Field trailblazes his radical pension plan

A blueprint for "thinking the unthinkable" about the Welfare State was unveiled yesterday by Frank Field, the Labour MP regarded as a trailblazer for Tony Blair. The plans from Mr Field, chairman of the all-party social security select committee, had been eagerly awaited as evidence of the possible shape of a radical overhaul under Labour.

A representative for Harriet Harman, Labour's social security spokeswoman, welcomed theproposals for "stakeholder pensions", which aim to give people a fund of their own on top of the basic state pension. But the net effect of the plans is remarkably similar to "old Labour" policies to raise taxes and redistribute resources from rich to poor.

Figures produced by the Government Actuary for Mr Field show that those earning less than about pounds 15,000 a year would gain in their pay packet and in future pension rights, while those above that level would pay more. In all, taxes and compulsory contributions would rise by pounds 3bn a year.

The most striking proposal is to close down the state earnings related pension scheme (Serps); from 2000 all employees would be required to contribute to their own pension. The plans would be funded by a cut in the starting rate of income tax to 5p in the pound, with the standard rate cut from 24p to 19p, offset by national insurance contributions. In addition, those earning more than pounds 100 a week would make compulsory contributions to a second pension.

The Labour leader is known to admire Mr Field, and to have been disappointed with Chris Smith, who he charged with "thinking the unthinkable" as social security spokesman. But Mr Field's plans are likely to be unacceptable to either Mr Blair or Gordon Brown, the shadow Chancellor, who both thought Labour's plans to increase income tax at the last election were a vote- loser.

8 How to Pay for the Future; ICS, 18 Victoria Park Square, London E2 9PF; pounds 40 institutions or pounds 10