot and a power to incur expenditure to enable my Department to acquire the information technology equipment that it will need if it is to deliver a modern service and to undertake preparatory work for the possible introduction of the euro, as outlined by my right hon. Friend the Prime Minister earlier this afternoon.

Mr. Jonathan Shaw (Chatham and Aylesford)

My right hon. Friend mentioned the single gateway, which has been received by constituents whom I have consulted and representative groups in my area with considerable enthusiasm. Will people with disabilities who attend the interviews be treated with dignity and respect, so that we do not have a repeat of the approach taken under the Tory benefit integrity project? Can he also give an assurance that the staff doing the interviews will be properly trained?

Mr. Darling

Yes. Lest my hon. Friend and others thought that I had finished with the Bill, having gone through the four main points, and was going to talk about the euro for the rest of the afternoon—no matter how tempting that would be because of the reaction of Conservative Members—I was about to turn to the single gateway. I will deal with the points that he raised and, if I miss any of them out, I will certainly give way.

However, I do not want to be denied my pleasure on the subject of the euro. One final point is that preparation for it and the delivery of a host of other measures within the Department clearly will depend on our having the IT equipment. The reform of child support, which will come forward in the next year or so, the single gateway and so forth will all require new IT equipment. At this stage, I will merely say of the clause that not only is Treasury approval required before detailed work is undertaken, but expenditure can be undertaken only if approved by the House.

Mr. Clifford Forsythe (South Antrim)

Will the Secretary of State give way?

Mr. Darling

I promise the hon. Gentleman that I will deal with the rest of the Bill, but if he wishes to intervene on this point, I will certainly give way.

Mr. Forsythe

It is an important point for Northern Ireland. Does the Bill in its entirety extend to Northern Ireland?

Mr. Darling

The hon. Gentleman will see at the end of the Bill those parts that apply to Northern Ireland. He will also be aware that, as part of the Government's settlement following the Belfast agreement last year, it is envisaged that there should be a level playing field throughout Great Britain for national insurance. That is what employers and business want.

Mr. John Hayes (South Holland and The Deepings)

Will the right hon. Gentleman give way?

Mr. Darling

Not at the moment.

Large parts of the Bill, excluding the single gateway, apply to Northern Ireland. Only certain parts of pension sharing on divorce, which I will deal with later, will apply there as family law in Northern Ireland is different from that in Scotland and in England and Wales.

I am conscious of the fact that a time limit has been imposed and that a large number of hon. Members want to speak, so I will deal with the single gateway, which is in many ways one of the most important features of the Bill. It reflects a radical change in approach and culture in the benefits system.

Clause 47 introduces the new single gateway for people of working age. As I said, far too many people are written off or have allowed themselves to be written off and have resigned themselves to a lifetime on benefit. Too many children are growing up in workless households and have come to expect nothing better for themselves. The Government need to tackle that poverty of expectation.

For example, the present system assumes that in many cases lone parents will stay on benefit for 16 years or longer. If a lone parent wants to work, she is on her own—without access to training, support or advice. The new deal takes a new approach. It provides active support not merely for lone parents, but for people with disabilities, as well as for the long-term and young unemployed. It is worth noting that more than 210,000 young people are already on the new deal and that 60,000 people, who would have been on the dole if we had not taken that action, are now in paid employment.

Mr. Eric Forth (Bromley and Chislehurst)

What will happen if the lone parent refuses to work, or does not want to do so?

Mr. Darling

One thing is clear: we will not compel lone parents to work—

Mr. Forth

Oh!

Mr. Darling

That should not be news to the right hon. Gentleman. He is in the House often enough, although he may not listen to what is said. We have made it abundantly clear that, as regards the gateway, everyone of working age coming through the benefits system will be required to attend an initial interview to be told their options. However, we have made it clear that lone parents and the disabled will not be compelled to take a job.

Mr. John Bercow (Buckingham)

Will the Secretary of State give way? [Interruption.]

Mr. Darling

I am glad to have the support of Opposition Members. I shall give way in a moment. The point is that the single gateway builds on the new deal, because it provides everyone of working age with advice on their options in work, training and child care. Everyone of working age entering the benefits system will, for the first time, get the help that they need and have the right to expect. In turn, they have a clear responsibility to take up that help, so, as a condition of receiving benefit, they will be required to take part in an interview to find out about the opportunities that are open to them.

My hon. Friend the Member for Chatham and Aylesford (Mr. Shaw) asked whether we will be sensitive to people faced with particular difficulties. Of course we shall—we want the single gateway to work. One of the aspects of the new deal by which I am most struck is that those who have been on it speak openly about the qualitative difference between the service they receive now and the service they used to receive when the Tories were in office. There is another difference—

Mr. Bercow

Will the right hon. Gentleman give way?

Mr. Tom Clarke (Coatbridge and Chryston)

Will my right hon. Friend give way?

Mr. Darling

I shall certainly give way, both to the hon. Gentleman and to my right hon. Friend, but let me finish my point.

Unlike what happened in the past, we now offer help through the national child care strategy; the working families tax credit, which helps to make work pay; and the minimum wage, which the Conservatives oppose and have pledged to repeal, but which will get rid of the poverty arising from low wages. There is help available now that was never available in the past, and having a personal adviser means that people can be taken through the gateway system and have their options explained to them individually. I give way to my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) first, and then to the hon. Member for Buckingham (Mr. Bercow).

Mr. Clarke

My right hon. Friend is embarking on a herculean task and we wish him well. However, may I pursue the point raised by my hon. Friend the Member for Chatham and Aylesford (Mr. Shaw)? We all understand my right hon. Friend's objectives, but I am sure that he understands the situation that he has inherited. Disabled people, including some of my constituents, are extremely worried about the adjudication—often medical adjudication—that may lead to benefits being cut off. Will he give an assurance that a more professional approach will be taken to such cases? Has he made progress on the issue of the time that people wait for their appeal?

Mr. Darling

We are making progress on the issue of appeals. I recently met Judge Harris, who is in charge of the independent tribunal service, and the chief executive of the new agency that the Government are establishing. I impressed on them that the current delays—the average is seven months—are completely unacceptable, especially because most cases deal with people on extremely low incomes, who do not have the leeway for survival that a well-off person has. We are taking a number of steps—I am bound to say to say that some are controversial, for example, the composition of tribunals—because the current position is not satisfactory. It might be a cliché that justice delayed is justice denied, but I am genuinely concerned.

On the quality of medical examinations, I shall speak later about the ending of the all-work test and about its replacement. All of us have had brought to our attention constituency cases where matters were unsatisfactory. We are determined to address such cases, because the integrity of the system means that people have to have confidence in the decisions taken.

Mr. Bercow

rose—

Mr. Darling

Lest the hon. Gentleman becomes over-excited, I give way.

Mr. Bercow

The right hon. Gentleman is in no danger, but I am grateful none the less. When someone does not give good cause for failing to attend an interview under the single work-focused gateway, how quickly will the decision be taken to deny that individual benefit, and will the denial be absolute or partial?

Mr. Darling

We have made it clear that, if someone enters the benefits system, one of the conditions of receiving benefit is attendance at an interview. I should have thought that the hon. Gentleman would, on behalf of his constituents, be more interested in what we are doing to help people than in focusing on the negative aspects.

Mr. Bercow

Answer the question.

Mr. Darling

I have answered it, but for the avoidance of doubt, let me repeat my answer. It will be a necessary condition of receiving benefit that a person attends an initial interview. In cases where there is good cause for failing to attend, for example, when a person has recently been bereaved, or—

Mr. Bercow

indicated dissent.

Mr. Darling

The hon. Gentleman might not be bothered about those things, but it is important that we are sensitive to the requirements of the public. When there is good cause, the interview can be deferred so that, when the person attends the interview, he or she is in the right frame of mind to hear what options are available.

Mr. Tony McWalter (Hemel Hempstead)

Will my right hon. Friend give way?

Mr. Alan Simpson (Nottingham, South)

Will my right hon. Friend give way?

Mr. Darling

I shall give way, but hon. Members should not blame me if one or two of them are cut out of tonight's debate. I give way first to my hon. Friend the Member for Hemel Hempstead (Mr. McWalter).

Mr. McWalter

I have written to my right hon. Friend about this point, but I seek further clarification now. Subsection (6) of clause 47 says that people might not be asked to go for an interview, subject to various regulations. That is an important point, as some people have conditions that would be exacerbated by the offer of an interview—I refer particularly to those who suffer from manic depression or ME. I seek my right hon. Friend's assurance on that important point. In saying that everyone will be asked to present for an interview, will he emphasise that the operation of subsection (6) may mean that not quite everyone must attend?

Mr. Darling

My hon. Friend is correct—he has raised this matter before. Like our approach to the new deal, we are anxious to ensure that people coming through the system view the single gateway as helpful. We know that some people are reluctant to attend interviews and are determined—for not very good reasons—not to co-operate. We must be tough with them. However, there are other people who suffer from particular disabilities—I mentioned the cases of someone who has been recently bereaved or of a lone parent who has difficulty with child care arrangements—and we must be sensitive.

The Bill gives us the power to make regulations so that we do not get into a situation where no reasonable person could justify our request. I assure the hon. Member for Buckingham and my hon. Friend the Member for Hemel Hempstead that we are determined to be reasonable in our approach because we want it to work. We know that we must take fairly firm action with some people. However, it would be unreasonable to tell others—who have perfectly good reasons for refusing—that they must present for an interview within three days. I shall give way to my hon. Friend the Member for Nottingham, South (Mr. Simpson) as he was so anxious to intervene.

Mr. Alan Simpson

I thank the Secretary of State for giving way; I hope that he will find my intervention helpful. Opposition Members are seeking to portray the measure as an attack on the poor and the unemployed.

I am the chair of the inter-agency monitoring group on the new deal in Nottingham, and we have discovered that compulsion is not the problem. The most important feedback that we have received is that the morass of means-tested benefits we inherited from the Tories has left people in danger not of being part of a something-for-nothing society, but of working for nothing for some time because of complications in the operation of the wage and benefit systems. In Committee, will my right hon. Friend look carefully at the changes that he is introducing to see whether they will extricate people from dependency on means-testing? Will he consider also the problems of those in low-wage employment? Unless we alter the taper, there is a danger that they will face a marginal tax rate of 95p in the pound.

Mr. Darling

I knew that my hon. Friend was an office bearer in several organisations, but not in the Nottingham group. I take at face value his assurance that he is being helpful.

I shall explain a number of things. My hon. Friend's most important point concerned the position of people who are on benefit and who find that work does not pay because they lose too much money for precisely the reasons that he gave. We introduced the working families tax credit—which the Conservative party opposes and has pledged to repeal, despite the fact that it will cost many people up to £17 a week in an effective tax rise—because we want to ensure that people coming off benefit and into work see increases in their pay packets. That is one of the most significant reforms of the benefit and tax systems that this country has seen in the past 25 years. I believe that it will be welcomed warmly, especially when people see it beginning to work upon its introduction in October next year.

My hon. Friend is right: we must examine many parts of the benefit system—for example, housing benefit. Some measures in the Bill will encourage work. We have much more to do and this is not the last word on welfare reform—far from it. As to means-testing—I dare say that this point will be raised in the course of the evening, if not in further interventions in my speech—there has been a growing disparity in incomes over the past 20 years, and possibly before that. The Government make no apology for the fact that, on our election, we went out of our way—especially in the Chancellor's first two Budgets—to provide additional help to those at the lowest end of the income scale: the disabled and pensioners. That involves having regard to people's income and means, and I make no apology for that because we have a lot of work to do in catching up with and helping those people who have suffered at the hands of the Tories. Conservative Members may complain about means-testing today, but they doubled it during their 18 years in power.

Mr. Hayes

Will the right hon. Gentleman give way?

Mr. Darling

Not now. I shall make some progress and then I shall give way.

The single gateway is part of a wider strategy to ensure that people have the opportunity to work. The Bill introduces two further measures to help people into work. Clause 48 requires joint claims to jobseeker's allowance from young couples who do not have children, so that both will have access to support and advice from the Employment Service and, if they have been unemployed for more than six months, to the new deal for young people. Clause 49 provides for the new £112 million programme of employment zones to cut through red tape and focus resources on areas that suffer from persistently high unemployment, such as those to which my hon. Friend the Member for Nottingham, South referred.

My right hon. Friend the Secretary of State for Education and Employment is taking steps to ensure that, using the new personal job accounts, we shall be able to help unemployed people aged 25 or over to improve their skills and get extra help in finding work.

By pioneering a different approach, we are doing far more to help people get into work. Of course, that is just one part of our overall strategy. We are determined to do more for people who cannot work, so the Bill also reforms and modernises support for disabled people.

We consulted on all our proposals. More than 300 responses were received from local and national organisations and individuals, including Members of the House. The disability benefits forum, which the Government set up in 1998, played a particularly important role in that consultation. Even though members of the forum did not agree with us in a number of key areas—which is not surprising in some cases—their advice was helpful and they have asked to meet us again during the Bill's passage through Parliament.

We are doing a great deal to improve the opportunities and support available to disabled people, but before I describe the ways in which we are doing so, I shall give way to the hon. Member for South Holland and The Deepings (Mr. Hayes).

Mr. Hayes

The right hon. Gentleman will know that I am, proudly, a joint chairman of the all-party disablement group. Although the forum was welcomed by all members of the group, he must surely acknowledge, and apologise to the House for, the fear and trepidation caused by a number of ill-judged statements by those on the Government Benches, including Ministers. Those statements have severely damaged the expectations of disabled people and picked out and frightened the most needy and vulnerable. I hope that the Secretary of State will take this opportunity to dissociate himself from those remarks and apologise for them.

Mr. Darling

I find the hon. Gentleman's remarks a bit hard to take. He should perhaps read his deputy leader's speeches to Tory party conferences in the late 1980s and 1990s. The hon. Gentleman was not a Member of the House when the benefit integrity project was set up, but he might care to remember which Government introduced that.

We are taking measures across the board that will go a long way towards helping people with disabilities. For example, we are investing in the new deal for disabled people and introducing the disabled person's tax credit, which, from October, will provide a guaranteed minimum income of at least £150 a week for a single disabled person moving from benefit into work. The new disability income guarantee is worth at least £128 a week for the most severely disabled people under 60 who are getting income support. We are building on our commitment to comprehensive civil rights with the Disability Rights Commission.

All those reforms are an essential part of our overall approach. We want to do more to help people into work, but we are conscious of the fact that there are many people who cannot work. I make it clear today, as I did when I made my initial statement on these matters last October, that no one receiving benefit will lose their benefit entitlement as a result of the changes when they are introduced. We want to provide opportunity where once there was none.

I shall draw attention to a number of issues that I know hon. Members will want to debate. Clause 50 ends the incapacity benefit all-work test and the assumption that everyone on incapacity benefit cannot and will not work. The new assessment introduced by the Bill will consider what people can do, not just what they cannot. No disabled person will be forced into work, but together the single gateway and the new assessment will help disabled people to identify their options and plan for a return to work, where that is possible.

If we want to do more for the people who need help most, we have to ask ourselves how we use our resources, and we are making changes to the incapacity benefit regime. Clause 52 introduces a fairer partnership between the state and individuals by changing the way that occupational or personal pensions are treated for incapacity benefit.

In 1953, only 28 per cent. of people had an occupational pension. Today, 86 per cent. of men and 77 per cent. of women working full-time have one. As a result, about a third of people receiving incapacity benefit also get payments from an occupational or personal pension and some of them receive a pension of more than £150 a week—yet incapacity benefit was intended to replace lost income from work. It was never intended as a top-up to income in early retirement, which is what it has become in many cases. A quarter of men over 60 are on incapacity benefit and many of them were channelled into claiming that benefit by the Conservatives in the 1980s to hide what was happening with the unemployment figures.

We want to reward thrift and saving. People should be rewarded for making their own pension provision, so under our proposals people will be able to keep the first £50 a week of any early retirement pension paid, but their incapacity benefit will be reduced by a taper of 50p for every additional £1 of pension received. That is reasonable when one bears it in mind that people would need an income from their occupational pension of nearly £10,000 a year before they lost all their incapacity benefit.

I can tell the House also—this matter was raised during consultation—that the £50 threshold will be kept under review to ensure that it remains at a fair and reasonable level.

Dr. Ian Gibson (Norwich, North)

First, does my right hon. Friend agree that removing the 14 physical descriptors would be major step forward in scrapping the all-work test? Descriptors that define how people can lift sacks of potatoes and cartons of milk are not consistent with the modern medical world. They must be removed if the Government are to introduce factors to determine what people can do.

Secondly, will my right hon. Friend consider the iniquity of medical doctors receiving £78 for each session, the duration of which is ill-defined and which often last for between one and five minutes? By my calculations, by doing those tests five days a week and seven months a year, they can earn about £140,000. It is always the same doctor whom clients in my surgery say they have met. Is not £140,000 a lot of money for taking a few pence away from people who are severely inconvenienced?

Mr. Deputy Speaker

Order. Interventions are becoming very long and many hon. Members are waiting to speak. I ask hon. Members to be brief in their interventions.

Mr. Darling

I shall try to be brief in my reply.

If my hon. Friend has a doctor in his constituency who is earning £140,000 a year for seeing patients for one minute at a time, I ask him to write to me and I shall deal with that. I should be interested if someone were doing so because I certainly have not come across such a case. Perhaps everyone is keeping very quiet about it, but I should be surprised if that were so. My hon. Friend raised a second point about descriptors—

Dr. Lynne Jones (Birmingham, Selly Oak)

Will my right hon. Friend give way?

Mr. Darling

If my hon. Friend will contain herself, I shall give way in a moment. I am mindful of the fact that I have been speaking for nearly half an hour and I have by no means finished.

On descriptors, we have considered the medical side of the new personal capacity assessment. I have considered it on a number of occasions. My hon. Friend the Member for Norwich, North (Dr. Gibson) has a medical background and he will know that, whatever system is used for making assessments, it is always possible for someone to say that it is unsatisfactory and deficient in some respect.

We have compared the system with what happens in other parts of the world. Members of the disability benefits forum are also considering it. We want to get it right because it is not in our interests to have a scheme that does not enjoy people's confidence. Introducing a scheme that has 100 per cent. support will be difficult, because in my experience anyone who falls foul of a scheme tends to find something wrong with it. People who get through a system tend not to think that it is too bad.

I gave an undertaking earlier that the medical test for incapacity benefit will remain the same, but we are adding the capacity test to ensure that we have a better chance of finding out what people can do rather than what they cannot do.

Several hon. Members

rose—

Mr. Darling

I shall give way to my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) and then I shall speak for five minutes solid before I give way to somebody else.

Dr. Lynne Jones

My right hon. Friend's plans to means-test incapacity benefit will mean that someone who becomes disabled, let us say, in their late 40s—my age—who has saved for a pension will lose all entitlement to incapacity benefit if they have an income of about £9,300. That is about half average earnings. Will not such people feel absolutely betrayed because, even though they have paid national insurance contributions for 20 years or more, they will receive no benefit as a result of those contributions?

Mr. Darling

If we were starting from scratch—if there were no incapacity benefit scheme—I do not believe that we would now set up a scheme that ignored the fact that many people receiving IB have quite substantial incomes from their pensions. Perhaps my hon. Friend would ignore it, but I am afraid that I would not because, in any social security system, we must have regard to how much we can spend overall and where we spend it.

We could, and should, do far more to help people who need help, especially younger people who are disabled—I am about to outline measures that we are taking in that regard. It is scandalous that we have been paying so little to people who have been severely disabled. However, we can assist those who need our help only if, at the same time, we consider how we are spending our money overall.

I do not believe that my proposal in the Bill to create a £50 disregard so that anyone with a pension will always be £50 a week better off—the average payment is about £85—is unreasonable. There will always be a balance between what the state provides and what individuals provide. That has been a feature of our social security system for the past 50 years. I believe that the proposal for the disregard and the taper is reasonable. There is a further proposal—

Ms Joan Walley (Stoke-on-Trent, North)

Will my right hon. Friend give way?

Mr. Darling

Unless I make progress, no one else will get to speak. However tempting that might be, it would not be fair. However, I will give way to my hon. Friend later.

Clause 51 restores incapacity benefit to its original intention—helping people who lose their income when illness or disability causes them to stop work. We are strengthening the link between recent work and entitlement to IB by reforming the contribution conditions. We are determined to do more for carers, so we are making special provision for those getting invalid care allowance to ensure that they can still qualify for IB. We are also protecting people who have been off IB for a short spell and have not had a chance to rebuild their national insurance contributions, to ensure that they do not lose out.

I want to say a word about the new support that we are providing for severely disabled young people and children. Clause 56 applies, for the first time, the higher rate mobility payment of disability living allowance to severely disabled children aged three and four. That reform is worth more than £35 a week extra in new support for disabled people, and gives children and their families access to the Motability scheme.

We also want to provide better help for young people disabled early in life. Clause 53 gives young disabled people who claim before they are 20 a new entitlement to IB without requiring them to meet the usual contribution conditions, which is worth up to £25.60 a week extra and provides real help for those young disabled people who need it most.

One of the strongest arguments that several disability organisations made was that it would be wrong to penalise someone who is young, who is disabled, and who has stayed on after school to go into higher education or training. I accept that, so we shall table a Government amendment to raise the age limit for claiming IB for young disabled people who begin training or higher education before they are 20 to the age of 25.

All those reforms focus help on those who need it most—disabled young people unable to work and severely disabled young children.

Ms Walley

Does my right hon. Friend accept that there is concern that, currently, people undergoing medical examinations are not gaining entitlement to the benefit? When he reviews the medical examinations, will he consider how to ensure that there can be public trust in the new system that he sets up? A survey undertaken by the Stoke-on-Trent citizens advice bureau found that about 68 per cent. of people who had been refused incapacity benefit in the first instance were awarded benefit later. Will my right hon. Friend consider how trust might be re-established, given the contracting out of the medical examinations?

Mr. Darling

I entirely take my hon. Friend's point. I attach considerable importance not only to ensuring that the medical test is fair and seen to be fair, but to ensuring that we get benefits right first time. My hon. Friend mentioned a very bad feature of the social security system, which has been growing over the years: far too many awards are overturned on appeal because they were not right first time. Some of the changes that we have made will allow officials to put things right before they have to go through the appeal procedure. That relates to the point that my right hon. Friend the Member for Coatbridge and Chryston made. In the past, a wrong decision had to be appealed, which sometimes took months. I am very conscious of that.

Dr. Brian Iddon (Bolton, South-East)

Will my right hon. Friend comment on the length of time between an interview when benefits have been awarded through the gateway and a recall interview? I see nothing in the Bill determining that.

Mr. Darling

That is not in the Bill, but regulations will be made specifying the trigger points for second interviews. It may help the House if I give an idea of the Government's thinking—as yet not finalised—on that. In any event, people should be seen after five years if they have not been in before. However, I shall give some examples. A person might be called for interview at the end of caring responsibilities; when they leave or take up part-time work; when they leave or start education or training; when we receive results of the new personal capability assessment, showing that the person is able to work; or when the youngest child of a lone parent enters primary or secondary school. At such a milestone event we could reasonably say to people, "Something has changed; come in and see what the options are."

I emphasise again that people who have been through the new deal, seeing a personal adviser, will know from experience that they are getting a qualitatively different service when they go in. The Department will be focused on how it can help people.

We are making regulations, and there will be ample time to discuss the matter in Committee—I do not know whether my hon. Friend the Member for Bolton, South?East (Dr. Iddon) has aspirations to serve on it.

Mr. Iain Duncan Smith (Chingford and Woodford Green)

Will the Secretary of State give way?

Mr. Darling

This is the last time—I promise.

Mr. Duncan Smith

The right hon. Gentleman is talking about the amount of time that a person spends on benefit before they are likely to be seen or interviewed. Has he also considered, and will he be giving targets for, or indications of, the length of time between when a person is called for interview and when they are seen or expected to be seen?

Mr. Darling

The normal expectation is that, unless there is good cause of the type that I mentioned earlier, a person will come in for an initial interview within, let us say, three to four days of applying for benefit. Subsequent interviews will take place at milestones such as those that I have described. Regulations will be published and guidance issued to staff on when interviews should take place—how much notice people should get.

I emphasise to the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that the Government want to ensure that, throughout the process, everyone's mind is focused on work, not benefit, and also focused on what help, and what additional training and skills, they might be able to get. The initial interview is therefore crucial, but the Bill makes provision for subsequent interviews to ensure that we do not prolong the present situation, where someone can be left on benefits, in effect, for a lifetime, and nothing is done to help them. It is not good for them or for anyone else.

I shall now discuss bereavement benefits. I repeat that none of the changes will affect existing widows—widows over pension age—or war pensioners, but the current system needs reform. It is out of date. If we started afresh, we would not reinvent the present system. When widow's benefit was introduced more than 50 years ago, most women—certainly after marriage—did not work, whereas today seven out of 10 married women work, almost as many as the eight out of 10 married men who work.

Audrey Wise (Preston)

Will my right hon. Friend give way?

Mr. Darling

I will give way when I have finished this passage.

The system helps many women on good incomes who have no children to care for, yet it does nothing for bereaved husbands struggling to bring up children. The current system is deficient in that it spends most on those who need it least. Forty per cent. of women getting that benefit are in the top half of the income bracket. Moreover, 75 per cent. of the money that we spend goes to women without dependent children, whereas 35,000 widows see nothing at all because their widow's benefit is deducted pound for pound if they happen to be on income support.

Audrey Wise

My right hon. Friend says that a great many women work, but he does not seem to take account of the fact that they are still largely congregated at the lower end of the wages table and that many of them work part time rather than full-time, or are on temporary work or in other disadvantaged jobs. Will he look at that again? One job does not simply equal another.

Mr. Darling

We have introduced the working families tax credit, underpinned by the minimum wage, precisely to tackle that problem, which my hon. Friend rightly raised for years while the Tories were in power—and nothing happened.

The Government's strategy has to be looked at right across the board. We are trying to deal with the problems of low pay and, in some cases, exploitation, particularly of women who work for ridiculously low sums. We are also ensuring that we have fairer benefit and bereavement systems, which is one reason why we want bereaved husbands and their children to be treated on the same basis as widows, through a weekly non-means-tested benefit. That will help low-paid people more than it will help others, because we believe that the current system does not provide enough help with immediate costs, unpaid bills or funeral expenses. We are doubling the lump sum payable on death to £2,000.

We are also providing transitional help to those without children in the period immediately following bereavement. The Bill provides for non-means-tested help for widows and widowers without children for six months following bereavement and for older widows over 55 without dependent children, without income and without the prospect of work. We want to ensure that they are no worse off from these changes by providing extra help through income support.

Finally in that regard, we are also ensuring that the system does more to help the poorest widows and widowers and their children who, until now, have lost their benefit pound for pound. They will be able to get additional help worth an extra £10 a week. In respect of disability benefits and widow's benefit, our objective is to focus help where it is needed most.

These reforms look to the long term and to the needs that we know that we will face in the future; because we are looking to the long term, we are reforming the pensions system. In December, I published proposals for far-reaching reform of the pensions system, and the Bill is the first stage of our reforms. A large part of the Bill—clauses 15 to 43—delivers on our commitment to enable pension sharing on divorce. For the first time, pension rights can be shared like other assets at the time of divorce, which will provide greater flexibility and choice for divorcing couples and for the courts.

Mr. Hilton Dawson (Lancaster and Wyre)

That change is extremely welcome, but I understand that the Government intend that provision to apply only to people who have not commenced divorce proceedings when the Bill becomes law. Surely it would be more logical, and no more retrospective, to allow the provision to apply to people who have not reached the decree absolute stage. Such people would still be married, after all.

Mr. Darling

The Bill will affect only cases initiated after it comes into force. Any degree of retrospection causes immense difficulties. [HON. MEMBERS: "The CSA."] My hon. Friends mutter about the Child Support Agency; it provides an example of what happens when one revisits matters that were otherwise settled. I cannot help my hon. Friend on that issue; the provision will not be retrospective.

Miss Anne McIntosh (Vale of York)

Has the right hon. Gentleman considered the position of professional couples with no dependants, especially those couples where the lady might be the major breadwinner? The measure might cause problems on divorce that otherwise would not have arisen. Has he considered the implications of that?

Mr. Darling

It will be up to the courts to decide how the assets are divided, if the divorcing couple cannot decide, and the measure provides an option that is not otherwise available. It is more common to find that the man works and has a substantial pension, which he gets to keep. That is unfair to the woman, who may have contributed, if not in cash then by helping the man to build up his pension rights. The measure will give additional options, but it will be up to the court to decide what is equitable.

Clauses 1 to 7 also provide a framework for the new stakeholder pension schemes, which are central to our objective of ensuring that those who can save for their pension do so. I believe that everyone who can save has a responsibility to do so, but not everyone has that opportunity. For the third of employees who do not have the option of joining an occupational scheme at the moment, a personal pension scheme is the only option, but such schemes are not suitable for many people, especially low earners or contract workers.

Mr. Steve Webb (Northavon)

rose—

Mr. Jeremy Corbyn (Islington, North)

rose—

Mr. John Greenway (Ryedale)

rose—

Mr. Darling

I will start—

Mr. Corbyn

There is one behind you.

Mr. Darling

I will start with the Liberals and then look behind me.

Mr. Webb

Would the Secretary of State feel that his reforms had failed if someone on a modest income—say £10,000 a year—who had taken out a stakeholder pension found that he was still dependent on income support a few years after retirement?

Mr. Darling

Our objective is for everybody who works during a normal lifetime to retire with sufficient income above income support. The hon. Gentleman was clearly not referring to someone who had earned £10,000 for a short period—and it is unlikely that such a person would ever have considered a personal private pension, unless badly advised—but the objective is for people who have worked throughout their lives for £10,000 a year to retire with an income above income support, either through the state second pension or through an occupational or a stakeholder pension. The objective under those options is for people to retire with an income above income support, but they will have to take advice on whether or not to go in for a stakeholder pension. I have always been clear on that point.

Mr. Corbyn

The Secretary of State will be aware of the pamphlet produced last year by Barbara Castle and Peter Townsend on the future of the state earnings-related pension scheme. He will also be aware that his Bill, in effect, ends SERPS. Is he not concerned that the Bill is creating a big market for private pensions, when we could be refunding the SERPS scheme to ensure that that good system, which was introduced by the previous Labour Government, is allowed to continue?

Mr. Darling

My hon. Friend has raised an important and interesting point, with which I want to deal. Our proposals replace SERPS with the new state second pension. SERPS is earnings related, so it does not do much for poorer pensioners. When I considered pension reform, I of course looked at SERPS and whether or not we should reinstate it, in whole or in part. A lot has happened over the past 25 years. There are many more people in occupational schemes—they have made their own pension provision—than was the case, or than was even anticipated, in the 1970s, but the group that is losing out particularly badly is the low-paid.

I urge my hon. Friend, if he has not already done so, to look at the Green Paper that we published last December and, in particular, the table about half way through that document showing how we are giving significant help to people earning £9,000 a year or below. The system now assumes that people are earning £9,000, whether they are or not, and a considerable amount of pension can be accrued with such an income. That will benefit low-paid people in a way that SERPS could not, because it was not designed to do that.

Over the past 25 years, and gradually during the century, more people have made funded provision for themselves. Generally, they will be better off than if they had relied purely on the state. My approach to introducing pension reform was to work within the present system, but to tackle the deficiencies. One of the main deficiencies was that we were not helping people on lower incomes.

Mr. Greenway

I am inclined to agree with the right hon. Gentleman. There are many people who have taken out personal pensions for whom stakeholder pensions, particularly if such pensions are introduced by their employers, will be attractive. Will he reconsider the illogicality of not allowing people to invest in both? Many personal pension policyholders will lose out badly if they are advised to come out of such a scheme and go into a stakeholder pension.

Mr. Darling

The hon. Gentleman has a lot of experience in the industry, and I understand the point that he makes, but there are a lot of people for whom stakeholder pensions might be a better option than personal private pensions. A lot of people who were put into personal private pensions should never have gone into them in the first place.

A number of people have been critical in the pensions press of what might happen to personal private pensions, but most of them neglect to say that they make a handsome living out of selling such pensions. I have always made it clear that personal private pensions are a good option for some people, particularly the better-paid and people who change jobs, but I make no apology for saying that there are people in the middle and lower ranges who ought not to be in such schemes.

Stakeholder pensions are essentially aimed at that market and it is for the Government to ensure that people have options. We must not conduct policy as the previous Government did: the only option for people not in occupational pension schemes was to go into a personal private pension scheme. That was not right, which is why we are legislating for the new stakeholder pension scheme. It will give people without a second funded pension a better opportunity to save.

Dr. Lynne Jones

Will my right hon. Friend give way?

Mr. Darling

I am sorry, but, having spoken for 50 minutes, I must draw my remarks to a conclusion. I gave way to my hon. Friend earlier.

The Bill provides for stakeholder pension schemes to be run in ways that put members' rights and interests first. We shall require all stakeholder pension schemes to meet specified standards. They will be cheaper, with lower charges, and more flexible. For example, if someone takes a break from work to bring up children, we want to ensure that charges will not eat up all his or her savings. We also want to ensure that the schemes are simpler and more transparent.

The stakeholder provision in the Bill is only part of our pension reforms. We are consulting until the end of March on our new state second pension, to which I referred earlier. We announced earlier this month that we want to build on the stakeholder pension scheme proposals by making the rules on pension investments more flexible.

Our objective, through structural reform of the pensions system and other measures, is to ensure that more people take out a funded second pension. That will ensure that people get a better pension, a better retirement, and a better future. The Bill plans for the long term. It is designed to deliver a welfare state equipped to meet the needs of the next 50 years.

The Tory amendment, which Madam Speaker was kind enough to select, is a complete dog's breakfast. It is bereft of ideas and complacent, and it ignores the mounting problems that the previous Government neglected for 18 years. It is therefore also extremely costly. We have already cut the bills of social and economic failure by tackling the causes of poverty and social exclusion. We are making work pay with the working families tax credit and the first ever national minimum wage.

The Liberal Democrat amendment has been written in two halves—perhaps by two of the contenders in the leadership campaign. The first half is extremely sensible and welcomes what the Government are doing; the second was clearly written by somebody who takes a different tack in trying to garner support. A second pence on income tax will be needed to pay for some of the proposals.

Our objective is to provide security for today's poorest pensioners through the new minimum income guarantee. We shall spend £1 billion more on disability benefits this Parliament; we are helping 6.5 million families with the biggest ever rise in child benefit; and we are building an affordable, manageable and effective welfare state, based on our principle of providing work for those who can, and security for those who cannot.

These proposals are radical, essential, workable and right. I commend the Bill to the House.

6.23 pm

Mr. lain Duncan Smith (Chingford and Woodford Green)

I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof: this House declines to give the Bill a Second Reading because the complex and unrelated nature of some of the issues covered, which themselves should be subject to separate legislation, will have the effect of complicating pension provision, increasing the disincentive to save, fostering dependency particularly for the self-employed, widows and disabled people, and although, through the work-focused gateway, the Government seeks to make benefit conditional, the necessary conditions for success are missing since the Bill does nothing to increase job creation; and regrets the missed opportunity for lasting reform of social security and pensions. Today's long-awaited welfare Bill should be measured against the Government's own targets. The Secretary of State is fond of quoting the Prime Minister selectively, but let us complete the quotations. On 7 May 1997, the Prime Minister clearly said: I have asked Ministers at the Department of Social Security to look in detail at how we can make far reaching reforms that tackle insecurity and property as well as reducing the social security bills". It is important to get that quotation right, because that is how we judge the Government. According to their figures, and taking account of the working families tax credit, social security spending will increase by some £37 billion.

Many hon. Members may be forgiven for thinking that this is a case of déjà vu, because the Government have already launched most of the proposals. They have a habit of launching, relaunching, re-relaunching and re-re-relaunching items to different sections of the media.

First, however, I want to discuss how the Bill is presented. In a sense, the Government are abusing Parliament. Given that the Bill contains 75 clauses, 10 schedules and runs to 109 pages, it could have been divided into two separate pieces of legislation—some might argue even three or four. The Secretary of State knows that. For example, the provision on pension splitting on divorce is complex and clearly should have formed a separate Bill. Both sides of the House are in favour of the measure, but serious issues need to be discussed, which should be done separately.

The other pensions sector, the stakeholder pension schemes, could also have been subject to separate legislation. After all, the Government have not yet finished their consultation process, and here we are legislating in detail. Just by looking through the Bill we can see the vast raft of Henry VIII clauses. The Bill has been put together quickly in the absence of consideration of genuine comment from many people outside.

Why cannot the Government wait until the consultation process is over, at least before launching the stakeholder legislation? They could easily have presented a separate Bill. Perhaps the Government think that the consultation process is not important, but it was they who said that it was in the first place. Furthermore, representative groups say that much of what they have said has been ignored and they are concerned about the nature of the consultation process.

The Bill has been rammed together with clauses that should not all be in the same legislation. As a result, it will not get the scrutiny that it should receive, nor will the Government be able to take account of some of the major concerns. As I said earlier, the provision on pension splitting should have formed a separate Bill. We agreed that it required close scrutiny and said that there was no ideological difference between us on the concept of the legislation or the idea that it would impart fairness to those who feel that the current system treats them unfairly.

There are some complex issues that require a lot of consideration. Pension splitting will be successful only so long as the benefits outweigh the difficulties. Clearly, it was not embarked on previously because of its complexity. We intend to approach this provision constructively, and I hope that the Government will do likewise. I hope that, if they find that there are major problems, they will acknowledge them during our scrutiny of the Bill.

Ms Gisela Stuart (Birmingham, Edgbaston)

Will the hon. Gentleman acknowledge that pension splitting on divorce was subject to pre-legislative scrutiny by a Select Committee, which took extensive evidence? I should have thought that he would be satisfied with that.

Mr. Duncan Smith

I do not know whether the hon. Lady has been in the House long enough to know that nobody should be satisfied simply because somebody else has scrutinised something. The Bill must go through a Standing Committee. I do not know whether the hon. Lady will be on that Standing Committee, but, if she is and intends to keep silent throughout, she will do her constituents no service whatever. As she knows, the Select Committee on Social Security has made a number of recommendations, some of which have not been accepted by the Government. Perhaps she will advance those arguments to the Government.

The Secretary of State said that one of the main parts of the Bill was the gateway. A number of different clauses fall under that heading, so I shall deal with those in turn. The first is the provision for benefits for widows and widowers. The line that runs through much of the Bill—I have raised it before and the Secretary of State knows that I will raise it again—is the continued erosion of the contributory principle and the increasing dependency on the means test, which have become part of the Government's overall thrust. As I have always said, that will lead to an attack on the incentive to work and particularly to save. For example, clause 45 says that the new bereavement benefit will be cut off for those without dependent children after 26 weeks, whereas the current entitlement to widow's benefit is up to retirement age.

Yet again, the Government have ignored many widows' concerns. Under existing calculations, some 250,000 women who are likely to receive the benefit will subsequently lose under the scheme. The National Institution of Widows said that it would like to see the state contributory principle upheld for future widows and that it would oppose pushing those widows on to means-tested benefit. Cruse Bereavement Care said: These benefit proposals would as with all means tested benefits act as a disincentive to saving and encourage people to spend any life assurance benefit or savings they may have made. Most intriguingly, those changes force those who would normally be entitled to widow's benefit on to income-based dependency.

I received a letter—completely out of the blue—from somebody who lives abroad but has made national insurance contributions for the whole of his working life. It is relevant to read part of the letter. He says: I am 65 years of age and a state pensioner; my wife is 50 years of age. I have made contributions for some 44 years to ensure a state pension and a widows pension. Some 20 years' contributions were on a 'voluntary basis' as I worked abroad … I paid voluntary contributions to ensure state and widows pension in preference to a private pension scheme, now I learn that the Government is going to renege on their pensions 'contract' with my wife and I. He says that he feels that he and his wife are abused.

Whether the Government like it or not, that individual highlights yet another example of the strong psychological connection that the public make with the contributory principle. The right hon. Member for Birkenhead (Mr. Field) has made that point time and again. In that individual's case which I have just cited, there is also a legitimate connection, because he paid voluntary contributions. [Interruption.] I love the way in which Labour Members argue that the Conservative Government changed the system. I thought that the Government have said that we got everything wrong when we were in government, instead of which they now say that they want to continue aspects of our policy. It is quite remarkable. I do not know why Labour Members wanted a change of Government: perhaps, rather like the Liberal Democrats, they should have preferred to be on a Cabinet Committee and get on with it.

The Government maintain that there will be serious savings, but that there will be short-term costs of about £140 million. They say that the costs will be offset by the savings. They are wrong, because I do not believe that that will happen. If, through the disincentives, more people are forced on to means-tested benefits, the cost of such benefits will spiral, which will more than obliterate any savings that the Government think they will make. They make the most absurd calculations of the number of people who may end up on means-tested benefit.

A similar theme emerges when we consider the changes for those eligible for incapacity benefit. Those changes will discourage people from saving. For the first time, people with disabilities on incapacity benefit will be means-tested. The Disability Benefits Consortium said: Making disabled people rely on means-tested benefits is not the way to promote a sense of independence, nor of preventing poverty. Clause 51 will encourage people to leave work earlier than they would have done. If they work part-time, they are likely to fall below the national insurance contributions threshold, so they will not qualify for incapacity benefit. That is a worry for them. The Royal Association for Disability and Rehabilitation is particularly concerned that people whose health is deteriorating—particularly in the latter years of their working lives—will be driven to take such action, and to take the view that it is not worth their continuing for the two-year requirement.

The terms of clause 52 are also perverse, and they are not first about means-testing. Due to the introduction of the taper, those who have saved for private health provision and have made an effort so that they are not completely reliant on the health service will be driven back to the NHS, thereby increasing the burden on the health service. I thought that the Government wanted people to save, but that is a disincentive to save.

Age Concern said: There is a danger that by reducing incapacity benefit for those people with a certain level of private pension, and focusing state help only on the poorest through means tested benefits, people will actually be deterred from saving.

Dr. George Turner (North-West Norfolk)

The hon. Gentleman attacks the Government's proposals on means-testing. Is he committing his party to removing that arrangement if it ever gets the opportunity? If he is attacking means-testing, how is that consistent with his other attack on Labour for being profligate in government?

Mr. Duncan Smith

The Secretary of State said that it is a question of balance. I think that the Government have got the balance wrong. In answer to the hon. Gentleman—[Interruption.] Unlike the Secretary of State, I shall attempt to answer questions. The hon. Gentleman asked what we would do in government. If he is making up his mind about whether to vote Conservative or Labour at the next election, he will have to wait to find out. We will tell him clearly what we will do, and he can make his own decision. Most of these provisions will get through, but I believe that they will have a detrimental effect, so we shall have to make what changes are necessary to ensure that people do not suffer more than they have to.

Let us consider the gateway interviews, and the requirement for certain categories of benefit recipients to be available for interview. The Government have launched this policy six or seven times, and it was the only element of the Bill used in the attack on the "something for nothing" culture in the Daily Mail. I was intrigued that the Secretary of State showed no trace of irony while he announced that he was planning to extend the concept of the jobseeker's allowance, which Labour Members so heavily attacked when in opposition. His hon. Friend the Under?Secretary of State, the hon. Member for Wallasey (Angela Eagle), said during the debates in 1995: There is an authoritarian behavioural requirement of jobseekers".—[Official Report, 10 January 1995; Vol. 252, c. 109.] The hon. Lady chirrups, but does she think that she is an authoritarian figure now, because that is the logic of extending the concept?

The Government Front-Bench team, who sit there now, trooped through the Lobby and voted against the jobseeker's allowance, which they now laud as the key to their changes. That is absurd. However, my colleagues and I are always prepared to welcome what appears to be a sinner who repenteth. Like many people who first saw the proposals in the Green Paper, we wondered how tough the Government were and whether they would see this through properly.

The Bill confirms that the Government think that it is good to talk, but where is the action? Of course, those who receive benefit have obligations, and if they are able to work, they should seek work. The Government should take the necessary measures to assist them. However, the Government have other obligations that they do not seem keen to ante up to. Most importantly, they must ensure that the cost of employing people falls rather than rises, and that costs on business are kept low, otherwise the necessary jobs will not be created and bringing people in for interview will achieve nothing but frustration and extra costs.

This is a Government whose right hand does not know what the left hand is doing. The Treasury and the Department of Trade and Industry are busy imposing extra burdens on industry. In a previous speech, I estimated that they have risen by approximately £40 billion since the Government came into office. On top of that, the Department of Social Security, through devices such as the working families tax credit, will increase spending on social security by some £37 billion over the next three years. Like everything else, that will bear directly on individuals through their tax burden, and ultimately make employing them even more expensive.

The Government also started the new deal for lone parents, which will cost £200 million over this Parliament. Frankly, it has failed. Approximately 6 per cent. of lone parents take work, and a very high proportion of them fall out of work within six months. I notice that the Government now refuse to publish the figures for the number of lone parents falling out of work because they are so bad. The Government should cancel the programme, but they continue with it.

While continuing with that programme, they talk about obligating lone parents to come in for an interview. Surely they should accept the fact that the original programme has failed. They should save the extra money that they were to spend on that programme, and put it into the gateway—the great idea lauded by the Secretary of State. The Government's stated policy is to do one thing, but they intend to do another. It is absurd.

The Government seem unsure about what they intend to achieve. At no point have we had any targets for savings to be made through welfare to work or the gateway. Bearing in mind the fact that there are about 1 million lone parents on income support, how many new jobs does the Secretary of State think will be created? I shall give way to the Secretary of State if he wants to intervene on that point, but it appears that he does not.

The Government have yet to say how they will spend the money required to interview all those who are eligible. The gateway may become a bottleneck. We see the spending, but we do not see the saving. The Secretary of State has an opportunity to clarify the situation. There will be up-front costs to interview all those people to whom he referred—he said that will happen within three to four days, which is quite a commitment—so he must spend the money required to ensure that they can all be interviewed in that time. The cost will be considerable.

On the basis of what we have learnt from the lone-parent interviews under the new deal, the costs just for lone parents could rise to £100 million. I assume that the Government will ante up to that. I saw the Secretary of State nodding, so I assume that that is the case. [Interruption.] He is now shaking his head, because he realises what the cost will be, but he was nodding when I referred to his commitment.

In the Bill, the Government start to wobble. The gateway is interesting, because the Government use fairly tough language, which worries a number of Labour Members. Clause 47(6) is interesting, however, because it leaves local authorities and even individuals providing services with wide discretionary powers to decide whether a person need not attend the interview.

I am aware of the guidelines that have been published. Paragraphs (a), (b) and (c) give guidance—rather simple guidance—on who should and should not be involved. Paragraph (a), to which the Secretary of State referred, allows someone to disapply the requirement. The example involving the exemption of pensioners was so specific that we have been led to believe that there is some other reason why the Government did not include it in the Bill. Why does the Secretary of State not spend a bit more time working that out? Why does he not specify exactly who should be exempted? If he does not, pensioners will begin to worry about whether they are included—a question that the Secretary of State has left to the discretion of local authorities and individual agencies.

Paragraph (b) allows for the waiving of the regulations for the terminally ill and those who have already attended interviews. That is fraught with complications; but, in my view, paragraph (c) creates the biggest problem of all, because it gives the widest scope for the deferring of an interview. All Labour Members would do well to read it. The example given is likely to affect many people, both those who are genuinely sick and those who may seek to use it as an excuse.

Many people with disabilities are taking serious medication, and would, it seems, qualify almost perpetually. Such people will be left wondering, because the Bill does not make it clear whether they will be called for an interview or the requirement will be waived. The situation will be patchy: the law will be applied differently in different areas, because there will be different views about which group should be called in. There really is a problem for the Secretary of State. The vagueness of the drafting will lead to further difficulties, and the Secretary of State has left himself open to the requirement for sweeping legislation later. The genuinely ill will worry, and others who learn about the system may say, "Well, there is a way around this." They may observe the way in which others are treated, decide to behave accordingly and make their excuses.

There is, however, another problem. Officials will be under pressure, and will not have the appropriate resources. The Secretary of State has not committed himself to spending the necessary money: he said that he was not prepared to spend it if it was as much as I suggested. Let us therefore assume—for it is just about possible: Governments have found themselves in difficulties before—that, in the absence of the appropriate resources, officials will be under pressure. Staffing numbers alone will be a problem, but the officials will be under further pressure because, according to the Secretary of State, people will have to be interviewed within three to four days.

Officials will be under pressure to ensure that people are interviewed, and they will have to deal with a backlog. Of course they will be tempted to look at the categories in the guidelines and say, "I can get rid of a few of these people." That is a huge hole in the legislation; the Secretary of State knows that, and I wonder why he has left it there.

Moreover, given that the Secretary of State has specified three to four days for those categories—the sick, the disabled and pensioners—he expects those who must make the decision to do so in that time. That will lead to yet more complications. Officials will be under further pressure, and the fact that the guidelines criss-cross will cause extra difficulties.

The more we look at the proposals, the more we see classic new Labour. It is window dressing for the sake of good headlines; behind it, all is confusion and extra cost with no savings at the end.

The Secretary of State spent some time talking about pensions. The long-awaited reform will create even more problems than it seeks to solve. The Government's attack on pensioners—their abolition of advance corporation tax dividend credit, which meant taxing pensioners £5 billion a year—has created the worst environment for many years. There has been the attack on pensioners, and there have been attacks on savings: there has been a series of stealth taxes.

Under the present Government, someone aged 35 with a starting salary of £10,000, rising to £32,000 over 30 years—that allows for about a 4 per cent. increase per annum—will find that his income on retirement is reduced by between 11 and 15 per cent., as a direct result of the Government's new tax. Instead of retiring on a pension of some £14,700, that person will retire on, at best, a pension of £12,500. Those figures are from the National Association of Pension Funds, and they provide a startling illustration of the Government's failure and the attack that they have made on pensioners and savings. This is a classic example of the way in which the Government have failed pensioners.

What have the Government done in the Bill to put the position right? In fact, they have made the position worse. Occupational pension schemes are already in difficulty as a result of the Government's changes, and those difficulties will now increase. Clause 1 makes it clear that stakeholder pensions will be alternatives to occupational and personal pension schemes: people will have to choose between them. No one can have an occupational or personal pension, and also be a stakeholder. Clause 3(7) adds to the administrative nightmare: it will force companies to set up two separate arrangements, one for new entrants to stakeholder schemes and the other for existing occupational pensioners. There will be extra costs and extra complications.

Clause 1—along with the abolition of ACT dividend credit, and the change in national insurance rebates for contracted-out money purchase schemes, contracted-out salary-related schemes and personal pensions—will put huge pressure on employers to close their company schemes. Eventually, they will simply offer stakeholder schemes, which could ultimately lead to smaller retirement pensions for many people.

The Government are on record as saying, in their Green Paper, Occupational pension schemes are the great welfare success story of this country. The Green Paper—published by the Secretary of State—continues: They are provided voluntarily by employers and many millions of people benefit from them now and will continue to benefit. How hollow those words are. As ever, rhetoric and reality are detached, and the public out there who are trying to save will suffer. This is a badge of shame that the Government will wear until the next general election.

No new occupational scheme has been set up since the Government were elected. Instead, schemes are closing.

Ms Stuart

Will the hon. Gentleman give way?

Mr. Duncan Smith

No; I have already given way to the hon. Lady.

Not content with destroying occupational pensions, the Government now seem happy to dip into what is left. Let me refer to a little article in the Daily Mail—a paper that the Government now adore, because they like to be published in it. Indeed, the Secretary of State's right hon. Friend the Prime Minister seems to write for it exclusively. According to the article, The state has made a £17 million profit after a computer glitch led to pensioners being short-changed. The £20 million windfall came about after more than £2 billion which should have been paid out in cash rebates to private pension holders was banked instead. The Government plans to set aside only £3 million to compensate the victims, with the rest going to the Treasury. That is pretty typical: it is what we have come to expect from the Government. The Government have sticky fingers. Not only are they busy crushing occupational pensions, and creating a nightmare for those who must choose with no way of affording the proper advice; as ever, they are content to fiddle extra money for the Treasury that was not theirs to start with.

Ms Stuart

Will the hon. Gentleman give way?

Mr. Duncan Smith

No, I have done so already.

Finally, no mention is made of lifelong individual savings accounts. They are on the loose, cutting across stakeholders and complicating what was meant to be simple. There is no extra promise for advice about stakeholder pensions, enabling people to decide whether to opt for an occupational scheme or to take out a LISA. That will mean more cost, and more confusion.

Ms Stuart

Will the hon. Gentleman give way?

Mr. Duncan Smith

Yes, I will.

Ms Stuart

The hon. Gentleman mentioned the creation of new occupational pension schemes giving defined benefits. I understand that, apart from the restructuring of companies, nothing like that was done during 18 years of Tory government.

Mr. Duncan Smith

That is interesting. The hon. Lady has gone and put her foot in her mouth. She must have been eating too many genetically modified foods. In fact, her party's Government made things so bad for occupational pensions that those schemes are now closing. [Interruption.] The point stands. No new schemes have been opened under the present Government—and new schemes were opened under the last Government. [Interruption.] My point is well made. The hon. Lady is wrong. This Government set about breaking down occupational schemes. The Secretary of State sits there smiling. [Interruption.] The only thing that has been lost is the ability of the hon. Member for Stockport (Ms Coffey) to tell pensioners in her constituency that the Government have done anything to support pensioners. The Government have smashed occupational pension schemes and made a complex nightmare of the stakeholder scheme. Pensioners are the ones who will suffer for it. The hon. Lady should tell her pensioners—who, in the example that I gave, would lose more than £2,000—that they are better off under this Government. The fact of life is that they are not.

The Government have made a huge mess of all of it. The Treasury's LISAs, which will affect all aspects of the stakeholder scheme, were meant to help simplify pensions.

Mr. Howard Flight (Arundel and South Downs)

Does my hon. Friend know where the hon. Member for Birmingham, Edgbaston (Ms Stuart) possibly could have found the bogus data that she quoted? Towards the end of the previous Government's tenure, I personally established an occupational scheme. I know of many other similar schemes.

Mr. Duncan Smith

My hon. Friend is quite right. The point that I was trying to make was that the hon. Member for Birmingham, Edgbaston (Ms Stuart) was wrong—[Interruption.] I said that she was wrong. I shall accept an apology from her, because she was wrong. She sits there hoping for a job, taking briefs from those on the Treasury Bench, but she should be very careful that she gets it right. I dare say that she will eventually apologise.

The point that I was making—it is most important—is that LISAs have created only more confusion. The Chancellor's original idea for stakeholder pensions was that they should be simple, and therefore cheap and easy to understand. Instead, we have seen many variations on the stakeholder scheme—the last of which is the LISA, for which the Treasury seems to be responsible.

I ask the Secretary of State why the Bill does not deal with the LISA or any of its requirements? Why is the LISA not relevant to this Bill? We have no idea how the Government will control LISAs. We have an idea of the controls that they will impose on stakeholder pensions, but no idea about LISA controls. The final result of all the confusion and chaos that the Government are causing in the pension industry could be an accusation of mis-selling. The sad part about it is that that mis-selling will have to be dealt with by another Government, after that lot on the Labour Benches have been thrown out of office.

Mr. John Greenway (Ryedale)

My hon. Friend has put his finger on the real problem confronting the industry and those who give advice. Even in two years, people who choose a stakeholder pension will have to buy an annuity. If people choose a LISA instead, they will be able each year to take cash from it. Which scheme will be better in the long term? Who will be responsible for giving that advice?

Mr. Duncan Smith

My hon. Friend, who knows something about the subject, has put his finger on the point. The Government are in a state of confusion. The two sides of the Government do not talk to each other, and the situation is a mess. Far from simplifying pension provision, they have made it much more complicated and succeeded in inflicting a final body-blow to occupational pension schemes.

A scheme that Ministers said was a great success story is likely now to be heading into the history books as something that people used to be part of, once upon a time. If we add to that attack the Government's annual £5 billion tax on general pension funds and a rising means test, in the minimum income for pensioners, we realise that Ministers have managed to do the double—providing disincentives from both ends for pensioners, who will be squeezed in the middle.

Ministers said that they would simplify pensions, but have made them more complex. They said that, ultimately, pensions would be cheaper; now, pensions will be more expensive. They said that they would support occupational pension schemes, but are now killing them off.

In this Bill—as with so much else that the Government do, with their huge majority—the Government seem petrified by the prospect of dissent and obsessed with control. We have seen such behaviour from the Home Secretary this week—but the House is used to it, as we see it every week. Ministers put together such legislation and ram it through the House, half-finished and without a variation.

A year ago, I explained the criteria for successful reform: it must first strengthen the family; it must strengthen personal responsibility and break the dependency culture; it must strengthen alternative welfare provision; and it must protect those who are in genuine need. On all four counts, the Bill fails.

Mr. Edward Leigh (Gainsborough)

If Conservative Members are moving away from means-testing, and if we are not prepared to accept the huge taxation and public spending increases necessitated by implementation of the ideas of the right hon. Member for Birkenhead (Mr. Field), is there another way—perhaps a third way—of dealing with the matter, by requiring families, and encouraging them in the tax system, to take up more of the strain of looking after dependent children, the elderly and the disabled? Is a third way available to us?

Mr. Duncan Smith

My hon. Friend, too, has put his finger on it. There is only one way of addressing the issue—by involving people and by incentivising, not disincentivising them, to take responsibility for their lives. The Government are doing the exact opposite. Although they talk about incentives, all their actions—from their rhetoric, which sounds big, to their delivery, in the Bill—deliver one disincentive after another to saving or to going back into work. The Bill exemplifies the Government's approach to the issue.

The Bill will damage savings, provide disincentives for those returning to work, create chaos and confusion in the pension market and increase social security costs, without saving money at the other end. It is a bad Bill from a bad Government, and it is our pleasurable duty to oppose it today.

Mr. Deputy Speaker (Mr. Michael J. Martin)

I remind the House that Back-Bench speeches will be limited to 10 minutes.

6.56 pm

Mr. Tom Levitt (High Peak)

I am a trustee of the Royal National Institute for Deaf People, and shall be talking today about issues affecting the disabled. The post is unremunerated. I do not have to declare it, but wanted to make a clean breast before beginning.

The Bill will have a considerable positive impact on the lives of very many disabled people across the country. We should, however, examine carefully the context in which it will operate. I believe that the Bill will enable us to implement long overdue reform, particularly of the disability benefit system, so that it is better focused, more efficient and in tune with the parallel initiatives that will be taken by other Departments.

Since creation of the benefits system 50 years ago—when the social environment was completely different—so much baggage has been left behind, which we have inherited, that it is essential that we carefully study the current system if we are to ensure fairness for all concerned. The fact is that, 50 years ago, disabled people were primarily those who had been wounded in the war. They were young people who, because of their acquired disability, were looking forward to half a century of economic inactivity. Although they believed that the nation had a duty conscientiously to look after them, they did not have the expectation of rights and emancipation that the disabled now have the right to expect. In the years that followed, although there was fuller and more stable employment, there was not assistance for those in employment, as there is now and will be in future.

As the Secretary of State said, current incapacity benefit figures show that about one quarter of British men aged 60 are not capable of work because of incapacity. However, I do not believe that that figure can be right, especially as it is larger than the corresponding number of 60-year-old men who were not able to work 50 years ago. I do not believe that the health of the nation has become so much worse in that sense in the past 50 years.

We had an entirely different perception of disabled people 50 years ago. We were happy to put away into asylums people with mental incapacity or a learning disability, and to leave them for year after year. It was a matter of "out of sight, out of mind". Deaf people were locked up in those same institutions, because of a failure to understand what disability is all about. The Sexual Offences Act 1956 refers to people with mental incapacity as "defectives". That shows the attitude to disabled people that existed among our legislators. I hope that, when my right hon. Friend the Home Secretary looks at that Act in his review of sexual offences, the word "defectives" will be removed from the legal vocabulary.

We have to ask what the disability benefits system is for, how it is achieving its aim and whether it can be improved. For example, why has the system denied benefits to children under five, depriving their families of compensation for the extra costs of the children's disability? The Bill addresses that, making funds available to cover three and four-year-olds with disabilities. That non-means-tested benefit will be tax free and worth £1,800 a year to the families of the 8,000 children who will be covered.

Why are 70 per cent. of those in receipt of severe disablement allowance also entitled to income support? That suggests that the SDA is not meeting the needs of those with disabilities and is not providing them with an incentive to get out of the benefit trap.

The incapacity benefit system is governed largely by fear. If someone who has been on incapacity benefit for some time knows that they are getting better, there is a disincentive to admit it. Anyone who is long-term sick and starts to get better knows that there will be an economic penalty and they will get no extra assistance to get into work. If they have given up on work or the system has given up on helping them, they get no help in the first place.

There is thus a real incentive for people to hide their developing abilities as they grow out of chronic sickness. The proposal to bring in a new 12-month linking rule for incapacity benefit will be a great relief for such people, allowing them at least to try the world of work, having previously felt alienated from it.

One of the most exciting aspects of the Bill is that it encompasses the idea of joined-up government. The Government acknowledge that disabled people have a right to quality information about the benefits and services available to them and to assistance and training in seeking work when appropriate. They also have a right to special help, after the onset of disability or age-related impairment, to stay in work when possible. Most of all, underlying the Bill is a commitment to the independence and dignity that disabled people need and should be encouraged to keep.

We have to ask why the Department of Social Security and the Employment Service are each given responsibilities for certain aspects of the system, but are refused a mechanism to work together to achieve their common and complementary aims. We cannot defend one Department not knowing what the other is doing when they are working in complementary fields. We cannot defend one officer passing the buck to another Department and officers at the sharp end of the benefits services giving confusing or incomplete advice. It is not surprising that the advice is often confusing and incomplete and people end up with the wrong benefits. Someone who knows all about the jobseeker's allowance cannot, under the present system, be reasonably assumed to be an authority on disability benefits. Higher-quality advice must be available to everyone.

Many local authorities have proved that the concept of the one-stop shop works. If it covers advice and benefits, the new deal for disabled people and carer's allowances, dealing with compassion and real concern for the disabled people who need its services, will work.

The system must treat disabled people with dignity. There will be an expectation that disabled people will take part in an interview with an adviser. The location and the information given must be accessible to the disabled person. If necessary, it should take place in the disabled person's home, so that the atmosphere is as relaxed as possible and conducive to a meaningful discussion on all aspects of work, benefits and other assistance that may be available. There should be no suggestion that force or blackmail will be used to get the disabled person into work against their will.

Training for the advisers is a major investment. It is right to pilot the proposals. We must not rush the single gateway, because the quality of training must be right. The circumstances, conditions and premises must be accessible and there should be no workhouse atmosphere—none of the screens that form a barrier between the officer and the claimant.

The experience of the new deal has often been a revelation to Employment Service staff. They have told me that it is what they came to the job for. They are able to give the quality advice that people need, instead of treating them as numbers and just trying to get on with the job. Dealing with interviewees as people is important for the new one-stop gateway.

I was going to raise some of the major issues that have been raised by the disability lobby and some of the problems

Mr. Deputy Speaker

Order.

7.7 pm

Mr. David Rendel (Newbury)

The main thrust of the Bill is to remove more than £1 billion of benefit from widows, carers and sick and disabled people. The Liberal Democrats therefore strongly oppose it. It is not what people voted for when they elected Labour to government. It is not even what most Labour Members thought they were standing for in the election. If there are still Labour Members of principle who are prepared to stand up for the ideals for which their party has stood so proudly for so many years, I hope that they will have the courage of their convictions, as 47 of them bravely did when joining us in opposing the lone-parent benefit cuts in the previous Session.

With much reluctance, we shall vote for the Conservative reasoned amendment. It is a feeble amendment, making little reference to the Bill's most obnoxious aspects—the benefit cuts. It is not even clear whether the Conservatives will oppose those cuts in Committee. We hear with an ironic laugh the Tories decrying the increased dependency on means-testing that the Bill involves. Under the Conservatives, spending on means-tested benefits doubled, as did the number of people dependent on such benefits.

We welcome the chance that the single gateway will provide for many people to discuss employment opportunities. We hope that the gateway will focus on more than just employment and will provide advice on benefit take-up, child care facilities and training opportunities. We want interviews to be focused on the individual, not on the benefit that they are claiming, providing support rather than threatening disentitlement.

However, with that welcome come several warnings, some of which mirror the points made by the hon. Member for High Peak (Mr. Levitt). The Bill lists the benefit claimants who will be subject to the single gateway. There appear to be no exempted categories, although there will be some discretion in deferring interviews if they appear to be neither helpful nor appropriate. For people to have peace of mind, the Government must make it clear who will be required to attend an interview, and when.

If the interview is to be solely work-focused, it is surely unsuitable to demand that everyone attend. Severely disabled people may benefit less from a work-focused approach, and more from a service-delivery approach. The Government must be prepared to adapt the gateway to provide for individuals in their own right. By bringing in categories such as carers in receipt of invalid care allowance, the Government risk placing too heavy an emphasis on paid work. Caring for elderly people, children or the sick and disabled is often in itself a full-time job, and it is high time the Government recognised that.

We are told that interviews can take place in the home when it is not feasible or appropriate for claimants to visit an office. It is essential that that measure is interpreted generously. Jobcentres are frequently inaccessible to clients; indeed, something like one third of job centres do not have a disabled toilet. Disabled people—as well as those who live in rural areas—will benefit from the possibility of a home visit.

As for those who must attend interviews in the office, will they receive some reimbursement for the costs of attending—as that, too, would only be fair? When people do not attend an interview, there must be some investigation of why they do not before the benefit is disallowed. For example, someone might have gone into a state of deep depression just before they were called for their interview, and that sort of reason must be taken into account.

Given the climate of fear created by the benefit cuts—and following the disastrous benefit integrity project—claimants are likely to see the interview as nothing more than an attempt to refuse them benefits. The Government must strike a balance between policing claimants and supporting claimants. Both are equally important.

If the Government take only one lesson from the benefit integrity project, it must be that training of staff is essential. In my constituency, a lone parent informed the Benefits Agency that she was going back to work. She handed in her benefit books, and was told to apply for family credit. No one told her to apply for the lone-parent benefit premium. Her housing benefit was altered, and paid on the assumption that she was getting the lone-parent premium. When the housing benefit department explained the shortfall to her, it was too late for her to apply for lone-parent benefit. Such cases speak for themselves—adequate training is a must.

The gateway provides an opportunity to simplify the system, but unless the Government make clear how the gateway interviews will interact with child support interviews, new deal interviews and the host of other assessment procedures that claimants have to undergo, they are threatening to create more complexity, not less. If the gateway is to be seen as opening an opportunity, rather than closing one, it must remain open after the client has got a job. The Government must recognise that job retention is at least as important as obtaining a job in the first place.

If the Government want to end the something-for-nothing culture, as they claim, and if they want a true contract of rights and responsibilities between the claimant and the state, the gateway offers a valuable opportunity to strengthen the contract on both sides. Sadly, it seems likely, at present, that the gateway will be seen by claimants as an attempt by the authorities to strengthen their hand against that of the claimant.

The Government want an end to the something-for-nothing culture—so whom do they target? They target the recently bereaved. They target those who become incapacitated after the age of 20—or, as we now hear and welcome, after the age of 25 if they are students. They target, disproportionately, women and carers. They penalise savers.

The Bill removes more than £1 billion in benefits. The Secretary of State claims that he is not taking money from the poorest, and he is right to say that the safety net of means-tested benefits is not being removed. So keen is he on those benefits that his changes will force another 250,000 people on to means-tested benefits. The £1.2 billion has to come from somewhere. The first group to be targeted are widows. It never struck me that widows were guilty of something for nothing—yet the Government seem to believe that they are guilty to the tune of £500 million a year.

The Secretary of State was keen to stress that the money does not come from the poorest claimants, but he is wrong—the poorest are equally affected. He is targeting everyone. Widows and widowers will benefit from the increased lump sum, but that is costing the Government only £70 million a year, and is nothing more than an overdue recognition of rising costs.

Many of the poorest widows will be able to claim means-tested benefits when their bereavement allowance stops after six months. However, unless they have dependent children, all new widows and widowers will lose their state earnings-related pension scheme payments—on the basis of their spouse's contributions—altogether. These payments previously amounted to up to a quarter of widows' pensions.

Many people have contributed to their pensions, believing that their partner would benefit. The Government are treating that prudence with contempt. In one part of the Bill, the Government's pensions proposals duck the issue of compulsion in second-tier pensions. However, here we find the Government producing a disincentive to save voluntarily. What a contradiction.

What of those widows and widowers with small lifetime savings of just £8,000? They will not be eligible for means-tested benefits, and they, too, will lose out. Sadly, they are often among those who, in terms of income, are the least well-off.

The Government expect that, just six months after losing a spouse, men and women will find it easy to be back in work—in many cases, after many years out of the workplace. Have the Government no feeling or care for those people? Does the Secretary of State really believe that a woman who has suffered the trauma of losing her husband through suicide or a car accident can get straight back to work as if nothing had happened? The Government clearly know nothing about the psychology of bereavement if they think that that is how human beings behave.

In case any hon. Member thinks that six months sounds reasonable, let no one forget that a widow who knows that her bereavement allowance will run out after only six months will worry about how she will manage thereafter many months before it does run out. The restriction of the bereavement allowance to just six months is unnecessary and cruel, and an attack on human beings when they are at their most vulnerable.

The Government are right to extend widows' benefit to widowers. However, many will view that move with cynicism—after all, the Government only moved on the issue when confronted with a court case that was almost certain to force them to do what they are now claiming the credit for doing voluntarily. However, it is sheer opportunism to take the necessary reforms to widows' benefits and twist them so as to make some money for the Treasury. Having done so, the Government have done their best to portray the £100 million cost of extending benefits to widowers as the main effect of the changes, while conveniently hiding—and, apparently, forgetting—the £600 million cut in widows' pensions.

While we are on the subject of bereavement, why is the lump sum payment not paid to bereaved pensioners as well? The Government could have used the opportunity of reforming widows' benefits to remove that piece of unfair age discrimination. We believe that there is no need to seek savings in bereavement benefits. No extra money need be spent, but the £500 million net cuts could be used to increase the time limit on the bereavement allowance, to include SERPS payments and to pay the lump sum payment to the bereaved of retirement age.

Who else do the Government choose to target? They target sick and disabled people, and those who care for them. The Government now want to cut £700 million in disability benefits. Once again, those who are eligible for means-tested benefits will remain relatively unaffected, yet those with small lifetime savings will be excluded. The Government are targeting women, carers and those who have followed Government advice and saved for their retirement. I know that my hon. Friend the Member for Winchester (Mr. Oaten) hopes to speak on that point later.

The Bill is a mixed bag, and is full of contradictions. The single gateway aims to encourage work, but cuts to incapacity benefit and severe disablement allowance will prove a disincentive to take work.

The stakeholder pension aims to encourage people to save, but the shift to means-testing will pull people in the other direction. The stakeholder pension and the measures for pension splitting on divorce would seem to support women and carers, but they will simultaneously be penalised through the cuts in severe disablement allowance. The only coherent thread seems to be cutting benefits and promoting means-testing.

That is not what the electorate hoped for when the morning of 2 May 1997 dawned and they woke up to a new Government. In benefits, Labour cuts have followed Tory cuts and it has been hard to tell the difference; but there is hope: already there are signs that some Labour Members may be prepared to say that enough is enough.

After the lone-parent benefit fiasco, Labour Members who had supported the Government in the Lobby, some of them, I understand, in tears, are said to have sworn that they would never be prepared to act in that way again. Now they have the chance to show that they are prepared to stand up for their principles and to vote for a fairer, more just society in which we can reduce the gap between rich and poor. I hope that they will take that chance.

7.21 pm

Mr. Frank Field (Birkenhead)

This is an important day for the Government and for my right hon. Friend the Secretary of State. No one who has witnessed his performance over the few months for which he has held the post could come to any conclusion other than one of admiration for the way in which he commands his brief, presents his brief to the House and regularly demonstrates the quality of humour, which is rare in politicians; it is even rarer for politicians to be able, as he is, to see the joke about themselves and to join in.

Today, we learned of another quality of my right hon. Friend—one that is a crucial quality for someone in his position—knowing when to give way before one is defeated. I very much welcome the announcement of the crucial change of raising the age limit for severe disablement allowance from 20 to 25. The position was not defensible, and it shows good sense and compassion that my right hon. Friend moved quickly to confront reality.

There is much in the Bill that Labour Members will want to support, so I will be very surprised if the enticement offered by the hon. Member for Newbury (Mr. Rendel) has any effect other than to drive us together. The extension of disability benefits to children under five is welcome, and it is a great compliment to my hon. Friend the Member for Preston (Audrey Wise) who, in every year that I have been in the House, has made the case for that reform. It must be a sweet day for her to see that important concession made. Many parents with disabled children owe her a great debt.

There is much to be welcomed in the single gateway. Not only do our constituents think that we have been lax in not operating the rule continuously since 1948, but many claimants themselves express surprise at how little interest Government officials take in them once they have registered for benefit. Before the general election, we said that we wanted to talk to people as they register for benefit and say, "This is the first day of the rest of your lives; how can we make the rest of your lives as happy and constructive as possible?" For that to work, attitudes will have to change in some local offices and staff will need to be trained in new ways; but I do not believe that there is a great deal to fear.

If this great project, the Bill, is a craft that is about to set sail, it is still in harbour. The crew on this side of the House may be anxious to catch Ministers' ears and tell them of the parts of the Bill that may cause trouble on the voyage. I regret to say that there are aspects of the Bill that are weakest where one would have thought that a Labour Government would be strongest and areas in which it seems that the Government are setting out to defeat their own objectives.

The hon. Member for Newbury was right to say that he was puzzled by the Prime Minister saying that he wanted to root out the something-for-nothing society. The Bill takes much away from those who contributed in the sure faith that they would be able to draw when benefits were needed; but there is not much in the Bill that takes away from people who have contributed nothing or very little. Some of the crew may want to talk to the captain about matters of much concern before the great ship sets sail.

The Government have two policies on pensions: the proposals in the first part of the Bill, grouped around the idea of the stakeholder; and the ideas, also quite properly being promoted, about trying to guarantee today's pensioners a decent minimum income. The two policies are inconsistent.

As the hon. Member for Northavon (Mr. Webb) has demonstrated on several occasions, pensioners face a poverty trap—if their income is above a certain level, they are disqualified—and a savings chasm is opening up, so it will be impossible for people to save during their working lives sums that will allow them to breach the growing gap. There is that growing gap because, for all the good reasons in the world, the Government have said that they will index the guaranteed minimum against earnings, while most other pension incomes, if we are lucky, will be indexed against prices.

Over time, the gap will grow and an increasing number of people who have done everything that the Government have said and do not want to be part of a something-for-nothing society—and would be appalled to think that they were being so categorised—will be told, as a reward, "Well done, good and faithful servant, but you didn't try hard enough and your pension isn't big enough" or "You didn't manage to amass enough savings." Those people will not be better off, and some of them will be worse off, than other people who laughed at the Government and decided not to behave properly. We are talking not about the very poorest people but about the bedrock of Labour supporters: the people who turned out for us in abundance at the general election. Those are the people who will lose.

There is a similar problem with widows. It is not good enough for the Government to say that those who are currently widows will not be affected. Nobody, not even the Conservative party in government, came up with reforms of that kind. Many of our constituents are budgeting on the basis that, should they die, their wives will be covered by the scheme. They have had no option, because the scheme is compulsory, which I think is quite proper. They have not been able to put contributions into a private scheme to protect their wives. They now know that, if they die, the chances are that their wives will not be covered.

It is impossible to square the provisions on incapacity benefit with the despicable phrase about something for nothing. We are talking about people who, through their working lives, have persevered and struggled to get back to work, often many times, after suffering disability. They did that in the knowledge that their contribution conditions were safe—they had to make only one year's contribution in the whole of their working lives—but now that is to be changed, and they will have had to make one year's contribution in the past two years.

The message will quickly go out from doctors and others, "Please don't bother to go back to work, where you may fail, because by doing so you will probably—not inevitably—disqualify yourself. Get on to benefit straight away, because that is the only way that you can secure the contribution that you've made." That is the very opposite of what the Government said before the election, during the election, and even in presenting the Bill.

We are beginning to witness the targeting of some of our voters, who were targeted by the Conservatives and Mrs. Thatcher when they were in power. She targeted rewards such as tax concessions and council house sales, and we found that our vote was vulnerable at elections. During the passage of the Bill, I beg my hon. Friends to consider carefully how some of its provisions will strike at the best aspects of working-class decency. Our supporters look to us to protect those decencies, not to destroy them.

7.31 pm

Mr. John Greenway (Ryedale)

It is a privilege to follow the right hon. Member for Birkenhead (Mr. Field) and I wish to contribute in the same spirit that he did. I recall my experience of 29 years working in the insurance and pensions industry, and I remind the House of my interest, especially the fact that I am the president of the Institute of Insurance Brokers and a member of the Insurance Brokers Registration Council, which is a regulator. We have had our share of work to do on the pensions mis-selling issue, about which we have had other debates.

The industry feels a great sense of déjà vu at the Government's proposals for pension reform. The Government's objectives are similar to those of the 1980s and are also laudable. They include transferring provision for income in retirement from the state to personal pensions for as many people as possible, and to encouraging a greater uptake of pension provision. We all agree that the present arrangements are capable of improvement, but we should also remember that this country has done significantly better than most other countries in the European Union. We have greater provision, but we need to extend it into lower-income groups, because many in those groups have made little, if any, provision for their retirement.

It is also clear that some lessons have been learnt from the problems that have beset the industry following the changes of the 1980s. The Government are right to concentrate their efforts on costs and charges, which were too high for many. Time does not allow an analysis of why that happened. We also have a much better regulated industry than we had in the late 1980s, and we have a more professional industry giving advice. It is to be hoped that the contracting-out arrangements will be better.

Other problems remain, and I do not believe that the Government will achieve a smooth transition to stakeholder provision. There is a real danger of paralysis for the next two years, as people do nothing while waiting for stakeholder pensions to come on stream. Those people in the under-£18,000-a-year income group will be most affected. In an intervention in the Secretary of State's speech, I commented about the lack of provision for mixed provision, and I wish to stress the importance of providing complete portability through the stakeholder arrangements.

Stakeholder pensions have been given a positive welcome by the industry. I chair the all-party insurance and financial services group and we have had numerous meetings on the Green Paper and the Government's proposals. More meetings are likely, because major concerns remain. The benefit design of a stakeholder pension is much the same as a personal pension. It will be taxed as earned income. Yes, it will be available over a long time, between the ages of 50 and 75, and there will be an entitlement to a quarter lump sum, tax free, but the pension will still be based on an annuity purchase. The industry and many right hon. and hon. Members understand and appreciate the concern that annuity purchase currently represents poor value and is the major cause of many of the losses on personal pensions that have attracted compensation. That will cause a big headache for arrangements in the second phase. There is no compulsion to include life assurance. Nor is there any guarantee that people will be better off, because the annuity payment may not be index linked. That is the other side of the coin of the problem mentioned by the right hon. Member for Birkenhead.

The biggest problem arises from the generous provisions on contributions that the Government propose—100 per cent. of salary or £3,600, whichever is the lower. That is good for those under the figure, and it is a huge improvement on what happens now for personal pensions. However, it is incongruous and illogical that the benefit of that improved contributions limit will not apply to personal pensions. Another problem is that the five-year rule, and even the one-year rule, will be income related. It would have been better to allow everyone a flat rate contribution of £3,600 regardless of income. In an ideal world, that would apply equally to personal pensions, and I urge the Government to think seriously about that suggestion.

The low charges that are envisaged mean that commission is unlikely to be payable, but advice is important and information is not advice. The proposal for maximum charges is less of a problem for large contributions paid by cheque or by direct debit than it is for small contributions paid weekly or monthly. There is strong support in the industry for a requirement for employers to provide access to stakeholder schemes, but individuals should be free to nominate their preferred stakeholder, especially if they move between jobs. Serious practical difficulties could arise for those people whose income fluctuates either side of the threshold, at both ends of the spectrum at the interface between the second state pension and the stakeholder pension at one end, and between the stakeholder pension and personal pensions or other arrangements at the other.

I emphasise again the need for flexibility and mixed provisions. I cannot understand the logic of arguing that people who have personal pensions now but who will fall in the stakeholder income group should have to cancel those contracts to contribute to a stakeholder pension. That is illogical. I understand the Secretary of State's point about costs and charges, but there is a danger that personal pension holders will be penalised twice over. If his argument is that, in some instances, the personal pensions are poor value, why disallow the benefit improvements to personal pension holders that will be allowed to stakeholders? That, too, is illogical. It is no solution to cancel policies and turn them into stakeholder plans.

Costs are not the sole problem. No one has yet addressed the regulatory complexity that is placed on the industry by the Superannuation Funds Office and the Inland Revenue, which adds to costs. Equally, inflexibility undermines value.

In conclusion, I shall make a final, general point. Major policy changes in the pension sector must be long-term initiatives. Contributors and pensioners will invest and draw their benefit under successive Governments, and it will be in no one's interest to anticipate that there will be another major upheaval in 10 or 15 years. Therefore, it is crucial that, with the Bill, we achieve certainty and stability in pension provision, especially for people in low-income groups.

The Government published the Bill before the consultation ended. I do not quibble with that, but it behoves the Government to listen to the representations of industry. I hope that the Bill is not sent into a Standing Committee with the intention that it will emerge in precisely the same form. It is obvious that there must be some flexibility and some listening: if there is, we can get the Bill right.

7.40 pm

Mr. Malcolm Wicks (Croydon, North)

The Bill is important and complex. It is an omnibus Bill, and deals with a wide range of items on the social policy agenda. However, one common theme is obvious—the attempt of the social security system to deal with substantial changes in our society. Those changes include aging and the implications for pensions, the approach to death and bereavement, and issues to do with disability, employment, patterns of work, and unemployment.

The modern feature with which Parliament is having to get to grips is family insecurity. There is no dodging the need for the state to get involved in personal relationships at their most raw and bloody. Hon. Members know, from our advice surgeries, the difficulties that have arisen with the Child Support Agency, and we shall see similar difficulties arise out of pension sharing on divorce. The personal has become political, and we have to meet that challenge.

As an aside to the problem of pension sharing on divorce, I think that, sooner or later, the House will have to get to grips with the related phenomenon of cohabitation. A view on marriage that is not balanced by a view on cohabitation means that there is a risk that all sorts of incentives and disincentives will be built into the system. The House needs to be aware of that problem.

With the Bill, we are dealing with very detailed questions. I hope that the House can change the culture of Standing Committees, so that the Executive's proposals can be scrutinised seriously. Under the previous Government, I got very fed up because Conservative Members were unable to say anything about the measures that went through the Standing Committees. The House of Commons must adopt a grown-up approach to scrutiny: we shall need it if we are to get this very important measure right.

As well as detailed scrutiny, we need an overall vision of social security. The Government have a good story to tell about the health service and education, but what is the story that we want to tell the public about social security? Where is the vision, and what are the underlying principles? It is more difficult to spread good news about social security than about other matters, because the minutiae often get in the way of the storyline.

I think that we need to ground our approach to social security in a sense of moral philosophy—not as a theoretical proposition, but as something that can translate easily into a popular message. The problem is to balance matters of citizenship, and of rights and responsibilities, in these modern and complex times. The idea is hardly new: it is one of the oldest in democratic political philosophy, but it is a rich seam. Although people often articulate the idea, the connection is seldom made between the rhetoric about rights and responsibilities and the details of social policy.

I believe that we need to make that connection so that we can explain to people about rights and duties, and build a popular consensus about social security reform. Much of the task is easy. Most people accept that, if they are able to do so, they have a duty to find employment. Also, most people accept that there is a duty to maintain children, even when a family splits up due to divorce or separation.

However, people also have rights with regard to children, such as a right to receive child benefit. When it comes to the care of elderly people—I expect that the royal commission report will be available shortly—we have a moral duty to help our elders when they grow frail, but we also have rights to some social policy partnership. The royal commission will tackle that, and the strategy for carers set out by the Government a week or so ago came at the problem from another angle.

In social security matters, the ethic of duties and rights, and the balance to be struck between them, finds its best expression—historically and probably for the next 50 years—in terms of contributions and benefits, and in the importance of the social insurance principle. We undermine the social insurance principle at our peril—[HON. MEMBERS: "Hear, hear."] Those who have undermined it most agree with me. It is a sight for sore eyes to see them reincarnated as opponents of the means test.

We all hope that the single gateway will turn into an Arc de Triomphe for the Government, who are right to make the connection between social security and employment. It is perfectly reasonable to tell people that they have a right to claim a benefit, but that they should go for an interview, and think about the rest of their lives. That principle was set out by my right hon. Friend the Member for Birkenhead (Mr. Field), and there can be no quarrel with it.

Although we must approach the matter of single parents with sensitivity, the Government must think it through carefully. I do not want to sound macho, but it is nonsense in this modern age that single parents can stay on income support until their youngest child is 16. I put it to the House that, if we were thinking afresh today about that rule, we would not specify an age of 16. We would not be as cruel as the people in Wisconsin, who set a limit of 12 weeks, but we might adopt the European model, which holds that the time for a parent to start thinking about work is when the child begins school.

There may be many exceptions, but the quid pro quo should be that, for people with children under five—below school age—we should be more generous in terms of the benefits that we give to the youngest children. That would mean that the difficult judgment that many parents face about when to work and when to stay at home to care for children is taken by the person who knows best. Mother knows best, not the state. I want there to be more rigour in our thinking about the obligations and rights of lone parents.

I shall end by expressing two cautions about the Bill, much of which I support. The first has to do with vocabulary. We need to be careful about how we present the Bill to a wider public, and we must be especially sensitive when we present it to the weakest and most powerless people in our society.

In the previous Parliament, the former Secretary of State for Wales, the right hon. Member for Wokingham (Mr. Redwood), was on one occasion to be seen speaking to the inhabitants of a council estate. There is something unedifying in watching powerful male Ministers in suits lecture single mothers and children, who are among the poorest and weakest members of our community. We must be aware of the language that is used. As I argued when I spoke about the balance between rights and duties, it is possible to speak about obligations and entitlements in a sensible and moderate language.

This is not weak stuff. Sometimes, there is a need for rigour: the reform of the Child Support Agency, for example, has meant that most fathers now—at long last—pay maintenance. However, we also need a sense of compassion when we deal with many of our fellow citizens. I hope that, as well the rigour that will be needed, the milk of human kindness will run through the Bill.

My second caution is also important, and it has to do with social administration. A key test is our need to be sensitive and professional in the administration of much of the Bill. If we are not careful, we may feel pessimistic about the experience of the Child Support Agency or the benefit integrity project. The best of policies fall down if their administration is not right.

We are dealing with some of the most vulnerable people. We are talking about mothers who have sometimes been victims of domestic violence and who turn up at the social security office emotionally and physically bruised. We are talking of people who have the most severe disabilities, many of whom would dearly love a job and need supportive employment schemes. Many people in emotional pain come to the state for support, and the gateway will rightly institutionalise that. The challenge for the Government lies in turning social policy, much of which I support, into sound social administration.

7.51 pm

Mrs. Jacqui Lait (Beckenham)

It is always stimulating to follow the hon. Member for Croydon, North (Mr. Wicks), who clearly thinks deeply about social policy and usually comes up with interesting ideas. If I am lucky enough to sit on the Committee, I hope that he will be able to join us, although I suspect that that would do little for his blood pressure because he would not be able to speak as he wished.

The hon. Gentleman said that a theme ran through the Bill. I agree that there is one, but that theme was the one identified by the Secretary of State. Throughout the Bill runs a discouragement of saving and an increase in means-testing. Those two things run hand in hand, and either the Government are prepared to accept their implications or, as has happened time after time, they have failed to think them through.

If people stop saving because they will be better off on benefits, wealth creation will suffer. People will become more dependent on the state, and taxes—direct or by stealth—would have to increase. Given our demographic structure—I need not run through statistics that we all know—those increased taxes would fall on fewer and fewer working people.

We must ensure that people who can save do save for their retirement. The Bill will put them off because people on a lower or medium income will see no reason to save. If the minimum income guarantee, housing benefit and council tax benefit are combined, someone on an average wage—the national average is about £19,000 a year—would have to retire with a pension fund of £100,000 to achieve the same income. Someone on an average wage would need to save roughly £1,400 a year to manage that.

That money represents the family holiday. Should a family forgo the annual holiday? Should they forgo a new car, saved for over several years? Should they save the money so that they can end up with an income precisely the same as the income that they would receive from the state? I cannot see people making that illogical economic decision. They will decide to live on the state, and that will, dare I say it, be even easier when they receive a national insurance rebate under the Bill's proposed system.

As my hon. Friend the Member for Ryedale (Mr. Greenway) said, we must not only consider what people would save in a pension fund, but warn them that, under the current annuity system, they will not get the income that they expect. Annuities are giving rotten returns. The Government are reforming pensions in the Bill, and they should have included annuities in that reform.

If, as is foreseeable, we are about to enter a period of high growth but falling prices, incomes will fall, and annuities for people on pensions will be yet further reduced. Meanwhile, income from investments will be doing very well. We shall produce a generation of people embittered by the fact that they have not been able to maximise their income in retirement because the Government failed to take the opportunity to reform annuity law. We should ensure that people have options so that they may choose how best to ensure an income in retirement. We should ask whether maintaining the rigid rules about annuities is the best way forward for everyone.

The proposals on widow's benefit and incapacity benefits also militate against saving, encouraging people to go on to means-tested benefits. I sponsored a ten-minute rule Bill proposed by the late Judith Chaplin—then the hon. Member for Newbury—which called for equal pensions for widowers, so I have no problem with equality. As the work market develops, I believe that more and more women will build their own entitlements because they will always be in work. We must ask whether a widow's benefit is necessary in the long run. I accept the Government's argument on that point, but their proposals will militate against saving for retirement among both widows and widowers.

I would like to know how the Bill affects the working families tax credit and widowed parents who return to work. Will they keep their widowed parents allowance as well as WFTC and their income? Or will they lose the allowance? That might create a poverty trap, but it could equally be seen as a waste of the state's money.

The Government have missed another opportunity—the chance to return unfunded Government pension schemes such as those for teachers. The schemes are good for teachers, although they would probably do better in the private sector. However, because they are unfunded, they are paid out of current income. That is not the best way in which to provide for teachers in the long run, and other pension schemes within the Government's ambit should also have been reconsidered. Perhaps we may see some Government amendments along those lines.

The Bill is vague on pension splitting. I hope that our debates in Committee will allow us to change the system of scrutiny from negative resolution of statutory instruments to the affirmative procedure. That would allow important and detailed rules and regulations to be debated in the House.

There is increasing complexity as benefits move towards greater means-testing, and greater administration costs are associated with that. There is also a further weakening of the contributory principle. The Royal National Institute for the Blind has pointed out some of the problems, and the Secretary of State has amended one proposal accordingly.

Let me turn to the personal capability assessment. I want to be sure about how some cases from my constituency will be covered by the proposals. For example, how will mental illness be assessed? A constituent of mine—a paranoid psychotic—is being refused benefit. How will his case be assessed under the new arrangements?

I am glad that disability living allowance is to be extended to three and four-year-olds, but I would take it even further down the age scale because a greater number of disabled children are being born and they require extra help from the very beginning. Paediatric nurses and doctors have been lobbying me for years on that point.

We will be taking up a number of issues in Committee and I look forward to being able to press the Government even further on the matter. My general impression of the Bill is that, despite its one or two good points, fundamentally, it will reduce more people to dependency on the state, rather than on themselves, and increase means-testing, thus discouraging savings.

8 pm

Mr. Jeremy Corbyn (Islington, North)

I have some sympathy with the view of a number of hon. Members that the Bill is far too big. It contains at least three major elements, all of which deserve detailed scrutiny. I imagine that those hon. Members who are fortunate enough—if that is the way to describe it—to be appointed to the Standing Committee to deal with the Bill will be looking towards their summer holidays by the middle of May, rather than detailed scrutiny of clause 64. If Parliament is to discuss such major legislation, it is important that it is produced in such a way that each section can be thoroughly scrutinised—pensions generally, pension splitting on divorce, disability benefits and the many other aspects of the Bill.

I am also concerned at the language used in the introduction of the Bill and the Daily Mail type of reporting that has surrounded it. I come from that tradition in the Labour party that believes in a universal welfare state. It is something that the party was founded to achieve and has campaigned to preserve and extend. The party was founded on a belief that society as a whole has a responsibility to insure all its members against homelessness, poverty and ignorance—all of which were envisaged in the Beveridge report and in the post-war consensus surrounding the welfare state.

Language such as the "something-for-nothing society" has been used. Many of my constituents are poor and up against it—many other hon. Members represent similar people. Often, they are unemployed or have difficulty finding a job that lasts more than six months or pays anything like the proposed minimum wage—never mind above that—and they rely on state benefits to survive. About one third of schoolchildren are relying on income support. We should be a little more careful about the language that we use. We are talking about the life blood of an awful lot of people.

My constituency is paraded weekly in The Daily Telegraph and The Sunday Telegraph as the home of the Islington set and extremely wealthy. In fact, it has the highest rate of long-term unemployment of any English constituency, a normal unemployment rate of well over 15 per cent. and many inhabitants who are very poor indeed. The black unemployment levels are far higher than the white unemployment levels. All those issues need to be tackled.

I welcome the Government's willingness, preparedness and determination to deal with those issues of multiple poverty and deprivation, but, by going away from the very principles on which the Labour party was founded, we do ourselves no good with people who have loyally supported us in election after election and who turned out in such vast numbers in May 1997 to get rid of a Government who had created massive gaps between the richest and poorest and who, despite all their attempts at reinventing themselves, had been seen as the party of the means test and of meanness in our society.

I shall concentrate on pensions. The state pension was a marvellous achievement when it was first introduced by Lloyd George. However, before the Liberals become too excited, I must point out that I have a little booklet at home, which was presented to me by a local pensioners' group, which states: No thanks to Lloyd George. The story of how the state old age pension was won. He was forced into it by radical groups who met in Walworth road, where the Labour party used to have its head office—the spirit of many of us is still there.

Obviously, the introduction of the state old-age pension was a huge step forwards, as was the passage of the National Assistance Bill, which is still an important landmark piece of legislation because it envisaged the complete welfare state. That legislation saved many asylum seekers from the poverty into which the Tory Government tried to force them three years ago.

The state pension needed reform and development and the most important reforms were introduced by Barbara Castle when she was Secretary of State for Social Services in the 1970s. She introduced the state earnings-related pension scheme for people who did not have access to occupational pensions and the linking of the state pension with earnings or prices, whichever rose the fastest, in 1975. By 1980, the state pension was approaching a quarter of average earnings. The former Chancellor of the Exchequer, Lord Howe, abolished the link with earnings and linked it only to prices. As a result, it has fallen enormously in value in the past 18 years.

Dr. Lynne Jones

Is my hon. Friend aware that Age Concern reckons that, by 2050, pensioners who get the state retirement pension and the second pension in full and who have had an income of £9,000 a year or less will receive the princely sum of the equivalent of £82 a week, which is no more than the state pension that was created by the previous Labour Government?

Mr. Corbyn

I thank my hon. Friend for that intervention. Before anyone else seeks to intervene, I must say that I will not give way again as I have only four minutes left.

The National Pensioners Convention, at the request of the Labour party, made strong representations concerning future pension policy. It met the party in opposition and has met the Secretary of State and other Ministers since we came to power in May 1997. The convention has argued strongly for the linking of the state pension with earnings as a way to ensure that all pensioners share in the rising living standards of our society.

The Government introduced the pensions Green Paper, which we are not debating today. I am a little disappointed that a major part of the Bill relates to pensions, putting into legislative effect part of what is in the Green Paper. Many members of the NPC and others are concerned that a consultation process that they had thought would continue until the end of March has become part of a legislative process. The chances of changing a major Bill like this in Committee are, as everyone knows, fairly minimal.

The Government envisage a minimum income guarantee for pensioners of £75 a week. When I discussed the matter with the Islington pensioners forum, I was explaining the figure, when some disgruntled voice from the third row asked, "What's so great about £75 a week?" I thoroughly agree. The pensioners thought that that was a reasonable starting point to get the state pension to now, but that we needed more. During the previous Parliament, my right hon. Friend the Member for Birkenhead (Mr. Field), others and I were discussing in the Select Committee on Social Security the future of the secondary pension that was proposed at the time. I hope that my right hon. Friend will not mind my quoting him, but he said that, if the political will was not there to maintain the link with earnings of the existing state pension, who was to say that it would be there to maintain the value of any minimum income guarantee or secondary pension in the future? I do not understand why we cannot take this opportunity to revalue the state pension and continue with SERPS, perhaps altering it in some way to assist the poorest, instead of creating a market in which an even bigger slice of the pensions bill is to be paid by individuals into private pension schemes, which probably cost more to administer than a state scheme.

One figure out of the Green Paper that disturbs me greatly is to be found on page 14. If 100 equals the amount of Government money that is spent at present per pensioner, by 2050, under the proposals, it will be down to 58—in other words, public expenditure on pensions will be nearly halved in the next 50 years. Having been mis-sold pensions and conned in the 1996 legislation by the former Prime Minister and the right hon. Member for Sutton Coldfield (Sir N. Fowler) about the real effects of the mixture of public and private pensions, the public are prepared to support the idea of a much higher universal state pension. I wish that we were taking the opportunity to achieve that.

My hon. Friend the Member for Newport, West (Mr. Flynn) tabled early-day motion 328, which envisages an increase in the state pension, which could be funded with the existing surpluses within the national insurance fund. We should be taking this opportunity to declare ourselves in favour of the principle of a high level of state pension, of efficient and reliable public pension provision, rather than forcing an awful lot of people in middle income and middle age down the rocky road of personal private pensions, which have already been such a bad experience for so many people.

8.10 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I am pleased to be able to take part in this interesting debate. It is a shame that the many hon. Members who want to speak are limited to only 10 minutes, which prevents them from taking interventions, as the hon. Member for Islington, North (Mr. Corbyn) said. Good points have been made by hon. Members on both sides of the House.

The Bill is both immensely important and immensely complicated. I suggest to Ministers that one way of giving hon. Members who have not had the opportunity of being behind the curtain of Government secrecy a means better to understand the problems faced by Ministers would be to extend the process of pre-legislative scrutiny. When the Select Committee on Social Security, which I have the privilege to Chair, scrutinised drafts of parts III and IV of the Bill, I was amazed by the complexity of the interrelated problems that Ministers have to face. It is a source of wonder to me that anything that makes sense emerges from the Department of Social Security, if the experience of my Select Committee is anything to go by. That is a serious point: we should all be more humble about how difficult and complicated cracking the problems can be.

While on the subject of parts III and IV, about which I could speak for my entire 10 minutes without hesitation, deviation or repetition, I want to bring to Ministers' attention my belief that the implementation date of April 2000 is a year too early. To achieve the complex changes, the cultural shifts and the training that are necessary in a way that is successful and does not hurt people or cause casualties, it is necessary to consider seriously the need to take more time before the pension splitting on divorce provisions of the Bill—which should probably have appeared in separate legislation—are brought into force. I hope that the Government and the Standing Committee will give that serious consideration.

I am rather disappointed by the stakeholder pensions provisions. I thought that stakeholder pensions were a good idea, but they are likely to be overcomplicated and overregulated in their implementation, which will lead to all sorts of problems for existing occupational schemes. In addition, the Bill as it stands does not address the problems faced by the self-employed. I hope that the Standing Committee will have a chance to scrutinise that problem properly.

I should tell the hon. Member for Croydon, North (Mr. Wicks) that his ghost lingers in the Social Security Committee. We are considering the possibility of carrying out an extended inquiry into the future of the contributory principle in the hope that such an investigation will inform future debates. In the past, the hon. Gentleman argued powerfully and cogently that we should take such action. We hope to get our report out before the contributory principle is completely abolished—we shall have to be quick.

Like the hon. Member for Beckenham (Mrs. Lait) and others, I am extremely worried about the annuity problems that have arisen—how much annuities can provide and the inflexibility of annuity provision. I await on tenterhooks the outcome of the Equitable Life case, which relates to the guaranteed annuity option question. Those matters are extremely important, for they will have a dramatic impact on the future provision of pensions. The Standing Committee and the Government will have to give consideration to that problem.

I am excited about the opportunities that can be won through the introduction of gateways and I subscribe to everything that my hon. Friend the Member for Newbury (Mr. Rendel) said. There are difficulties, but gateways are a potentially revolutionary way of providing help, back-up and support to the people we want to serve. The 12 pilot projects must be considered carefully. I believe that it is necessary to bring together, in a revolutionary way, the Department for Education and Employment and the Department of Social Security if those gateways are to be introduced in a way that fully exploits their potential.

I should remind the House that jobs do not always eradicate poverty: many families in this country live in poverty even though some of their members are in work. Furthermore, I do not need to remind hon. Members who represent constituencies with higher unemployment rates than mine that there are not always jobs to be had. The Bill's provisions have to be implemented sensitively.

I have recently seen some interesting statistics relating to the issue of compulsion. According to figures from the Library, benefits sanctions and the element of compulsion in the jobseeker's allowance are brought to bear in only one in 40 cases—that is before appeals are taken into account, so the final figure could be less—because people do not respond in good faith to the rules. If we are talking only about shirkers—the pejorative term that people like to use when referring to such cases—or those who are swinging the lead, we must remember that, at most, they comprise only one in every 40 cases. We could have a whole Bill dealing with gateways, integrating the work of the DFEE and the DSS. The Standing Committee must look carefully at the details of clause 47.

Incapacity benefit is a crucial element of the Bill. The right hon. Member for Birkenhead (Mr. Field) was right to express his concerns, and I share them. I have a letter from Patricia Alexander of Currie, in Midlothian in Scotland; I do not have time to quote from it as extensively as I should have liked. She suffers from rheumatoid arthritis and she is obviously scared rigid by the possibility of the interviews. She writes: I can't help wondering at what point the interview stops being friendly … I have a knot in my stomach thinking about this. You"— she is addressing the Secretary of State, not me— have turned me into an insecure sponger on society where previously I was making the best of the life I have and convincing myself my life wasn't really so bad. I shall send the letter to the Secretary of State and hope that he and his officials will look into this lady's case. I suspect that she would not be compelled to attend for interview, given that her physical condition is so bad, but she does not know whether or not that is so, and she is worried about it.

On a technical, but extremely important, point, I come to clause 67, about which the Secretary of State has written to the Chairman of the Public Accounts Committee. The clause introduces a power to incur expenditure on the basis of a simple, straightforward statutory instrument, not a Bill. Since 1932, the House of Commons has placed severe constraints on the deployment of public expenditure, but the Bill gives the Secretary of State the power to anticipate changes two years in advance and set in motion preparatory work, and it enables him to make such proposals through statutory instruments.

I admit that that utilises the same technique as local government special grant reports, whereby the reports have to come before the House for consideration. However, I have to tell Ministers that I reserve my position on that question. I hope that, if the Government go down that route, they will seriously consider publishing drafts of such orders. What does the Select Committee on Procedure think? I suspect that the procedure could become available to any Secretary of State, not just the Secretary of State for Social Security. If so, the Social Security Committee will want to see any special grant-type report dealing with preparatory expenditure.

Preparatory expenditure is justified in terms of paving the way for IT provision to be put in place—I am in favour of IT provision, as is the Minister of State. However, I have to point out that the procedure introduced in the Bill represents a dramatic departure from the way in which Parliament has controlled Government expenditure, and it should not be taken lightly. I hope that, before the Standing Committee reaches clause 67, the Secretary of State will have made clear to the PAC, the Social Security Committee and the Procedure Committee how he intends to deploy those provisions. If he does not deploy them in a constrained and careful way, he will drive a coach and horses through House of Commons control over an important area of public expenditure.

8.20 pm

Mrs. Rosemary McKenna (Cumbernauld and Kilsyth)

Discussions about welfare reform often generate more heat than light, but tonight's debate has been reasonable and not in that vein. When we support welfare reform, we are sometimes accused of attacking the most vulnerable members of society and those in deepest poverty. Such claims are rich coming from Conservative Members who forced more people into poverty by putting them on benefit in order to massage the unemployment figures under the previous Government.

It is important to put my remarks in context. When I was a small child, my father became ill and was hospitalised for two years. He spent a further two years recovering at home and then secured a succession of poorly paid jobs. I know what it is like to live in poverty: to live from day to day. At the time, my mother was trying to raise three children and maintain some sort of dignity. I know what it is like to live on benefit. Believe me, our lives began to change only when my father began working again. He might have had poorly paid jobs, but at least he was in the labour market. That is the important principle behind welfare reform that the Government are trying to achieve.

Those whom we are trying to help back to work will at least receive a minimum wage. We did not have that. It is not a great wage but, together with access to lifelong learning and further education, it is a first step towards prosperity. It is wrong to describe any discussion about welfare reform as an attack on the poor. The current system of benefits has not released one person from poverty. It is now clear to everyone that, for those who can work, employment is the only route out of poverty.

Our country is not full of workshy individuals and families: tens of thousands of people are denied access to work and do not receive the adequate financial support that would allow them a decent quality of life and some dignity. Thousands of long-term sick and disabled people who want to return to work are denied the support and assistance that they need in order to take that vital step and seek employment. Under the current system, thousands of people with disabilities who will never be able to work do not receive adequate financial support and cannot enjoy a decent quality of life.

It is quite wrong to portray this Bill as a crackdown or a squeeze on the poorer members of society. In fact, it is quite the reverse: it seeks to ensure that those in real need are supported at a proper level. We must all accept that the present benefit system does not work. The gap between rich and poor is wider now than at any other time this century. One in three children lives in poverty—we should be ashamed of that statistic. In the main, people's health and education achievements continue to reflect the social class from which they come.

Tinkering with the present system will not impact to any degree on the social or economic inequalities in Britain today. That is why we should welcome the Bill and embrace the opportunity in Committee to discuss the real issues and the meat of the legislation. The present system traps people in poverty. It was not designed to do that, which is why the new deal has been welcomed by young people, the long-term unemployed, lone parents and the disabled. The Bill is based on the principle of work for those who can work and security for those who cannot.

I am concerned about the plight of those people who have long-term debilitating illnesses, such as ME. They struggled for years to have ME recognised: first, as an illness and, secondly, for benefit purposes. Anyone who knows ME sufferers will be aware of the appalling effect that the condition has on their lives and on their families. Access to incapacity benefit made the lives of ME sufferers less stressful, which is very important to the recovery process.

Many people, particularly the young, recover from illness. However, in the past they received no assistance in returning to work. They had to find themselves jobs and were removed from the benefit system as soon as they secured employment. Because it was a contributory scheme based on previous earnings, those who bravely tried to return to work but failed when their health deteriorated lost their benefit at a higher level. As a result, people had no incentive to try to return to work and became trapped on benefit. That is extremely distressing for people suffering from illnesses—especially when the removal of stress contributes to recovery. The system that was designed to help is delaying the recovery process.

People with long-term illnesses should derive some comfort from the measures in the Bill. As well as determining entitlement to benefit, the reform of the all-work test will provide information about people's capabilities and may be used to plan a return to work—if people are able to do so. The single gateway interview will ensure that those who claim incapacity benefit receive help in planning a route back to work or receive the benefits to which they are entitled. The creation of a single point of access, involving the Employment Service, Benefits Agency, local authorities and the Child Support Agency, should simplify the whole process and make it much less threatening.

Since the general election, the change of culture in the Employment Service has been remarkable. With the creation of the new deal, clients view staff much more positively—they are seen as providing assistance. Anyone can see that the creation of personal advisers has been a tremendous success. Ordinary people know that they are now receiving the kind of professional help that the better-off could always procure and that they are involved in making decisions about their own lives. The difference is tangible when one walks through the door of my local employment office.

We cannot ask agency employees to change without proper training. Prompted by past problems, the trade unions fought for and achieved the installation of security barriers between staff and their clients. That state of affairs was always unacceptable, but the real antagonism between staff and clients proved that the system was not working. The Government must give an undertaking that all staff will feel comfortable with the new approach and that people will have a different experience. That will involve a real commitment to training and a change in attitude that is crucial to the success of the legislation.

One of the lessons that my parents learned during my father's period of unemployment was that part of the key to future success was access to education—lifelong learning. That is how one gets out of unemployment, and the Government's commitment to that is crucial.

With the changes that the Government have already introduced, the millions of pounds being spent, the multi-agency approach to tackle our most deprived areas, the minimum wage, the working families tax credit, nursery places, help with child care, education and maintenance allowances for 16 to 18-year-olds from poor families and the changes being introduced by the Bill, we shall begin to attack the endemic poverty that exists in far too many areas in Britain. That is when we offer real equality of opportunity to the people whom we are elected to represent.

8.29 pm

Mr. Julian Brazier (Canterbury)

The hon. Member for Cumbernauld and Kilsyth (Mrs. McKenna) will forgive me for the fact that time prevents me from following up her speech, but she seems to have been the only Back Bencher so far to see any merit in the Bill.

The balance of the debate on both sides of the House has been clear. The measure conjures up a curious picture of a stormy sea and sky, with the good ship SS Britain heading for the rocks. The crew rebel, sack the captain and officers and replace them. The new captain appoints a sturdy helmsman from Birkenhead who sets a new course, then sacks him and replaces him with the deputy purser, who puts the ship back on the original course and piles on more coal.

The central weakness of our benefits system is means-testing, which provides the strongest possible disincentive to save and, in some cases, to work. The worst features of the system were introduced in 1988 and I make no bones about that—I was new to the House then and I have since written a number of papers arguing that. As several hon. Members on both sides of the House have implied, the measure goes further down exactly the same route and it will result in a huge increase in costs and extend dependency, particularly but not exclusively among elderly people.

Mr. Andy King (Rugby and Kenilworth)

Rubbish.

Mr. Brazier

The hon. Gentleman says, "Rubbish", but let us consider pensions. In 1988, pension provision in this country was on course and we had by far the highest level of occupational pensions in Europe—an achievement of which to be proud. Year by year, the proportion was rising and indeed, in 1988, already more than half the number half of pensioners had an occupational pension. At the same time, the proportion of pensioners reliant on income support progressively dropped until, in 1988, it was less than 14 per cent.

The changes made in 1988, which in many respects are copied and amplified by the pension provisions in the Bill, introduced a income support supplement for pensioners, paid on a means-tested basis. We also changed the capital rule on housing benefit. The justification given by Ministers then was exactly the same as that given by Ministers today: that we were focusing on need.

What happened? The effect on pensioners was electric. On the one hand, the proportion of people with occupational pensions continued to rise. Had those changes not taken place, one would have expected the proportion of pensioners reliant on means-tested benefit to decline further over the next four or five years from 14 per cent. to 11 or 12 per cent. Far from it. The proportion increased from 14 to 16 per cent.—a rise of one seventh.

Let me state that effect in plain English. Throughout the country, hundreds of thousands of pensioners dumped their savings. Who can blame them? They were warned that they would be punished by reductions in their housing benefit if they did not do so and rewarded by a supplement on income support if they did. That is exactly what the Government are doing with their minimum pension guarantee, which will affect a much larger number of people.

The parallel with the Bill could hardly be closer. My hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) and other Members on both sides of the House have outlined the measures in such detail that I do not want to repeat their remarks. Not only will there be an even greater disincentive for those with modest savings to retain them but, for the first time, those who are likely to qualify for modest pensions will have a strong incentive to stop saving into their pension funds. The reasons for that have been explained carefully and at length by several Members who understand pensions extremely well, including my hon. Friend the Member for Ryedale (Mr. Greenway), who is an expert on the pensions industry.

Mr. Duncan Smith

Particularly pensions for the self-employed.

Mr. Brazier

As my hon. Friend says, my hon. Friend the Member for Ryedale is particularly knowledgeable about the self-employed.

I remember a jibe made by Labour Back Benchers in a number of social security debates. I was proud of many actions taken by the previous Government, but I was not proud of their actions on social security. I listened to the jibe of Labour Members, who asked, "How can the Conservative Government argue that the better-off need incentives to work harder but the poor do not?" I thought that there was a lot of truth in that jibe and, when it was made by those such as the right hon. Member for Birkenhead (Mr. Field), I felt embarrassed. Now, unbelievably, a Labour Government have extended means-testing for working people with 89 per cent. tapers in the working families tax credit going right up the income scale and the measure before us provides pensioners with a huge disincentive to save. Of course, colleagues have also mentioned the impact that it will have on incentives for the disabled, widowers and several other groups.

In opposition, Labour again and again made points about the weaknesses in what we were doing. We often heard the then Leader of the Opposition—now the Prime Minister—say, "Let us move from a handout to a hand up." I was one of those who were writing pamphlets in the background, saying that we needed to try to eliminate the disincentives in the system that the extension of means-testing had brought. I also heard the detailed ideas advanced by people, including the right hon. Member for Birkenhead and many colleagues far more distinguished than me—the late Sir Brandon Rhys Williams prominent among them.

I can hardly believe it. We now have a Labour Front-Bench team putting before the House measures that would extend further up the income scale all the worst features of the changes that we made, while starting to unravel the one really good thing that we did in welfare: the encouragement of the growth of occupational pensions and pensions for the self-employed. We were scoring about five out of 10; the present Government seem determined to score about nought out of 10.

That jibe is not quite fair. A few small provisions round the margins are good. I welcome the introduction of the pension for widowers. A close friend, who was a contemporary of mine at school, is bringing up a little boy. He has had mental health problems and he is struggling, and it is grossly unfair that he does not get similar treatment to a widow. I welcome the fact that several small measures in the Bill will be helpful.

The truth is, though, that this measure characterises everything that is worst about the new Labour party. It bears no resemblance to the traditional views of Labour, grounded in the Beveridge report, which is the basis for the post-war consensus. Clement Attlee would not recognise it. It bears no resemblance to the modern thinking on occupational pensions that spans so much of the political spectrum. It bears no resemblance to the pledges and aims that were so articulately outlined by Labour Front-Bench Members before the general election. It is nonsense.

I acknowledged that the problems in the process started with the mistakes that we made in 1988, but it is incredible how, month after month, at Social Security Question Time, in social security debates and when measures are brought before the House, whenever an hon. Member says, "But you are introducing more means-testing in the face of all the evidence of the damage that it does," Ministers respond by saying, "But the Conservatives did it first."

Ministers may be surprised to hear this, but actually, we lost the last general election, and I am one of those who believes that our introduction of means-testing and the impact that that had on working-class families was one reason why we did so. The British people did not vote to change the captain and officers because they wanted more coal put on, more steam got up and a faster journey towards the rocks for the benefit system—but that is exactly what the Labour Front-Bench team is delivering.

8.39 pm

Mr. Roger Berry (Kingswood)

It is tempting to follow the hon. Member for Canterbury (Mr. Brazier). For weeks, I have observed the Tory party reinventing itself as the party that opposes means-testing and supports the contributory principle. That sits ill with all that the previous Government did, but Back Benchers have only 10 minutes each in which to speak in the debate, so I shall not spend more time on that.

I shall say a few words about the provisions in this detailed, complex and important Bill that relate to disabled people. I happen to be secretary of the all-party disablement group. We made a written submission to the Secretary of State at the end of December 1998, and I should like to place on record our gratitude for our meeting with my right hon. Friend a few weeks ago. I am pretty certain that the ink was dry on the Bill when we had that meeting; nevertheless, that was an important opportunity to put across some of the views that have been expressed by the all-party group—views that, I make so bold as to suggest, are widely reflected by other disability organisations.

I warmly welcome a number of provisions in the Bill, such as the extension of the higher rate mobility component of disability living allowance to three and four-year-olds. I also warmly welcome increased benefits for severely disabled young people, and I acknowledge in particular the extension by my right hon. Friend the Secretary of State of benefit improvements for severely disabled young people up to the age of 25. I am sure that that extension is, in part, a response to the consultation exercise.

Other measures that the Government are implementing, but are not directly the concern of the Bill, have also been widely welcomed. In the consultation document, for example, the commitment to a disability income guarantee and the expansion of specialist disability services were highlighted. Those are two examples of measures that do not require primary legislation and are therefore not in the Bill.

The all-party disablement group, and disability organisations generally, warmly welcome a great deal in the Bill, in the consultation paper and in other areas of work that the Government are undertaking. However, there are some serious areas of concern and I want to take up from my right hon. Friend the Member for Birkenhead (Mr. Field) the issue of incapacity benefit.

I urge my colleagues in the Government to show the same understanding for the arguments made by disability organisations in relation to their worries about incapacity benefit that has been shown in relation to their representations about severe disablement allowance. The Bill proposes changes to the entitlement conditions for incapacity benefit. The principle is to be established that only those who have worked recently should be entitled to that benefit. Specifically, certain contribution conditions will have to have been satisfied in respect of the previous two years.

The effect of that is that about 170,000 fewer people—about 10 per cent. of those currently eligible—will be eligible for incapacity benefit. Therefore the question needs to be asked: why should 170,000 people, who are unable to work because they are disabled or because they have a long-term illness, not receive an income maintenance benefit as a result of being unable to work and have to rely, if they qualify, on means-tested income support?

The argument which has been made, and which was alluded to by my right hon. Friend the Secretary of State, is that people have received incapacity benefit who should not have received it. Reference is frequently made to the fact that the previous Administration allegedly encouraged people to claim incapacity benefit rather than unemployment benefit. That was the first argument for this policy.

I want to make two points. First, if the Government have evidence suggesting that people who should not receive incapacity benefit will receive it, the solution is to sort out the gateway. It is quite simple: if the problem is that we fear that what may have happened in the past will happen in the future—that people who are not entitled to incapacity benefit will somehow access it—we should deal with that through the operation of the gateway for that benefit—the all-work test or whatever replaces it. That is the sensible thing to do. I urge the Government seriously to consider the implication of denying tens of thousands of genuine claimants their right to the benefit because it is assumed that some may not be entitled to it. The solution to the problem is perfectly clear.

Whenever it is said that in the past people who should not have accessed incapacity benefit have done so, it should be remembered that that is in the past. This Bill applies to new claimants. With the greatest respect to the Government, it is not good enough simply to look backwards and argue that that is why we should remove people from incapacity benefit, because we are dealing with new claimants.

Clause 51 provides for regulation-making powers to protect people who have not recently paid contributions because of caring responsibilities for which they receive invalid care allowance. However, some people cannot be protected in that way. They may have been looking after young children or combining child care responsibilities with part-time work. Some carers may not have claimed invalid care allowance. Others who have paid contributions for many years may become unemployed and then become disabled. Individuals with an extensive work record who subsequently experience a period of unemployment before becoming disabled will find that their contributions count for nothing.

There has been much reference to the "something-for-nothing problem". It is rather insulting to accuse people who have fallen on hard times of wanting something for nothing when they have paid their taxes and national insurance contributions. The people whom I have in mind have a contribution record of 10, 20 or 30 years. After a period of unemployment, they then become disabled. Their problem is not something for nothing, but rather nothing for something. Although they have made their contributions, they are to be denied benefit. That will produce some absurd outcomes. For example, somebody who has worked for 10 years, is unemployed for two years and then becomes disabled is unable to get incapacity benefit, whereas someone who has been unemployed for 10 years and worked for two years can get the benefit.

I shall try to put this tactfully—I am already in trouble anyway. This problem needs to be thought through and I desperately hope that the good sense that the Government have shown in listening to representations on the severe disability allowance will be extended to the grave concerns expressed about incapacity benefit.

My final point concerns the level of incapacity benefit and the fact that it will depend on people's occupational and personal pensions. When the Tories cut invalidity benefit, that was the reason that they used. Billions of pounds worth of savings will be made arising from the cuts made under the previous Administration, who said that they were making those cuts because people were now more likely to have personal or occupational pensions.

Will the Government please consider not using that argument for a second time? To do so would be unfair in the extreme. I very much hope that the Government will take on board my comments and those of the vast majority of disability organisations—indeed, every disability organisation whose submission I have read—and reconsider their proposals on incapacity benefit.

8.49 pm

Mr. Edward Leigh (Gainsborough)

I am sure that the Bill is well intentioned and that the Government believe that it is the only course of action available to them. However, I firmly believe that it will be counter-productive to everything that they hope to achieve. It will compound rather than solve the problems. It will increase means-testing, not indirectly but directly. One has only to look at the proposals to end widow's benefit based on the contributory principle to realise that.

Sadly, the Bill is riddled with tokenism, such as the single gateway concept, which for many young people will be a gateway into a jobless void. Make-work schemes introduced in the past have simply made bureaucracy, not work. If they have made jobs, they have made them at a price that has not been cost-effective.

The Select Committee conducted a rigorous pre-legislative inquiry into pension sharing. However, I still believe that the proposals have been barely thought out, and I oppose them. If I am fortunate enough to be selected for the Standing Committee, I shall set out my opposition in greater detail.

There is no solution to divorce poverty. Indeed, divorce should be difficult. The only solution to divorce is some sort of judgment of Solomon which pleases no one, but that is the reality of life and divorce. We are in danger of creating a mini-CSA disaster. It is almost a cliché to say that the CSA has been a disaster. It will eventually be wound up, and these issues will be returned to the courts, whence they should never have been taken in the first place.

We are going down an extremely dangerous route. The only solution, in broad terms, is for the parties to a marriage that breaks up to keep for themselves everything they have accumulated up to their marriage, for everything accumulated during the marriage to be split down the middle, and, if children are involved, for the court to make a payment to the mother, who usually looks after them, based on a percentage of the father's salary.

I believe that pension sharing will not work. In my experience, the courts are used to dealing with property that is extant. Given the increasing number of short marriages, pension contributions will not have time to accrue to a significant extent. Pension sharing can work only for couples who have had long marriages and are close to retirement age. The courts will be required to interfere in events that will occur way in the future. I believe that chaos could result, and that many people will be beggared. Crumbs cannot be divided in two. If the pension hopes of divorcing couples have to be divided, the only way that can work is to use the Scottish system, which broadly divides everything accumulated during the marriage in half.

These issues have not been adequately debated by Parliament. This is a classic case of Members on both Front Benches walking blindly into something—as they did with the CSA. Many people will reap the whirlwind in years to come.

This is not the Bill that we should be considering. We should be discussing a Social Security (End of Dependency) Bill. We are as guilty as anyone else, and after all the bitter lessons that we have learnt in the past 10 years—my hon. Friend the Member for Canterbury (Mr. Brazier) outlined them extremely well—we should try to reach a cross-party consensus. That may or may not be possible, but we should wind down the remorseless rise in spending of the past 50 years, which has thoroughly corrupted the working classes of this country, and ensured that people on low incomes are encouraged to work on the side while drawing maximum benefits. We have institutionalised—to quote a phrase current this week—family corruption. We should all be ashamed of that. Now we are putting a vicious new twist into the doleful process that both parties have been engaged in for the past 50 years.

In a manic attempt to get single mothers into work, we are ensuring that they will be paid to look after any children but their own. What could be more cruel, senseless and pointless than that? The most sensible arrangement in life—it has been around for a long time—is two people committing themselves to marriage for life, with one working and one looking after the children. That has been deliberately eroded by Governments over the past 50 years.

It is a pity that Evelyn Waugh is dead, because we need a scathing "Vile Bodies"—type satire of the new work ethic. We are creating a ghastly 1970s Swedish perversion of the welfare state. Responsibility does not lie only with this Government: these proposals are merely the latest in a long, sad process that has continued for many years.

The time for tinkering is running out; the time for salami slicing is over. The time for palliatives is at an end. The time has come for a radical new step to be taken. We need to examine the Department of Social Security, all its benefits and all its structures, and unpick it from the foundation stones upward. That is a task for the Opposition as they prepare for government. [Interruption.] There is no point in the present Government's being arrogant. Sooner or later they will be the ex-Government, and sooner or later our party must try to prepare for government. We cannot return to the old days of tinkering with the system, or make the mistakes made by the present Government. We cannot indulge in short-term opposition, hoping that when we take over power the problems will somehow be solved. The problems will not be solved just by our taking power; we must have our own radical vision.

One benefit must, broadly, be retained. I refer to the basic state pension. That pension, however, should be based rigidly on the contribution principle, and should be passed to an independent body of the mutual, friendly society type. In other regards, however, radical reform is needed. At present, the Government are tinkering with the system. The introduction of stakeholder pensions, the retention of the basic state pension and the system of second pensions will merely confuse people, and I believe that the stakeholder pension will finally destroy any chance of re-creation of the occupational pension movement. Why should employers contribute, when their employees will be given rebates in return for entering the stakeholder pension system?

I believe that, eventually, poverty relief will have to be handed back to local authorities. That may sound radical, but it has happened in the past. I do not think that we can simply re-create 400 benefit agencies. We must think in terms of local action to deal with poverty.

As I said earlier in an intervention, there is a "third way", although it may not be possible. If we are now rejecting the idea of means-testing—as I believe we are—and if we believe that we cannot take the route advocated by the right hon. Member for Birkenhead (Mr. Field), there must be another way. We must try to build into our system, through tax arrangements, increased pressure on families to maintain children, the elderly and the disabled. That may sound radical and shocking, but it is happening increasingly throughout the world. In many American states, for example, as social security budgets run out of steam, Governments and state legislatures ensure that families are made responsible.

Why do we assume that that is such a ridiculous idea? Why do we hand out child benefits to everyone, irrespective of income? Why do we not make parents responsible? Why do we allow young people to become a charge on the state? Why do we not make their parents, or close family members, responsible? Is that such an impossible idea? Is it impossible to try to re-create the sense of family responsibility, the work ethic and the concept of enterprise by telling family members, "You will be responsible"?

My time is running out. Let me just say that, if we adopted such an approach, we would re-create the system of family control and good, responsible behaviour for which the country is crying out, and which the Government are not delivering.

8.59 pm

Audrey Wise (Preston)

Let me begin by disposing of the Tory amendment, which will not take long.

The Tories complain that the Bill does nothing to increase job creation; that comes from the party that presided over a mass collapse of jobs. They complain about the missed opportunity for a lasting reform of social security; that comes from the party that, year after year and in Bill after Bill, made the social security system worse and more complicated. They complain about bad drafting; that comes from the party that frequently produced amendment papers that were more voluminous than the Bills to which they referred.

Some Conservative Back Benchers now say that they never agreed with all that. Means-testing is becoming Conservative Members' target. "Targeting" was the word that they often used. They were "targeting need", so everything was good. Now, everything is bad: it is means-testing, with which they never agreed. However, I can tell those of my hon. Friends who were elected at the most recent general election that I do not remember a single dissenting Tory voice—not one—on any social security issue. If Conservative Members were worried and embarrassed about those issues, they hid their feelings very well.

I move to the more pleasant task of welcoming the extension of mobility allowance to three and four-year-olds. I am very interested in and very concerned about children. Therefore I really do welcome the provision. Moreover, in that bit of the Bill, I do not have to say that anything is being taken back; it is an unadulterated good.

When I think about children, I think also about their parents. I think about lone parents, because they have special problems. My right hon. Friend the Member for Birkenhead (Mr. Field) said that he wants people to be interviewed and given an opportunity. I am not at all averse to the phrase that he used—"How can we help you with the rest of your life?" That is great. I do not think that such an offer will require compulsion. It will have to be made at the right time, which is not necessarily immediately after a traumatic event that causes someone to need benefit—in such cases, people need benefit very quickly—but the principle of offering help is fine.

I do not understand the need for compulsion. Particularly, I do not understand the need for compulsion for repeated interviews. If an opportunity is being offered, the word will get round. People will tell others about it, and they will flock to that opportunity. The danger of compulsion is that people think that it will lead to more compulsion. They think that it leads to compulsion to take jobs.

I believe Ministers when they say that that is not in prospect. However, I should just fire a warning shot by reminding the House that, for the duration of the second world war, when there was not only conscription but direction of labour—one not only had to work, but was told where to work—there was no compulsion on mothers with children of school age, which was then up to 14. If we could avoid such compulsion during the second world war, I do not know why we cannot do so at the beginning of the next millennium. Let us be careful. We do not want to put people off what could be a good idea by making them feel that there is a hidden threat.

A few weeks ago, I lobbied the Under-Secretary of State for Social Security, my hon. Friend the Member for City of York (Mr. Bayley), on abolition of severe disablement allowance, and have no doubt that other hon. Members lobbied similarly. I told my hon. Friend that there was absolutely no justification for a cut-off at 20, and that it would be a bit more logical if the age were 25. I am very pleased that at least that amount of sense has been seen, and that the cut-off will not be at 20, which would have been extremely damaging.

I have nevertheless to ask the original question: why abolish the allowance at all? The benefit started life as non-contributory invalidity benefit, which was introduced by the previous Labour Government. There was a need then for a non-contributory invalidity benefit, and there still is. Although I am glad that the effect of abolition of the benefit and its replacement with incapacity benefit will be greatly to increase benefit for the youngest, so that they will be better off—that is great; I am very pleased about it—I do not see the reason for preventing anyone, even those who are over 25, from claiming the benefit if they have need to qualify for it.

Let us not forget that we are talking about severe disablement. The Government apparently think that about 16,000 people—or even fewer, as now only those aged up to 25 will be able to claim—are able to claim severe disablement allowance, and that 70 per cent. of those will qualify for income support. The average loss for the other 30 per cent., whose other income disqualifies them from income support, will be £50 a week. That will apply to fewer people, but what counts is not just the other income of the person in question, but other income in the household. The disabled person might have no income, relying on that of a husband or partner. Taking that £50 a week will be a robbery of dignity as well as of cash. Both are important.

The Government predicted savings of £80 million a year in the long run. That figure will be lower now, so why not go the whole hog and accept that the previous Labour Government were right to take a great leap forward in recognising the need for a non-contributory invalidity benefit? Let us keep it available to all ages. The proposal discriminates particularly against women, because there is an assumption that if they are over 25 they will have had an opportunity to build a contributions record. That may not be the case and it is more likely not to be so for women. It would be untrue for anyone who had worked only part-time and remained under the contributions threshold, which is now about £80 a week. Many people go out to work but do not earn more than the threshold, so they never build a contributions record. I appeal to the Government to rethink the proposals.

Some of my hon. Friends have said that they are worried about changes in incapacity benefit. I echo what my hon. Friend the Member for Kingswood (Mr. Berry) said about the dangers of the proposed changes to the contribution conditions. People may well be unable to build or keep a contribution record. If they go sick, they may be able to work only part-time. Their entitlement will be killed. Some will do it, just as they rest before going for medical examinations, then have to be in bed for the next month. People are generally honest. They try. If their contribution record goes out the window because they are not able to work for long enough or for high enough wages, they suffer. That disincentive to work is against all the Government's stated aims.

Then there is the issue of incapacity benefit being a top-up for early retirement. Age Concern has pointed out that people have to qualify. They cannot just go along and say that they fancy having incapacity benefit. If they qualify, they should have it.

I have talked about non-contributory benefits. Let us remember that the essence of contributory benefits is that they are not means-tested. How can Secretaries of State refer to the means of the individual as an excuse for getting rid of people's entitlement to a non-means-tested benefit?

Mr. Flight

Hear, hear.

Audrey Wise

I can do without "hear, hears" from the Conservatives, thank you very much. The hon. Gentleman is several years too late.

Mr. David Winnick (Walsall, North)

Take my "hear, hears", then.

Audrey Wise

I shall take my hon. Friend's.

The Government are urging people to make private provision. The Secretary of State will then say, "Well, you are going to be well off. You're going to have £9,000 a year. Why should you get state benefit?" People should get state benefit because they have paid for it.

Mr. Deputy Speaker (Mr. Michael Lord)

Order.

9.9 pm

Mr. Howard Flight (Arundel and South Downs)

Before I come to the stakeholder measures in the Bill, I should like to make some brief points on the other territories covered. As others have pointed out, the reneging on the widow's pension arrangements is outrageous. When I spoke to a group of constituents about the issue recently, they were horrified. There has been pension mis-selling in the private sector, but the proposal is downright robbery in the state sector.

I am still not clear what the gateway interviews are all about. Are they about helping people, or are they meant to be a real discipline? My hon. Friend the Member for Buckingham (Mr. Bercow) asked the Secretary of State whether people would not receive social security benefits if they did not turn up, but the Secretary of State declined to answer and ducked the issue. Bluntly, there is no point in issuing threats unless they are for real. If, on the other hand, the interviews are about genuinely helping people, they need to be approached in a much more helpful fashion.

Clause 55—which has not been mentioned—gives the Government considerable scope for regulation making in relation to attendance allowance. My fear is that the clause is there to enable the Government, in due course, to move to means-testing attendance allowance, along with everything else.

On stakeholder pensions, I am concerned that the opportunity for a real and sensible rationalisation and reform of pensions has been missed. America has a simple approach to pensions—one is either a member of an occupational scheme or a 401K, where employers are incentivised to provide 401K schemes. People understand what is on offer—it is very easy. In the UK, we are adding two further complications: the stakeholder, on top of personal and occupational schemes; and the LISA, which can apparently be used as a method of managing money by any one of additional voluntary contributions, or occupational, personal or stakeholder schemes. However, it is not clear how one will plug in from one to another, or whether the LISA is merely a money-management vehicle or—in terms of retirement—whether one can use a draw-down mechanism for what has been accumulated in the LISA.

The main objective of the stakeholder pension surely must be to address pension fund provision by the self-employed. On the Government's own figures, there are 10 million people with occupational schemes, 10.5 million with personal schemes and 7 million in SERPS. There is a work force of working age of about 35 million, with the maximum potentially in work of 31 million. Beyond the 27.5 million who are already provided for, those who are not, overwhelmingly, are the self-employed—the issue of carers being a separate territory.

I cannot see what will make the self-employed take out stakeholder pensions. For those who are in paid employment, there is no choice. They either accept SERPS2, or they take out a stakeholder scheme, if they are not already in a personal or occupational scheme. For the self-employed, there is no proposal that they should be forced to choose between the SERPS2 replacement or a stakeholder scheme. The Government may be hoping that they will be so attracted by stakeholder schemes that they will take one out automatically. I fear that this will be in vain.

The state guaranteed minimum pension now offers a pension top-up that will be approximately equal to that which the average wage earner will accrue within a stakeholder scheme, assuming capital build-up of about £85,000. The incentive for the self-employed individual to take out a stakeholder scheme is dramatically negative. He would be saving £85,000 for absolutely nothing, and would end up in the same position, free, under the state pension guarantee. Yet that is the one key area where there is cross-party agreement: that we, as a country, want as many people as possible to provide for their pensions privately.

My next objection is the limit of £3,600. What is that all about? Many people using stakeholder schemes will find, in relation to their salaries, that that is inadequate—and yet, apparently, they cannot then do a personal pension on top. They may find themselves accumulating much less than 10, 12 or even 15 per cent. of income. Why not make the limit on stakeholders £3,600 or 15 per cent. of income? My fear is that the £3,600 is a marker for that sum being the maximum that anyone will be able to put into a pension scheme on a tax-exempt basis. In a couple of years, it will be asked why one pension scheme should allow more tax advantages than another.

I genuinely fear that we will have death by a thousand cuts for occupational schemes. Stakeholder schemes will become irresistible for new businesses, especially for covering middle management. There may still be top hat schemes for the top executives, but there is a danger of pension provision for the people in the middle worsening.

The proposals were supposed to help job mobility, but one cannot continue a stakeholder scheme if one moves to new employment where there is an occupational scheme. That seems contrary to the objectives.

The industry has not been given nearly enough detail to get the products up and running. It is keen to co-operate, but there will be a planning blight and the Bill's objectives will not be met by 2001 unless there is a lot more detail. I believe that, as with 401K schemes, people should be able to choose their stakeholder pension; but if the company provides the stakeholder pension, it chooses the manager and the product.

The question of annuities has been completely ignored. The route down which we are going will vastly increase money-purchase pension schemes. Are the Government content that the annuity market will provide adequately? There are overwhelming arguments for scrapping the compulsion to buy an annuity at 75, and reforming the draw-down rules. In the 226 schemes—personal pension schemes—one has to buy an annuity at the time of retirement.

There are some awkward tax rules in relation to equity-linked annuities, whereby, if there is success and the with-profits results exceed the return limit by 3 per cent. in a year, one could easily die and lose some of the net accumulation, after providing from the annuity profit for bad years as well as good. That puts people off using with-profits annuities.

I do not see how the country will cope with the massive proliferation of pension choices without some form of central register for individuals' pension provisions. People will need to discover what cover they have, and it will be needed to provide advice as economically as possible.

As my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) said, there has been some progress with stakeholders; and I am a great supporter of the LISA as a way of managing money; but the biggest change that the Government have introduced for pensions is the abolition of advance corporation tax recovery, thereby robbing pension funds of £5 billion a year. They have endeavoured to excuse that by saying that it was a process for the rational reform of company taxation.

Many will have seen in the newspapers that Unilever has paid a massive dividend because it could not find any investment that met its investment criteria. It was in any case always old-fashioned nonsense to argue that a tax bias in favour of retention would lead companies to reinvest, giving pension funds the benefit of capital appreciation. The—

Mr. Deputy Speaker

Order. I call Mr. David Lock.

9.19 pm

Mr. David Lock (Wyre Forest)

I am grateful for the opportunity to contribute to the debate and I wish to concentrate my brief remarks on the issue of stakeholder pensions. Occupational pension funds are one of the great successes of the past 50 years, and I am pleased to serve as the secretary of the parliamentary all-party occupational pensions group. They are the principal reason why millions of pensioners have a reasonable living in their third age, enjoying retirement and living life to the full in their 60s, 70s and 80s. Anyone who thinks that an active life is over when one finishes work should look no further than the Lords and Commons rugby team, whose scrum-half last weekend was aged 69.

However, for many, an occupational pension was never an option when they were working. Today's poor pensioners are, by and large, those who never joined an occupational scheme or were not in a position to make alternative provision for their retirement. They are the 35 per cent. of employees whose employers did not have a pension scheme, those who moved from job to job, the self-employed and those in a number of other categories. Those pensioners are scraping by on a low income. I am delighted that, with the minimum pensioner income guarantee, free eye tests, winter fuel payments, concessionary travel and other measures, the Government are doing so much to target help on those pensioners who need it most. But state help is no substitute for self-reliance. Being entitled to benefits is not the same as having the confidence of one's own income. Our challenge is to ensure that those who are in work today do not become tomorrow's poor pensioners.

Confidence is essential for the pensions market to work, because we invest today and must have confidence that benefits will accrue in many years' time. The pensions industry in Britain has suffered a massive blow to confidence for those who are outside the occupational pension world, as a result of the crass mismanagement and under-regulation of the industry in the 1980s. The history of pensions this-selling and its 2.5 million victims has been told on numerous occasions, and I shall not repeat it. However, there is an equal, if not larger, problem with personal pensions, to which the previous Government and the industry should have faced up. It is the issue of charges. I can do no better than quote the authors of the Pension Provision Group, who said: Of the main forms of second-tier pension provision, personal pensions have the highest costs, and their charging structure makes them unsuitable for lower paid people who have a high risk of not being able to keep up the payments in the longer term". There are massive introductory commissions and start-up charges. One third of people who buy a personal pension abandon contributing in the first three years and 40 per cent. do so within four years. That means that vast sums are being contributed to the financial services market with no benefit returning to the investors.

The Bill paves the way for the creation of a new vehicle that will restore confidence to the pension marketplace for those who do not have the benefit of an occupational scheme but can none the less save for their retirement through, of course, stakeholder pensions. A number of issues arise from the proposals for stakeholder pensions. The first is that of trust. No financial institution will be able to start its own stakeholder pension scheme to generate profits for its shareholders rather than benefits for the scheme members. I trust that regulations will ensure that the nature of all stakeholder pension schemes will be explained in plain English. Members need a clear annual statement stating exactly how much has been paid; the value of the fund to date; and what that would produce in retirement benefits.

I also look to my hon. Friend the Minister for an assurance that regulations will ensure that charges will be strictly capped, so that there is a fair balance between the costs that fall on the scheme generally and those that fall on the individual policyholder. If an individual contributes for three years or more, he should be able to point to that part of the annual statement that shows the benefit that he or she has accrued. That will be the incentive to carry on contributing.

The second issue is that of confidence. Stakeholder pensions will inspire confidence because they will be run as non-profit-making trusts, rather than designed to benefit external shareholders. The stakeholders can know that the funding to which they are subscribing will be focused on them, designed to give them benefits and not simply used—as many personal pensions have been—as a vehicle for somebody else to cream off the profits.

Who will be the trustees for the new trusts? I am delighted that many organisations have expressed an interest in setting up stakeholder pension funds. Trade unions, chambers of commerce, employers' organisations and many other bodies are in a position to offer stakeholder pensions to the people within their influence. I especially welcome the work of trade unions. Many trade union members have earnings that fall between £9,000 and £20,000. They no longer work predominantly for the public sector or for large employers: many work for smaller employers or move from job to job. Union members look to their union to look after their interests at work. It is logical that they should also look to the union to offer them the opportunity to invest in a pension for when they finish work.

Thirdly, stakeholder pensions will catch people early. When they are up and running, they will encourage employees to become involved in a pension fund when retirement is the last thing on their minds. I appreciate that retirement from work may seem a distant prospect for some hon. Members, such as my hon. Friends the Members for Shipley (Mr. Leslie) and for Watford (Ms Ward). I have just emerged from the halcyon days of youth, and can recall what a distant prospect reaching the age of 60 once seemed. However, the reality is that, if it is left solely to young people to plan and pay for pension provision at the crucial time, they will put off doing it until they "get around to it". There is always a better use for money today than saving for a distant tomorrow.

Yet, the longer money is in a savings scheme, especially a pension fund, the more it grows. It earns interest, and interest on that interest. As many people have found to their cost, they get much less if they start saving late in life.

Clause 3 imposes a duty on employers who do not operate an occupational pension scheme to select which stakeholder pension scheme should apply to their employees. That is a modest duty and employers should not be able to sidestep it. After consultation, they will be obliged to designate one or more schemes to their employees. That will be of great benefit to the 35 per cent. of employees without an occupational pension.

Finally, I strongly support the growth of ethical investment funds, which have been a remarkable and impressive development in recent years. Many people ask about the type of businesses in which their savings are invested, and they are right to do so. I would not want to invest in a tobacco firm, or in a company that improperly exploited people and natural resources in developing countries. Other people feel strongly about companies that carry out animal experiments. However, because pension savings are pooled, investors lose the right to control how their money is used.

Stakeholder pensions will provide substantial opportunities for the Churches, Greenpeace, Friends of the Earth and other organisations to create pensions with clear and transparent ethical investment strategies. The record of the ethical investment trusts to date has been most impressive, and that reflects their professionalism and the high-risk nature of the less ethical activities in which some companies get involved. Those who did not invest in the American tobacco companies are not now paying the price of settling tobacco litigation in United States.

Stakeholder pensions are a significant and welcome investment. They will offer a non-profit-making, safe and convenient investment vehicle to provide secure futures for the millions of people for whom occupational pensions are not available. They will provide the same benefits for tomorrow's pensioners that people with occupational pensions enjoy today. I hope that all hon. Members recognise our collective interest in persuading everyone who can to save for their retirement. The Bill, by making provisions for stakeholder pensions, takes a significant step in that direction.

9.28 pm

Mr. Quentin Davies (Grantham and Stamford)

We have had a thoughtful and well-informed debate, to which many members of the Select Committee on Social Security have contributed. It has been an unusually original debate, and some very original remarks were made.

What has been most notable about the debate is the strange absence of party politics. People listening to the debate, if they were not in the Chamber or watching on television, would have had difficulty in guessing from which side a contribution came. However, they would have had no difficulty in grasping that most speakers have criticised the Government. Very few had a good word to say about the Bill.

Perhaps even more surprising is that Liberal Democrat Members, who are normally so subservient to, and so glamorised by, the Administration, decided to stand up and be counted. That may, perhaps, make the Government's business managers pause, at least for a second or two.

We have heard powerful speeches, including that of my hon. Friend the Member for Canterbury (Mr. Brazier), who spoke bravely and well in acknowledging that not all was as it should have been under the previous Administration. Serious mistakes were made then, but my hon. Friend pointed out the extraordinary irony that a Labour Government who won power by claiming to offer a different deal to the British people have in fact simply aggravated the position that they inherited. The Government have gone much further down the bad road of means-testing, and they have begun to attack the national insurance system in a way that their predecessor would not have dreamed of doing.

We heard penetrating and expert contributions from my hon. Friends the Members for Ryedale (Mr. Greenway) and for Arundel and South Downs (Mr. Flight), each of whom has long-standing professional expertise in the field. The House always listens to my two hon. Friends with great attention, and it did so again tonight. I hope that we shall defeat this extremely bad Bill in half an hour or so, but, if we cannot succeed in doing so, I hope that we shall hear from my hon. Friends again in the Standing Committee.

My hon. Friend the Member for Beckenham (Mrs. Lait) also gave us an effective indictment of the Bill and of the impact of means-testing on saving. She made a slightly different calculation from that which I made in the Chamber a couple of weeks ago, and she came up with the figure of £100,000, below which anyone who could not save that much would be better off not saving at all. To save some lesser sum would only deprive that benighted individual of the thousands of pounds of means-tested benefits to which he or she would otherwise be entitled.

My hon. Friend's £100,000 is somewhat more than the £80,000 that I calculated, but both figures are far too high. It is appalling to think of people on low or modest incomes saving all their lives for nothing at all. It is appalling that their sacrifices should be mocked and made as nothing by the new Labour Government. As each month passes, and the Government go further down the road of means-testing, the figure will rise higher and higher. It will continue to rise throughout this Parliament unless the Government see the error of their ways, and there has been little sign of that.

We heard a particularly thoughtful and frank speech from my hon. Friend the Member for Gainsborough (Mr. Leigh) who did not spare us in the language that he used. He referred to the corruption of family life, and to a deliberate increase of dependency in our culture. Such things need to be said because the House is the one place in which the wiles, deceptions and cover-ups of the Government may be revealed. Only here can we get away from the clever press spin to which we have become so used over the past two years. It is here that we can get behind that spin to see the reality of what is happening.

Perhaps the most shattering indictments of the course on which the Government have embarked have come from their own side of the House. They came from a range of right hon. and hon. Members who carry great respect in the House. As all hon. Members here would bear out, they have had a record since they have been in the House of taking a close interest in social security and welfare. They have fine personal records of compassion and concern for the disadvantaged. I think in particular of the right hon. Member for Birkenhead (Mr. Field) and the hon. Members for Preston (Audrey Wise) and for Croydon, North (Mr. Wicks), but they were joined by other hon. Members, including the hon. Member for Islington, North (Mr. Corbyn), who always speaks sincerely, even if it is—[Interruption.] I was about to say that it is relatively unusual that I find myself agreeing with the hon. Gentleman, but I certainly did so tonight.

After all that, Mr. Deputy Speaker, you might think that we not only had a good debate, which we certainly have had, but that the House has had a good day. In fact, the House has had not a good but a very bad day. We have had a shameful day and I trust that the Government will not try on the House another day like this.

First, the Government came to the House with three distinct Bills wrapped up in one: one on stakeholder pensions, one on pension sharing and one on their disreputable, so-called welfare reform proposals, which are designed to take money from the bereaved and widows, some of the most vulnerable people in our society. Why did they wrap those three distinct Bills in one? I will give way to any right hon. or hon. Member on the Treasury Bench who wants to intervene to offer another explanation of that extraordinary procedure. The Government thought that, by wrapping all those measures together, they could confuse the public debate and bury some of the most unpleasant proposals, which would escape the scrutiny that they so obviously require.

If that were not enough, the Government have compounded the error. Someone—no doubt, Mr. Alastair Campbell, once again—decided to be even cleverer than wrapping up three distinct Bills in one document. He decided—I say "he" advisedly, because those on the Treasury Bench are mere puppets in his hands—that he could bamboozle the British public even more effectively, first, by ensuring that the Bill, which is actually three Bills, was put before the House on the day on which we have a statement on the euro, when two hours would be taken out of the time that we might otherwise have to debate it. Secondly, he calculated that tomorrow's headlines would concentrate on the euro, so some extremely unpleasant realities for millions of people could be hidden from public view.

Mr. Chris Pond (Gravesham)

rose

Mr. Davies

I will give way in a moment, but, first, the hon. Gentleman will have to listen to the third reason—in some ways the most disgraceful—why the procedure tonight has been extremely disreputable. It is that the stakeholder pension Bill should not have been debated in the House today either as a separate Bill or wrapped up with a lot of extraneous legislative proposals because the consultation period set out in the Green Paper that the House received in December does not end until 31 March. If the public cannot have confidence that the Government will not formulate final proposals in the form of a Bill until a consultation period has come to an end and they have listened to what those who want to comment on the proposals have to say, they will cease to respond to consultation.

By treating Parliament and the public with such contempt, the Government are ensuring that the whole principle of consultation is devalued. By doing so, Ministers have done a terribly bad day's work, not only for their Department and for the people who depend on the national insurance system, but for the whole cause of good, effective Government—Government who listen to people and who take account of realities before drafting Bills.

The Government have been so carried away by their vast majority, which they think will allow any amount of ill-considered rubbish through the Chamber, that they have decided that they can contemptuously discard the consultation process.

Mr. Pond

I am grateful to the hon. Gentleman for giving way, and apologise for having caught him in mid-flow. Does he recognise that one of the reasons why Labour has such a large majority is that the Conservatives in government caused such havoc for the poorest and most vulnerable section of our community that people lost all faith in their actions? May I also say to him—he will like this bit, I promise—that I was rather impressed that, like us, he sat through sitting after sitting of the Social Security Committee when it considered pension sharing on divorce so as to find out what it was all about? Does he not recognise that the reason why it is legitimate to put the large section dealing with pension sharing on divorce in the Bill is that there has been important scrutiny in the Select Committee, whose debates will be important in the Standing Committee?

Mr. Davies

The hon. Gentleman is obviously dissatisfied that he failed to catch your eye, Mr. Deputy Speaker, and so was unable to make a speech. What an extraordinarily perverse and idiotic line to take—that, because the previous Government made a few mistakes, it is a good idea for the Labour Government to make a load of colossal new mistakes in the same vein.

There is a great deal wrong with the Bill. On the subject of pension sharing, we heard some interesting suggestions on how to deal with flaws in the Bill from the hon. Member for Croydon, North and my hon. Friend the Member for Gainsborough. On stakeholder pensions, it is clear that a range of essential issues have not been thought through—the burden on employers, the heavy management and administration structure of the trust and, in particular, the utter confusion created by the Treasury having put forward its rival set of proposals for lifelong individual savings accounts. People will now need to take expensive and complex advice if they are to sort out the confusion that the Government have gratuitously created.

As I have said before, perhaps the most fundamental problem with stakeholder pensions is that, although they are supposedly designed for the less well-paid and the lowest-paid members of our society, the Government are rapidly making it clear that the less well-paid should not be investing or saving at all, whether in a pension or by any other means. That is the great tragedy of what the Government are doing to our society and to our future as a nation.

On welfare reform—so-called reform—what the Government are doing is quite unspeakable: it is a brutal attack on the most vulnerable. Suggestions have been made tonight about the line that genuine welfare reform might take—I look again at the hon. Member for Croydon, North. Far from adopting such a course, the Government, under the orders of the Treasury or perhaps of Mr. Campbell, have not been ashamed to go for the softest targets, the people who can least easily defend themselves—widows and those who qualify for incapacity benefit. They cannot get much lower than that.

So complete has the subjugation of the Department of Social Security to the Treasury become that the Ministers now sitting on the Treasury Bench, who only got there after a couple of reshuffles which were needed because their predecessors were not quite as malleable, are not prepared to do anything to stand up for the national insurance system, which ought to be their sacred charge. As we have seen clearly tonight, the disquiet among Opposition Members providing the most graphic testimony, the Government no longer have any principle that cannot be subverted for the sake of a quick political fix, or under instructions from the Treasury. There is no promise that will not be broken and no person so vulnerable that he or she will be protected from Treasury savings.

The Government have debauched their principles and devalued a great national institution—the national insurance system, which was the achievement of many generations in this century and of all political parties. They have sullied the legacy of their own forebears and betrayed the trust of their own supporters. Most unforgivable of all, they have simply defrauded millions of British working people who have contributed all their lives for the national insurance benefits that they are now to be cynically denied.

9.44 pm

The Minister of State, Department of Social Security (Mr. Stephen Timms)

This has been a lively and interesting debate. We have enjoyed the rumbustious speech made by the hon. Member for Grantham and Stamford (Mr. Davies); it was somewhat unguided and mistargeted, but no less enjoyable for all that.

I am pleased that so many hon. Members wanted to take part in the debate, recognising as they do the central importance of the task that the Bill takes on. The Government have set out to build a new Britain that will be modern and decent—and a modern and decent Britain needs a modern and decent welfare system. That is what the Bill is for.

There can be no dispute that the system needs reforming. A constituent—a young Asian man in his late 20s—came to see me at my surgery last summer. Four years ago, he was working at one of the big London sorting offices. While off work one day, he was in a car accident and he was left with only partial use of his left arm. He was forced to give up his job, awarded a low rate of disability benefit and has not worked since. He told me that he wanted to work again, but he obviously had no confidence at all that he would be able to do so. He is married with a young child and another on the way, and he has been deeply worried about how he can bring up his family decently on the low income that he now receives.

However, there is no reason why my constituent could not work: he is a bright young man, he is right-handed and his right arm is fine. What he needs—and what he should have been offered four years ago—is some serious help to plan a return to work. Better still, he should have received help so that he did not have to leave work in the first place. That young man has been badly let down by our benefit system, and it is the system that needs to change. Too much of what the system does is out of date, or is done in an out-of-date way. The result is that far too many people are badly off when they do not need to be.

The Bill marks the start of a process of vital reform: building a system that delivers for people and that provides help to people, instead of trapping them, by applying the success that we have seen in the new deal right across our welfare system. When the Bill was published, I heard a radio interviewer on "Good Morning Wales" talking to a lone parent, Bithig Davies, about work-focused interviews for making and renewing benefit claims. She did not denounce them, but said: It's nice to think that somebody actually cares about single parents who want to go back to work … In my case it didn't happen. Nobody bothered at all. That is the real indictment of the system that we have inherited: it has not bothered. By building on the new deals already in place, the Bill will at last start to put things right. A modern and decent Britain needs modern and decent welfare that is active, people centred, efficient and robust on fraud and that exploits new technology to the full in delivery. That is the kind of welfare system that we want.

We want to rebuild the system around work and security: work for those who can and security for those who cannot. It must be driven by principle, recognising that, for those who are able to, having a job is the best way for people to realise their full potential.

Dr. Lynne Jones

My hon. Friend has quoted a young woman from a radio interview. I am sure that most people support the gateway and the concept of the individual, tailored approach. However, did the Government's consultation not reveal that the majority of the 1,000 or so respondents felt that job interviews should not be compulsory?

Mr. Timms

Our proposals for single parents have been welcomed extremely widely, and the young woman whom I quoted from that radio interview speaks for the overwhelming majority of lone parents.

I turn to some of the points raised in this excellent debate. I shall comment first on the intervention that the hon. Member for South Antrim (Mr. Forsythe) made at the beginning of the debate about the effect of the Bill in Northern Ireland. The majority of the Bill's clauses—with the exception of those measures set out in clause 74—will not apply automatically in Northern Ireland, which has a separate system. It is anticipated that Northern Ireland will legislate to retain parity with the rest of the United Kingdom, but that will be achieved when the Assembly assumes its functions in March or April this year via a new fast-track procedure.

My hon. Friend the Member for High Peak (Mr. Levitt) rightly drew attention to the scale of the changes that have occurred in the past 50 years since the present welfare system was defined. He was absolutely right to state that disabled people, in particular, are no longer willing to be written off by the system, as has occurred in the past. Disabled people have ambitions, and the Government want those ambitions to be fulfilled.

The hon. Member for Newbury (Mr. Bendel) began an interesting contribution by denouncing the Tory party's amendment and then announced that he intended to lead his hon. Friends into the Lobby to vote for it. I lost the logic of his argument. Many people who voted for the Liberal Democrats at the general election will be surprised to learn this evening that Liberal Democrat Members are voting with the Tories on welfare.

My right hon. Friend the Member for Birkenhead (Mr. Field), in a characteristically thoughtful speech, welcomed the announcement that people who remain in education and become incapacitated before the age of 25—rather than 20, as the Bill states—will be passported on to incapacity benefit. My hon. Friend the Member for Preston (Audrey Wise) particularly welcomed that measure and the change to accessibility to the mobility component of disability living allowance for young children.

I disagree with my right hon. Friend the Member for Birkenhead in his interpretation of the effect of the changes that we are making. The Bill revitalizes contributory benefits by, for example, extending bereavement benefits to widowers. That is a new contributory benefit for people who have not had access to one in the past. We are proposing new contributory rights through the state second pension, which is a new, 100 per cent. contributory scheme to be introduced by the Government.

Mr. Forsythe

Is the Minister telling the House that the Bill will not be introduced in Northern Ireland, except by the Assembly? If we suppose, for the sake of argument, that there is no agreement and no Assembly, are the Government saying that the legislation will never be introduced in Northern Ireland?

Mr. Timms

I have every confidence that the Assembly will take up its powers within the next couple of months and introduce the necessary legislation, but the Bill's provisions will not automatically take effect in Northern Ireland.

On the future of the contributory principle, I point out that nobody starting from scratch would invent the system that we have today, with all its complexities. We are improving and rationalising contributory benefits for people of working age which account for only 20 per cent. of national insurance benefit spending. We make no apology for concentrating extra help on those who need it most. That is why we are giving young disabled people a new entitlement to incapacity benefit.

We remain firmly committed to a strong contributory basis for retirement benefits, including the basic state pension, which will not be means-tested, as well as the new state second pension. That is not the death of a principle; it is the birth of a strengthened and modernised benefit system.

In response to the points made by my right hon. Friend the Member for Birkenhead, I point out that, since last October, when we greatly extended the linking rules for incapacity benefit from eight to 52 weeks, disabled people have been assured that they can try work for short periods with a guarantee that they will be able to return to the same level of benefit if they should fall ill again. That rule also means that they will be able to meet the new contribution test; so, rather than making it harder for people to try work, we are making it easier, and it is absolutely right that we should do so.

My right hon. Friend the Member for Birkenhead and my hon. Friend the Member for Kingswood (Mr. Berry) made several points about incapacity benefit. Those concerns have also been raised by members of the disability benefits forum and others. The changes that we are making are right. After the war, fewer than one third of people in work had access to a non-state pension. Today, about three quarters do. It is right to reflect that change in the rules for incapacity benefit, as we are doing, and to cut the incentive to retire early that the old system provides.

It is right also to ensure that incapacity benefit is an insurance benefit for people who become incapacitated while working, as was intended. The system should not engender in people who are unemployed for a long time an aspiration to become sick. We want a system that encourages people to aspire to work.

The changes are right, and they give us the opportunity to improve the help that we provide for the people who need it the most. I would say to the hon. Member for Newbury in particular that it will not do, even given the notoriety of the Liberal Democrat party on this score, to applaud the extra spending in the Bill while deprecating the measures that make those improvements possible.

I had hoped to be able to respond to some of the interesting points that have been made about stakeholder pensions. Rightly, the hon. Member for Ryedale (Mr. Greenway) commented that they have been welcomed by the industry. In a well-informed speech, my hon. Friend the Member for Wyre Forest (Mr. Lock) spoke about the widespread interest in providing stakeholder pensions; I have no doubt that they will be very successful.

In one of the most effective speeches of the evening, my hon. Friend the Member for Cumbernauld and Kilsyth (Mrs. McKenna) spoke about the way in which the Employment Service had been transformed by the new deal; she was absolutely right. The Tory idea of social security was as a giro factory. The claimant went in and spoke to someone sitting behind a glass screen he or she they had never seen before and would never speak to again. If the claimant could persuade the system that he or she was entitled to benefit, it started to send giros; beyond that, it took no further interest in the person. And the cheaper the system was to operate, the better—never mind the consequences.

Our view is completely different. We want a social security system that actively helps people, not one that just sends out giros. We want a system built around not, "How little can we get away with paying you?" but "How could we best help you plan a move to independence?" We want to invest in new technology, not to cut staff but to enable our staff to provide people with the help that they need and have not been able to obtain in the past.

As has been said, the job of the Employment Service used to be to minimise the amount of jobseeker's allowance that it paid out. [Interruption.]

Mr. Deputy Speaker

Order. There is a general buzz of conversation. Hon. Members must listen to the Minister responding to the debate.

Mr. Timms

The staff were encouraged to think of themselves as benefits police, with targets set accordingly. However, with the new deal—I am delighted that my right hon. Friend the Secretary of State for Education and Employment is on the Front Bench with me tonight—they have a completely different task. For the first time, as a result of the windfall tax, they have the resources to do the job that most people join the Employment Service to do: helping people into work. The youngsters who have been on the receiving end of the new deal, who, after the past 18 years, have every reason to be sceptical about the whole thing, are saying that the new deal works, and that the Employment Service has been transformed into an ally.

My right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities tells of one unemployed young man visiting his local employment office for his new deal interview. As the interview went on, it dawned on the adviser that the young man had basic skills problems with reading and writing, which were preventing him from finding a job. He wondered how, tactfully, to raise that issue without appearing to be insulting, and eventually he brought into the conversation the fact that the local college was offering a basic skills course and asked whether the young man would be willing to check it out. The young man reflected for a few moments and said, "I will go if you will come with me." So the adviser went with him. The young man signed up for the course and is now on the way to finding a job. That is how the welfare system should work, and that is the transformation, throughout the welfare system, that is heralded by the Bill.

Among disabled people, there are about a million not currently in work who would like to be if they could. We want to help them to fulfil their ambitions. We also recognise that, for others, work is not a realistic option. A modern and decent society accepts that, and must ensure that everyone, including those unable to work, shares in the prosperity and security of the rest.

The Bill starts the process of building the modern and decent welfare system that Britain desperately needs. We shall no longer abandon people simply to receiving handouts, when their position could be transformed by active help and support. The Bill is a vital step forward; I commend it to the House.

Question put, That the amendment be made:—

The House divided: Ayes 172, Noes 336.

Division No. 72]	[9.59 pm
AYES
Allan, Richard	Cran, James
Amess, David	Curry, Rt Hon David
Ancram, Rt Hon Michael	Davey, Edward (Kingston)
Arbuthnot, Rt Hon James	Davies, Quentin (Grantham)
Atkinson, David (Bour'mth E)	Davis, Rt Hon David (Haltemprice)
Atkinson, Peter (Hexham)	Dorrell, Rt Hon Stephen
Baker, Norman	Duncan Smith, Iain
Ballard, Jackie	Emery, Rt Hon Sir Peter
Beith, Rt Hon A J	Evans, Nigel
Bercow, John	Faber, David
Beresford, Sir Paul	Fabricant, Michael
Blunt, Crispin	Fallon, Michael
Body, Sir Richard	Fearn, Ronnie
Boswell, Tim	Flight, Howard
Bottomley, Peter (Worthing W)	Forth, Rt Hon Eric
Bottomley, Rt Hon Mrs Virginia	Foster, Don (Bath)
Brady, Graham	Fraser, Christopher
Brake, Tom	Gale, Roger
Brand, Dr Peter	Garnier, Edward
Brazier, Julian	George, Andrew (St Ives)
Breed, Colin	Gill, Christopher
Brooke, Rt Hon Peter	Gillan, Mrs Cheryl
Browning, Mrs Angela	Gorman, Mrs Teresa
Bruce, Ian (S Dorset)	Gorrie, Donald
Bruce, Malcolm (Gordon)	Gray, James
Burnett, John	Green, Damian
Burns, Simon	Greenway, John
Burstow, Paul	Grieve, Dominic
Butterfill, John	Gummer, Rt Hon John
Campbell, Menzies (NE Fife)	Hague, Rt Hon William
Cash, William	Hamilton, Rt Hon Sir Archie
Chapman, Sir Sydney (Chipping Barnet)	Hammond, Philip
	Harris, Dr Evan
Chidgey, David	Harvey, Nick
Chope, Christopher	Hawkins, Nick
Clappison, James	Hayes, John
Clark, Rt Hon Alan (Kensington)	Heald, Oliver
Clark, Dr Michael (Rayleigh)	Heath, David (Somerton & Frome)
Clarke, Rt Hon Kenneth (Rushcliffe)	Heathcoat—Amory, Rt Hon David
	Hogg, Rt Hon Douglas
Clifton-Brown, Geoffrey	Howarth, Gerald (Aldershot)
Collins, Tim	Hughes, Simon (Southwark N)
Colvin, Michael	Hunter, Andrew
Cotter, Brian	Jack, Rt Hon Michael

Jackson, Robert (Wantage)	Roe, Mrs Marion (Broxbourne)
Jenkin, Bernard	Ruffley, David
Johnson Smith, Rt Hon Sir Geoffrey	Russell, Bob (Colchester)
	St Aubyn, Nick
Jones, Nigel (Cheltenham)	Sanders, Adrian
Keetch, Paul	Sayeed, Jonathan
Key, Robert	Shepherd, Richard
King, Rt Hon Tom (Bridgwater)	Simpson, Keith (Mid-Norfolk)
Kirkbride, Miss Julie	Smith, Sir Robert (W Ab'd?ns)
Lait, Mrs Jacqui	Soames, Nicholas
Lansley, Andrew	Spicer, Sir Michael
Leigh, Edward	Spring, Richard
Lewis, Dr Julian (New Forest E)	Stanley, Rt Hon Sir John
Lidington, David	Steen, Anthony
Lilley, Rt Hon Peter	Stunell, Andrew
Livsey, Richard	Swayne, Desmond
Lloyd, Rt Hon Sir Peter (Fareham)	Syms, Robert
Loughton, Tim	Tapsell, Sir Peter
Luff, Peter	Taylor, Ian (Esher & Walton)
Lyell, Rt Hon Sir Nicholas	Taylor, John M (Solihull)
McIntosh, Miss Anne	Taylor, Matthew (Truro)
MacKay, Rt Hon Andrew	Taylor, Sir Teddy
Maclean, Rt Hon David	Townend, John
McLoughlin, Patrick	Tredinnick, David
Madel, Sir David	Trend, Michael
Malins, Humfrey	Tyler, Paul
Maude, Rt Hon Francis	Tyrie, Andrew
Mawhinney, Rt Hon Sir Brian	Viggers, Peter
May, Mrs Theresa	Walter, Robert
Moore, Michael	Waterson, Nigel
Moss, Malcolm	Webb, Steve
	Whitney, Sir Raymond
Nicholls, Patrick	Whitney, Sir Raymond
Norman, Archie	Whittingdale, John
Oaten, Mark	Wilkinson, John
Öpik, Lembit	Willetts, David
	Willis, Phil
Ottaway, Richard	Wilshire, David
Page, Richard	Winterton, Mrs Ann (Congleton)
Paice, James	Winterton, Nicholas (Macclesfield)
Paterson, Owen	Woodward, Shaun
Pickles, Eric	Yeo, Tim
Prior, David	Young, Rt Hon Sir George
Randall, John
Redwood, Rt Hon John	Tellers for the Ayes:
Rendel, David	Mr. Stephen Day and
Robertson, Laurence (Tewk'b'ry)	Mrs. Caroline Spelman.

NOES
Abbott, Ms Diane	Blackman, Liz
Adams, Mrs Irene (Paisley N)	Blears, Ms Hazel
Ainger, Nick	Blizzard, Bob
Ainsworth, Robert (Cov?try NE)	Blunkett, Rt Hon David
Alexander, Douglas	Boateng, Paul
Allen, Graham	Bradley, Keith (Withington)
Anderson, Donald (Swansea E)	Bradley, Peter (The Wrekin)
Anderson, Janet (Rossendale)	Bradshaw, Ben
Armstrong, Ms Hilary	Brinton, Mrs Helen
Ashton, Joe	Brown, Russell (Dumfries)
Atkins, Charlotte	Browne, Desmond
Austin, John	Buck, Ms Karen
Banks, Tony	Burden, Richard
Barnes, Harry	Burgon, Colin
Barron, Kevin	Butler, Mrs Christine
Battle, John	Byers, Rt Hon Stephen
Bayley, Hugh	Campbell, Alan (Tynemouth)
Begg, Miss Anne	Campbell, Mrs Anne (C'bridge)
Beggs, Roy	Campbell, Ronnie (Blyth V)
Bell, Martin (Tatton)	Canavan, Dennis
Bell, Stuart (Middlesbrough)	Cann, Jamie
Benn, Rt Hon Tony	Caplin, Ivor
Bennett, Andrew F	Casale, Roger
Benton, Joe	Caton, Martin
Bermingham, Gerald	Cawsey, Ian
Berry, Roger	Chapman, Ben (Wirral S)
Best, Harold	Chaytor, David
Betts, Clive	Chisholm, Malcolm

Clapham, Michael	Griffiths, Win (Bridgend)
Clark, Rt Hon Dr David (S Shields)	Gunnell, John
Clark, Paul (Gillingham)	Hain, Peter
Clarke, Charles (Norwich S)	Hall, Patrick (Bedford)
Clarke, Eric (Midlothian)	Harman, Rt Hon Ms Harriet
Clarke, Rt Hon Tom (Coatbridge)	Healey, John
Clarke, Tony (Northampton S)	Henderson, Doug (Newcastle N)
Clelland, David	Henderson, Ivan (Harwich)
Coaker, Vernon	Heppell, John
Coffey, Ms Ann	Hesford, Stephen
Cohen, Harry	Hewitt, Ms Patricia
Coleman, Iain	Hill, Keith
Connarty, Michael	Hinchliffe, David
Cook, Frank (Stockton N)	Hodge, Ms Margaret
Cooper, Yvette	Home Robertson, John
Corbett, Robin	Hoon, Geoffrey
Corbyn, Jeremy	Hope, Phil
Corston, Ms Jean	Hopkins, Kelvin
Cox, Tom	Howarth, Alan (Newport E)
Crausby, David	Howarth, George (Knowsley N)
Cryer, Mrs Ann (Keighley)	Howells, Dr Kim
Cryer, John (Hornchurch)	Hoyle, Lindsay
Cummings, John	Hughes, Ms Beverley (Stretford)
Cunliffe, Lawrence	Hughes, Kevin (Doncaster N)
Cunningham, Jim (Cov?try S)	Humble, Mrs Joan
Dafis, Cynog	Hurst, Alan
Dalyell, Tam	Hutton, John
Darling, Rt Hon Alistair	Iddon, Dr Brian
Darvill, Keith	Illsley, Eric
Davey, Valerie (Bristol W)	Ingram, Rt Hon Adam
Davidson, Ian	Jackson, Ms Glenda (Hampstead)
Davies, Rt Hon Denzil (Llanelli)	Jackson, Helen (Hillsborough)
Davies, Geraint (Croydon C)	Jamieson, David
Davies, Rt Hon Ron (Caerphilly)	Jenkins, Brian
Davis, Terry (B'ham Hodge H)	Johnson, Alan (Hull W & Hessle)
Dawson, Hilton	Johnson, Miss Melanie (Welwyn Hatfield)
Dean, Mrs Janet
Denham, John	Jones, Barry (Alyn & Deeside)
Dobbin, Jim	Jones, Helen (Warrington N)
Dobson, Rt Hon Frank	Jones, leuan Wyn (Ynys Môn)
Donaldson, Jeffrey	Jones, Dr Lynne (Selly Oak)
Doran, Frank	Jowell, Rt Hon Ms Tessa
Dowd, Jim	Kaufman, Rt Hon Gerald
Drew, David	Keeble, Ms Sally
Dunwoody, Mrs Gwyneth	Keen, Alan (Feltham & Heston)
Eagle, Angela (Wallasey)	Keen, Ann (Brentford & Isleworth)
Eagle, Maria (L'pool Garston)	Kemp, Fraser
Edwards, Huw	Kidney, David
Efford, Clive	Kilfoyle, Peter
Ellman, Mrs Louise	King, Andy (Rugby & Kenilworth)
Ennis, Jeff	Kumar, Dr Ashok
Etherington, Bill	Ladyman, Dr Stephen
Ewing, Mrs Margaret	Laxton, Bob
Field, Rt Hon Frank	Lepper, David
Fitzpatrick, Jim	Leslie, Christopher
Fitzsimons, Loma	Levitt, Tom
Flint, Caroline	Lewis, Ivan (Bury S)
Flynn, Paul	Lewis, Terry (Worsley)
Follett, Barbara	Linton, Martin
Forsythe, Clifford	Lock, David
Foster, Rt Hon Derek	Love, Andrew
Foster, Michael J (Worcester)	McAllion, John
Foulkes, George	McAvoy, Thomas
Fyfe, Maria	McCabe, Steve
Galloway, George	McCafferty, Ms Chris
Gapes, Mike	McCartney, Ian (Makerfield)
Gardiner, Barry	McDonagh, Siobhain
George, Bruce (Walsall S)	McDonnell, John
Gerrard, Neil	McGuire, Mrs Anne
Gibson, Dr Ian	McIsaac, Shona
Gilroy, Mrs Linda	McKenna, Mrs Rosemary
Godman, Dr Norman A	Mackinlay, Andrew
Goggins, Paul	McLeish, Henry
Golding, Mrs Llin	McNulty, Tony
Gordon, Mrs Eileen	Mactaggart, Fiona
Griffiths, Nigel (Edinburgh S)	McWalter, Tony

McWilliam, John	Sedgemore, Brian
Mallaber, Judy	Shaw, Jonathan
Marek, Dr John	Sheerman, Barry
Marsden, Gordon (Blackpool S)	Sheldon, Rt Hon Robert
Marshall, David (Shettleston)	Short, Rt Hon Clare
Marshall—Andrews, Robert	Simpson, Alan (Nottingham S)
Martlew, Eric	Singh, Marsha
Maxton, John	Skinner, Dennis
Meacher, Rt Hon Michael	Smith, Angela (Basildon)
Meale, Alan	Smith, Rt Hon Chris (Islington S)
Michael, Rt Hon Alun	Smith, Miss Geraldine (Morecambe & Lunesdale)
Michie, Bill (Shef'ld Heeley)
Milburn, Rt Hon Alan	Smith, John (Glamorgan)
Mitchell, Austin	Smith, Llew (Blaenau Gwent)
Moffatt, Laura	Snape, Peter
Moonie, Dr Lewis	Soley, Clive
Moran, Ms Margaret	Southworth, Ms Helen
Morgan, Ms Julie (Cardiff N)	Squire, Ms Rachel
Morgan, Rhodri (Cardiff W)	Starkey, Dr Phyllis
Morley, Elliot	Steinberg, Gerry
Morris, Ms Estelle (B'ham Yardley)	Stevenson, George
Mountford, Kali	Stewart, Ian (Eccles)
Mudie, George	Stinchcombe, Paul
Mullin, Chris	Stoate, Dr Howard
Murphy, Denis (Wansbeck)	Stott, Roger
Murphy, Jim (Eastwood)	Strang, Rt Hon Dr Gavin
Naysmith, Dr Doug	Stuart, Ms Gisela
Norris, Dan	Sutcliffe, Gerry
O'Brien, Bill (Normanton)	Taylor, Rt Hon Mrs Ann (Dewsbury)
O'Brien, Mike (N Warks)
O'Hara, Eddie	Taylor, David (NW Leics)
Olner, Bill	Taylor, Rt Hon John D (Strangford)
Organ, Mrs Diana	Temple—Morris, Peter
Osborne, Ms Sandra	Thomas, Gareth (Clwyd W)
Palmer, Dr Nick	Thomas, Gareth R (Harrow W)
Pearson, Ian	Timms, Stephen
Pendry, Tom	Touhig, Don
Perham, Ms Linda	Trickett, Jon
Pickthall, Colin	Truswell, Paul
Pike, Peter L	Turner, Dennis (Wolverh'ton SE)
Plaskitt, James	Turner, Dr Desmond (Kemptown)
Pond, Chris	Turner Dr George (NW Norfolk)
Pope, Greg	Twigg, Derek (Halton)
Pound, Stephen	Twigg, Stephen (Enfield)
Powell, Sir Raymond	Vaz, Keith
Prentice, Ms Bridget (Lewisham E)	Walley, Ms Joan
	Wareing, Robert N
Prentice, Gordon (Pendle)	Watts, David
Prescott, Rt Hon John	Welsh, Andrew
Primarolo, Dawn	White, Brian
Prosser, Gwyn	Whitehead, Dr Alan
Purchase, Ken	Wicks, Malcolm
Quin, Rt Hon Ms Joyce	Wigley, Rt Hon Dafydd
Quinn, Lawrie	Williams, Rt Hon Alan (Swansea W)
Raynsford, Nick
Reid, Rt Hon Dr John (Hamilton N)	Williams, Alan W (E Carmarthen)
Robertson, Rt Hon George (Hamilton S)	Wills, Michael
	Winnick, David
Robinson, Geoffrey (Cov'try NW)	Winterton, Ms Rosie (Doncaster C)
Roche, Mrs Barbara	Wise, Audrey
Rogers, Allan	Woolas, Phil
Rooker, Jeff	Wray, James
Ross, Ernie (Dundee W)	Wright, Anthony D (Gt Yarmouth)
Rowlands, Ted	Wright, Dr Tony (Cannock)
Ruddock, Joan	Wyatt, Derek
Russell, Ms Christine (Chester)
Salmond, Alex	Tellers for the Noes:
Salter, Martin	Mr. Mike Hall and
Savidge, Malcolm	Mr. David Hanson.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading):—

The House divided: Ayes 318, Noes 180.

Division No. 73]	[10.14 pm
AYES
Abbott, Ms Diane	Cryer, Mrs Ann (Keighley)
Adams, Mrs Irene (Paisley N)	Cryer, John (Hornchurch)
Ainger, Nick	Cummings, John
Ainsworth, Robert (Cov'try NE)	Cunliffe, Lawrence
Alexander, Douglas	Cunningham, Jim (Cov'try S)
Allen, Graham	Dalyell, Tam
Anderson, Donald (Swansea E)	Darling, Rt Hon Alistair
Anderson, Janet (Rossendale)	Darvill, Keith
Armstrong, Ms Hilary	Davey, Valerie (Bristol W)
Ashton, Joe	Davidson, Ian
Atkins, Charlotte	Davies, Rt Hon Denzil (Llanelli)
Austin, John	Davies, Geraint (Croydon C)
Banks, Tony	Davies, Rt Hon Ron (Caerphilly)
Barnes, Harry	Davis, Terry (B'ham Hodge H)
Barron, Kevin	Dawson, Hilton
Battle, John	Dean, Mrs Janet
Bayley, Hugh	Denham, John
Begg, Miss Anne	Dobbin, Jim
Beggs, Roy	Dobson, Rt Hon Frank
Bell, Martin (Tatton)	Donaldson, Jeffrey
Bell, Stuart (Middlesbrough)	Doran, Frank
Bennett, Andrew F	Dowd, Jim
Benton, Joe	Drew, David
Bermingham, Gerald	Eagle, Angela (Wallasey)
Berry, Roger	Eagle, Maria (L'pool Garston)
Best, Harold	Edwards, Huw
Betts, Clive	Efford, Clive
Blackman, Liz	Ellman, Mrs Louise
Blears, Ms Hazel	Ennis, Jeff
Blizzard, Bob	Etherington, Bill
Blunkett, Rt Hon David	Field, Rt Hon Frank
Boateng, Paul	Fitzpatrick, Jim
Bradley, Keith (Withington)	Fitzsimons, Lorna
Bradley, Peter (The Wrekin)	Flint, Caroline
Bradshaw, Ben	Flynn, Paul
Brinton, Mrs Helen	Follett, Barbara
Brown, Russell (Dumfries)	Forsythe, Clifford
Browne, Desmond	Foster, Rt Hon Derek
Buck, Ms Karen	Foster, Michael J (Worcester)
Burden, Richard	Foulkes, George
Burgon, Colin	Fyfe, Maria
Butler, Mrs Christine	Galloway, George
Byers, Rt Hon Stephen	Gapes, Mike
Campbell, Alan (Tynemouth)	Gardiner, Barry
Campbell, Mrs Anne (C'bridge)	George, Bruce (Walsall S)
Campbell, Ronnie (Blyth V)	Gerrard, Neil
Canavan, Dennis	Gibson, Dr Ian
Cann, Jamie	Gilroy, Mrs Linda
Caplin, Ivor	Godman, Dr Norman A
Casale, Roger	Goggins, Paul
Caton, Martin	Golding, Mrs Llin
Cawsey, Ian	Gordon, Mrs Eileen
Chapman, Ben (Wirral S)	Griffiths, Nigel (Edinburgh S)
Chaytor, David	Griffiths, Win (Bridgend)
Chisholm, Malcolm	Gunnell, John
Clapham, Michael	Hain, Peter
Clark, Rt Hon Dr David (S Shields)	Hall, Patrick (Bedford)
Clark, Paul (Gillingham)	Harman, Rt Hon Ms Harriet
Clarke, Charles (Norwich S)	Healey, John
Clarke, Eric (Midlothian)	Henderson, Doug (Newcastle N)
Clarke, Rt Hon Tom (Coatbridge)	Henderson, Ivan (Harwich)
Clarke, Tony (Northampton S)	Heppell, John
Clelland, David	Hesford, Stephen
Coaker, Vernon	Hewitt, Ms Patricia
Coffey, Ms Ann	Hill, Keith
Cohen, Harry	Hinchliffe, David
Coleman, Iain	Hodge, Ms Margaret
Connarty, Michael	Home Robertson, John
Cook, Frank (Stockton N)	Hoon, Geoffrey
Cooper, Yvette	Hope, Phil
Corbett, Robin	Hopkins, Kelvin
Corston, Ms Jean	Howarth, Alan (Newport E)
Crausby, David	Howarth, George (Knowsley N)

Howells, Dr Kim	Mountford, Kali
Hoyle, Lindsay	Mudie, George
Hughes, Ms Beverley (Stretford)	Mullin, Chris
Hughes, Kevin (Doncaster N)	Murphy, Denis (Wansbeck)
Humble, Mrs Joan	Murphy, Jim (Eastwood)
Hurst, Alan	Naysmith, Dr Doug
Hutton, John	Norris, Dan
Iddon, Dr Brian	O'Brien, Bill (Normanton)
Illsley, Eric	O'Brien, Mike (N Warks)
Ingram, Rt Hon Adam	O'Hara, Eddie
Jackson, Ms Glenda (Hampstead)	Olner, Bill
Jackson, Helen (Hillsborough)	Organ, Mrs Diana
Jamieson, David	Osborne, Ms Sandra
Jenkins, Brian	Palmer, Dr Nick
Johnson, Alan (Hull W & Hessle)	Pearson, Ian
Johnson, Miss Melanie (Welwyn Hatfield)	Pendry, Tom
	Perham, Ms Linda
Jones, Barry (Alyn & Deeside)	Pickthall, Colin
Jones, Helen (Warrington N)	Pike, Peter L
Jones, Dr Lynne (Selly Oak)	Plaskitt, James
Jowell, Rt Hon Ms Tessa	Pond, Chris
Kaufman, Rt Hon Gerald	Pope, Greg
Keeble, Ms Sally	Pound, Stephen
Keen, Alan (Feltham & Heston)	Prentice, Ms Bridget (Lewisham E)
Keen, Ann (Brentford & Isleworth)	Prentice, Gordon (Pendle)
Kemp, Fraser	Prescott, Rt Hon John
Kidney, David	Primarolo, Dawn
Kilfoyle, Peter	Prosser, Gwyn
King, Andy (Rugby & Kenilworth)	Purchase, Ken
Kumar, Dr Ashok	Quin, Rt Hon Ms Joyce
Ladyman, Dr Stephen	Quinn, Lawrie
Laxton, Bob	Raynsford, Nick
Lepper, David	Reid, Rt Hon Dr John (Hamilton N)
Leslie, Christopher	Robertson, Rt Hon George (Hamilton S)
Levitt, Tom
Lewis, Ivan (Bury S)	Roche, Mrs Barbara
Lewis, Terry (Worsley)	Rooker, Jeff
Linton, Martin	Ross, Ernie (Dundee W)
Lock, David	Rowlands, Ted
Love, Andrew	Ruddock, Joan
McAllion, John	Russell, Ms Christine (Chester)
McAvoy, Thomas	Salter, Martin
McCabe, Steve	Savidge, Malcolm
McCafferty, Ms Chris	Sedgemore, Brian
McCartney, Ian (Makerfield)	Shaw, Jonathan
McDonagh, Siobhain	Short, Rt Hon Clare
McDonnell, John	Simpson, Alan (Nottingham S)
McGuire, Mrs Anne	Singh, Marsha
McIsaac, Shona	Skinner, Dennis
McKenna, Mrs Rosemary	Smith, Angela (Basildon)
Mackinlay, Andrew	Smith, Rt Hon Chris (Islington S)
McLeish, Henry	Smith, Miss Geraldine (Morecambe & Lunesdale)
McNulty, Tony
Mactaggart, Fiona	Smith, John (Glamorgan)
McWalter, Tony	Smith, Llew (Blaenau Gwent)
McWilliam, John	Snape, Peter
Mallaber, Judy	Soley, Clive
Marek, Dr John	Southworth, Ms Helen
Marsden, Gordon (Blackpool S)	Squire, Ms Rachel
Marshall, David (Shettleston)	Starkey, Dr Phyllis
Marshall—Andrews, Robert	Steinberg, Gerry
Martlew, Eric	Stevenson, George
Maxton, John	Stewart, Ian (Eccles)
Meacher, Rt Hon Michael	Stinchcombe, Paul
Meale, Alan	Stoate, Dr Howard
Michael, Rt Hon Alun	Strang, Rt Hon Dr Gavin
Michie, Bill (Shef'ld Heeley)	Stuart, Ms Gisela
Milburn, Rt Hon Alan	Sutcliffe, Gerry
Mitchell, Austin	Taylor, Rt Hon Mrs Ann (Dewsbury)
Moffatt, Laura
Moonie, Dr Lewis	Taylor, David (NW Leics)
Moran, Ms Margaret	Taylor, Rt Hon John D (Strangford)
Morgan, Ms Julie (Cardiff N)	Temple—Morris, Peter
Morgan, Rhodri (Cardiff W)	Thomas, Gareth (Clwyd W)
Morley, Elliot	Thomas, Gareth R (Harrow W)
Morris, Ms Estelle (B'ham Yardley)	Timms, Stephen

Touhig, Don	Wicks, Malcolm
Trickett, Jon	Williams, Alan W (E Carmarthen)
Truswell, Paul	Wills, Michael
Turner, Dennis (Wolverh'ton SE)	Winterton, Ms Rosie (Doncaster C)
Turner, Dr Desmond (Kemptown)	Wise, Audrey
Turner, Dr George (NW Norfolk)	Woolas, Phil
Twigg, Derek (Halton)	Wray, James
Twigg, Stephen (Enfield)	Wright Anthony D (Gt Yarmouth)
Vaz, Keith	Wright, Dr Tony (Cannock)
Walley, Ms Joan	Wyatt, Derek
Wareing, Robert N
Watts, David	Tellers for the Ayes:
White, Brian	Mr. Mike Hall and
Whitehead, Dr Alan	Mr. David Hanson.

NOES
Allan, Richard	Flight, Howard
Amess, David	Forth, Rt Hon Eric
Ancram, Rt Hon Michael	Foster, Don (Bath)
Arbuthnot, Rt Hon James	Fraser, Christopher
Ashdown, Rt Hon Paddy	Gale, Roger
Atkinson, David (Bour'mth E)	Garnier, Edward
Atkinson, Peter (Hexham)	George, Andrew (St Ives)
Baker, Norman	Gill, Christopher
Ballard, Jackie	Gillan, Mrs Cheryl
Beith, Rt Hon A J	Gorman, Mrs Teresa
Bercow, John	Gorrie, Donald
Beresford, Sir Paul	Gray, James
Blunt, Crispin	Green, Damian
Body, Sir Richard	Greenway, John
Boswell, Tim	Grieve, Dominic
Bottomley, Peter (Worthing W)	Gummer, Rt Hon John
Bottomley, Rt Hon Mrs Virginia	Hague, Rt Hon William
Brady, Graham	Hamilton, Rt Hon Sir Archie
Brake, Tom	Hammond, Philip
Brand, Dr Peter	Harris, Dr Evan
Brazier, Julian	Harvey, Nick
Breed, Colin	Hawkins, Nick
Brooke, Rt Hon Peter	Hayes, John
Browning, Mrs Angela	Heald, Oliver
Bruce, Ian (S Dorset)	Heath, David (Somerton & Frome)
Bruce, Malcolm (Gordon)	Heathcoat-Amory, Rt Hon David
Burnett, John	Hogg, Rt Hon Douglas
Burns, Simon	Howarth, Gerald (Aldershot)
Burstow, Paul	Hughes, Simon (Southwark N)
Butterfill, John	Hunter, Andrew
Campbell, Menzies (NE Fife)	Jack, Rt Hon Michael
Cash, William	Jackson, Robert (Wantage)
Chapman, Sir Sydney (Chipping Barnet)	Jenkin, Bernard
	Johnson Smith, Rt Hon Sir Geoffrey
Chidgey, David
Chope, Christopher	Jones, leuan Wyn (Ynys Môn)
Clappison, James	Jones, Nigel (Cheltenham)
Clark, Rt Hon Alan (Kensington)	Keetch, Paul
Clark, Dr Michael (Rayleigh)	Key, Robert
Clarke, Rt Hon Kenneth (Rushcliffe)	King, Rt Hon Tom (Bridgwater)
	Kirkbride, Miss Julie
Clifton—Brown, Geoffrey	Kirkwood, Archy
Collins, Tim	Lait, Mrs Jacqui
Colvin, Michael	Lansley, Andrew
Cotter, Brian	Leigh, Edward
Cran, James	Lewis, Dr Julian (New Forest E)
Curry, Rt Hon David	Lidington, David
Dafis, Cynog	Lilley, Rt Hon Peter
Davey, Edward (Kingston)	Livsey, Richard
Davies, Quentin (Grantham)	Lloyd, Rt Hon Sir Peter (Fareham)
Davis, Rt Hon David (Haltemprice)	Loughton, Tim
Dorrell, Rt Hon Stephen	Luff, Peter
Duncan Smith, Iain	Lyell, Rt Hon Sir Nicholas
Emery, Rt Hon Sir Peter	McIntosh, Miss Anne
Evans, Nigel	MacKay, Rt Hon Andrew
Ewing, Mrs Margaret	Maclean, Rt Hon David
Faber, David	McLoughlin, Patrick
Fabricant, Michael	Madel, Sir David
Fallon, Michael	Malins, Humfrey
Feam, Ronnie	Maude, Rt Hon Francis

Mawhinney, Rt Hon Sir Brian	Stunell, Andrew
May, Mrs Theresa	Swayne, Desmond
Michie, Mrs Ray (Argyll & Bute)	Syms, Robert
Moore, Michael	Tapsell, Sir Peter
Moss, Malcolm	Taylor, Ian (Esher & Walton)
Nicholls, Patrick	Taylor, John M (Solihull)
Norman, Archie	Taylor, Matthew (Truro)
Oaten, Mark	Taylor, Sir Teddy
Öpik, Lembit	Townend, John
Ottaway, Richard	Tredinnick, David
Page, Richard	Trend, Michael
Paice, James	Tyler, Paul
Paterson, Owen	Tyrie, Andrew
Pickles, Eric	Viggers, Peter
Prior, David	Walter, Robert
Randall, John	Waterson, Nigel
Redwood, Rt Hon John	Webb, Steve
Rendel, David	Welsh, Andrew
Robertson, Laurence (Tewk'b'ry)	Whitney, Sir Raymond
Roe, Mrs Marion (Broxbourne)	Whittingdale, John
Ruffley, David	Wigley, Rt Hon Dafydd
Russell, Bob (Colchester)	Wilkinson, John
	Willetts, David
St Aubyn, Nick	Willis, Phil
Salmond, Alex	Wilshire, David
Sanders, Adrian	Winterton, Mrs Ann (Congleton)
Sayeed, Jonathan	Winterton, Nicholas (Macclesfield)
Shepherd, Richard	Woodward, Shaun
Simpson, Keith (Mid-Norfolk)	Yeo, Tim
Smith, Sir Robert (W Ab'd?ns)	Young, Rt Hon Sir George
Soames, Nicholas
Spicer, Sir Michael	Tellers for the Noes:
Spring, Richard	Mr. Stephen Day and
Stanley, Rt Hon Sir John	Mrs. Caroline Spelman.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).