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Baroness Hollis of Heigham: My Lords, I thank your Lordships for those comments. Perhaps one should just recall the present position. At present, women receive a widow's pension. That woman may have no financial need because she receives from her husband a generous occupational pension. She may not be unemployed. She may be in well or adequately paid work. She may have no dependent children. Therefore, she is not in financial need; she is not unemployed; she has no dependants; she has a generous income; and yet she is currently receiving a widow's pension until her retirement age.

I suggest to your Lordships that that cannot be sensible when at the same time a man who may have come out of work in order to support his children and look after them receives nothing at all. As we see, something like 40 per cent. of all widows' benefit expenditure is going on the top 50 per cent. of women's incomes. Therefore, as a result, we are spending rather a lot of money on women who no longer have the same financial need as they did when the scheme was first developed.

Back in 1946, only one married woman in eight worked. Now, something like 70 per cent. of married women work, almost as many as married men. In addition, back in 1946-48, a very few women--only 100,000--would have had access to an occupational pension. Now 1.5 million do so. Therefore, the old world in which the widows' benefit scheme was constructed--a world where a woman was not in work but at home without any access to an occupational pension--has gone. Therefore, it is right to review the benefit to see whether it is right that money should be going to support those who have generous alternative incomes of their own while at the same time men, whose need may be financially much greater, receive nothing at all. Therefore, we are seeking to target money on those in greatest need and to do so in ways which are fair equally to men and women.

The noble Lord and the noble Earl asked whether that represented a dilution or a thinning of the contributory principle. Yes and no. On the one hand, it is certainly the case that the contributory principle will no longer

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extend to widows who do not have dependent children and who are over the age of 45--a benefit for life--irrespective of their means. That is certainly true. However, it does extend to men for the first time a benefit based on the contributions of their former spouses. Therefore, men are enjoying a contributory principle which, so far, they have not been able to do.

In terms of the particular points which have been raised, I should like to deal, first, with the one raised by the noble Lord, Lord Higgins. I can confirm that the £2,000 lump sum is neither means tested nor taxable. We will write to the noble Earl with the exact figures involved, but we calculate that the doubling from £1,000 to £2,000 certainly is well above the price increases. My officials have not been able to do the necessary calculations in the time available, so we will write to the noble Earl with the precise figures.

The noble Lord, Lord Higgins, made a comparison with the working families tax credit and asked why we were concerned about the better-off widow when we were apparently going to throw away this benefit at families with £35,000 a year. Such families with five children, which is the example beloved of both the noble Lord, Lord Higgins, and the right honourable Member in the other place Mr. Iain Duncan Smith, represent precisely 1 per cent. of all parents. I suggest that that is a reductio ad absurdum. The noble Lord's party seems to stand for scrapping the working families tax credit, scrapping the new deal and scrapping the minimum wage; indeed, scrapping all the things which will lift women and men equally off poverty pay into work which is well paid enough to begin to float them off a dependency on benefits. We are making work rewarding. All the noble Lord can say is that he does not want it because someone on £35,000 a year with five children--that is, 1 per cent. of parents--may be affected. I believe the noble Lord's position in that respect is indefensible. He would consign such people to a life either out of work or, as currently, on a dependent hand out.

The noble Lord asked me to name the winners and losers as regards the new proposals. Among the gainers will be 40,000 new widows per year. They will gain the extra lump sum which will go up from £1,000 to £2,000. For the first time, some 15,000 widowers per year will gain the lump sum of £2,000. Approximately 5,000 new widowers will gain the widowed parents' allowance in the first full year rising to £20,000 as the scheme matures. Moreover, 20,000 existing widowers will gain on its implementation. On the other hand, among the losers, around 20,000 widows in the first full year will receive a weekly benefit for the shorter period of six months. They are the losers.

I believe that the noble Lord asked about a gap when a widowed mother would lose benefit before she might be entitled to a transitional payment. At present, the widows' pension, which does not go with having children, only kicks in at the age of 45. So we are not changing the situation in that respect. The noble Lord asked where the £85 figure came from. I can tell him that this is a compound of the average situation; namely, the widows' or widowers' benefit, with either one or two children, together with a SERPS accrual. I also

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believe that the noble Lord asked whether people would get the SERPS accrual for the bereavement allowance as regards the six-month period. The answer is no.

The noble Lord asked how the latter would coincide or how it calibrates with the equalisation of the state pension age. The harmonisation starts in 2010 and finishes in 2020. Therefore, I do not see why there should be a problem. The noble Lord also said that, if this had been done in the private sector, there would be an outcry at a default on a contributory benefit principle. That comes a bit rich when the previous government halved the benefit of SERPS in their period of office. That was indeed a commitment by government to a contributory principle. The noble Lord should be careful. He was halving SERPS, which was a benefit targeted at those men and women who were not eligible for occupational pensions; in other words, the poorer men and women in work. He halved the value of that benefit. What we are doing in terms of our reforms is ensuring that more benefit goes to those who are more lowly paid--that is, the poorer paid men and women equally.

The noble Earl, Lord Russell, asked about the situation for current widowers. As I understand it, when this legislation is passed by both Houses in its present form, current widowers with dependent children will be entitled to the widowed parents' allowance. However, they will not be entitled to the lump sum if they are already widowed. The noble Earl was worried that the six-month period for bereavement allowance was too short, especially if there were dependent children. He is entirely right. If someone is bereaved with dependent children, he or she will continue to receive the allowance until the youngest child leaves full-time education at 16 or 19. Perhaps there was a misunderstanding in that respect. Finally, the noble Earl asked whether it was consistent with social fund regulations. The answer is yes. I checked the position earlier this morning and I can tell the noble Earl that it is indeed. However, if there is any aspect of this upon which he wants further elaboration, I shall be very happy to write to the noble Earl.

I can tell the House that, roughly speaking, virtually all of the money--that is, £600 million in time--will come from the loss of the widows' pension being for life where there are no dependent children. Netted off against that £600 million is the additional cost of the extra money going in the lump sum and to additional widowers.

4.36 p.m.

Baroness Turner of Camden: My Lords, I thank my noble friend the Minister for repeating the Statement. This is a very complex matter and it will take some time to examine it in order to realise precisely what is involved. Of course, I applaud the proposal to make a bereavement allowance to widowers as well as to widows and, similarly, I also applaud the intention to ensure that children who are dependent are properly cared for.

As I am sure my noble friend the Minister probably understands, because she knows that I am a trustee of the Widows Advisory Trust, my concerns relate to the

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position of older widows, especially those aged over 45. As I understand the situation, the latter perhaps will be expected to attempt to join the labour market even though they may have spent their lives looking after their families. Of course, by that time, the children will not be dependent because they will have grown up. I am sure that such widows will find it difficult to secure appropriate employment. Moreover, as the noble Lord, Lord Higgins, said, the benefit is a contributory one for which their husbands will have made contributions during their working lives.

My noble friend the Minister said that many women now benefit from what she described as generous occupational pension provision. Many such schemes have provision for widows' benefit. However, that is by no means always very generous. Many pension schemes are predicated on the assumption that the resultant benefit will also take into account the fact that the recipient is entitled to the ordinary flat rate pension or, in the case of a widow, a widow's pension. So the whole assumption of that family, even in relation to an occupational pension, may have been that that would be built up by the addition of a widow's pension because the pension itself would not be sufficient by itself to keep the widow out of poverty.

We must be careful before we start to interfere with contributory benefits. Indeed, if we are not careful, this set of proposals may well prove to be a bonanza for life insurance salesmen. But, on the other hand, there may well be families who simply cannot afford to make private provision. It is people for whom private provision is simply not a possibility that I have concern. As we on this side of the House have always agreed, it is the job of government to care for the vulnerable. In this connection, I believe that widows in the age group to which I referred could rightly be regarded as the vulnerable--that is, those whose husbands may have felt that they were making provision for them through their contributions to the national insurance scheme.


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