James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge & Hyde, Labour)

I beg to move amendment No. 88, in clause 9, page 9, line 17, leave out ‘and section 44C below’.

David Taylor (North West Leicestershire, Labour)

With this it will be convenient to discuss clause stand part.

James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge & Hyde, Labour)

We now enter the delightfully complex area of the state second pension, which we hope to make simpler by means of the Bill. Committee members will know that, since the state second pension was introduced in 2002, certain groups have been deemed to be earning at the low earnings threshold, which is currently around £12,500 per year. Some of the groups that have been deemed to be included are carers and low earners and, as a result, they accrue additional pension and have double the state earnings-related pension scheme rate, typically 40 per cent.

With clause 9, we want to take the reforms that we made in 2002 a step, or indeed a couple of steps, further. We want to allow more people to be deemed to be earning at the low earnings threshold, thus meeting our objective of modernising the contributory principle by making work in care count equally for state pension purposes. This would include those awarded child benefit for children up to the age of 12, approved foster carers and those caring for one or more severely disabled people for at least 20 hours a week.

The recognition of carers ensures that equal recognition for caring is made for both basic state pension and S2P. These carers, in addition to those already covered by the original S2P provisions, will accrue state second pensions because they will have the necessary qualifying earnings factor, either through earnings alone or through credits alone, as before.

Clause 9—this is quite important—will also help those who currently just missed out on accruing S2P in a particular year because they worked for only part of that year and had caring responsibilities for the remainder of the year. It will allow people to combine their credits from caring, for example, with their earnings to bring them into S2P.

I am sure that the Committee will welcome the steps that we took in 2002 and the significant improvements that this Bill makes.

My technical amendment No.88 does not change what we intend to do; it simply corrects a minor drafting error. It makes clear the obvious. It does not require someone who has earned enough to qualify for S2P also to have a credit in a particular year—for instance, if they are a carer—to make that year count for S2P.

Andrew Selous (Shadow Minister, Work & Pensions; South West Bedfordshire, Conservative)

We welcome the clause, as it means that a wider range of carers, parents and disabled people will be treated as earning at the lower earnings threshold of £12,500 a year for 2006-07 for state second pension purposes. We particularly welcome the fact that the labour market attachment test, which required people to pay class 1 national insurance contributions for a 10th of their working life since 1978, will no longer apply. We are especially pleased about the provision as it affects carers.

I have just one question for the Minister. The explanatory notes on the Bill state that at present parents who are in receipt of child benefit for a child under six are treated as earning at the lower earnings threshold in respect of S2P. The notes also say that those people in receipt of home responsibilities protection are treated as being at the lower earnings threshold. Paragraph 32 of the explanatory notes defines home responsibilities protection as being awarded to people caring for children under 16. It is a minor point, which I have raised before with the Minister, but I should be grateful if he would clarify the issue of the different ages of children as it relates to qualifying for various levels of pension in the Bill.

James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge & Hyde, Labour)

That point was covered in an earlier debate. The age in respect of qualifying for the state second pension is going up to 12, and for qualifying for the basic state pension it is going down to 12; the two are being harmonised. There was a question whether we could have a theological debate on the matter, and I assured the hon. Gentleman that we could not. The improvements to the basic state pension more than outweigh the reduction from 16 to 12 and raising the state second pension eligibility to 12 will bring a significant number of people into the state second pension.