Clause 1 - Intestacy: surviving spouse or civil partner

Inheritance and Trustees' Powers Bill [Lords] – in a Public Bill Committee at 8:55 am on 12 March 2014.

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Question proposed, That the clause stand part of the Bill.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice

It is a pleasure to serve under your chairmanship, Mr Owen. It is good that north Walians are so influential in the Committee.

I will be relatively brief because we had a substantive debate on the Bill in the Second Reading Committee on 3 March. I am grateful to the hon. Member for Barnsley Central, who leads for the Opposition, for being positive and constructive about the Bill.

May I say a word or two about the Bill as a whole so that I will not need to repeat the principle? The Bill is not controversial, but modernising, progressive and welcome. It comes from the work of the Law Commission, which looked at inheritance and trustees’ powers, and is based on its recommendations. Its key purposes are to modernise and simplify the law on inheritance and trusts in relation to the large number of people who die without leaving arrangements in a will. It would be great if we had a world in which everybody made written arrangements, and the Ministry of Justice is keen for that to happen, but it is not the case at the moment.

Perhaps I can give colleagues a reason why the Bill is important. The hon. Gentleman and others, including my hon. Friend the Member for North West Norfolk, asked me in the Second Reading Committee what numbers we were talking about. More than 480,000 deaths were registered in England and Wales in 2011. In the same year, 260,000 grants of representation were obtained to administer estates, of which 40,000 were intestate. For the remaining 220,000 deaths—nearly half the total number—for which there was no grant of representation, it can be assumed that about four out of five might be intestate. Therefore nearly 180,000 people die every year without leaving written provision. That is calculated on the basis that estates for which there is no grant of  representation are likely to be smaller, because people do not bother to go through the legal process. Smaller estates are therefore likely to be intestate.

We have estimated, on advice, that in 2011 the total number of intestate deaths in England and Wales was approximately 220,000, so we are dealing with a lot of people and a lot of families. We are trying to reduce the room for potential dispute, as we all know how terribly controversial things can become if arrangements are not clear. Just under 46% of the total number of registered deaths in 2011 were classed as intestate.

I will give just three other statistics and then I will deal specifically, but briefly, with clause 1. Between November 2007 and October 2008—the last year for which we have accurate figures—there were just over 1,000 intestate estates in England and Wales that were over the top level that is relevant to the Bill, which is more than £450,000. That is very few indeed. Working assumptions from census data and other work indicate that between 5% and 10% of intestate deaths involve spouses who leave parents, full siblings or descendants of their brothers and sisters, but no children or other descendents, so only between 50 and 100 intestate estates will be affected by clause 1.

Clause 1 will simplify and modernise the rules that govern the division of a person’s property when they die without leaving a will. It will bring those rules in line with real-life expectations. The clause will change the intestacy rules in the following way: when a person dies, leaving a spouse but no children or other descendants, the whole estate will go the spouse; and when a spouse and children or other descendants are left, the personal chattels and all the estate up to the value of £250,000—that is the statutory legacy—will go to the spouse, with anything left over that £250,000 divided equally, with half going to the spouse and half to the children.

Clause 1 will also make small changes to resolve existing ambiguities in how the interest on the statutory legacy is calculated. The clause and the Bill as a whole will make no change to the situation in which a deceased person has no spouse and no children, when the intestacy rules will operate as they do now in that the whole estate will pass to the nearest living relative.

Photo of Dan Jarvis Dan Jarvis Shadow Minister (Justice) 9:00, 12 March 2014

It a pleasure to serve under your chairmanship, Mr Owen. I thank the Minister for setting out the Government’s position on clause 1. We welcome this move to bring existing inheritance legislation more into line with modern family living, especially given that these laws have not been updated for more than 20 years. Intestacy is an important issue, affecting thousands of families across the country each year. It is positive that there is a great deal of consensus on these reforms across the Committee. I pay special tribute to the Law Commission, and thank those in the other place for the work they have done to design, scrutinise and improve the Bill.

The Committee will be aware that the substance of the Bill stretches back to the beginning of the Law Commission’s work in 2008. The proposals have since been subjected to full and thorough debate in the other place, and in last week’s Second Reading Committee,  the Minister comprehensively set out the detail of the Bill. With that in mind, there is little that needs to be added.

I would like to comment briefly on what can be best described as the spirit behind the Bill. I can say, with confidence, that we are united on both sides of the Committee about the importance of making wills and keeping them up to date. As we debated last week, these laws will come into effect only when someone has, sadly, passed away without having made a valid will or other binding declaration. The Committee will be familiar with the figures: more than 60% of the adult population do not have a will and around a third will still not have a will by the time they pass away. Approximately 220,000 people will die in those circumstances each year and, most importantly, those who most need a will are the least likely to have made one.

The impact of that situation is clear. Cases where a person’s estate transfers to the state because they have no will and no known relatives have more than doubled since 2008, and the number of family provision claims has risen by 400%. The Minister is well aware of all those issues, and is paying close personal attention to them. He gave a generous response when I raised these points before and offered to work with the Opposition on the plans he is developing to raise public awareness of the making of wills. I take him up on that kind offer, as we are keen to collaborate with him so that we can get this right and spread the message to as many families as possible across the country.

The Minister previously talked about an annual public information campaign to encourage people to organise their estates. He mentioned the possibility of the campaign being linked to father’s day, which falls on 15 June this year. Could the Minister update the Committee on how those plans are progressing, whether there is a launch date for the campaign, what support he would like from the Opposition and what resources his Department has allocated to raise public awareness of writing wills?

Opposition Members are ready to support the Minister’s efforts. If we can save just a few grieving families from having to go through the intestacy procedures and make life a little easier for those families that do have to go through them, the Bill will make a real difference. For that reason, we will not be opposing this clause or any of the other provisions to be considered by the Committee.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice

I am grateful to the hon. Gentleman for his constructive role. I will be quick, but I hope helpful in taking things forward a little. He has tabled a question about these matters, and my answer should be in Hansard today, if it was not there yesterday.

The Bill addresses a serious failure in our system, which I was aware of before I was appointed. I was pleased to take some responsibility for these issues in the Department. We have far too few people making wills. With people living longer—and, sadly, more people suffering from Alzheimer’s and dementia in their old age—we need more people to plan ahead and make arrangements for their affairs while they are still alive. This is slightly incidental and lateral, but a lot of people think about donating their organs, although often do not do as much as they had intended to. These are all things that we do not like to face, but it is actually much more responsible that we do so.

When I joined the Department, I talked to civil servants about these issues, and I met the head of the Office of the Public Guardian, who looks after people who have mental health issues and cannot administer their own affairs. The plan is still to have a public communications campaign to alert people to what they can do—and should do—and to make it much easier for people to make a will. I still hope we can do that by June, but these things are always subject to organisational issues.

I am happy to tell the hon. Gentleman that I will ask my office today to fix a time for he and I to meet, together with any colleagues he wants to bring with him—they will be most welcome, as will you, Mr Owen—to try to ensure we get the best ideas on the table. I do not want the campaign to be complicated or expensive, and we can improve it as the years go on.

It would be a good thing if we used the opportunity of the Bill becoming law—as it will, I hope, by June—to say that we now have a more modern system for dealing with people who do not provide in writing for their estates, that we have modernised the law in relation to trusts and inheritance, and that we now want to make sure that people take responsibility for making provision so that their children, spouses and partners do not face terrible uncertainty. I will be in touch with the hon. Gentleman’s office this week and we will hopefully have a discussion in the next week or so to see whether, as I would hope, we can have a launch date in June.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 12 ordered to stand part of the Bill.

Schedules 1 to 4 agreed to.

Bill to be reported, without amendment.

Committee rose.