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I beg to move, That the Bill be now read the Third time.
I shall be brief since the Third Reading debate is itself a short one. The Third Reading marks another significant landmark for the Bill. The Bill gives effect to the proposals which were set out in the White Paper on social security published at the end of 1985. That White Paper followed the most extensive examination of the social security system since the war. It started in the autumn of 1983 with the inquiry into retirement. That was followed by an examination of family support, housing benefit, and supplementary benefit.
The Bill itself has been subject to the longest scrutiny by a Standing Committee of any social security legislation since the original Beveridge proposals just after the war. I should like to pay tribute to my hon. Friend the Minister for Social Security and to my hon. Friend the Parliamentary Under-Secretary for their work on the Bill. I believe, too, that the standard of debate throughout the proceedings has been very high, both from the Government Benches and from the Opposition.
The Bill has three major objectives. The first is to ensure that many more people should have a pension of their own. We want to achieve a major extension of occupational and personal pensions. Over the past 20 years occupational pension cover has remained static. That was so not just in the so-called years of pension blight in the 1960s and the early 1970s, but it has continued to he the case since. The result is that we have basically two nations in pensions, one with its own occupational scheme and the other with no scheme of its own. All the evidence is that people without additional pensions of their own would welcome the opportunity to have them. The Bill makes it easier for both employers and employees to set up new pension arrangements while at the same time preserving the basic pension unchanged and a modified second tier state earnings-related scheme.
The Bill gives for the first time in this country the right to a personal pension. That means in practice that anyone, whether a member of the additional state scheme or of an occupational scheme, can choose instead to have a personal pension. In other words, the pension will be personal to the individual and will be fully portable from job to job.
Personal pensions will be accumulated on a money purchase basis with contributions qualifying for tax relief. Each person will be able to choose the kind of pension savings scheme that he wants and the kind of body which he wants to run his savings scheme. The significance of the last measure is that under the provisions of the Bill we are opening up the provision of pensions not just to life assurance companies, but to building societies, banks and unit trusts. That will not only give the public a wider choice and a greater say in how their pension savings are invested, but it will increase competition between providers of pensions to the benefit of the consumer.
We are concerned to encourage not only personal pensions but the spread of occupational pension schemes. Here again, there is substantial scope for expansion. Up to now there is little doubt that employers, particularly small employers, have been discouraged from starting new schemes by the fact that only schemes promising a benefit related to salary could contract out of the state earnings-related scheme. That is an open-ended commitment which not all employers could reasonably be expected to take on. The Bill provides an alternative route to an occupational pension. In brief, we will see an expansion of occupational schemes and an expansion of industrywide pension schemes.
The changes that we are making come on top of the important changes that we have already made in the 1985 legislation on early leavers and on transfer rights. Taken together, the legislation that is now going through the House and the legislation that was passed in 1985 amount to a major extension of occupational pensions and personal pensions, and a major extension of rights for members of schemes.
The second aim of the legislation is to seek to concentrate help in areas where that help is needed. The evidence of the social security review was that the present system fails to do that in a number of ways. The position has changed over the past 20 years. Any diagnosis of need shows that some of the most difficult problems are today faced by low income families with children. Families with children—unemployed families, but also low income families in work—now make up more than half the people living on the lowest incomes. At the same time, there is the totally indefensible position where families can be worse off in work than out of work, and where they can lose income as their gross wages rise. Through the family credit proposals and the family provision of income support the Bill will enable us to direct more help to these areas. It will help us to tackle both the unemployment and the poverty traps.
I made clear yesterday our commitment to the object and aim of family credit. I believe that there is widespread agreement with the Government's central proposition that we should direct more help to low income families with children.
The Green Paper proposals that have been adopted in the Bill achieve that in a number of ways. For example, fiat rate child benefit as a universal basis of help for all children, which will be paid, of course, directly to the mother, will continue. A new family premium in the income support scheme and a new expanded and improved family credit have been designed specifically to target help more accurately and more generously on low-income families with children.
That will enable us to direct more help to low-income families. As I have already made clear, we estimate that family credit will reach twice as many families as the family income supplement. There is widespread agreement that the present family income supplement scheme is not working and should be replaced. The family credit scheme is a good and worthy successor to that scheme.
The third objective of the Bill is to ensure a simpler system of social security. One of the most, common complaints from the public is that the system is, at times, one of bewildering complexity. That is not in the interests of the claimants or of the staff who have to administer the system. The Bill will simplify benefits and put income support, housing benefit, and family credit on a similar basis. The Bill will go further than that. It will introduce common rules for the different benefits and simplify the present complexities of the contracting out rules for the state pension scheme.
The changes have been made because over the next 10 to 15 years we will introduce a new computer strategy for social security. That will be the biggest computer operation of its kind ever undertaken in this country and it will cost up to £2 billion. That strategy will radically improve the service that we give to the public.
The reforms set out in the Bill are fundamental. They follow the most comprehensive review of social security since the last war and the most detailed consultation with the public.
The reforms propose a new framework of social security that will serve the public better in future. The debate on social security has changed. The question is not now whether social security should be reformed, but how it should be reformed.
We are still waiting to hear the proposals from the hon. Member for Oldham, West (Mr. Meacher). He launched those proposals in a tentative way some 13 months ago. I have no wish to intrude into the hon. Gentleman's private grief, but we have been promised his proposals for some time. The time has come for him to make clear where the Opposition stand on these matters.
For years hon. Members on both sides of the House have spoken eloquently of the need for reform. The Government must do more than simply recognise the problems in social security. They must put forward solutions and set out a programme for action based on clear principles and objectives. The Bill achieves that. We have a programme which will confer new rights in pensions. We will set the pensions of the future on a sound basis and give millions of people new opportunities for planning for their future and an independence which the public will appreciate and understand.
The Bill contains a programme that cuts through the unnecessary complexities of much of social security and concentrates on what should be its central aim of directing help to those who need it most. It contains a programme that will tackle the most notorious aspects of the unemployment and poverty traps. It will give more support to some disabled people as well as to those low income families who face special difficulties.
That is a programme for reform which deserves the support of the House. The House cannot turn its back on the problems in social security which undeniably exist and which have not been denied, throughout the debate. The House and the Government have a responsibility to act. I ask the House to support the Bill tonight so that we may take the action that is needed.