LORDS AMENDMENT (Hansard, 22 March 1979)

§ Lord WELLS-PESTELL

My Lords, I beg to move that this House doth agree with the Commons in their Amendment to the Lords Amendment to insert a new clause after Clause 3. I do not think it is incumbent upon me to take a great deal of your Lordships' time over this Commons Amendment. We discussed this Amendment at some length in a discussion which lasted for 55 minutes, and which occupied 18 full columns of Hansard. But perhaps I ought to make clear the effect of the Government Amendment carried in another place, proposing that subsection (4) of this new clause should be left out.

1303 With subsection (4) removed, the clause reverts to the form it was in when I introduced it at the Committee stage of the Bill in your Lordships' House. As I explained to your Lordships at that time, the clause will enable the Secretary of State for Social Services, by Affirmative Order. to reduce the ages at which the earnings rule ceases to apply to retirement pensioners—currently, 70 in the case of men and 65 in the case of women. This would enable us gradually to phase out the earnings rule as a step towards abolishing it completely. But, as I made clear to your Lordships in introducing the new clause, the Government were simply taking power to make changes. The question of using that power would need to be considered in the light of the economic situation at the time, in relation to the many other claims on public expenditure and to the Government's expenditure priorities.

Subsection (4), which is the matter now before your Lordships, was introduced at the Report stage of the Bill by the noble Lord, Lord Cullen of Ashbourne, and it provides, in effect, for the earnings rule to be finally abolished by 5th April 1984. I do not know whether there was any great significance in the famous 1984. It is important that I should explain clearly why the Government have sought to remove subsection (4). As I have made quite clear to your Lordships, and as has been made clear in another place, the Government are committed to abolishing the earnings rule for retirement pensioners. In this, I think I can say without fear of contradiction that there is nothing between the Government and the Opposition. I suppose that the only qualification is "when resources allow", which we feel is an important one, and it was this consideration which led the Government to remove subsection (4).

The Government do not think it right to introduce into the Bill a provision which would commit the Government—whichever Government was in power in 1984—to the additional expenditure which would be involved in abolishing the earnings rule without regard to the resources which might be available at that time, or to the other priorities that the Government of that time would have. But it is only right that that Government should be able to determine their own priorities, 1304 and that they should not be committed in advance, if I may say so with the greatest respect, to divert resources to the abolition of the earnings rule, if it were considered that there were more important calls upon those resources.

The removal of subsection (4) would not limit a future Government's action in any way. We have already provided in the clause a power to ease the way to abolition of the earnings rule. If resources were available, there would be nothing to prevent a future Government from finally getting rid of the earnings rule by April 1984, if they wished to do so. A future Government would be very much aware of the views which have been strongly expressed in your Lordships' House, and in another place, that the rule should be phased out completely over the next five years, and they could be expected to take account of those views when considering what their priorities should be. But the Government feel that at least the decision—and any such decision—must be made by the Government of the time and not by this Government.

I know that the Opposition take the view that the Government's estimates of abolition— which we say would cost between £64 million and £124 million, depending on how many people continued to forgo their pension after pension age—are far too high. This point was made more than once, quite properly, by the noble Lord, Lord Cullen of Ashbourne. I explained in some detail at the Report stage of the Bill why the Government cannot accept that view, and I do not propose to repeat today what I said then. The Government remain convinced that the cost of abolition would be very high, and in reading the report of the proceedings in another place when this matter was considered there on 19th March, I was interested to see that the noble Baroness's right honourable friend in that place accepted that the cost could be as high as £40 million.

I have no doubt that in future years the cost of abolishing the rule will be different from the estimates to which I have referred, and different from the estimates made by noble Lords on the other side of the Chamber. But whether the cost will be higher or lower, I cannot say, and I do not think that any of us can at this stage. This will be a matter for 1305 the Government of the day to determine, but, as I said earlier, the whole question of priorities, so far as that Government are concerned, will remain. We should not tie their hands in that way; and that is precisely what subsection (4) of the new clause would do. Therefore, I beg to move.

§ Baroness YOUNG

My Lords, at this late stage, I do not wish to rehearse again all the arguments that we have had on this matter. Clearly, both sides of the House, and the Liberals, agreed that we should abolish the earnings rule for retirement pensioners. It is to us very disappointing indeed that, when this matter was debated in another place, it was lost by so small a margin of four votes only. It is particularly disappointing that that important Division should have taken place at the fag end of a dying Parliament, on a matter of some considerable importance to a lot of people.

It is also very difficult for us on this side to avoid the conclusion that, at any rate in another place, the Government deliberately misled my right honourable friend and his colleagues over the Amendment that they were going to put down in your Lordships' House. Clearly, they believed that it would meet the point and include a date for the abolition of the earnings rule, but as the noble Lord, Lord Wells-Pestell, has made quite clear, although the Amendment admits in principle that the earnings rule should be phased out, it does not put a date on it. May I tell the noble Lord that the significance of the date of 1984 was that the earnings rule would be phased out within the lifetime of a Parliament, which is generally reckoned to be about five years. That is why that date was put in, and there was no other significance at all.

As I said, we find this a disappointing matter. However, I should like to reiterate that when we form the next Government this is a matter to which we shall return. I also reiterate the pledge of my right honourable friend that we shall phase out the rule within the lifetime of the Parliament.