Liberal Democrat Conference: Welfare State: New pension urged to beat `time bomb'

RADICAL PROPOSALS to reform the welfare state, including compulsory second pensions and the taxing of child benefit, were overwhelmingly endorsed by the conference, in spite of fierce protests that they went against the very principles of the Liberal Democrat Party.

Nearly 80 per cent of activists at a debate endorsed the leadership motion to shake up social security provision. Under the plans, a second compulsory pension, initially set at the same rate as the current compulsory Serps contribution, would be introduced to tackle the "threat of a pensions time bomb".

In a further move, there would be a doubling of Child Benefit for the youngest child in any family with a child under five, funded by taxing benefits for higher-rate tax payers. And the troubled Child Support Agency would be abolished.

Professor Steven Webb, pensions spokesman, said: "If we do not act now, we will have to reap the harvest of the pensioner poverty time bomb." But delegates warned they would be giving Tony Blair a "blank cheque" for pension reform.

Havard Hughes, a councillor from Brent, said: "Are we abolishing our principles, only to give Tony Blair and his cronies an easier ride? Why is there such need for radical change? Could this policy proposal not just be a flight of fancy?

"And what is this element of compulsion? Are people going to be sent to prison, or will Paddy Ashdown come after people with a stick?"

Others lamented there was no accountability for private companies to invest the pensions in an ethical way.

"A compulsory second pension would end our freedom to invest where we like. Surely that freedom is an important liberal principle," one party member said.

Baroness Ludford warned that the taxing of child benefits for some families would end the principle of universality, and would create a two-tier system of welfare.

"We should maintain it as an untaxed and un-means-tested benefit. I do not want to pick up Peter Lilley's and Harriet Harman's rejected policies."

She warned that such taxing of benefits would undermine the "hard fought for" independence of women and result in a "bureaucratic hassle".

However, defending the proposals, Willy Goodhardt, a former member of the party's federal policy committee, argued that people would not always be able to rely on their children's willingness to pay for their pensions.

"We do have to take into account demographic changes. There is an urgent need for reform," he said.