§ Mr. Burstow
I beg to move amendment No. 12, in page 26, line 33, at end insert—`and, for the purposes of calculating the pensioner's earnings factor under this subsection, in addition to any earnings, the pensioner will be credited with earnings equal to the lower earnings limit then in force in respect of each week in which invalid care allowance was payable or would have been payable but for the fact that under regulations the amount payable to him was reduced to nil because of his receipt of other benefits.'.
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
With this, it will be convenient to discuss the following amendments: No. 65, in page 26, line 46, leave out "six" and insert "twelve".
No. 68, in page 26, line 46, leave out "six" and insert "eleven".
No. 11, in clause 37, page 31, line 41, leave out from "he" to end of line 43 and insert—'provides information regarding caring activity within a specified time which will be no less than six years following the year in which the qualifying caring activity took place.'.
§ Mr. Burstow
To get the state second pension, carers must receive or have an underlying entitlement to invalid care allowance for the full 52 weeks of the year. ICA rules mean that many carers lose entitlement for some weeks of the year. In the past, that meant that a week's benefit was lost. Under the state second pension, it means that a whole year's contribution will also be lost.
Carers can, in theory, get eight weeks of respite care under the current rules. Many place great value on that, but, as we all know from talking to carers in our constituencies, it can be very difficult for them to schedule their lives to avoid the linking rules that disqualify them from entitlement to invalid care allowance. They also have to bear in mind that if the person whom they are caring for is admitted to hospital unexpectedly, their eligibility and entitlement to invalid care allowance will also be jeopardised, thus risking the loss of a whole year's contribution to the state second pension.
Respite care is not the only area in which the rules could affect contributions to the state second pension. Many carers may value part-time work and see it as a further way of getting some respite and some connection to the wider community. However, particularly since the introduction of the minimum wage, it is difficult for people to earn below the £50 earnings rule limit. Even those who earn below that level can find that a Christmas 740 bonus or other bonuses push them above the earnings limit. That can result in them losing not just a week's invalid care allowance, but their entitlement to a whole year's contribution to the state second pension.
The Government say that the state second pension will be a valuable boost to carers' retirement incomes, but we believe that it is being built on a shaky foundation if invalid care allowance is used as the point of entry to entitlement. The amendments are designed to push the Government a little further to consider how to improve the situation for the approximately 400,000 carers in this country, many of whom have been caring for a very long time. When those people see the detail of how the state second pension will operate, they are less than enamoured of the scheme.
Amendment No. 12 would enable carers to combine weeks of ICA with weeks of earnings over the lower earnings limit. It would help those who do not get ICA throughout the year and have periods when they are able to work but do not reach the lower earnings limit. For example, people receiving ICA for 40 weeks and earning £100 in each of the other 12 weeks would not get a year's credit for the state second pension, as their earnings would have been below the lower earnings limit and they did not get ICA for the whole year.
The Minister rightly said that the Government wanted to help the lowest earners in our country, but the way in which the scheme is constructed will make that impossible. We cannot help the real lowest earners unless we can fix the problem.
Amendment No. 11 concerns home responsibilities protection. The Government propose to change the qualification period, so that within three years of the entitlement to a benefit lapsing, if people have not made their declarations to the relevant authorities, they will lose the protection. At present, with the basic state pension, people can still claim after 15 or 20 years or more.
The Government are changing the requirement to allow only three years for both the basic state pension and the state second pension. We feel that that is not long enough to be fair, and that it would be better to align the change with other practice. For example, voluntary class 3 payments have to be paid before the sixth tax year after the one in which they were due and the time limit for claiming back overpaid tax or tax allowances is also six years.
The Government are concerned that people will not be able to remember the details of their periods of caring and eligibility for ICA. If that were the case, surely the same would apply with those two tax measures. We are arguing for consistency of approach in different legislation to the requirement for people to give notice of their entitlement.
We do not deny that the Government are making improvements for carers through the state second pension, but using eligibility for the invalid care allowance, which is very badly constructed, as the basis for entitlement to credits for the state second pension means that many carers will not get the credits that they deserve as a recognition for their many hours and years of caring.
§ Mrs. Lait
In the interests of brevity, I shall speak only to amendment No. 65. We discussed at length in 741 Committee credits for women at home with children, but the subject needs a further airing, as the Bill does not make as much provision for that as we had under SERPS. We think that it is prescriptive for the Government to say that credits will be available only to women with children under the age of six.
It is not often that the Conservative party joins those who voted just now on the basic state pension, but on this occasion we have tabled similar amendments: indeed, in Committee, we tabled an amendment to allow women to continue to be able to receive credits in respect of children under the age of 11.
§ Dr. Lynne Jones
I am pleased that the hon. Lady supports extending credits to carers of older children, but, last week, the hon. Member for Buckingham (Mr. Bercow) advocated that lone parents with children should be forced to work and should have their benefits cut if they did not go to work. Will she dissociate herself from those comments?
§ Mrs. Lait
All I would do is point out that it is the hon. Lady's Government who are cutting credits at the age of six, whereas we had arranged that women be credited for SERPS in respect of children up to the age 16, so I do not think that there is much of a point to be made out of that.
May we concentrate on the arguments for ensuring that women with children under the age 11 or 12 receive credits with regard to home responsibility payments? That may help us to move on speedily.
The reason why we have worked on the basis of 11 or 12 is that that is the age at which children break from primary school and go to secondary school. That is when their school hours tend to get longer and their mothers feel freer to go to work. It is interesting that labour market trends show that the bulk of women start working full-time when their children are aged 11-plus.
One of the purposes of our amendment is to ensure that women who have career breaks have the best possible chance of building their pension. We want to help them and to ensure they have the choice of staying at home to look after children until they are at school full-time and are more independent. That is why we have tabled the amendment to extend credits to the age of 12.
§ Dr. Lynne Jones
Amendment No. 68 credits carers of school-age children up to the age of 11 for the state second pension. As I have established, the real purpose of the state second pension is more to fill the gap left by the failure to uprate the basic state pension in line with earnings than to replace SERPS. In judging the Bill's adequacy in respect of giving credits for non-earners, the appropriate yardstick should be the groups who are credited for the basic state pension.
A parent who receives child benefit is credited with home responsibilities protection, which reduces the years required to qualify for the basic state pension. The Bill requires that the child must be under six for the carer to qualify for state second pension carer credits, but, even after the children go to school, the demands placed on a carer, especially in a child's early years or where there are a number of young children in a family, often preclude a return to work. If work is possible, it is often part-time and on earnings that fall beneath the lower earnings threshold. Therefore, the carer would not automatically qualify for credits for the state second pension.
742 That is particularly the case for lone-parent families. It is relevant that some Conservative Members seem to be advocating that lone parents should return to work if they have children of school age.
The Government have patted themselves on the back for the extra help that they have given to carers to be credited into the state second pension. I hope that my hon. Friend the Minister, when she responds to the debate, will explain the logic of not including the carers of children of primary school age.
§ Angela Eagle
In considering the amendments, we must bear in mind the huge gains that the introduction of the second state pension will bring for carers and the low-paid. About 18 million people will gain from the provisions: 9.5 million will be moderate earners; 4.5 million will be low earners; 2 million will be disabled people; and 2 million will be carers.
For the first time ever, the Bill provides that carers without a work record will have access to an additional pension. If they have a lifetime of caring, the Bill will give them access, for the first time, to additional pension provision. With that in mind, I shall deal with the amendments in this group.
Amendment No. 11 would extend from three years to six the time within which caring activity must be reported to the Department in order to qualify for credits for the second state pension. Home responsibilities protection at present protects the basic pension provision of someone caring for a child or for a sick or disabled person. It is not a credit or benefit in its own right.
As my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) pointed out, the protection works by reducing the number of qualifying years needed for full basic pension. Therefore, a person still has to work for many years, and many carers do not qualify for the benefits of home responsibilities protection because of the structure of the old system. The hon. Member for Sutton and Cheam (Mr. Burstow) might have had the grace to recognise that the second state pension will be a hugely beneficial development for those people. The hon. Gentleman both nit-picked around the edge of the argument and raised some serious issues, but he might have pointed that out.
Many child benefit recipients get home responsibilities protection automatically. Others need to complete a form to notify the Department of periods of caring activity that qualify. That can be done at any time after the period of caring. Given that home responsibility protection began in 1978, we could theoretically be asking people to provide information up to 49 years after the period of caring in question.
As the new home responsibilities protection for the second state pension is worth so much more in benefit—it will be as if an extra £9,500 had been earned, so it will be a big earnings boost—it seems prudent to make the system more sensible. Accordingly, we are to ask people to report to us the years in which they were caring.
We believe that three years is a reasonable interval in which a person may report caring activity, but the amendment suggests six. It is important that we can be confident that notifications are given using correct information. We do not believe it reasonable to expect carers to remember the number of hours of caring that 743 they undertook during a period of time more than 20 years previously. We therefore consider record-keeping to be important.
In addition, our aim of ensuring that as many carers as possible benefit from the additional pension provision under the second state pension means that we are proposing to keep the limits tight. We have decided that three years is the optimum period. That means that people who care throughout 2003–04 will need to have notified the Department by 5 April 2007 that they were caring in that period. If carers want to provide the information at the end of a year of caring rather than three years later, they will be free to do so.
The provision will not be retrospective, so people who have been caring in 1999–2000 will be able to notify the Department at the point of retirement under the old system, for the purposes of protecting their basic pension entitlement. In order to ensure that the change is implemented smoothly, we will provide advanced warning for those who may be affected, especially existing carers. We intend to mount a publicity campaign to reach carers in advance of the introduction of the second state pension, and we hope to make many more pensioners aware of home responsibilities protection than are aware of it at present.
The Carers National Association has agreed to disseminate information to its members at the appropriate time. We will pursue that offer, to ensure that people know that they have to report.
A balance must be struck between allowing records to be checked and the bureaucracy of requiring mandatory reports at frequent intervals. We believe that three years strikes the right balance. Verification of information six years after the event would be more difficult, and would leave the scheme open to abuse.
Amendment No. 12 is a variation on a theme that we discussed in Committee. Entitlement to the state second pension will be calculated on an annual basis, as is the case for SERPS. It would not be operationally feasible to move to a system that calculated entitlement on a weekly basis. As I explained, the second state pension is intended to help low earners through the low earners' boost, and carers through credits towards the second state pension. We believe that, in the interests of consistency, fairness and operational manageability, that is the right approach.
The amendment confuses the two. It would allow people who were entitled to invalid care allowance to top up an earnings factor that was otherwise below the lower earnings limit, so they could benefit from the low earners' boost, mixing and matching different gateways. That is a sure recipe for administrative complexity and anomaly. That approach would favour a particular group. It would not, for instance, benefit carers who do not claim invalid care allowance but who apply for home responsibilities protection instead, because it takes a year to accrue that. So we hope that the amendment will be withdrawn, or defeated if it is pressed to a Division.
Amendments Nos. 65 and 68, which show the co-operation between the Opposition and my hon. Friend the Member for Selly Oak, are interesting. We had an 744 interesting debate about these matters in Committee. Five or six Conservative Members spoke, each expressing a completely different opinion. Some wanted women at work, some wanted them at home and some could not quite decide where they should be. They really need to sort themselves out on this issue.
Almost 1.5 million women caring for young children will begin to build up entitlement to additional pension for the first time under the state second pension. It is designed to give most help to those who are least able to afford to make their own provision, which is why we are focusing on mothers of children below school age. We recognise that they have the fewest opportunities, as they are caring for younger children, to earn above the lower earnings limit. Many mothers of school-age children combine their caring duties with part-time work and could benefit from the state second pension's low earners' boost when they earn as little as £3,432 a year. [Interruption.] The hon. Member for Gainsborough (Mr. Leigh) may think it is boring, but it will enable women who work part-time on low pay to accrue additional pension, often for the first time, so that they can look forward to retiring on a reasonable income instead of on to means-tested benefits, as all too many do now. The old systems have not supported them, and an examination of income statistics and the number of women who manage to qualify through their own contributions for additional pension, and even the basic pension, will confirm that view.
§ Dr. Lynne Jones
My hon. Friend talks about part-time earners. As I mentioned, people who work for 16 hours a week on the minimum wage will still not achieve the level of income to which she refers. What about those carers?
§ Angela Eagle
My hon. Friend is right. The lower earnings limit implies between 17 and 18 hours a week. We hope that through the new deal, the new opportunities in the workplace and the support that the Budget has given to single parents and low earners, making work pay, many people will have the chance to improve the number of hours they work, reach the lower earnings limit and qualify for the low earnings boost.
Focusing help on those caring for children under school age matches the choices that most mothers make. Most mothers take career breaks or periods out of work when their children are very young; many go back to work as their children get older. In addition, 4.5 million low earners—70 per cent. of whom are women—will gain under the second state pension. My hon. Friend should celebrate that, and welcome it.
In view of that explanation, I urge the hon. Member for Sutton and Cheam to withdraw the amendment.
§ Mr. Burstow
We have heard that a category of people on low incomes and with patchy records of receipt of invalid care allowance will find all the gates shut when it comes to the state second pension. Consequently, those people will not receive the low-income boost that the Minister rightly trumpets.
The Minister suggested that I should be doing her job by trumpeting the state second pension outside the House. I should be happy to support a benefit that truly boosted the pensions of retired carers, but I have set out why that will not happen. The numbers that the Minister gave us will prove illusory unless the workings and eligibility criteria of the invalid care allowance are substantially 745 improved. The Minister said that she would do something about that, but I hope that the Government will do more. Simply telling us that something is not operationally possible is not acceptable to thousands of carers who expect more of the Government.
This issue clearly needs further consideration at future stages, and we shall return to it in another place. I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.