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Baroness Hollis of Heigham: I want to respect the courtesies of the House, but does the noble Lord accept anything that I have said tonight about the problems inherent in his amendment which show that his amendment will not do what he thinks it might do, which is tackle pensioner poverty? Does he accept that?

Lord Goodhart: I shall take this in order. The position that has been taken by the Minister is of course entirely consistent with the line that the Government have been running.

Baroness Greengross: I did not say that I supported the amendment. I said that it had a number of attractive elements and that some of those are already part of the Government's policy, but I do have concerns about it.

Lord Goodhart: What I meant to say in reference to the noble Baroness, Lady Greengross, was that support meant support in principle rather than for the ideas behind these amendments, in particular for an age-related addition rather than for the specific details of this amendment. I understand, as I said, the position of the noble Baroness, Lady Castle, and have, as we may find when we reach later stages, some sympathy for it.

The position of the Government is that everything must be concentrated as much as possible on the minimum income guarantee as an attack on poverty among pensioners. I quite accept that--I think it is a matter of common sense--but the differences within the age cohorts is indeed wider than the differences between them, that is perfectly true. If the argument put forward by the Minister is taken to its logical extreme, you begin saying that you must rule out free television licences for all pensioners at the age of 75 and restrict them to those in receipt of the minimum income guarantee; you also have to say that you rule out the winter fuel allowance for all pensioners and restrict it to those in receipt of the minimum income guarantee; and indeed you go beyond that because ultimately that particular argument leads you to say that there will be no state pension at all and that all pensioner benefits will be provided through income support (under the minimum income guarantee) and will be limited to those pensioners who satisfy its income requirements. I believe that that would not be acceptable in this House.

Baroness Hollis of Heigham: Perhaps I may make it clear that the Government have no such intention. The Prime Minister has repeatedly made it clear that the basic state pension is a building block within the overall prosperity of pensioners and will remain so.

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Lord Goodhart: Of course I accept that. I was merely pointing out that this is the logical conclusion to which that particular argument leads. The question surely is: what is the right balance between means-tested benefit for pensioners through the minimum income guarantee and non-means-tested benefits? The Government have put forward what I certainly regard as being an interesting and in many ways excellent proposal for the state second pension, but surely the aim must be, among others, to provide people who have full contribution records with a pension that will enable them to get to the end of their lives without having to rely at some point on means-tested benefits. Means-tested benefits may be necessary and will be necessary no doubt for those without full contribution records, but the state second pension is designed--and, I think, designed quite effectively, at the beginning--to take people outside the need for MIGs. The problem is that as people get towards the end of their lives and find it more difficult to claim means-tested benefits, they will have to fall back on them. When the Minister says that only 40 per cent of those over 80 are in receipt of the minimum income guarantee, my reaction is that 40 per cent is an enormous figure. It is far larger than the proportion of people in the population as a whole who are reliant on income-related benefits. It seems to me that the case--

Baroness Hollis of Heigham: I also gave the noble Lord the figure that, for a single person over 80, the difference between MIG and the retirement pension was nearly £20. Under the noble Lord's proposals, that single person would get only £7, so he would still need to be topped up between £7 and £20. Anyone who would currently qualify for most of MIG would still need to qualify even under the noble Lord's proposals.

Lord Goodhart: The triggers I have in mind take into account the fact that people will be better off under the state second pension. That will mean that the difference should diminish. We need to ensure that pensions are set at a level which will make it unnecessary for people who have paid full contributions, including the contributions to the second pension, to rely on the minimum income guarantee. That is important. The Minister's argument, taken to its logical conclusion, means that all benefits for pensioners should be provided by the minimum income guarantee.

I shall take the amendment away and look at it again.

Baroness Carnegy of Lour: How will the plan be funded?

Lord Goodhart: It will require only a relatively small addition. It is much less expensive than providing an earnings link for the whole of the pension.

Lord Higgins: That would make it cheap.

Lord Goodhart: Of course it makes it cheap. We regard this as being targeted on those who are in particular need. It will help a much higher proportion of those who are in particular need.

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As I said, I shall take the amendment away and look at it again. However, it is very likely that, either in this form or in another, we will come back to it at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 30 [Earnings from which pension derived]:

[Amendment No. 110 had been withdrawn from the Marshalled List.]

Baroness Turner of Camden moved Amendment No. 111:

    Page 27, leave out lines 9 and 10.

The noble Baroness said: The intention of this amendment is to extend the categories of people who will be credited with benefits in the state second tier pension despite having insufficient earnings. The proposed amendment removes the reference to earnings over the lower earnings limit. It therefore gives deemed earnings to anyone with earnings under the lower earnings threshold. As I understand it, this would benefit principally the unemployed.

The real purpose of the second tier state pension is as much to fill the gap left by the erosion of the basic state pension as to provide a replacement for SERPS. In judging the adequacy of the Bill's provision in respect of granting credits for non-earners, the yardstick therefore should be the groups who would now be credited for the basis state pension. People signing on as unemployed are credited with full NI contributions each week.

The Government may feel that to give credits to the unemployed would be a disincentive to work. However, we are not talking about immediate benefits but deferred benefits in retirement. For most people who are unemployed the idea of making pensions contributions is quite out of the question. I therefore hope that the Government will see that there is justification for this small amendment and respond positively to it. I beg to move.

6.15 p.m.

Lord Higgins: I have pointed out on previous occasions that the Bill is very much a package, with virtually no connection between the child support part and the pensions part. I hope therefore that the Committee will allow me just a moment or two to elaborate on the point made by the noble Baroness in explaining her amendment.

As she rightly said, it relates to the state second pension and she wishes to extend the provision for deemed contributions to a wider group than those covered by the Bill as it stands. My understanding throughout has been that the Government's strategy is effectively to have three levels of pension: a second state pension for those earning less than, in broad terms, £9,500 a year; a stakeholder pension for those earning between £9,500 and £21,600; and either personal pensions or company pensions for those above; in other words, what one might reasonably describe as the middle and upper earnings levels. I was therefore surprised by the speech of the Secretary of

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State, Mr Darling, to the National Association of Pension Funds. It may be helpful to quote a small passage in full and then, on the basis of what I have just said, ask the noble Baroness to clarify the position.

Mr Darling said:

    "And from 2002, 18 million people will gain from the new State Second Pension ... That's why we've introduced Stakeholder Pensions--to give more choice to 5 million people. We'll continue to work with you to make pension provision better".

Two points puzzle me. The first is the statement that from 2002,

    "18 million people will gain from the new State Second Pension".

My understanding is that, even with the amendment we are now considering, no one will gain in the sense of receiving benefit from the state second pension in 2002, not least because we do not know when the state second pension will come in. The Government have said that it will come in when the stakeholder pension is established.

Baroness Hollis of Heigham: In stage 2.

Lord Higgins: In stage 2, yes. When will we know that the stakeholder pension has been established as far as concerns stage 2 of the second state pension and how are we to tell that that is so?

Another point puzzles me in Mr Darling's speech. He said:

    "But we want moderate and higher earners to get into funded pensions. That's why we've introduced Stakeholder Pensions--to give more choice to 5 million people".

Apparently, Mr Darling is now saying that the stakeholder pension is for moderate and higher earners to get funded pensions. That is not what he intends.

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