Child Support, Pensions and Social Security Bill

– in the House of Lords at 7:11 pm on 19th July 2000.

Alert me about debates like this

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security 7:11 pm, 19th July 2000

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Child Support, Pensions and Social Security Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 25 [Regulations]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

I shall speak also to Amendments Nos. 45, 46, 62 and 64. The amendments place a cap on the amount of child maintenance payable. The opposition amendments would limit the amount of maintenance that a non-resident parent can be asked to pay for his children to £200 a week for each qualifying child.

In our previous discussions on the subject, I have always acknowledged that the arguments for and against a maximum level of liability are finely balanced. I accepted your Lordships' point that the financial arrangements for very wealthy families on divorce or separation can be substantially more complex than for other families. In particular, the courts could have difficulties in shadowing the CSA rates if the parents are wealthy and have complicated financial arrangements. It was put to us that if child maintenance figures are high, it could be regarded as spouse maintenance rather than child maintenance. I therefore undertook to consider the matter further and report back to your Lordships today.

The government amendments are different from the opposition amendments, although they are similar in effect. The opposition amendments would cap the amount per child--£200 for one, £400 for two, £600 for three or more. We propose a cap on the amount of net weekly income taken into account for the purposes of making a maintenance calculation. That cap will be set at a net weekly income of £2,000, as calculated under Schedule 1 and regulations. That means, effectively, £300 for the first child, £400 for the second and £500 for the third. When there are two children, our method aligns with the opposition amendment, but it is also compatible with the rest of the CSA assessments.

The liability of a non-resident parent with a net weekly income of more than £2,000 who has one child to support and no children in his second family will be capped at £300 a week. If he has two children to support, it will be £400 a week, or £200 per child. If he has three or more children to support, the figure will be £500 per week, or £167 per child if there are three qualifying children.

We propose to take account of any children in the second family against the capped income. If there is one child in the second family, the £2,000 net income will be reduced by 15 per cent before the maintenance for the first family is calculated.

We believe that a cap based on an upper limit of net weekly income rather than an amount in respect of any one child is simpler to administer, simpler for parents to understand and consistent with the rest of the scheme. We recognise that the decision on the upper figure is inevitably somewhat arbitrary, but we believe that £2,000 is justifiable, reasonable and pragmatic. A net income limit of £2,000 is broadly equivalent to an annual salary of just under £170,000 gross. That is 10 times higher than the £200 cut-off for low earners and five times the national average wage. That is sufficiently high to ensure that all children benefit from a reasonable level of maintenance, while providing that only those who are likely to have more complicated financial arrangements are affected. We have provided powers to ensure that the upper limit can be amended by regulation, subject to the affirmative procedure, should that prove necessary in the light of experience or future changes in society.

The amendments also provide for the courts to make a top-up maintenance order, in the same way as is currently provided for in Section 8(6) of the 1991 Act. That is another measure that your Lordships pressed for at earlier stages and I gave assurances that I would consider it.

We remain convinced that court-based agreements should, in the main, be settled in line with CSA rates, as that will avoid fluctuations in the level of maintenance when the parent with care moves on or off benefit. That is why, under the reformed child support scheme, we propose to open up access to the CSA for private, non-benefit cases when parents are unhappy and a new court order has been in place for at least a year.

Allowing the courts to make a top-up maintenance order is an important safeguard to ensure that children continue to share in the living standards of non-resident parents, even when the non-resident parent is liable for the maximum amount of child support. Separating parents and their lawyers will need to bear in mind during negotiations on a divorce settlement that a non-resident parent's liability for child maintenance will not necessarily stop because his net income exceeds £2,000 a week.

Very few parents will be exempted. Those who are will have extremely complicated financial arrangements and it will be more appropriate for them to be dealt with by the courts. They will know what level of maintenance they will be taking into the settlement.

I should also make it clear for the record that if the non-resident parent applies to the CSA for a variation of his assessment because, for example, of the cost of staying in contact with the children, the variation will be applied to the full amount of net income rather than the capped income being reduced by a further variation. The income that we are not taking into account in setting maintenance liability will be available to meet other expenses.

I hope that the amendments will alleviate the concerns that were raised previously by the Opposition and others outside your Lordships' House about the effects of the new scheme on the court-based financial arrangements made on separation by a few wealthy parents. The amendments will allow the courts, in establishing financial arrangements for very wealthy parents, to work from a fixed maximum child support liability. That should make it easier to establish the other aspects of the financial package and--this is what matters to me--produce stability in the financial arrangements surrounding the well-being of the child.

I hope that noble Lords will not move their amendments and will be content that ours will have the effect that we were pressed to accept on Report. I beg to move.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, before the Minister sits down, will she estimate how many are the very few non-resident parents who will be affected?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, we have a case load basis of about 1.2 million parents--both parents with care and non-resident parents. We estimate that between 50 and 100 may be affected.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, this is an important amendment, although, as the noble Earl, Lord Russell, has just pointed out, the number of individuals affected is not very great. None the less, there is a point of principle involved. On Second Reading, back on 17th April--it seems a long time ago--I said:

"Another aspect which causes us concern is that there is no upper limit on the amount which, under the new simplified formula, will be taken from the absent parent. There are important issues here which we can no doubt pursue in Committee--for example, where someone is immensely rich but an absent parent, the extent to which that income should be transferred back to the children of an original marriage".--[Official Report, 17/4/00; col. 469.]

This part of the Bill is--if I may use the expression--the child of the noble Baroness, Lady Hollis. She has done an immense amount of work on it in preparation and behind the scenes. She appreciated our concerns and said at earlier stages of the Bill that she would give them careful consideration.

As the Minister has pointed out, there are two sets of amendments. Our Amendments Nos. 41 and 42 would prescribe a maximum amount for each child, whereas the government amendments refer to a total income. They are broadly similar in intent, but they are not precisely the same. I am sure that whichever one is selected we shall find that one group of wealthy parents with one child will say they like it one way, and another with three children will say they like it another. Nonetheless, on the whole, that is something which we shall be able to tolerate. In particular, the noble Baroness has pointed out the complications which ensue as far as the second, third, or fourth families of a particular individual are concerned.

I have always been strongly of the view in debating such matters that, if the Government are clearly making a concession, which is undoubtedly the case on this occasion, it is wrong to perpetuate the debate more than necessary. I would simply say that we appreciate the care which the Minister has given to it. We welcome the amendment proposed. The matter is very finely balanced, but, rather than call a Division which we might lose, I think on balance it is better to accept the noble Baroness's amendment, and we on this side of the House do that with some enthusiasm.

On Question, amendment agreed to.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

moved Amendment No. 2:

After Clause 32, insert the following new clause--

:TITLE3:("Age addition

:TITLE3:AGE ADDITION

. For section 79 of the Social Security Contributions and Benefits Act 1992 there shall be substituted--

"Age addition.

79.--(1) A person who is above the age of 75 and who is entitled to a retirement pension of any category shall be entitled to an increase of the pension to be known as the "age addition".

(2) A person who is in receipt of a pension or allowance payable by the Secretary of State by virtue of any enactment or instrument (whether passed or made before or after this Act is passed), and who--

(a) is above the age of 75, and

(b) fulfils such other conditions as may be prescribed, shall be entitled to an increase of the pension or allowance, also to be known as the "age addition".

(3) A person who is above the age of 80 and is in receipt of age addition shall be entitled to an increase in the age addition, to be known as the "further age addition".

(4) Age addition and further age addition shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations."").

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, this is a very important amendment. It is one which we were unable to vote upon at the Report stage because it did not come on for debate until nearly 10 p.m.

What we are proposing here is that there should be a substantial addition to the basic state pension for pensioners who reach the age of 75, and a further and equally substantial addition on reaching the age of 80. This would, of course, replace the present absurd addition of 25p a week at the age of 80.

The amendment does not specify the amount, for the obvious reason that the actual rate will need to be varied from year to year by regulations made by the Secretary of State. A recently published Liberal Democrat policy paper on ageing has proposed that there should be a £5 addition at 75 and a further £5 addition at the age of 80. Those are the figures we have in mind.

The policy paper also proposes that there should be a £5 per week increase in the basic state pension for all pensioners as well as the age additions for the older pensioners. This amendment is confined to the age additions.

We are particularly concerned with the older pensioners because older pensioners have, in some respects, greater needs. They need more heating and warmer clothes. They may need special food. They may need to use more expensive local shops because they cannot travel to the supermarket and bring back a heavy load of groceries.

More important than that, old people as a group have lower pensions than younger pensioners. Occupational pensions are linked to earnings, in general, at the date of retirement, but after retirement they are subject at best to an increase in line with the retail price index. That increase may in many cases be capped at 5 per cent. Therefore, so long as real earnings continue to increase, those who retired the longest time ago will have the lowest pensions. Furthermore, the same will be true of the state second pensions. It is also, of course, a fact--and this is a significant fact--that the older pension cohort consists disproportionately of women--who live longer than men--and of pensioners living on their own, because so many of them are widows or widowers. Indeed, we know that some 40 per cent of people over the age of 80 do not have adequate state, occupational or personal pensions and have to rely on the minimum income guarantee to supplement their pension.

The Minister has said many times before--and will no doubt say again this evening--that age is not a good test of need. She will say that disparity of incomes between older pensioners as a group and younger pensioners as a group is much smaller than the disparity of incomes between richer and poorer pensioners within each age cohort. That statement is, of course, perfectly true. I do not contest it for a moment.

The Minister will say that we should therefore concentrate extra money on the poorest pensioners through the minimum income guarantee. Of course I welcome the minimum income guarantee. It plays--and will in any foreseeable circumstances continue to play--an important part in ensuring that the poorest pensioners have the means to secure a basic standard of living. However, the logical conclusion of that argument, which we have heard from the Minister, is that we should get rid of the right to a basic pension altogether and should concentrate only on the poorest among the elderly.

But concentration on the minimum income guarantee ignores the fact that people who have contributed to their parents' pensions through their own national insurance contributions feel--and rightly feel--a need to be fairly treated when they come to draw their own pensions. They do not see an increase in the minimum income guarantee as fair if those who are not on the minimum income guarantee get no benefit for themselves

The reaction of pensioners to last year's 75p a week increase in the basic pension shows what happens when pensioners feel that they are being treated unfairly, as I believe they plainly were last year. Yesterday we had a spending review promising extra expenditure of £43 billion a year. What do the pensioners get out of that? I will tell you exactly what they get out of that, they get a new telephone service to make it easier for them to contact the Benefits Agency. That is all that they get out of the spending review.

The Minister may try to hide behind the technical defence that social security benefits are annually managed expenditure and the review deals with something different, which is departmental expenditure limits. But, let me say now that that will not do. Page 5 of the spending review makes it clear that the £43 billion is based on the assumption that social security spending will increase in real terms only by 1.2 per cent a year up to the end of the year 2001-02. That amount is already almost entirely committed to the increase in the spending on the working families' tax credit and in effect leaves nothing for improvement to basic pensions beyond a rise in line with the cost of living.

I predict that the fury of pensioners at their 75p per week increase last year is as nothing compared with what will be their fury when they realise that they are excluded from the goodies handed out by the Chancellor of the Exchequer yesterday. The Minister may, of course, say that if more of that £43 billion goes to pensioners it means there will be less for other good and worthy causes. My answer to that is, so be it. The Chancellor yesterday poured out a cornucopia of gifts, but what he gave to pensioners was no more than a tiny crumb. The additions which we propose are the minimum that is required to do justice to pensioners. I beg to move.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative 7:30 pm, 19th July 2000

My Lords, the noble Lord has made a clarion call for pensioners and as somebody who is over 75, I am extremely sympathetic. However, he does not say what the age addition should be, so we have no idea what sort of sum of money is involved. I should think it would be a very large sum indeed. It is entirely inappropriate for this House, as revising Chamber, to suggest such a thing.

Of course, it is an excellent idea from the point of view of pensioners. I am not in a position to judge whether or not age is a good criterion but I know that the Government consider that it is not. I do not believe that this House should attempt to pass such an amendment.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, after the events of yesterday and the speech which we have heard from the noble Lord, Lord Goodhart, it is clear that we on these Benches are certainly the most prudent of the three parties in terms of economic management. For that reason, I do not feel able to support the amendment in the name of the noble Lord, Lord Goodhart. However, I draw his attention to the recent statements which have been made by my right honourable friend the Leader of the Opposition as regards our own proposals on the subject.

But, like the noble Lord, Lord Goodhart, I thought it appropriate, before taking a view on the amendment, to see what happened in the spending review announced yesterday. It is not insignificant that that is now entitled "Spending Review 2000" rather than "Comprehensive Spending Review". No doubt the Minister will tell us why it is not called the "Comprehensive Spending Review". Our view is--and this was mentioned by the noble Lord, Lord Goodhart--that it is probably because pensioners seem to be excluded to a remarkable extent.

I thought that that might be a rather cynical view and felt that I should see exactly what was said in the spending review. So I looked under "Departmental Reviews", which refers to Section 18, Department of Social Security, DSS, page 81. However, page 81 refers to the Ministry of Agriculture, Fisheries and Food. The pensions statements seem not to be there at all. I carried out further intensive research and found that there is a Department of Social Security Section 18 on page 87. I am not quite sure how that happened.

At all events, the noble Lord, Lord Goodhart, is right to say that the reality of the situation is that all there is for pensioners is a new phone line which is to be established. Perhaps in passing the noble Baroness will tell us whether that will be a freephone number.

What are pensioners likely to find if they ring up and ask various questions? I suppose someone could ring up and ask whether it is the case that quite a lot of the vast amount of money which the Chancellor is now proposing to spend is as a result of the changes previously made to advance corporation tax, which deprived pensioners of some £5 billion or more.

Alternatively, pensioners may wish to inquire into a number of other matters. In particular, they may wish to clarify what was meant by the Chancellor in the four lines which he devoted to this subject yesterday, when he said:

"I can also confirm that, in the autumn, the Government will publish our proposed plans for a new pensioner credit, with a view to further announcements on a Budget timetable".--[Official Report, Commons, 18/7/2000; col. 224.]

Of course, we are not in the least bit clear as to what the position will be in relation to a new pensioners' credit. What seems highly likely is that the Government will fiddle the figures in the same way that they did for the working families' tax credit by not conforming with internationally accepted standards for such matters to be treated as public expenditure or as a tax reduction. But clearly, it is the case that this should be treated as a public expenditure increase. But there is no sign of that whatever in the so-called spending review.

Therefore, we hope that the Minister will clarify those matters, because they are all clearly relevant to the proposals for increased public expenditure which have been made by the noble Lord, Lord Goodhart, in his amendments. We look forward to hearing her defence of the Government's position as regards the overall expenditure situation.

Photo of Baroness Crawley Baroness Crawley Labour

My Lords, before the noble Lord sits down, the position of pensioners in the Comprehensive Spending Review has been criticised by both the noble Lords, Lord Higgins and Lord Goodhart. Does the noble Lord, Lord Higgins, not agree with me that, out of the £43 billion spending commitment in that review, the extra sums to be spent on health, for example, will have a very beneficial impact on many pensioners who are consumers of the health service?

Photo of Lord Higgins Lord Higgins Conservative

My Lords, clearly, that is so. But these amendments relate to their pensions. We merely have the throw-away four lines by the Chancellor in the course of his speech which promise jam tomorrow but not jam today. I do not dispute at all the point made by the noble Baroness. Of course, that is so. But one needs also to take into account the extent to which the Government's proposals so far have an adverse effect on many pensioners.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I shall not dispute the claim made by the noble Lord, Lord Higgins, that in the funding of pensions, his is the most prudent party. The figures which I have, which I hope are roughly the same as those of the noble Lord, show that his party is committing to pensions, over and above what the Government are committing, the sum of £300 million, whereas we on these Benches are offering to commit £3.5 billion. There is a distinct difference.

In advancing that commitment, the noble Lord, Lord Higgins, illustrated why his party, like Sir Walter Raleigh, in 1066 and All That, is left over from the previous reign. If you follow questions of British social attitudes as regards whether people prefer tax cuts or increases in spending, the proportion favouring increases in spending has risen every year since 1983. At least in the past five years, the balance has clearly changed. The Government, very belatedly, are showing faint signs of realising that. The party of the noble Lord, Lord Higgins, has not yet realised it. It no doubt soon will.

I say to the noble Baroness, Lady Carnegy of Lour, that I have spent a lot of time reading the passages in the Companion about the financial privilege of another place. As I understand it, the position is--and I have checked it with some care--that this House is always free to ask and the other place is always free to refuse, from which it does not necessarily follow that the other place will refuse on any particular occasion. There are people in another place who feel a certain anxiety about whether they will hold their seats. Some of those people believe that the funding of pensions will make a considerable contribution to the answer to that question.

Like my noble friend, I was absolutely astonished that the Chancellor of the Exchequer did not take the opportunity in what he said yesterday to provide any increase in pensions. I appreciate, of course, all the technical arguments why it may not have been expedient to do so. But, in political terms, this is an emergency which has been coming for quite some time. I have seen it coming since I spoke to the Brent Pensioners' Forum in 1997, which is a while ago now. It has reached the point where, almost like the dissolution of a marriage, the trust of voters in the Labour Party is on the edge of disappearing beyond the point of recall.

I suspect that yesterday, the Chancellor of the Exchequer had, and threw away, his last chance. If the effect of his actions is to make Mr Hague Prime Minister, one might wonder why he did that. That is not for me to speculate. But, if that is the case, we have this year left. If pensioners are to be satisfied, something must be done now. We can no longer have before us the amendment of the noble Baroness, Lady Castle, which was disposed of at Report by a show of power that I have not seen produced by a government since the noble Baroness, Lady Thatcher, was in No. 10 Downing Street.

We could not have supported that amendment, as the noble Baroness, Lady Castle, knows very well. We too have prudence, but we do not put it in quite the same place as the noble Lord, Lord Higgins, does. But since that amendment is not before us, the amendment which my noble friend Lord Goodhart has moved is the only show in town. So, if people on the Labour Benches do not want to see Mr Hague in Downing Street, they might think that this amendment is the best prospect that they have left. It is a lifeboat. We are happy to offer it to them and we will welcome aboard any of those who want to join us.

I know that the Minister will make arguments about targeting. I remember the Minister herself, in some extremely able speeches in the single parent debates at the beginning of this Parliament, arguing that the hardship of being on benefit was in large part a measure of how long one had received it. I have weighed up those arguments and find them extremely powerful, especially in relation to pensioners. My noble friend Lord Goodhart touched on some of the points which are relevant, such as having to go to a nearer place for shopping and having to get a taxi because one cannot drive.

But there are things such as the overcoat wearing out. As one gets older one feels the cold more. These big capital sums are one of the great hardships of any life on benefit. For that reason, the figures which the Minister will undoubtedly present will be telling very much less than the full story. This is a much better targeted amendment than the Minister will suggest.

The Minister will of course sing the praises of the minimum income guarantee. I understand the good intentions behind MIG. I am not going to shoot the Minister; she is doing her best. She is making great efforts. Perhaps the noble Baroness, Lady Castle, would like to share the joke with me. I might enjoy it.

Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour

I could not resist it. You said that you were not going to shoot her because she was doing her best. I merely added, "to shoot herself".

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, the noble Baroness, Lady Castle, has a lot more confidence in the Minister's aim than I have. The Minister is doing her best to find the people who are entitled to MIG to take it up. But, as the noble Baroness, Lady Castle has explained to this House many times, there are a great many people for whom the obstacle to taking up MIG is a simple, plain matter of pride. They do not take charity. They believe that they have earned it.

Since there are qualities in our population which I do not want to discourage, I believe that the people MIG is least likely to reach are those who need it most. For that reason I do not think that MIG can ever do what is wanted. I believe that my noble friend's amendment is the only thing that can. I hope that the House will view it with favour.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security 7:45 pm, 19th July 2000

My Lords, despite the bait laid down by the noble Lord, Lord Higgins, and to some degree by the noble Lord, Lord Goodhart, I do not intend at Third Reading of this Bill to go into a wider debate on the Comprehensive Spending Review, as opposed to the details of this amendment at Third Reading of this Bill.

The purpose of this amendment is to allow the payment of an age addition to the basic state pension to people of 75 years of age and to allow for a higher age addition at the age of 80. As we have had a version of this at every stage of the Bill, noble Lords will not be surprised at my arguments any more than I am entirely surprised by the arguments adduced by the noble Lord, Lord Goodhart, this evening. I accept with the noble Lord that on average pensioner incomes tend to decline with age. But the differences within age cohorts are, as the noble Lord, Lord Goodhart, has acknowledged tonight, infinitely greater than the differences between them.

To put these differences into context, we can look at the median cash incomes that couples are receiving. For couples under 75 years of age, the poorest one-fifth are receiving on average £133 per week; the top one-fifth are receiving £457. For the over 80s, the poorest one-fifth receive £113 and the top one-fifth receive £348. That means that in each age group the richest one-fifth receive more than three times as much as the poorest one-fifth. The difference between age groups is much smaller and only about 12 per cent less. To put it in cash terms, the average income range within each age cohort spans about £250. The average income between age cohorts is approximately £25. In other words, the range within each age cohort is about 10 times greater than the differences between age cohorts.

In other words, that would mean that the Liberal Democrat amendment would give an additional £10 to those on £350 a week, providing they are over 80 years of age, but give nothing to those receiving £133 per week--about one third of the other group--because they are under 75 years of age. That is the effect of the amendment of the noble Lord, Lord Goodhart. There will be an extra £10 for those receiving £350 a week because they are over 80 years of age, and nothing at all for those receiving £133 per week because they are under the age of 75. What sort of justice is that? There is none.

The noble Earl, Lord Russell, said that he had been persuaded in an earlier debate by the analogy with lone parents that people, through length of time on benefit, become poorer. That is true if pensioners were in the same position as lone parents. But lone parents are on benefit because they have no other income and therefore, over time, their capital goods wear out. Their income is the same irrespective of whether they have been receiving benefit for five years, 10 years or 20 years.

The point about pensioners is that they do not all have the same income as lone parents. The point being made by the noble Earl, Lord Russell, substantiates the point made by government. It is precisely because of the inequality of income, unlike the equality for lone parents, that we need to target help in the way that we propose. I give way to the noble Earl.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I am grateful to the Minister. When we speak of lone parents, it is often assumed--it is most certainly assumed by the Minister--that they may have to return to work at some future date. We do not normally make that assumption about the pensioner in his 80s unless he is a Member of this House.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, that is not a comment relevant to the point I was making, which was that lone parents are on benefit because they have no alternative income and experience poverty. There is persistent poverty and they are persistently on benefit. That is why we try to get them into work. Pensioners do not have a common income. If they did, my noble friend's amendment that she pressed at Committee and Report stages would have far greater resonance if pensioners all shared the same income in the same way as lone parents. It is because they do not and because the poorest one-fifth have only one-third or so of the income of the richest one-fifth, that to treat them all in the same way as my noble friend would, or treat them differently according to age, as the noble Lord, Lord Goodhart, would do, fails basically, simply and decently to address the poverty that is targeted on the poorest one-fifth, and to some extent the poorest two-fifths, of pensioners. That is why the Government are convinced that the best way to tackle pensioner poverty, and therefore ensure that those who need help get it whereas those who do not need help do not get it, is to produce, with their support, the minimum income guarantee irrespective of age.

We are aware of the needs of pensioners who have failed to qualify for the minimum income guarantee. That is why we have raised the capital limits from next April from £3,000 to £6,000 and £8,000 to £12,000, to help those with smaller amounts of savings. As the noble Lord, Lord Higgins, perceptively noticed in the Chancellor's Statement, in the long term we shall be publishing in the autumn proposed plans for a new pensioner credit with a view to further announcements on a Budget timetable. That pensioner credit will be designed to ensure that pensioners who have worked hard all their lives are not penalised if they have a modest occupational pension or savings.

The noble Lord, Lord Higgins, said that that was a throw-away line. On the contrary, that needs to be linked with what we are doing with MIG for those at or below the poverty line. We then need to look at our proposals for raising the capital limits for those just above the midline; the Chancellor's proposals for the autumn timetable for publishing plans for new pensioner credit and what we have been doing in this Bill and last summer's Bill, which has introduced a state second pension and a stakeholder pension. The noble Lord would surely accept that with the pensioner credit we are putting the last of the building blocks into a comprehensive and consistent pensioner programme which I hope will ensure that future generations of pensioners will not suffer the poverty they have inherited over the past 20 years. I give way to the noble Lord.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, does the Minister not agree that unless the Government fiddle the figures in the same way they did on the working families' tax credit, all the recognised standards of accountancy suggest that that should be treated as public expenditure, and the public expenditure review does not include it?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I have no knowledge of the way in which the Chancellor will account for that expenditure; whether that will be through the Inland Revenue and tax credits systems or through the DSS. However, I have somewhat greater knowledge of the working families' tax credit. The noble Lord, together with the noble Earl, Lord Russell, took part in those debates. Unlike family credit which was paid to the parent at home and was therefore a benefit, the working families' tax credit is paid through the wage packet and is therefore a tax credit. That point was well aired. I know that the noble Lord disagrees. I do not think that I shall persuade him, any more than he will persuade me. However, that was perfectly proper and acceptable by all accounting standards of which I am aware. As far as I know, there has been no criticism to that effect, except from the Conservative Party.

I return to the amendment, rather than a wider debate on the CSR--

Photo of Lord Higgins Lord Higgins Conservative

My Lords, I apologise for interrupting the noble Baroness again. If it is not the case, as she suggests, that it is accepted by outside accountancy bodies, will she take steps to correct the statement?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, it is a question of what weight one puts on particular views. I know that the Conservative Party wishes to see that included in the expenditure on the Department of Social Security. The whole philosophic push of the working families' tax credit is that this was no longer a benefit paid to a parent at home but an encouragement to ensure that work pays for those who, for whatever reason--for example, low levels of skill or low regional wages in their local economy--would otherwise find it difficult to manage and to make work pay if they re-entered the labour market. In that sense it was a tax credit to encourage an attractive wage and therefore make it worth while to work.

We have had this debate. I do not think that it is appropriate to reargue it tonight. At the time, the noble Lord persisted in his points because he and his party are opposed to WFTC in the same way that they are opposed to the New Deal. As far as I can see, the only expenditure the Tory Party opposite is happy to support is that which ensures that people stay at home rather than go out to work and find it worth while to work either through the support of the New Deal or the WFTC. We have seen the Shadow Chancellor recently do a U-turn on the minimum wage. I think that it will not be long before we see the Shadow Chancellor do a U-turn on the New Deal and the WFTC as he recognises that putting this together has ensured that we now have some of the lowest unemployment figures ever. Whereas we inherited youth unemployment of over half a million, it is now down to 50,000. Instead of sniping away at accounting conventions, it would have been gracious rather than churlish if the Benches opposite had joined in congratulating the Government on their performance in terms of their economic record so far.

I return to the amendment. I am happy to stay on the wider territory of government expenditure if noble Lords wish. However, I suspect that most noble Lords would like me to proceed. The noble Earl, Lord Russell, said that this proposal was an alternative to the indignity of the charity of the minimum income guarantee. Again, either he has not read or listened to the previous debates or he has not addressed the facts. An age-related addition of the sort proposed by the noble Lord, Lord Goodhart, would lift 50,000 pensioners aged between 75 and 79 off MIG; 200,000 would remain on it. For those at £10, the proposal also in the amendment, it would lift 100,000 pensioners over 80 off MIG; 400,000 would remain on it.

If the noble Earl, Lord Russell, persists in what he says, he must either say that MIG will no longer be necessary--in which case three-quarters of the pensioners who would benefit from the age-related addition as expressed by the noble Lord, Lord Goodhart, would be poorer because they would lose their entitlement to MIG--or accept the Government's position; that is, if we were to do that, they would still need to apply for MIG. Therefore, they would still need to apply for an income-related benefit in addition to an age-related benefit. We cannot have it both ways.

The same is true of the amendment tabled by my noble friend on the earnings-related link. Because the age addition is so poorly targeted, in the same way as the earnings link, we have to have a minimum income guarantee on top. That means that the vast majority of people would still have to apply for an income-related top-up whether that is an age-related or earnings-related addition. Those facts are inescapable unless we are otherwise to consign three-quarters of pensioners currently eligible for MIG to a life of poverty lower than currently exists. I believe that the noble Earl wishes to intervene.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I was describing how pensioners think of MIG. That is fact, and I have listened to it more times than I enjoy, even when it was aimed against my own party. I think that it is common ground between all parties that it will be a while before we can do without such a thing. We think--I should like to think that the noble Baroness does too--that there should be something else of right on offer.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I am reminded that it is Third Reading. Although I am being tempted by noble Lords opposite, I shall stop. The idea put forward by the Liberal Democrats means that the extra help that we are giving to low and moderate earners through the state second pension will not be available. The noble Lord's amendment will not work. Although it pays some money to older pensioners who need it, it gives a lot of money to older pensioners who do not need it and it does not help poorer pensioners, who will get nothing.

I repeat that any pensioners who come through age-related cohorts, any more than earnings-related additions, would still need MIG on top if their poverty is to be addressed. That would mean that some money would go to those who do not need it, whereas others would not get enough. On the ground that the age-related rebates are no more adequately targeted on the needs of poorer pensioners than are my noble friend's earnings-related amendments, I ask your Lordships to reject the amendment.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, to some extent I believe that the Minister and I, in the course of this debate, have been ships that pass in the night. Our arguments may not have impacted on each other. This amendment is not just about helping those with the lowest incomes. Indeed, I understand that those who receive an amount of MIG which is larger than the amount of the proposed age addition will receive nothing. This amendment is about helping older pensioners who have income just above MIG or, in the 120,000 cases of those who will be taken off MIG by the proposed age increases, it is about getting them out of the need to fill in the forms and to go through what is a serious issue for older people of having to make those applications. Furthermore, the great majority of those 120,000 will receive additional benefits from the age additions we propose.

So long as we have a contributory system, pensioners expect, and have a right to expect, that they will be treated fairly. That means that they should have been promised at least a small part of the vast sums which the Chancellor of the Exchequer dished out yesterday. The Minister said nothing about the derisory benefits provided for pensioners in the spending review and, indeed, there was little she could have said.

If we divide on this amendment, we do not expect to win; we shall not receive support from the Conservatives. However, it seems to us that this is a simple but vital matter of justice for pensioners and, whatever the outcome, I shall take the opinion of the House.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 25; Not-Contents, 108.

Division number 2

See full list of votes (From The Public Whip)

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour 8:09 pm, 19th July 2000

moved Amendment No. 3:

Before Clause 36, insert the following new clause--

:TITLE3:REPORT ON COST OF PENSION UPRATING IN LINE WITH GENERAL EARNINGS LEVEL

(" . The Government Actuary or the Deputy Government Actuary shall report to the Secretary of State his opinion on the effect on the level of the National Insurance Fund, and the effect which might be expected on the rates of contributions, in each year up to and including 2005-06 of annual increases in the basic pension by the percentage increase in the general level of earnings; and the Secretary of State shall lay a copy of the report before Parliament.").

Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour

Amendment No. 3 stands in my name and that of my noble friend Lady Turner. As I was about to say to the Minister when I was so rudely interrupted during our last debate on this Bill, her statistics, as always, are dazzling. But I am afraid that, as always, they are also incomplete and therefore misleading.

It is essential to the understanding of our pensions arguments in this House to get the figures right. One of the things the Minister omitted to point out to the House, which is part of the argument, was that if the earnings link had been introduced when this Government came into office in 1997, it would today have added £9.70 to the basic pension.

I know the Minister will say, "But you are proving my case"--the case which she had been arguing with such felicity during our last discussion on Amendment No. 2; namely, that that increase would shockingly go all the way up the line. I should point out to her that that happens to be the nature of insurance schemes. Insurance schemes do not add a means test for beneficiaries. If we subscribe, we are entitled to the results of those contributions. And the Minister's total indifference to the strengthening of the basic pension arises from the fact that not only she, but also the Government, abandoned the principle of state insurance altogether.

I remind the Minister of what we said in our manifesto for the last election. We said that the basic state pension would be the building block of our pensions policy; and it would be without means test. But her whole theme now is targeting, which was, of course, Margaret Thatcher's theme: you should target your resources on the poorest pensioners. She can become very eloquent about it--by cutting off this assent of the basic state pension to a reasonable level through the earnings link, we will have more money to target the poorest pensioners.

It really is a vital decision that this movement is making in this Bill. I should point out to her that the cost of restoring the earnings link does not fall on the British taxpayer. It is not a bit of welfare: it falls on the National Insurance Fund, which is financed and fed by the contributions of employers and employees. That has been a central part of our provision of security in retirement ever since the war. No government have sought to destroy that up till now. If we always say that you cannot do justice to the contributor to an insurance scheme because you must use your money to target, we are getting perilously near to the old poor law--are we not?--and to the destruction of what has always been the foundation of our policy on this side of the House.

The other thing that the Minister has also omitted to point out is that the cost, which falls on the contributors, is always offset by rising contributions because this is an insurance scheme. The contributions are earnings related, but the pension that people receive is not. But that does not seem to worry her. I find that a little unfair. However, if that is accepted and we get a more complete statistical picture from the Minister, we find that all the time the revenue coming into the fund is going up along with the cost. In fact, the revenue is far outstripping the cost at present, as we argued last time. I do not intend to go over the old ground.

The Minister loves to put on the frighteners. "Oh!", she said, "Look at the cost of restoring the earnings link. It would be £1 billion this year". She did not mention that the Chancellor in his Budget this year took away £1.35 billion from the National Insurance Fund to help the employers by reducing their contributions, as a sweetener to them to accept other levies that he wanted to place upon them. So it is the recipients of the pension from the National Insurance Fund who have paid for that sweetener to the employers. That is something that I am surprised she does not find rather distasteful. £1 billion this year, that is nothing. But she said that, by 2010, the cost will have increased to £7 billion and we will not be able to cut taxes. We should not believe that: it is nothing to do with taxes. It is the increased number of people you put on the means test that the taxpayer has to finance at an increased administrative cost. I should have thought that this House would have liked to weigh that in the balance of other arguments.

This figure was alluded to in another place last March when Oona King tabled a parliamentary Question. She began by asking what would be the increased cost of restoring the earnings link to 2010. The Answer, as the Minister said, was £7 billion. But again today the Minister has not said what is coming in to offset it. So Oona King tabled a second Question. She asked what would be the increased revenue coming automatically into the National Insurance Fund by the year 2010. The Answer was £11 billion. So at least until 2010 there would be a surplus in the fund. That is a very important point.

Do not the Government care about the insurance principle? They seem to be doing their best to destroy it, denying to the contributor to the fund the treatment that they will give to those on means testing--MIG. It is a new passion for means testing. This Government do not believe in insurance; they believe in targeting. I do not think that this House believes that. Speeches have been made which show that we are unhappy about that.

The Government Actuary strengthens my argument in that regard. The Social Security Select Committee has now turned its attention to pensioner poverty. The Government Actuary was asked what increase in contributions would be necessary to secure the measure that we seek. That may be considered part of taxation by some people who are not as literate as we all are in this House. It appears that over the next five years no increase in contributions would be required because of the surplus in the National Insurance Fund due to the fact that contributions are earnings related but the payments are not.

I hope that the amendment we move today will appeal to all sides of the House. We were prevented on the previous occasion by a sleight of hand from resubmitting the earnings link question in the form that the measure then took. Although I agree with a good deal of what the noble Earl, Lord Russell, said, I do not agree that that is out of play. Today we ask the Secretary of State to instruct the Government Actuary to report on the annual adjustments to contributions that would be made necessary by the introduction of the earnings link, and then to report that to the House. If we do not want dazzling statistics but the objective truth, how can we reject such an amendment? The amendment seeks facts. We are not playing a political game of statistical cleverness; we are trying to get at the facts for the sake of all the pensioners who look to us for help. I entirely agree with what the noble Earl, Lord Russell, said about the hostility to means testing that is deeply rooted in pensioners.

Only yesterday morning a pensioner said to me, "They have even changed the name of the National Insurance Office to the Social Security Office." Why should we label honest contributors as paupers who rely on our charity? There is an important principle here. The Minister need not try to hide the fact that the Government now view this as a matter of charity. In 1974, for the first time since the Beveridge report was introduced, we laid a statutory obligation on the government of the day to uprate pensions annually and to lay down the principle on which they should be uprated. That took the uncertainty out of the matter. I lived through that period and for part of that time I was a member of the Cabinet. Every year there was a kind of jostling for public sympathy. People used to say, "Oh, the poor pensioners--is it not time we gave them a bit?" I do not think that that is worthy of a civilised society today. I believe that we are in danger of undermining the automaticity of adjustment to the pension introduced after the war which we thought had been established for ever.

I do not want to go back to 1948; I go back merely to 1978. However, I am a little worried when the Minister dismisses my arguments on the grounds that those decisions were taken years ago and the world has changed. I am glad that she is not the Minister of Health because our National Health Service is still rooted in the principles of 1948. I go back to 1997 and to what we could have done to strengthen the basic pension since then but have not done. Let us have the courage at least to establish the facts.

There have been references to the Chancellor's Statement on his latest Comprehensive Spending Review. I do not know what the credit that he mentioned will involve. That is another thing we have to take on trust when we legislate in this place. However, if our amendment were to be carried, this House would have a regular opportunity to consider the financial situation year by year. I should have thought that is the kind of control we should like to have.

I salute the Chancellor on his Statement which was a good Statement in most respects. However, the failure to mention pensioners was a little obvious. It took our renowned parliamentarian Mr Dennis Skinner to say to the Chancellor nicely, "We all welcome the fact that there is to be 4 per cent over inflation on this and 4 per cent on that. I am therefore confident that my right honourable friend will tell us that pensioners will get a 3, 4 or 5 per cent increase over inflation as part of the deal". The Chancellor replied, "My honourable friend is trying to get me to anticipate the further consultation which is now going to take place. I ask him to be patient. You have been patient for 22 years; you can wait a few more days or a few more weeks--not until November". What did he mean by that? Will he wait until we are all safely packed off for the summer holidays? What did he mean by a few more days or a few more weeks? Are we to be the only people who do not have a word to say? Cannot we say in this Bill that we want the Government Actuary to report on the cost of this measure year by year? We can then decide what we think should be done for our pensioners.

Will the Minister tell the House what has been the success of the £15 million persuasion programme in which the Government have indulged to persuade those who qualify for the minimum income guarantee to take it up? I received a leaflet informing me that I may be entitled to the minimum income guarantee and how to apply for it. Presumably that leaflet has been delivered to millions of homes. What has been the increase in take-up of the minimum income guarantee since then? That is important. I refer to the £9.50 or £9.70 by which the basic pension would have been increased under this Government if we had reverted to the policy of 1974. We must remember that there are people whose income is just above the level necessary to qualify for MIG. They would bless her. They are excluded, so apparently we are going to hike it up a little bit. The Chancellor will come along--though why it cannot be part of the whole thing I do not know--and we will be told that some steps are going to be taken to offset a situation in which people who have saved and invested in another pension find themselves above the MIG limit. We are going to add a little bit of credit for them.

That is what we are asking for with the amendment; that we should be told, year by year, in an official report--not ministerial figures--what is the current situation: how many are not taking it up; how many are excluded; who will benefit. To hear the Minister talk, you would think there were only 1.5 million to 2 million pensioners on income support. But that is out of 11 million pensioners; what about the others who are looking for some relief?

I hope that the Minister will accept my amendment. The Government should accept it. If the matter is now going to further consultation, let us give them the opportunity to consult us. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, given the lateness of the hour, it might be for the convenience of the House if I respond right away. I will take the view of the House on this.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, providing I can speak after the noble Baroness.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

Me as well, my Lords?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

Yes, my Lords. My noble friend in her amendment is asking the Government to publish information on the effect on the National Insurance Fund of the prices and earnings uprating. At the moment this information is carried in two separate reports: the annual uprating published in January and the five-yearly quinquennial review. My noble friend's amendment seeks that we bring the information from these two reports together.

There are health warnings to be attached. The forecasts are necessarily uncertain and the information that my noble friend asks for, if anything, does not go far enough; it does not give a full and complete picture. However, my noble friend is asking for facts; we are happy to give them. We think that they will support the Government's case. In the light of that, I am entirely happy to accept my noble friend's amendment.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, we have heard a truly remarkable speech from the noble Baroness, Lady Castle, this evening. The position of my party on the issue of linking earnings to pensions is clear and well known: we take the view that the state retirement pension should be linked to prices rather than to earnings. But the position of the noble Baroness, Lady Castle, is also well known, and she believes that the link should be restored.

It is remarkable that she has had a degree of support from a number of sources recently--not least from the Social Security Committee in another place--on the contributory principle. Also, more especially, in the past few days the Scottish Affairs Select Committee on poverty in Scotland has said that,

"The Government was right initially to concentrate on the poorest pensioners but we recommend it should now ensure at the earliest opportunity that the level of state retirement pension is linked to changes in national average earnings".

This had a degree of support from a Mrs Irene Adams, who is Labour, I understand; Ms Anne Begg, who I believe is an enthusiastic supporter of Mr Blair; Mr Russell Brown, who is Labour, Mr Eric Clarke, who is Labour; and Mr Bill Tynan, who is also Labour.

It is therefore important that the information the noble Baroness has asked for is available.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, perhaps the noble Lord will allow me to intervene. Given that the Government have accepted the amendment and are happy to do so--the information is already in the public domain and we are just splicing together two sets of reports--I wonder whether we need to persist with this debate. I know that the noble Lord has other important issues on the agenda to discuss.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, most certainly we have. But I must say that I find the attitude of the Government to the noble Baroness, Lady Castle, quite remarkable. The way in which at Report stage Tellers were put in by the Government in order to vote down the noble Baroness, Lady Castle, was one of the most sordid episodes I can remember in parliamentary life. I do not understand why the Minister cannot wait a moment or two before trying to curtail debate.

Photo of Lord Higgins Lord Higgins Conservative

No, my Lords, I am not giving way. The noble Baroness is acting in a most extraordinary manner. I shall not delay the House more than a moment more. I believe the way in which the noble Baroness has been treated is disgraceful; I believe the way in which the Government are seeking yet again to curtail debate before we have a chance to speak in support of the noble Baroness, Lady Castle, is very strange. I shall not delay the House further. The situation speaks for itself--the Government are afraid of what the noble Baroness, Lady Castle, is saying and they are determined to try to gag her.

Having said that, of course I am glad that the Minister has accepted the amendment. We look forward to seeing the figures, particularly in the context of the new proposed pensioner tax credit, which was referred to earlier.

I shall not delay the House further on this occasion. It is a quite extraordinary episode and shows how the Government are frightened of what the noble Baroness, Lady Castle, is doing.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, I shall be very brief. I sat here at the end of the first day of Report stage when the noble Baroness, Lady Castle, was mugged by a number of her noble friends. Like the noble Lord, Lord Higgins, I found that an unpleasant occasion. On this occasion she has been mugged in an entirely different way--she has been mugged with kid gloves instead of boxing gloves by having her amendment accepted.

The Minister makes a face showing incredulity, but it is obvious that the amendment is simply symbolic and a peg on which the noble Baroness, Lady Castle, could hang a speech in favour of earnings linking. That is not something on which we could have followed her all the way, but what we do believe--and what I am prepared to say now--is that there are times when it is right that the basic pension should be increased for all pensioners by a sum above the rate of the RPI for that year. In view of what happened yesterday in particular, this is one of those occasions. We believe--and I wish to say so now--that the basic pension for all pensioners should have been increased this year, or should be increased next year, by £5.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, the amendment also stands in my name and I had intended to make a fairly lengthy speech. I shall not now bore your Lordships with it. I am grateful to the Minister for accepting the amendment; she is very wise to do so. I am glad that there will be an opportunity for both Houses in future to consider information as required by the text of the amendment.

I am sure that everyone in the House agrees that a case has been made for a thorough look at the basic state pension; hopefully something will emerge in that respect in perhaps a few weeks' or months' time. I hope that we shall have some result. I am glad there has been this opportunity, at this quite late hour, to talk about the basic state pension. It is important that we should do so. I repeat: I am grateful to my noble friend for her statement this evening.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, the speech I intended to make is not now necessary, but I want to congratulate my noble friends Lady Castle and Lady Turner on their ingenuity and sheer grit in pursuing this matter for so long to a successful conclusion. I congratulate my noble friend on the Front Bench and the Government on sensibly accepting the amendment.

Photo of Baroness Park of Monmouth Baroness Park of Monmouth Conservative

My Lords, I support every word spoken by the noble Lord, Lord Stoddart.

On Question, amendment agreed to.

[Amendment No. 4 not moved.]

Clause 50 [Directions for facilitating winding-up]:

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

moved Amendment No. 5:

Page 51, line 42, at end insert ("or

(c) the Authority has made an order under section 11").

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, Amendment No. 5 addresses a less contentious matter. The amendment extends the circumstances in which OPRA can give a direction to facilitate winding-up. Where OPRA exercises its powers under Section 11 of the Welfare Reform and Pensions Act to make an order directing that an occupational pension scheme is wound up, OPRA should have the power to make directions about how the winding-up should be accomplished. The amendment ensures that OPRA has that power. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, Clause 50 is part of the package of measures aimed at speeding up the winding up of occupational pension schemes. It gives OPRA power to direct action during the winding-up of the scheme. For various reasons the process can come to a standstill. Sometimes it may be because people winding up the scheme cannot get the information they need or that people are not acting as quickly as they should.

It is important that those winding up the scheme should get support when they are experiencing difficulties and that any information they need to make progress should be provided to them. The clause allows OPRA to direct that information is provided to the trustees or managers or persons involved in the administration of the scheme, or to any other person that regulations prescribe. Amendment No. 5 would enable OPRA to direct action to speed up the winding up in all cases where it has already used its powers in Section 11 of the Pensions Act 1995 to direct that the scheme should be wound up. It would enable OPRA to issue directions at any time in the winding-up process for those cases, but not for cases where it is the trustees or managers rather than OPRA who have made the decision to wind up the scheme.

Amendment No. 5 is unnecessary. When OPRA directs a scheme to wind up using its powers in Section 11 of the Pensions Act 1995 it must include in the order it makes any directions as to the manner and timing of the winding-up as it considers appropriate. It is at that stage that it has an opportunity to specify a timescale in which the winding-up must be completed and trustees will have a timescale to work to. The order made by OPRA has the same effect as if it was made under scheme rules. Trustees and managers would be expected to comply with the directions given by OPRA. If they are unable to comply they may request a review of any order made by OPRA.

These are new requirements. If, in cases where OPRA has directed that the scheme be wound up, it becomes desirable for OPRA to be able to give further directions during the winding-up, this can be done in regulations. With that reassurance that the amendment is unnecessary, I hope that the noble Lord will withdraw it.

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, I am grateful to the Minister for that reply. I am disappointed she feels that the amendment is unnecessary but she has given her reasons for that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 53 [Jurisdiction of the Pensions Ombudsman]:

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, I rise to give my objections to Clause 53 of the Bill and, with the leave of the House, to speak to Amendment No. 7. Clauses 53 and 54 introduce powers for the pensions ombudsman to decide matters which directly affect the benefits and interests of members and employers who are not party to the ombudsman's investigation. In our view, these clauses contain a significant extension of the jurisdiction of the pensions ombudsman and the nature of the cases which he or she then has power to determine. It would result in there being no material difference between the jurisdiction of the courts and the jurisdiction of the pensions ombudsman in determining pensions cases. However, the procedures in court contain many checks and balances and the judge will go to great lengths to ensure that all interests are properly considered. Oral hearings take place in court. They rarely take place in proceedings before the pensions ombudsman.

The provisions contained in these clauses appear to be an attempt to get round the restriction apparently placed on the ombudsman's jurisdiction resulting from the case of Edge v. Pensions Ombudsman. However, in the view of the Law Society of Scotland, the case of Edge simply interpreted the extent of the powers given under the existing statute--the Pension Schemes Act 1993. In the absence of detailed rules protecting an individual's right to a fair hearing, the extension of powers in the way proposed in Clauses 53 and 54 may not be compliant with Article 6 of the European Convention on Human Rights. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, Amendments Nos. 6 and 7 seek to remove Clauses 53 and 54 from the Bill. These clauses concern the powers and duties of the pensions ombudsman, what types of cases can be accepted and how investigations should be conducted.

The pensions ombudsman provides a useful service to scheme members and those who run pension schemes. He can consider both complaints of maladministration and disputes of fact or law and provides a cost-effective way in which these issues can be dealt with. Clause 53 will allow the pensions ombudsman to consider five new types of case and fill in gaps in the pensions ombudsman's jurisdiction. There are a range of issues that the pensions ombudsman can investigate but some areas where he currently cannot. On the basis of past inquiries, it is anticipated that these new areas of jurisdiction will increase the pensions ombudsman's caseload by some 2 to 3 per cent. To the individuals concerned, however, each case is important. Scheme members and those who run pension schemes will have access to the pensions ombudsman in more circumstances and thus have those complaints and disputes dealt with in a cost-effective and efficient manner. Without the changes contained in Clause 53, the only option in many cases would be to take the matter to court. That is a daunting prospect and has financial implications.

Clause 54 is also concerned with access to the pensions ombudsman. It ensures that the pensions ombudsman can look at cases that affect the interests of individuals not directly involved with the case. As a result of a ruling in the Court of Appeal last year, the existing pensions ombudsman legislation means that the pensions ombudsman should not accept a case if the investigation of it would impact on the interests of those not directly involved in the case. Such cases would have to go to court. These changes mean that the pensions ombudsman will be able to accept cases concerning such issues as winding up, death benefits and the use of surplus, which affect the interests of a range of individuals. The clause allows those whose interests may be affected by the complaint or dispute to be linked to the case, including members and those running pension schemes.

Importantly, it also ensures that all those who have an interest in the case have the opportunity to put their point of view to the pensions ombudsman, either personally or through an appointed representative. They will also be informed of the outcome of the case and be bound by it. We believe that the clauses should remain in the Bill. In the light of that we hope that the noble Lord will withdraw the amendment.

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, before the noble Baroness sits down, will she address my point that the two clauses may not comply with Article 6 of the European Convention on Human Rights?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I originally signed a statement to the effect that to the best of my belief, having taken advice at the highest possible level, the Bill is compliant. I have no reason to think that it is not. I shall check that point further. If the noble Lord would like to write to me to explain why he thinks the Bill may not be compliant, I shall be able to give him a fuller answer.

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, I thank the noble Baroness. I shall write to her on the important point of the European Convention on Human Rights. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 [Investigations by the Pensions Ombudsman]:

[Amendment No. 7 not moved.]

Clause 55 [Prohibition on different rules for overseas residents etc.]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 8:

Page 59, line 1, at beginning insert ("Except so far as regulations otherwise provide,").

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, in moving Amendment No. 8, I should like to speak also to Amendments Nos. 9, 10, 11, 38 and 39. These amendments are needed to address concerns expressed by pension industry contacts. The existing practice of some occupational pension schemes is to pay annual increases in pension in payment based on the rate of inflation of the country of residence, not by reference to the rate of inflation in the UK. Our initial legal advice is that this practice would be prohibited under the terms of Clause 55 but the position under the terms of the directive is less clear.

The amendments have two specific purposes. First, they provide that the clause shall come into effect on a date to be appointed in a commencement order instead of on Royal Assent. That will allow time to investigate fully the circumstances which have given rise to the pension industry's concerns. Secondly, they provide that regulations may specify exceptions to the provisions in Clause 55. Clearly, we want to avoid a situation whereby the legislation in the UK could cause UK schemes to be in breach of the terms of UK law even though the directive was not being breached. The regulation-making power may be used at a later date if necessary to make exceptions that would enable the UK to comply with the provisions of the directive without placing unnecessary restrictions on UK schemes. I commend the amendments to the House.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, the House will be grateful for that explanation. I should like to add my own thanks to the Minister for writing to me on this issue. She has rightly pointed out that, at this stage, the Government are unable to come to a firm decision and are therefore taking provisional action while they try to sort matters out by statutory instrument once they are clear about the legal position. The noble Baroness referred to the EU directive, 98/49/EC, which is designed to safeguard the position of members of occupational pension schemes with statutory rights.

However, what is not clear to me is why the Government agreed to this directive in the first place. It is difficult to see how the directive will operate in other member states. Is this measure aimed only at the United Kingdom? I believe that I am right in saying that, until recently, because, for example, of trade union pressure in France in pursuit of higher state pensions, it has been illegal to form company pension schemes. The situation in Germany is also very different. Germany does not have funded schemes. Indeed, the funds invested in British schemes are greater than those in the entirety of company schemes throughout the rest of the European Union. Moreover, in some countries of the European Union, if a company has set up a scheme but then finds that it has run into difficulties, it is able to claw back moneys that have previously been invested in the pension fund; that is a form of legalised "Maxwell" situation.

Is it right to assume that this directive, to the implementation of which this clause gives effect, will not apply to other countries in Europe? It seems to me that either it should apply to all the countries or that it should not apply to us, unless the Government feel, in their wisdom, that this is an appropriate action so far as concerns this country. In that case, it could be done on a unilateral basis. However, in the context of the European pension system, this entire set-up is very strange.

Perhaps I may make a further point. The Government, perhaps quite rightly, have decided to extend the provisions of this clause beyond the European Union to all overseas countries where a particular pension scheme takes into account the rates of inflation in the countries of domicile rather than the rate of inflation in this country. The Government are seeking, by dint of the clause and in the amendments, to protect against that. No doubt the noble Baroness will correct me if I am wrong on that point. It would seem strange, therefore, if a pension scheme is told that where the rate of inflation in, say, a South American country is 25 per cent, pensioners will receive rises of 25 per cent, but the scheme members resident in this country will receive rises equivalent only to the rate of inflation in this country. The effect of that on funds and surpluses, about which we all know, may be extremely unfair on members of such a scheme.

It is clear that the Government were taken by surprise by the provisions of the directive. I feel, therefore, that the clause requires rather wider examination than simply to say, "Do not worry. We shall sort out the whole thing using a statutory instrument". Such an instrument is not easily amended and only very limited time will be allocated to debate it.

To reach Third Reading of a Bill with such amendments being introduced seems to me to be an unsatisfactory situation. Perhaps, at least on some of the points that I have raised, the Minister can put our minds at rest.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I shall do my best to answer the questions put to me by the noble Lord, Lord Higgins, although I may need to follow up in writing some of his more detailed points.

Why were the amendments brought forward at this stage? We were unaware that some schemes have rules which provide for different treatment for UK resident members from those who live outside the country. That did not come to light during consideration and adoption of the EU directive in 1998. We are now responding to concerns raised by the pensions industry and we need a little time to resolve the issues that have been raised.

Why did we support the directive in the first place? The directive requires that schemes across the EU comply with practices that are common and universal in the UK; the directive spreads the good practice of the UK throughout the EU.

Finally, the noble Lord asked whether the directive applies to all countries in the EU. Yes, it applies to them all. I hope that I have answered all the points. If not, I shall write to the noble Lord.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, I understand that it is difficult for the Minister to deal with these highly complicated matters from the Dispatch Box. I shall look forward to receiving her reply to the points I have made previously.

However, the Minister has said that the directive applies right across the European Union. It is clear that the departmental officials must have been very badly briefed in 1998 and it is unlikely that they were able to conduct the negotiations all that successfully if they did not know about the particular point which is covered by this clause. In any case, consultations should have taken place with the insurance industry. They would then have discovered exactly what it was that they were negotiating.

The noble Baroness knows that I have declared an interest as the trustee of a pension fund, although not a fund affected in any way by this issue. I understand that it is not possible for this directive to apply, for example, in Germany.

Photo of Baroness Nicol Baroness Nicol Labour

My Lords, I thank the noble Lord for allowing me to intervene. I wonder whether the noble Lord is in order given that we are debating the Bill at Third Reading.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, I am open to persuasion otherwise and I shall take into account the point made by the noble Baroness. However, in the interests of the pensions industry, it is important that we should be given clear answers to these points. I accept that the Minister will write to me.

I shall return to the point that I do not believe that it will be possible for this directive to apply to pension schemes in, for example, Germany. If it did, it would be likely to bankrupt the company. No doubt, we shall learn more.

This situation is unsatisfactory at Third Reading. However, I should point out that these amendments have been tabled only at Third Reading. No mention whatever was made of them at previous stages of the Bill.

On Question, amendment agreed to.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 9 to 11:

Page 59, line 12, at beginning insert ("Except so far as regulations otherwise provide,").

Page 59, line 27, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").

Page 59, line 35, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").

On Question, amendments agreed to.

Clause 63 [Loss of benefit for breach of community order]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 12:

Page 64, line 45, after ("failed") insert ("without reasonable excuse").

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, we had two lengthy debates in Committee and on Report on the clauses that deal with the loss of benefit for breaches of community sentences. I made it clear that the Government believe that it is right that observing community sentences should be a condition of benefit entitlement. We do not believe that benefit should be awarded unconditionally, nor that those who fail to honour their obligations should receive the same levels of support from the benefit system as those who do.

However, the proposal to impose the benefit sanction before the court has decided whether there has been a breach clearly raised major concerns, and on Report noble Lords amended the provisions of the Bill to ensure that the benefit loss should follow, rather than precede, the court's determination.

The Government recognise the strength of feeling among noble Lords on this issue. I am pleased to say that we are willing to meet that point. In the light of the views expressed in this House by the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Lincoln, my noble friend Lady Kennedy, the noble Earl, Lord Russell, and others, the Government have responded by agreeing that no benefit should be withdrawn before the court has determined whether a breach has occurred.

In all but a tiny minority of cases--perhaps 400 out of 30,000 or so--the court does appear to uphold the judgment of the probation officer, but it is clear that for noble Lords this represents an issue of principle which the Government are willing to acknowledge. However, we believe that it is right that offenders should know that if they do not observe their community sentence, they stand to lose their benefits. Indeed, they have a right to know that that would be the case.

To make that point clear, with the agreement of the noble Lord, Lord Windlesham, we have added a further provision. The Secretary of State (in the person of the Benefits Agency) will write to the offender at the point where he is referred back to court, informing him that he will face a loss of benefit if the court finds that he has breached his community order. The offender will thus be aware, well before the court reaches its decision, that by his actions he has put his benefit at risk. He will be aware also that it is the Benefits Agency, not the court, that will be stopping his benefit if the breach is proven. In order for the Secretary of State to be able to do this, he will need to be notified by the Probation Service (or the courts in Scotland) that an information has been laid or proceedings commenced as well as when the court makes its determination.

Amendments Nos. 26, 28, 29, 30, 31 and 35 add back into the Bill the essence of the information requirement provisions at the laying of information stage. Amendment No. 33 imposes an obligation on the Secretary of State to notify the offender at that point. There are also a number of technical amendments to ensure that the Report amendments work properly.

Amendments Nos. 12 and 22 supply appropriate wording in respect of the court's determination of the breach, ensuring that the wording here is consistent with that in criminal justice legislation--that is, a breach is where the failure to comply with the conditions of a sentence is without reasonable excuse. I hope that that will reassure my noble friend Lady Kennedy that we recognise the concerns that she expressed on Report. The insertion of those words means that if, for example, a lone parent has had a childcare crisis, there is a clear discretion to count that a "reasonable excuse". I am confident that that will be welcome.

Amendments No 19, 23, 27 and 32 provide for benefit to be repaid if the offender successfully appeals the court's finding of a breach, which was overlooked in the amendments passed on Report. Otherwise, without the amendments, someone who was found in breach by the court and that decision was overturned on appeal, would not find himself or herself entitled to have benefits repaid. So, in good faith, we are extending the original amendment.

The rest of the amendments are technical, tidying up provisions, removing unnecessary words.

I hope that your Lordships will accept the amendments. We should seek to ensure that the fact that this is a measure about the conditions of entitlement to benefit, and not an additional criminal justice punishment, is well understood by those affected while respecting also the amendments passed on Report which ensure that there is no loss of benefit in the offender's pocket until after the court has determined that a community sentence has been breached. I commend the amendments to the House. I beg to move.

Photo of Lord Windlesham Lord Windlesham Conservative 9:00 pm, 19th July 2000

My Lords, this is the fourth and, I hope, last time that I shall speak about loss of benefit in the proceedings on the Bill. At each stage, the Government were left in no doubt about the strength of opinion in all parts of the House, objecting to the novel and misguided idea of linking the withdrawal or reduction of social security benefits to an alleged failure to comply with the conditions of a community penalty. The objections were shared by all ranks of the Probation Service--chief officers as well as line officers--the Magistrates' Association and the Justices Clerks' Society.

On Report, after a long debate, the House voted by a substantial majority of 170 to 116 to accept a cross-party amendment in the names of the noble Earl, Lord Russell, the noble Baroness, Lady Kennedy of The Shaws, the right reverend Prelate the Bishop of Lincoln, and myself. The effect of the amendment was to delay the implementation of the loss of benefit sanction until after a court had made a determination that an offender had failed to comply with the requirements of a probation order, a community service order or a combination order.

Although it is a convention of this House not to reopen at Third Reading an issue which has already been fully debated and decided on a Division, the Government have thought again and have come forward with a series of technical amendments which have been drafted by parliamentary counsel. These amendments, most unusually in my experience, are in the names both of the Minister and myself, speaking, as your Lordships will see, from the Opposition Benches. This accord indicates agreement reached at the earlier stage between the Government and my co-sponsors, if I may so describe them, on the key point; namely, that there should be no loss of benefit before a court has determined that a community sentence has been breached. That requirement is now included in the Bill as amended on Report.

The procedure that will be followed was explained by the Minister in her introduction. In effect, it means that if a probation officer has reason to believe that an offender has failed to comply with the terms of a community order and is referred back to the court in proceedings for breach, at that stage the local benefits office will write to the offender informing him or her that they will face a loss of benefit unless the court finds that the breach is not proven.

This is not an ideal solution. Speaking for myself, I should have preferred the entire notion of making the observance of a community penalty a condition for the receipt of a state benefit to be abandoned. I thought before, and I still think, that it is a wrong and mistaken approach and is unlikely to have the effects intended. But that is for another day. For now, I congratulate the Minister on bringing forward these changes. It is not an easy thing to do. The opinion of this House was quite clear. What was in doubt was whether or not the Government, with their substantial majority in the elected House, would be willing to accept our view. In the outcome, the Minister and the Government Chief Whip have been successful in ensuring that the decision of this House should prevail.

This is a notable concession by the Government. It will give effect to the cross-party amendment carried on Report and, thanks to the government draftsman, the Bill will be in a state in which it can be enacted if the House of Commons is willing to accept the amendments made in this House. As such, they have my applause.

Photo of Baroness Kennedy of The Shaws Baroness Kennedy of The Shaws Labour

My Lords, perhaps I, too, may express contentment that the Minister has made this concession. The government amendments go some way to meet the concerns expressed at previous stages by those who put their names to the amendments tabled by the noble Lord, Lord Windlesham. Like the noble Lord, I am deeply concerned that conditionality is to be extended in this way to include behaviour such as breaches of community service or of probation orders. Once the state decides that persons who are not well behaved should lose benefit it treads a very dangerous road. However, for the moment the Government are not to be moved on that matter. I hope that in the fullness of time they may be persuaded not to take this authoritarian route, which I deeply regret. However, I am pleased that the Government recognise the need for due process before anyone is at risk of losing benefit.

I am also delighted that by Amendment No. 12 my noble friend Lady Hollis seeks to add the words "without reasonable excuse". This means that a probation officer has a greater degree of discretion than originally provided for in the Bill. It also means that there would not be a reference to the court or the benefits office in cases where there had been a failure to attend perhaps because of illness, responsibilities towards children or other matters, which would greatly concern noble Lords and the community at large. Many people on community service and probation orders have multiple social problems and it is difficult to get their lives back on track. This is not about being paternalistic but about recognising the reality of the problems faced by people who are on probation. Sometimes probation officers are very reluctant to see people lose benefit because that loss only adds to their problems and exposes them to greater risk of committing crime. I am grateful that the new wording has been included so that the matter will be referred either to the court or the benefits office only where there is no reasonable excuse. I support the amendments.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I should like to express my great gratitude to the Minister and the noble Lord, Lord Windlesham, for the work they have put into these amendments. First and foremost, they are a conspicuous demonstration of the virtues of political skill. These days political skill is not always admired as I believe it should be. As with the skill of a good soldier, so the skill of a good politician is often best expressed in the avoidance of unnecessary battles. That is what has happened here, and I welcome it very warmly.

Like the noble Baroness, Lady Kennedy, I welcome in particular the introduction of the concept of reasonable excuse. I recall that the Minister and I clashed on Report on the interpretation of the old test. The Minister has proved herself to be right in the most delightful manner possible, for which I thank her.

I shall not reopen the argument about the clause as a whole. I agree with everything said by the noble Lord, Lord Windlesham, and the noble Baroness, Lady Kennedy. However, as the noble Lord, Lord Windlesham, said, that is for another day. Meanwhile, if the Minister will forgive me, I have just one slightly light-hearted remark to make. Whenever I observe a government Minister correcting our drafting, I am irresistibly reminded of a cat washing its kittens. It was needed, and it was well done.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative

My Lords, earlier today the Minister was kind enough to tell me that she would endeavour to discover whether the changed procedure in Scotland had been worked out. I do not know whether the Minister is yet able to give me that information or will write to me subsequently. However, on 10th July in response to a Question for Written Answer tabled by my noble friend Lord Windlesham, the Minister described the procedure in Scotland before the change. It is important to know whether the new procedure has been settled.

I remain anxious about the absence of a pilot scheme in Scotland. Obviously, it is possible to tell from a pilot scheme in England the reaction of young offenders to the loss of benefit. However, it is not possible to tell from such a pilot scheme whether the system will work smoothly. My colleague Mr David McLetchie, a Member of the Scottish Parliament, has tabled a Question asking whether the Scottish Executive under its devolved powers is willing to run a pilot scheme. I hope that that is helpful. The Government have not seen fit to ask the Scottish Executive about it. However, if that Question brings about such a pilot scheme, it should help the smooth working of the scheme.

Photo of Lord Higgins Lord Higgins Conservative 9:15 pm, 19th July 2000

My Lords, after the matter was raised at Second Reading by my noble friend Lord Windlesham we had fine debates in Committee and on Report on the complex issues raised by the Government's original proposals. Like my noble friend I should have preferred the matter not to have appeared in the form that it did in the first place. None the less I am very glad that the Minister has prepared a series of amendments in conjunction with my noble friend which meet the main points raised even though the situation may not be perfect.

Much was said in Committee and on Report about whether the Government's original formula was contrary to the European Convention on Human Rights. Despite the fact that there was a division of opinion then, my personal view is that the amendments before us will get the Minister off the hook. If we had not had these amendments, I believe that that would not have been the case.

As on previous occasions, I am reminded of the late Iain Macleod's dictum. When a government Minister made a major concession, he replied, "You don't shoot Santa Clause". I have always taken that to mean that one does not continue to debate indefinitely when the Minister has made the concession. On that basis, I congratulate my noble friend and the other all-party signatories on the matter. I believe that we, as a revising Chamber, have fulfilled the duty which falls upon us.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I am grateful for the warm welcome given to the amendments. Perhaps I may respond to the substantive point raised by the noble Baroness, Lady Carnegy of Lour. Because social security is not a devolved matter, the Scottish Executive has no power to pilot the scheme. If the finding of the pilots in England and Wales suggest that a pilot in Scotland would be desirable before the possibility of extending the policy nationally is determined, we shall consider that in consultation with the Scottish Executive. Although the procedures differ between the two, we think that similar operational issues would arise. But if we have any reason to think otherwise we shall pursue the matter further.

I am grateful for the remark about not shooting Santa Clause, particularly as the noble Lord sought to do precisely that when I was accepting Amendment No. 3 on behalf of my noble friend Lady Castle. To refer to accepting an amendment as "mugging" is not the usual meaning of the word. None the less, in the spirit of good will and harmony I am grateful to your Lordships.

On Question, amendment agreed to.

Photo of Earl Russell Earl Russell Liberal Democrat

moved Amendment No. 13:

Page 65, line 7, leave out from ("(5),") to end of line 8 and insert ("the court may impose a loss of benefit at a rate not greater than the prescribed amount, and for a period not exceeding the prescribed period").

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, in moving Amendment No. 13 I speak also to Amendments Nos. 14 to 18, 20 and 24. This is not intended as a group to reopen any past arguments. The clause is now water under the bridge. The procedure is now water under the bridge. These amendments are concerned with ameliorating the operation of a clause which is not being disputed on this occasion.

The amendments attempt to do two things to the clause. First, they would make penalties under Clauses 63 to 67 non-mandatory. They would allow a discretion in the extent of penalty to be imposed. Secondly, they would reduce the extent of the penalty: the amount to not above 20 per cent and the duration to not above four weeks. These are serious, practical proposals which contradict nothing which has happened in the House so far.

I have always thought that if a mandatory sentence happened to be just it could only ever possibly be so by coincidence. The point about a penalty is that the punishment should fit the crime, not the criminal offence. Even with a criminal offence so grave as murder, one murder, as we all know, is not the same as another. I shall not elaborate on the argument. It is familiar. But circumstances must always affect cases.

I noticed recently a report in the newspapers of a very early case brought under a parenting order. A woman's child was failing to attend school regularly. She made the point, very reasonably I thought, that she was not in a good position to check whether the child was going to school since in this glorious flexible labour market of ours she was required to start work at 4.30 every morning. In those circumstances, I should have thought one might at least think twice about whether some mitigation of penalty were reasonable. On the other hand, if someone were offending for the fifth or sixth time, one might possibly consider whether some increase of penalty might be in order. Simply making it all flat rate, a mathematical tariff, is Plato's theory of justice again. I have never believed in it. I still do not.

As regards the amount, I am sure that the Minister will argue that the purpose of a sanction is to cause hardship. That is not immediately in issue as at this moment no argument is being made about whether there should be a sanction. The question is one of proportionality between the offence and the sanction imposed on it and how much hardship should be imposed in relation to how much offence.

I suspect that the Minister will say that there should be enough to cause compliance, but, if you consider the history of the criminal law, that must always be a utopian objective. Even when death was the normal penalty, it never once stopped offending. Even in countries which apply Sharia law, it never stops offending. I am afraid that offending will go on as long as human beings go on. If that is the Minister's objective, she will never achieve it.

Therefore, we need to know how much suffering is caused and what is the effect of applying sanctions at any particular level. I presume from the present shape of the clause that the Minister believes that 20 per cent is not enough. I look forward to hearing her tell me why she believes that 20 per cent is not enough and we may perhaps carry on the debate from there. I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, these amendments would allow for the court to have discretion over whether or not the benefit sanction is imposed and the amount of the sanction, rather than for the sanction to be imposed automatically after the court determines that a breach has occurred, as we discussed in a previous amendment. It would constrain that discretion by limiting the extent to which any benefit may be reduced to a maximum of 20 per cent.

The amendments also provide for a maximum 20 per cent reduction to apply to the hardship provisions for JSA recipients. That is redundant as hardship provisions are unnecessary where benefit is reduced rather than removed altogether. Finally, they would limit the maximum period for which benefit may be reduced to four weeks rather than 26 weeks.

Amendment No. 13 provides that the benefit sanction becomes, in effect, an alternative or additional disposal of the court for breaches of community sentence, alongside the existing criminal disposals. This fundamentally alters the purpose of our proposals, including that discussed in the previous amendment. As a result, I would ask the noble Earl not to pursue the proposal.

We have said that we are willing to accept that the loss of benefit should not occur until after the court makes its determination of the breach. But to go further and give the court discretion over whether the sanction should be imposed and over the amount of benefit payments would be undesirable and unprecedented. I do not believe that the courts are equipped to make benefit decisions. Their role in these measures is, and should remain, to determine whether or not a breach has been committed and to set the appropriate criminal penalty.

The remainder of the amendments are designed to water down the benefit sanctions, presumably to minimise their impact on the offender. The Government do not believe it is reasonable to provide unconditional financial support to those who fail to honour their obligation to society to comply with their community sentences.

The reason for the precise percentages is that the benefit sanctions we propose follow the same arrangements and are set at similar levels to other sanctions in the benefit system which deal with breaches of entitlement conditions. We believe that that is appropriate. It is consistent with other entitlement issues; it is fair; and it can be easily understood by both staff and claimants alike. I believe that the amendments would complicate the system unnecessarily and reduce the effectiveness of the sanction in encouraging offenders to face up to their responsibilities.

We believe that the levels and duration of the sanctions we propose for the pilots strike the right balance between ensuring that appropriate sanctions are imposed for failing to meet benefit conditions and the avoidance of hardship.

The noble Earl did not mention the four and 26 weeks, but perhaps I may mention that the ability to vary the amount and length of the sanctions by regulations is necessary to ensure that the Government are able to respond flexibly to the findings of the pilot. I can assure the House that at this stage we have no intention of increasing the length of sanction beyond four weeks. With that response, I urge your Lordships to reject the amendments.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I thank the Minister for her point concerning four weeks. Of course, I never intended to vote on these amendments, least of all at this time of night. If I may say so, the Minister has not made that intention particularly easy for me to carry out.

In response to the question about the extent of the sanction, she said only, "We have always done it this way", which is not by any means entirely true. It is in any case the response of the forces of conservatism. I rather thought that the Prime Minister disapproved of them. However, it does not look as though we shall have a meeting of minds on this subject tonight. We shall doubtless return to it later but, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 to 18 not moved.]

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 19:

Page 65, line 29, at end insert--

("(5A) Where the determination by a court that was made in the offender's case is quashed or otherwise set aside by the decision of that or any other court, all such payments and other adjustments shall be made in his case as would be necessary if the restrictions imposed by or under this section in respect of that determination had not been imposed.").

On Question, amendment agreed to.

[Amendment No. 20 not moved.]

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 21 and 22:

Page 65, line 32, leave out subsection (7).

Page 66, line 23, leave out ("for paragraph (b)") and insert ("after the word "excuse" insert "(or, in the case of a probation order, failed)";

( ) for paragraph (b) of that subsection").

On Question, amendments agreed to.

Clause 64 [Loss of joint-claim jobseeker's allowance]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 23:

Page 67, line 31, at end insert--

("(5A) Subsection (5A) of section 63 shall apply for the purposes of this section in relation to any determination relating to one or both members of the joint-claim couple as it applies for the purposes of that section in relation to the determination relating to the offender.").

On Question, amendment agreed to.

[Amendment No. 24 not moved.]

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 25:

Page 67, line 34, leave out subsection (7).

On Question, amendment agreed to.

Clause 65 [Information provision]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 26 to 35:

Page 68, line 4, at end insert--

("( ) of the laying by a person employed or appointed by a probation committee of any information that a person has failed to comply with the requirements of a relevant community order;").

Page 68, line 7, at end insert ("and

( ) of any circumstances by virtue of which any payment or adjustment might fall to be made by virtue of section 63(5A) or 64(5A)").

Page 68, line 9, after ("any") insert ("proceedings are commenced that could result in a").

Page 68, line 10, leave out ("has been made").

Page 68, line 12, at end insert--

("( ) the commencement of the proceedings;").

Page 68, line 13, leave out ("the determination") and insert ("any such determination made in the proceedings").

Page 68, line 14, at end insert ("and

( ) any circumstances by virtue of which any payment or adjustment might fall to be made by virtue of section 63(5A) or 64(5A)").

Page 68, line 14, at end insert--

("(3A) Where it appears to the Secretary of State that--

(a) the laying of any information that has been laid in England and Wales, or

(b) the commencement of any proceedings that have been commenced in Scotland, could result in a determination the making of which would result in the imposition by or under one or both of sections 63 and 64 of any restrictions, it shall be the duty of the Secretary of State to notify the person in whose case those restrictions would be imposed, or (as the case may be) the members of any joint-claim couple in whose case they would be imposed, of the consequences under those sections of such a determination in the case of that person, or couple.

(3B) A notification required to be given by the Secretary of State under subsection (3A) must be given as soon as reasonably practicable after it first appears to the Secretary of State as mentioned in that subsection.").

Page 68, line 15, leave out subsection (4).

Page 69, line 4, at end insert--

("( ) For the purposes of this section proceedings that could result in such a determination as is mentioned in subsection (3) are commenced in Scotland when, and only when, a warrant to arrest the offender or to cite the offender to appear before a court is issued under section 232(1) or 239(4) of the Criminal Procedure (Scotland) Act 1995.").

On Question, amendments agreed to.

[Amendments Nos. 36 and 37 not moved.]

Clause 87 [Commencement and transitional provisions]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 38 and 39:

Page 95, leave out lines 1 to 3 and insert--

("(b) Chapters I to III of Part II (other than sections 37 and 38 and paragraphs 4 to 6, 8(1), (3) and (4) and 13 of Schedule 5);").

Page 95, line 6, leave out paragraph (g).

On Question, amendments agreed to.

[Amendment No. 40 not moved.]

Schedule 1 [Substituted Part I of Schedule 1 to the Child Support Act 1991]:

[Amendments Nos. 41 to 44 not moved.]

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 45 and 46:

Page 99, line 32, at end insert--

("(3) Any amount of net weekly income (calculated as above) over £2,000 is to be ignored for the purposes of this Schedule.").

Page 99, line 37, leave out ("or 7(7)") and insert (", 7(7) or 10(3)").

On Question, amendments agreed to.

Schedule 2 [Substituted Schedules 4A and 4B to the 1991 Act]:

[Amendments Nos. 47 to 59 not moved.]

Schedule 3 [Amendment of enactments relating to child support]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendment No. 60:

Page 106, line 46, at end insert--

("( ) in subsection (3), at the beginning insert "Except as provided in subsection (3A),";").

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, in moving Amendment No. 60, I wish to speak also to Amendments Nos. 61 and 65.

I announced on Report that I would bring forward government amendments that would allow the courts to continue, as now, to have the power to vary court orders which are made after the child support reforms have been introduced. Clause 2 makes changes to the child support scheme so that more separated parents can apply for child support. It will allow parents who have a court order for child maintenance which has been in place for a year to apply to the CSA for a child support calculation instead.

Those changes will not affect private clients with existing court orders; nor will they affect current arrangements whereby an existing court order will cease to have effect if a maintenance calculation is made as a result of a parent with care being on benefit.

Parents with maintenance orders in force at the time that the reforms are introduced and those with written maintenance agreements made before April 1993 will, as now, use the courts for enforcement and variation of child maintenance liability. As your Lordships know, we are introducing a one-year waiting period. New orders will be any court order made after the reformed child support scheme has been introduced.

The one-year waiting period is to ensure that those applying to the CSA have had time to consider fully the effects. We are also providing a two-month cooling off period. However, Clause 2 indirectly removes the ability of the courts to vary new court orders after they have been in force for a year. In the light of our debates on Report, in particular about Amendment No. 20, I told the noble Baroness, Lady Buscombe, that I would not be unsympathetic to allowing the courts to continue to have the power to vary new court orders made after the reforms are introduced.

We had taken the view that in those circumstances parents should originally come to the CSA. However, having reflected on the noble Baroness's arguments, I have decided that there is something to be gained from allowing courts to continue to vary new court orders even when, in accordance with the provisions of Clause 2, the CSA could accept an application for child support. We do not wish to force parents to come to the CSA when they remain content to leave maintenance to the court to decide, as long as the benefit system is not involved. When the courts are asked to vary court orders that were originally based on agreement between the parents, we are happy to leave the choice of whether to come to the CSA to the parents concerned.

However, if a new court order is subsequently varied by the court, there will be no further 12-month bar to a child support application. In other words, the 12-month clock will continue to tick from the date of the original order. I hope that I have met with good will the arguments put forward by the noble Baroness, Lady Buscombe. I beg to move.

Photo of Lord Higgins Lord Higgins Conservative 9:30 pm, 19th July 2000

My Lords, we are grateful to the Minister for the amendments. I know that my noble friend Lady Buscombe will be pleased. In the light of our earlier discussions, the sooner I sit down, the better, but we are grateful.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, perhaps I may say, with the greatest brevity, that I, too, welcome the amendments.

On Question, amendment agreed to.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 61 and 62:

Page 106, line 47, leave out from beginning to end of line 2 on page 107 and insert--

("( ) for subsection (3A) there shall be substituted--

"(3A) Unless a maintenance calculation has been made with respect to the child concerned, subsection (3) does not prevent a court from varying a maintenance order in relation to that child and the non-resident parent concerned--

(a) if the maintenance order was made on or after the date prescribed for the purposes of section 4(10)(a) or 7(10)(a); or

(b) where the order was made before then, in any case in which section 4(10) or 7(10) prevents the making of an application for a maintenance calculation with respect to or by that child."; and").

Page 107, leave out lines 3 to 5 and insert--

("( ) in subsection (6), for paragraph (b) there shall be substituted--

"(b) the non-resident parent's net weekly income exceeds the figure referred to in paragraph 10(3) of Schedule 1 (as it has effect from time to time pursuant to regulations made under paragraph 10A(1)(b)); and".").

On Question, amendments agreed to.

Schedule 5 [Pensions: miscellaneous amendments and alternative to anti-franking rules]:

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

moved Amendment No. 63:

Page 118, line 29, leave out (""other benefits" there shall be inserted") and insert (""payment of" there shall be inserted "all of his pension or other benefits"").

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, the amendment clarifies the definition of "pensioner member" for the purposes of the Pensions Act 1995. The current definition may include both a deferred and a pensioner member.

In the view of the Law Society of Scotland, the three categories of acting, deferred and pensioner members ought to be mutually exclusive. Active members and pensioner members are currently mutually exclusive, but the same cannot be said of deferred members. Voluntary contributions can now be taken early and benefits can be taken in payment. If a deferred member had voluntary contributions in payment, they would appear to be a pensioner member as well. We believe that our amendment would rectify that by inserting the word "all". I beg to move.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I appreciate the clarity--and brevity--with which the noble Lord moved the amendment. At present, the payment of a pension means that the recipient is considered to be a pensioner member. He cannot be both an active member and a pensioner member. The measures in the Bill will mean that a member who remains in pensionable service will be an active member, as distinct from a pensioner member. Paragraph 8(3) of Schedule 5 will achieve that, facilitating a new flexibility that the Inland Revenue has proposed to allow members of occupational pension schemes who are approaching retirement age to take a part-payment of their pension rights while continuing to work. People who take advantage of that flexibility will be able to continue to contribute to and build up rights in the scheme as active members.

The amendment would additionally require a pensioner member to be entitled to all of his pension or other benefits. That is unnecessary, in view of the amendment already made by paragraph 8(3) of Schedule 5. Far from clarifying the status of pensioner members, the amendment introduces confusion into the definition, and with it the risk of misinterpretation.

I understand the noble Lord's concern to protect the rights of those with a pension. We share that concern, but we think that the amendment could cause confusion. It would add nothing to the general protection of pensions in payment afforded by the law in other ways. It might even result in the creation of a special class of member whose rights as an active member might be unclear. It could also reduce the flexibility that the Inland Revenue are proposing.

Schedule 5 to the Bill seeks, as I have said, to place beyond doubt that a member who remains in employment and continues to contribute to and accrue benefits in his pension scheme has the protection necessary for active members' rights.

The noble Lord's amendment would not clarify anything, nor would it give any more protection to those who take advantage of the Inland Revenue's proposal for flexibility. I am glad to have the opportunity to make that clear, and, in the light of that, I would hope the noble Lord will withdraw his amendment.

Photo of Lord Astor of Hever Lord Astor of Hever Conservative

My Lords, I am grateful to the noble Baroness for that reply. It was felt that this was an important issue and I am grateful to the Minister for clarifying it.

I should also like to thank the Minister on behalf of the Scottish Law Society for pointing out the error in the wording of its original amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 9 [Repeals and revocations]:

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

moved Amendments Nos. 64 and 65:

Page 148, line 25, column 3, leave out ("Section 8(6).").

Page 149, line 15, column 3, leave out ("18(5)") and insert ("18(3) and (5)").

On Question, amendments agreed to.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I beg to move that this Bill do now pass, with one sentence only: I should like to thank your Lordships for the unfailing courtesy and good humour exhibited, especially when it was believed that the Government were wrong, and perhaps even harder when it was suspected that, despite their Lordships' views to the contrary, the Government might even be right. In the light of that, I should like to thank your Lordships. We now send the Bill, with the amendments made by your Lordships, to the other place. I commend the Bill to the House.

Moved, That the Bill do now pass--(Baroness Hollis of Heigham.)

Photo of Lord Higgins Lord Higgins Conservative

My Lords, I shall not delay the House more than a moment or two, but I would like to express our thanks to the Minister, who has carried the entire burden of this Bill on her shoulders. She has done so with consummate skill, knowledge and expertise, and we are extremely grateful to her. If I may say so, I do not believe there is any other Minister who could have dealt with this Bill in a better or more efficient way than the noble Baroness. In particular, of course, the clauses dealing with the Child Support Agency are very much hers. I think she will look back in future years and say that that was a good piece of legislation. It is to be hoped that it works out. I have fears that the combination of working two systems side by side will prove very difficult, but at all events, both behind the scenes and in this House, the noble Baroness has done a magnificent job.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, I, too, would like to thank the Minister, and all those with whom she has worked so hard to get this Bill through.

Her courtesy and her skill have been very great indeed. We have seen a remarkable example of it tonight. That example is one of many.

As regards the Bill, as I am sure the Minister knows, that is a different matter. She knows what I think about the CSA proposals and I shall not repeat them. If the issue of benefit and conditionality reaches this House again the Minister will think she has not seen anything yet. But, meanwhile, I thank her very much for everything she has done, and for the kindness and courtesy with which she has done it.

On Question, Bill passed, and returned to the Commons with amendments.