Commons Sitting of 19 May 1986

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    ISLE OF WIGHT BILL
    Lords amendments agreed to.
Oral Answers to Questions
  TRANSPORT

    Road Price Index
    Mr. Wattsasked the Secretary of State for Transport how the road price index has changed in relation to the retail prices index in each of the last five years.
    The Secretary of State for Transport (Mr. Nicholas Ridley): Road prices have fallen, relative to the retail prices index by about 25 per cent. since 1980. This means that we are getting more road for our money. The supporting yearly figures have been placed in the Library of the House.
    Mr. Watts: I thank my right hon. Friend for his encouraging reply. Is he aware that the director-general of the Federation of Civil Engineering Contractors recently commented that he viewed the health of the industry with some rapture? Does my right hon. Friend agree with that assessment, and to what extent is his Department responsible for it?
    Mr. Ridley: I am delighted to hear that our policies are causing rapture. I confirm that he have increased spending on roads by 25 per cent., and that there has been a 30 per cent. increase in value for money. That is why we have such a massive roads programme, whose benefits can be seen in all parts of the country.
    Mr. Peter Bruinvels: Does that mean that more money has been spent on roads and that the programme for building new roads has been substantially increased and improved since 1951? Will funds be made available to widen the M25 between junctions 8 and 10?
    Mr. Ridley: I should point out that the relevant date is not 1951 but 1980. The road output price index has hardly increased during the past six years. That means that we are getting the same cash prices, despite inflation over six years. I am studying the south-west quadrant of the M25 to discover the cause of the congestion, but I was not aware of any problems between junctions 8 and 10.
    Mr. Flannery: Does not the immense transfer of traffic from rail to road mean more pollution, more policing and more blockages all over the country? Are not the Government following a quite reactionary policy, given that, for example, the railways cause no pollution?
    Mr. Ridley: The hon. Gentleman should know that we are coping well with the increased traffic on our roads. Indeed, the programme that I have just set out explains just how well we have coped with it. I believe that people want roads, because motorists want to travel in their cars. It is up to shippers to decide on the cheapest and most convenient form of carriage for their goods. A little freedom in this area, as in others, is well worth while.

    M3-M27 Link
    Mr. David Atkinsonasked the Secretary of State for Transport when he expects the M3-M27 motorway link to be completed.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): We await the inspector's report on the final section of the M3. This section of the route from Bar End to Bassett may be completed by 1989.
    Mr. Atkinson: Business commuters and tourists to Dorset will welcome that day, but in the meantime is my hon. Friend satisfied with the safety of the existing link, the A33 Eastleigh bypass which The Economist recently described as a "death trap"?
    Mr. Bottomley: People rightly draw attention to dangers on our roads. We recognise the concern that exists, and have agreed to extend the central reserve crash barrier near Ironbridge at Crompton. Barriers on the rest of the Otterbourne to Chandlers Ford bypass would probably not be justified for the short period of use involved before the M3 extension is completed.
    Mr. John Browne: Does my hon. Friend accept that the completion of that stretch of motorway has serious implications for the noble and ancient city of Winchester? Will he ask the Secretary of State to warn his Cabinet colleagues that there must be an unusual degree of expenditure in order to protect the environment and to prevent irreparable damage being done to the city? I am thinking, for example, of the construction of a tunnel to the south and south-east of St. Catherine's hill in order to protect this beautiful city, which is important and historic both nationally and internationally?
    Mr. Bottomley: My hon. Friend has made his local anxieties plain and I am sure that his message will have been heard.

    National Bus Company
    Mr. Pikeasked the Secretary of State for Transport what recent representations he has received regarding the privatisation of the National Bus Company.
    Mr. Ridley: I have received a number of representations, mostly on behalf of groups of local managers and employees who welcome the forthcoming privatisation of NBC's subsidiaries and wish to gain controlling interests in their local companies.
    Mr. Pike: Does the Secretary of State accept that if the NBC must be privatised the services would be better protected if it were privatised as a whole and not split up? Would that not protect both services and jobs?
    Mr. Ridley: I do not agree with the hon. Gentleman. We discussed the issue often enough in Committee. Already over 50 management teams have expressed interest in buying the subsidiaries, out of the 65 companies involved. Having that number of different companies, together with other private operators, such as the municipal and passenger transport executive operators, will provide that element of competition which has been lacking in bus services and will give a much better deal to the passengers. After all, that is what it is all about.
    Mr. Stephen Ross: When does the Secretary of State expect to announce the acceptance of a bid for one of the companies by a management-work force buyer?
    Mr. Ridley: Currently four bids are at an advanced stage of negotiation with the NBC. I cannot say when the negotiations will be complete, but so far as I am aware no bus company management is being held up by NBC in its efforts to purchase the company. I shall announce to the House the details of sales as and when they take place.
    Mr. Beaumont-Dark: Is my right hon. Friend aware that many of us think that privatising any service is good
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    so long as it not only puts money into the Exchequer but helps the service? Does he understand, as I do, that one of the great ideas behind privatisation was that the difficult services would be improved? Does he agree that the scheme would fail if some services turned out to be worse than they are now? Will my right hon. Friend guarantee that services will improve?
    Mr. Ridley: Well in advance of the deregulation and the tendering for routes, which has not yet happened, in many cities services have already improved. Mini-buses are being introduced on a large scale. We can do all that without the Act being in force, so how much more will we be able to do when it is in force?
    Mr. Campbell-Savours: Will not deregulation and privatisation result in the loss of thousands of routes?
    Mrs. Kellett-Bowman: No.
    Mr. Campbell-Savours: Well, the people of Ryedale believed that. Do the Government now intend to change course? Do they accept that the people of Ryedale said no and that they want the restoration of proper policies?
    Mr. Ridley: I accept that the hon. Gentleman and his hon. Friends, along with members of the alliance, succeeded to some extent in awakening people's fears that only the registered mileage would be run, but everyone concerned knows that that is not the full truth. The whole of the tendered services are involved. Local councils have 10 per cent. more cash provision to subsidise those tendered services than they had last year, and they have to subsidise only 25 per cent. of routes instead of the 100 per cent. that they did before.
    Mr. Gow: Does not the privatisation of individual companies give employees and passengers an opportunity to become shareholders? What steps will my right hon. Friend take to encourage them to take that opportunity?
    Mr. Ridley: My hon. Friend is right. As is the case in the Isle of Wight, there is considerable enthusiasm for buying a local bus company. I have made it clear throughout the passage of the legislation that we would give some preference to employees and managers if they sought to buy their company. That is being translated into effect as the sales take place. I believe that the measure will spread ownership widely as well as improve passenger services.
    Mr. Robert Hughes: Why does the Secretary of State not face the facts concerning both the National Bus Company and other bus company services? Does he realise that the early morning mileage of NBC services is down by 37 per cent., that evening mileage is down by 48 per cent., and that Sunday mileage is down by 53 per cent.? National Welsh intends to withdraw completely its children's concessionary fare. Is that not the clearest indication possible that the right hon. Gentleman's policy is failing? It is no excuse to say, "Wait until October, when everything will be confirmed."
    Mr. Ridley: When will the hon. Gentleman wake up to the fact that he is telling only half the story? He knows perfectly well that to get half the Sunday services on 75 per cent. of all routes for no subsidy leaves more subsidy to provide the other half.

    British Rail Engineering Ltd.
    Mr. Martinasked the Secretary of State for Transport when he last discussed with the management of British Rail the effects of British Railways Board procurement policy on BREL.
    The Minister of State, Department of Transport (Mr. David Mitchell): My right hon. Friend has discussed this with the chairman, but the BR Board's procurement policy and its specific effect on British Rail Engineering Ltd. remain matters for management decision.
    Mr. Martin: I have met the Minister, the deputy director of BR and of BREL, all of whom have stated that there will always be a presence in the Springburn railway engineering workshops, small though they are. Will the Minister help to dampen the rumours recorded in newspapers since Friday that there will be complete closure of the Springburn workshops, which, if true, means that people have been telling me lies for the past 18 months?
    Mr. Mitchell: I am sure that the hon. Gentleman agrees that proposals which affect employment should be discussed first with the unions. There is to be a meeting tomorrow between British Rail and its unions to discuss its proposals as they affect BREL.
    Mr. Coombs: Will my hon. Friend give an estimate of the number of new jobs that have been created as a result of the Government's major investment programme in British Rail? Will he also say whether any jobs have gone overseas as a result of the programme?
    Mr. Mitchell: I do not know the precise number of jobs, but I can tell the House that £2·5 billion has been invested by British Rail since the Conservative party came to office. Virtually all that money has been spent in the United Kingdom, thus creating a large number of jobs. I do not have the specific number. I shall write to my hon. Friend.
    Mr. Bagier: Is the hon. Gentleman saying that Ministers know nothing about the contents of the statement to be made tomorrow? Is the hon. Gentleman prepared to admit that the weakend's rumours are based on facts and that there are to be massive cuts in BREL? How much of that has been brought about by pressure from Ministers in order to get rid of the part of the industry that is not paying, and to get the other half ready for privatisation?
    Mr. Mitchell: The changes that British Rail proposes to make about BREL are matters for discussion between the management and the unions. I am sure that the hon. Gentleman, as a good trade unionist, recognises that it is right that the proposals should first be disclosed to the unions that represent the men involved. My right hon. Friend the Secretary of State hopes to make a statement in the House tomorrow.
    Mr. Donald Stewart: Is the Minister aware that the Springburn works have a reputation not only in Scotland and the United Kingdom generally, but world wide? Is he further aware that, quite apart from the hundreds of jobs that might go, its closure would be a black mark against engineering in the United Kingdom throughout the world? Will he come clean with the House and say what the Government intend to do about the works?
    Mr. Mitchell: The distribution of work between one rail works and another is entirely a matter for the BREL management. As BR announced earlier this year. it intends to change the pattern of its maintainance work so that works, including Springburn, will be associated directly with the maintainance work of the areas and regions in which they operate.
    Mr. Sackville: Is my hon. Friend aware of the recent announcement of substantial and unexpected losses at the BREL foundry at Norwich'? Will he confirm that he is aware of the foundry's importance to employment in the town and that he is keeping the situation under review?
    Mr. Mitchell: I can assure my hon. Friend. I have been to Horwich and seen what has been happening there. I have also been involved in the increasing effort to provide employment there and at Shildon, where a major part of the rail works has been closed. I shall of course keep what my hon. Friend said in mind.
    Mrs. Dunwoody: Will the Minister have the honesty to admit that it is his policy that is causing BREL to retract at this speed? Can he give the House any idea how many of the BREL workshops have to close before he will lift a finger to protect the thousands of jobs involved in this engineering industry?
    Mr. Mitchell: The hon. Lady is quite wrong to say that that is my policy or the Government's policy. Let me make the cause absolutely clear. It is the result of massive investment in new rolling stock that we have acceded to BR's request to make. If there is investment in new rolling stock, less maintainance is required. There is no point in keeping maintainance capacity when there is no demand for it.
    Mr. Adley: Although I acknowledge the investment that the Government have authorised in BR, will my hon. Friend nevertheless look at the legislation was passed as long ago as 1929 under which the Government authorised expenditure to alleviate unemployment by the acquisition, by Britain's then private railways, of locomotives and rolling stock and by vast numbers of schemes to improve the permanent way and safety? Is my hon. Friend convinced that social circumstances today are any different from social circumstances then with regard to these jobs?
    Mr. Mitchell: The resources that BR devotes to rolling stock and track maintenance are a matter for BR. It wants to achieve the most cost-effective service possible to persuade passengers to use the railways rather than the roads. It can attract passengers only if it runs an efficient and cost-effective service. That must be a management decision.
    Mr. Snape: Does the Minister agree that the Department of Transport's policy of minimum resources for BR means that the existing intercity fleet is not big enough to meet demand, that the excessive demands on BR rolling stock are leading to the bad punctuality figures that are filling our newspapers, that in Wolverton, Eastleigh, Doncaster and Glasgow up to 4,000 people will lose their jobs as a result of an announcement that is to be made tomorrow, and that tomorrow we expect to see the organ grinder at the Dispatch Box accounting for his bankrupt philosophies rather than hiding, as he usually does, behind the jacket, if not the skirts, of the Minister of State?
    Mr. Mitchell: The hon. Gentleman has rather overrun himself. I have never worn a skirt in my life. What the hon. Gentleman said about minimum resources for BR is arrant nonsense. The maintenance requirements are down because of the massive investment in new rolling stock.
    Mr. Martin: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    Freight (Grants)
    Mr. Leadbitterasked the Secretary of State for Transport what was the cash limit for grants under section 8 of the Railways Act 1974 for the years 1979 to 1986, inclusive; and what was the total sum authorised for section 8 expenditure in those years.
    Mr. David Mitchell: The total cash limit for all freight facilities grants in the period 1979–80 to 1985–86 inclusive was £65·5 million. In the same period total expenditure was £43·8 million, which includes £1·4 million for waterway grants. All figures relate to England, Scotland and Wales.
    Mr. Leadbitter: Will the Minister give some precise information about this year? It is suggested that the authorisation limits have now been reached and that any further applications under section 8 will not be accepted. Is that the position? Will the Minister clarify what the position is this year so that the industry may know what response to expect from its applications?
    Mr. Mitchell: The cash limit for this year is £7·3 million. I shall be surprised if we have claims that equal that amount.
    Dr. Marek: Will the Minister categorically state that the applications in the pipeline will be processed and that any new applications that might be forthcoming to his Department in the next three or four weeks will not be held up or grant refused because of a lack of money?
    Mr. Mitchell: I have no reason to believe that there will be rationing through lack of money. Throughout the period to which I referred the claims have never equalled the amount of money that has been available. In both the past two years I have approved record numbers of grants.

    Channel Tunnel
    Mr. Adleyasked the Secretary of State for Transport if he will make a statement on his latest discussions with interested parties concerning the Channel tunnel project.
    Mr. Ridley: We hold frequent discussions with the concessionaires, the French Government, local authorities and other interested groups, particularly in Kent.
    Mr. Adley: I understand the opposition of certain hon. Members from Kent and of the Transport and General Workers Union, which is perfectly respectable. However, does my right hon. Friend agree that it is altogether different to find commercial interests such as Sealink deliberately trying to thwart the will of the House in this matter? As the project has, I believe, received the support of all the Opposition parties, will my right hon. Friend ensure that they are kept fully informed and that he takes them along with him in all the steps he needs to take to get the Bill through the House?
    Mr. Ridley: It is for hon. Members to decide what they do and say in Committees and in the House. In response to my hon. Friend, I must point out that there are about £800 million worth of railway orders involved in the Channel tunnel project, and every week that the Bill does not get through the House is a week in which those orders cannot find their way into the workshops of the country to remedy such problems as we were discussing earlier.
    Incidentally, I welcome my hon. Friend back to the House. I hear that he has not been well, and we are all glad to see him back.
    Mr. Boyes: Will the Secretary of State inform interested parties that on 1 May, during business questions the Leader of the House told me that he was considering setting up a Committee to look at the opposed private Bill procedure? Will the Secretary of State say that he will take into consideration any recommendations by that Committee, thereby encouraging a more open and democratic decision-making process on thiss unnecessary, unacceptable and unwanted project?
    Mr. Ridley: Although that question is not remotely a matter for me in my responsibilities, I must make it clear that I would welcome the setting up of the inquiry referred to by the hon. Gentleman. I believe that there is a great deal that we can do to improve procedures in that area. I only hope that it will be possible for the Channel tunnel and other such schemes to get through the House in reasonably good order so that we can contribute to creating jobs throughout the country.
    Mr. Soames: When my right hon. Friend is considering the Channel tunnel project, will he bear in mind the shambles that has been caused on the M25 by the inaccuracy of the planning of officials in his Department? What confidence can my right hon. Friend have in the forecast traffic levels for the Channel tunnel project?
    Mr. Ridley: Forecasting is always a hazardous business. It may be that 12 years ago those who forecast and planned parts of the M25 underestimated it. However, I am not sure that it is right to prejudge the nature of the cause of the congestion on the M25. It may be due to traffic signing or badly designed junctions. That is not quite the same thing as a shortage of capacity.
    Mr. Dalyell: What estimate has been made of the effect of delay on jobs, which are likely to be lost? What have the French had to say about what is going on in the House of Commons?
    Mr. Ridley: The hon. Gentleman will know that about 65,000 man-years of employment are involved in the project, and every week that it is delayed is a week when that employment does not find its way to the factories and workshops of Britain.
    In response to his second question, I think that it would be difficult to explain to a Frenchman, in my appallingly bad French, the processes that cause us to take so long to do what the French say they can do in three months.
    Mr. Baldry: Does my right hon. Friend not think it strange that those who constantly urge and exhort us to spend more on infrastructure are always in the vanguard of those who oppose any specific infrastructure project, whether it be the Channel tunnel or the building of a new motorway?
    Mr. Ridley: My hon. Friend is absolutely right. I have had three experience of that — Stansted airport, the

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    Okehampton bypass and the London docklands light railway. Now there is the Channel tunnel. They are all major infrastructure projects involving thousands of jobs, and on every occasion Opposition Members have voted against them.
    Mr. Robert Hughes: Will the Secretary of State be a bit more forthcoming? He constantly repeats at the Dispatch Box the number of jobs involved, yet when he is asked specifically to provide Government machinery to make sure that the jobs come to England, Scotland and Wales, he says that it is nothing to do with him. If he wants his bread buttered on both sides, and jam as well, the fact is that he has the responsibility for ensuring that, and he must take it. Otherwise, people will listen with some scepticism to his protestations about wanting the jobs.
    Mr. Ridley: The hon. Gentleman knows full well that I do not have the power to direct a private organisation, such as Eurotunnel, as to where it should place its contracts. Indeed, it would be against the European Community rules if I were to seek to do so. On the other hand, the hon. Gentleman knows perfectly well that massive opportunities exist for British firms, and I have no doubt that with their keenness and effectiveness they will secure more than their fair share.
    Mr. Meadowcroft: What is the Secretary of State's current estimate of when work is likely to commence on the Channel tunnel? Will there be genuine new through routes across London when the tunnel is open, which will be essential if I am to convince my constituents that the tunnel is not just for the south-east of England?
    Mr. Ridley: I cannot answer the hon. Gentleman's first question about when work will start on the tunnel, because that would be to prejudge the time that Parliament will take to consider the legislation, but I can assure him that the Channel Tunnel Group wishes to start as soon as Royal Assent is given. The hon. Gentleman will know that, on the best estimate, the tunnel might not be operative until 1993. British Rail is actively pursuing ways of opening up the tunnel not only to all points east of Calais but to all points north and west of Dover. It will put forward its plans in due course.
    Mr. Thurnham: Does my right hon. Friend agree that the project should provide many thousands of jobs among suppliers of equipment and materials, particularly in the north of England, and that any delay is to be deplored?
    Mr. Ridley: My hon. Friend is absolutely right. It is a massive infrastructure programme, involving large numbers of jobs, which will be distributed equally all over the country. All regions will benefit.

    Bus Lanes
    Mr. Dubsasked the Secretary of State for Transport if he will investigate the effectiveness of bus lanes in London on roads for which he is responsible.
    Mr. Peter Bottomley: Yes, Sir.
    Mr. Dubs: Does the Minister agree that buses in London benefit a great deal from having clear bus lanes? May I ask him, yet again, to look at the bus lane in Park lane? If the Minister were to go down there on a Monday to Friday at any time when the bus lane is in operation, he would find it filled with vehicles that use it as a parking lane.
    Mr. Bottomley: I have to report to the House that I have been down Park lane on a bus. I took a sandwich with me, and it was unfinished when I reached the other end. Unlike frogs, which eat with their eyes closed, I had mine open. Neither the bus nor the other traffic was held up.
    Mr. Higgins: Will my hon. Friend take overall responsibility for all roads with bus lanes and other unnecessary obstructions — for example, those at the Aldwych and on Westminster bridge? Why do we have what looks like a new parking lot for buses on Westminster bridge, because of the curious obstruction at its far end?
    Mr. Bottomley: As the suggestion comes from my right hon. Friend, I must take it seriously. Like the first inhabitants of Burkina Faso, the land of the wise men, otherwise known as Upper Volta, I might wonder whether it is right to take all those powers into my Department's hands. I have to report that I have been across Westminster bridge and down Aldwych and the Strand and I was not held up by the traffic.
    Mr. Tony Banks: Is the Minister aware that London Regional Transport estimates that bus lanes in London saved £9·9 million last year? Is that not a good reason for extending the bus lane network across London, because it would speed the flow of traffic through London? Is he further aware that a recent reply from the Secretary of State for the Environment revealed that the Department issued 429 parking tickets last year to civil servants who ignored bus lanes and double yellow lines? Will he encourage civil servants to park properly, so that buses and other traffic can be speeded up?
    Mr. Bottomley: We can do many things with statistics. We can say that Anne Boleyn had six fingers or that 18 per cent. of people share their baths. However, it is more important to consider each bus lane to see whether it is worth while.

    Heavy Goods Vehicles (Driver Tests)
    Mr. Evennettasked the Secretary of State for Transport what changes he proposes to make to the fees charged for the heavy goods vehicle driver tests.
    Mr. Ridley: I have been consulting industry about proposals to unify the time allotted and fees charged for heavy goods vehicle and public service vehicle driving tests. The effect would be a common test time of 90 minutes and a common fee of £40. For heavy goods vehicle tests, this is a reduction of £25. I shall shortly be inviting the House to approve regulations to make the new lower fee effective from 1 July 1986.
    Mr. Evennett: I thank my right hon. Friend for his reply. How much does he envisage the reduced fees will save the freight industry per annum?
    Mr. Ridley: The figure is about £1 million. I shall be interested to know whether the major reduction in the fee will receive as much publicity as it would have done if it had been an increase.

    M25 (Epping Forest)
    Sir John Biggs-Davisonasked the Secretary of State for Transport if he will pay an official visit to those parts of the Epping Forest constituency where residents suffer from noise and lighting from the M25.
    Mr. Peter Bottomley: My right hon. Friend has already done so by opening it. I shall visit it too.
    Sir John Biggs-Davison: Is my hon. Friend aware that my constituents will be grateful for the fact that he will be seeing for himself how far his Department's undertaking on landscaping, tree planting and lighting have been carried out? Will he take the opportunity to meet some of the sufferers in places such as Theydon Garnon, Roundhills and Woodbine Close?
    Mr. Bottomley: Yes, Sir.

    Pedestrian Crossings
    Mr. Nicholas Bakerasked the Secretary of State for Transport what representations he has received from highway authority associations about the criteria for the provision of pedestrian crossings.
    Mr. Peter Bottomley: We are considering suggestions that greater allowance should be made for the needs and safety of school children.
    Mr. Baker: My hon. Friend's answer will be welcomed. Will he encourage local highway authorities not to stick rigidly to criteria based on numbers of traffic or pedestrians, but to be more flexible in their approach, taking into account the speed of traffic as well as numbers and especially the needs of the community and the need to get the two halves of the community together?
    Mr. Bottomley: The key point which my hon. Friend makes and which I support, is that guidelines should be correct, and local authorities should use them appropriately.

    Tolled Crossings
    Mr. Roy Hughesasked the Secretary of State for Transport if he will now respond to the report of the Transport Committee on tolled crossings, H.C. 250–1, published on 19 February.
    Mr. Ridley: I am considering the report, which was published on 12 March. I shall respond as soon as possible.
    Mr. Hughes: Before going ahead with his proposal in October this year to appeal against the High Court decision to reject his decision to increase tolls on the Severn bridge by 150 per cent., will the right hon. Gentleman consider the horrific unemployment in Wales? If he does, he will be more likely to respond positively to the recommendations of the Select Committee.
    Mr. Ridley: It would be wrong to prejudge my response to the Select Committee report and to comment on matters before the Appeal Court in relation to the Severn bridge tolls. I fear that the hon. Gentleman must be disappointed in his desire to know my views on those matters.
    Mr. Hickmet: What did my right hon. Friend mean when he told the Select Committee that the Humber bridge was an exceptional problem? Does he concur with the report of the Select Committee that the Humber bridge is in an impossible financial situation and is losing more than £20 million a year, which is the deficit over income? Does he agree that the time has come to abolish the toll on this bridge, which is increasingly used by fewer and fewer people?
    Mr. Ridley: I agree that the circumstances in which the Humber bridge was built were indeed exceptional. It is the only example of the cost of winning a by-election that is known to this House. I fear that it falls to the Conservative Government to sort out this problem, and for some time I have asked the Humber Bridge Board to put forward proposals for discussion. It has just asked for a meeting, and that will be held as soon as possible to determine the best way forward.

  ATTORNEY-GENERAL

    Mr. Derry Mainwairing Knight
    Mr. Greenwayasked the Attorney-General on what date it was decided to prosecute Mr. Derry Mainwairing Knight; and if he will make a statement.
    The Attorney-General (Sir Michael Havers): The Director of Public Prosecutions decided to prosecute Mr. Derry Mainwairing Knight on 20 May 1985.
    Mr. Greenway: Is my right hon. and learned Friend aware of estimates that the "Satan trial", which lasted 36 days, cost up to £500,000 and that some lawyers were paid as much as £30,000 in fees? Does he share my concern that for some people the cost of justice looks too high?
    The Attorney-General: The figure of £500,000 is a gross exaggeration. I have made preliminary inquiries, but I do not yet have the full figures. A number of lawyers, both solicitors and banisters, would not agree with my hon. Friend's second point.

    Legal Aid
    Mr. Nicholas Brownasked the Attorney-General if he will make a statement on Her Majesty's Government's present review of legal aid funding.
    Mr. Dubsasked the Attorney-General if he will publish the results of the legal aid efficiency scrutiny.
    The Solicitor-General (Sir Patrick Mayhew): The report is expected in about a month's time. It will be published as soon as this can conveniently be arranged.
    Mr. Brown: I am grateful to the Solicitor-General for that promise to publish the report of the Treasury efficiency unit. Will he give an assurance that in their search for savings and extra money for the profession the Government will protect the interests of the consumers of legal services under the legal aid system? Does he acknowledge the now widespread fear that we are getting a second-class service for the most vulnerable sectors of the community?
    The Solicitor-General: I do not acknowledge the latter part of the question, nor would the Lord Chancellor. The scrutiny was set up with no preconceived ideas, but it is of concern to everyone, especially taxpayers, that the cost of legal aid in real terms has doubled since 1979.
    Mr. Dubs: I welcome the decision to publish the report. Does the Solicitor-General agree that efficiency is only one of several matters of concern about the legal aid system, and that many people believe that a wider ranging review of the scheme would have been of benefit both to the legal profession and to people who depend upon legal aid?
    The Solicitor-General: I agree that efficiency is very important, but it is not the whole story.
    Mr. Hickmet: Does my hon. and learned Friend agree that one of the great deficiencies of the legal aid system is the fact that if the litigant has an income below a certain level legal aid is forthcoming but that consequently a vast section of the public come into an income category which means that they are not able to obtain legal aid, even though at the same time, because of legal costs, they are unable to prosecute or defend cases?
    The Solicitor-General: I think that litigation should generally be avoided. The fact remains that very nearly 80 per cent. of our fellow countrymen who receive legal aid do so free of contribution. That is a substantial preponderance.
    Mr. Janner: Does the hon. and learned Gentleman accept that the question he was asked was absolutely right, because there is no justice in this country for the vast majority of people who do not qualify for legal aid and cannot afford to go to court without it? What will he do to increase legal aid so that ordinary people with ordinary incomes can get ordinary justice from our courts, so that they do not remain like the Waldorf hotel—open to all?
    The Solicitor-General: In legal aid, as elsewhere, the more one does, the more one may do. The Lord Chancellor has a very good record in the extension of the availability of legal aid. For example, legal aid has been extended to patients appearing before mental health review tribunals, and there is now the 24-hour duty solicitor scheme for all suspects held at police stations. People have had to wait for a Conservative Government before that has been achieved. Therefore, I do not feel that the implicit criticism of the Lord Chancellor is justified.
    Mr. Meadowcroft: Does the Solicitor-General accept that some of those denied access to legal aid are bitter at their inability to go to court and defend themselves? Has he ever considered linking legal aid to the law centre provision so that there is some balance between the two which would enable more people to take part in the legal process?
    The Solicitor-General: I expect that it is my fault, but I have not followed the later part of the hon. Gentleman's question. Apart from a few exceptions, law centres are not funded from Government funds, and it is right that they should not be. I quite understand that somebody outside the financial limits for legal aid may wish that he were within them. However, there must be a limit to the amount spent on legal aid. I repeat that twice the sum in real terms is being spent this year than was spent in 1979.
    Mr. Ryman: Can the Government do something to protect people who are sued by a legally-aided plaintiff, spend a great deal of time and money defending the case and cannot recover their costs? I have always thought that the provision is unfair. I believe that many people in the legal profession think it is wrong that a non-legally aided person who defends a case and wins can never recover the costs against the legal aid fund. Are the Government looking into that?
    The Solicitor-General: I acknowledge the sense of injustice that is apparent, but I cannot hold out any prospect of a change in the rules. Legal aid committees
    14
    should pay careful attention, as I believe they do, to the merits of a proposed case before granting legal aid certificates.

    Terrorism (Treason Charges)
    Sir John Biggs-Davisonasked the Attorney-General why no charges of treason have been brought against alleged terrorists; and if he will make a statement.
    The Attorney-General: While treason remains available for an appropriate case, there are substantial problems in bringing a prosecution based on the language of a statute designed for the different circumstances of more than six centuries ago. The common law remedy of murder, coupled with legislation on explosives and firearms, has proved both appropriate and effective for all recent cases.
    Sir John Biggs-Davison: Is my right hon. and learned Friend aware that I do not find his answer wholly convincing, having regard to the recent announcement on this matter by the Lord Chancellor?
    The Attorney-General: I know of my hon. Friend's great interest in this matter. I think that there was an early-day motion in his name on the subject some 12 years ago. One must realise that the 600-year-old statute is couched in such archaic language that it would be difficult to prove all the necessary ingredients of the crime and for a modern jury to come to grips with the terminology. It should be remembered that the Act was originally intended to deal with rival claimants to the throne in the 14th century, or where the country was at war with a foreign power. Fortunately, those conditions do not prevail today.
    Mr. Merlyn Rees: In view of that answer, why does the head of the judiciary, the Lord Chancellor, keep suggesting the use of the Act?
    The Attorney-General: The Lord Chancellor was speaking in his personal capacity. As the House will know, the only people who have ministerial responsibility to this House for prosecutions are my hon. and learned Friend and myself.
    Mr. Stokes: As there is a capital penalty for crimes of treason, arson of the royal dockyards and certain other crimes, which I shall riot specify, would a not be convenient to add terrorism to the list? Regarding history, surely the dangers now are greater, but the penalties seem weaker.
    The Attorney-General: The penalties would be the same under the Treason (Felony) Act 1848, for example, but, as I said in my initial answer, the Treason Act 1351 remains available in appropriate circumstances.
    Mr. John Morris: Will the Attorney-General confirm that there have been no cases of peacetime treason this century? Was he confirming a moment ago that constitutionally responsibility for prosecution is his and that the Lord Chancellor, while head of the judiciary, has no role in it? If the Lord Chancellor's recent speech at Grantham was a criticism that no treason charges were preferred in the Knightsbridge bomb case, which he gave as an example, will the Attorney-General remind the Lord Chancellor that, while we would all condemn any act of terrorism, the House, on a free vote, rejected the restoration of capital punishment for terrorist murder?
    The Attorney-General: The right hon. and learned Gentleman is right. The constitutional position remains the same.

  OVERSEAS DEVELOPMENT

    Aid Levels
    Mr. Jannerasked the Secretary of State for Foreign and Commonwealth Affairs what are the total levels of aid planned for the current financial year for (a) countries of the Commonwealth and (b) other countries.
    The Minister for Overseas Development (Mr. Timothy Raison): From bilateral country programmes, about £440 million and £110 million, respectively.
    Mr. Janner: In the light of the proposed financial aid to Commonwealth countries during the coming financial year, why are the Government proposing to reduce, however slightly, aid to India, when the need is growing? Why, when considering the implementation of the retrospective terms of adjustment, are other countries to be freed from the responsibility of repaying loans incurred before 1975, when Her Majesty's Government are to insist upon India meeting its loans, thereby making our aid worth about half its paper value?
    Mr. Raison: We have a special arrangement over retrospective terms adjustment with India, which includes our extremely valuable poverty focus element. We shall continue to provide India with far and away the largest of our bilateral programmes.
    Sir Anthony Kershaw: Does not India get the best deal from us of any country? Are not the needs of all countries equally claimant and difficult to decide against?
    Mr. Raison: I have a difficult job in allocating aid. My hon. Friend is right. Our programme to India is of great importance, and it is highly regarded by the Indians themselves.
    Mr. Ashby: Does my right hon. Friend welcome Mr. Geldof's efforts through Sport Aid, and what are the Government doing to help Sport Aid?
    Mr. Raison: Like everybody, I greatly welcome and admire what is happening through Sport Aid, as I did the efforts of Live Aid and Band Aid. The money provided by the latter two, £26 million, to help with the emergency in Africa was a valuable addition to the £190 million provided by the British Government over the past two years. We are funding the offices from which Sport Aid is organised.

    International Fund for Agricultural Development
    Mr. Tom Clarkeasked the Secretary of State for Foreign and Commonwealth Affairs if he will estimate the share of contracts granted to United Kingdom countries by the International Fund for Agricultural Development as a percentage of the total number of external contracts offered by the organisation since its inception.
    Mr. Raison: By the end of 1984, 5·6 percent. by value of IFAD's total spending was on British goods and services. We won 21 per cent. of procurement placed outside the benefiting countries.
    Mr. Clarke: How does the Minister defend the Government's astonishing attitude to the special fund for sub-Saharan Africa, in view of the fact that this country obtained 47 per cent. of non-local contracts, in spite of competition from Germany, the United States, Japan and other countries? Why are the Government being so insensitive to the agricultural needs of the area, as well as throwing away jobs?
    Mr. Raison: We are playing our full part in the replenishment of IFAD. I see the merits of the special fund, but the more we provide to multilateral agencies, the less we can provide for bilateral aid. Our bilateral aid is largely a tied programme, and it is highly effective. I am not anxious to see it whittled away.
    Mr. Beith: Will we not lose contracts for British firms if we do not contribute to the special programme? Is not the record of the IFAD programme in giving aid directly to agricultural production good, and does it not compare favourably with much of our direct aid?
    Mr. Raison: That programme does not yet have a record, because it has not yet come into being. Only a limited number of countries are subscribing to it. If we switch money from the bilateral to the multilateral programme, we shall lose the return on the bilateral programme, even though we make it up on the multilateral spending.

    Sub-Saharan Countries
    Mr. Chapmanasked the Secretary of State for Foreign and Commonwealth Affairs if he will report progress on co-ordination with other countries to ensure a concerted programme to help sub-Saharan African countries with their agricultural development programmes.
    Mr. Raison: There is widespread acceptance among bilateral and multilateral donors that their efforts in agricultural development and in other sectors should be co-ordinated, in support of policies agreed with recipient countries. I expect that the United Nations Special Session on Africa later this month will also focus attention on this subject.
    Mr. Chapman: I accept that there are good and logical reasons why this country should not contribute to the special IFAD fund, for the reasons that my right hon. Friend has given. Nevertheless, does he agree that co-ordination between donor countries is vital if we are to remove the scourge of famine from sub-Saharan countries? Can my right hon. Friend provide examples of co-ordination, and will he assure the House that the United Kingdom Government will play a leading part in the United Nations Special Session to deal with agricultural development in Africa?
    Mr. Raison: I assure my hon. Friend that we shall be very active in the United Nations Special Session. My right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs plans to attend, and so do I. As for co-ordination, we have already played a very prominent part in backing the efforts of the World Bank consultative groups, the United Nations development programme round tables, other World Bank activities and a variety of donor co-ordinating efforts, particularly those which are carried on in recipient countries.
    Mr. Deakins: What prevents Britain from spending a greater proportion of its aid to sub-Saharan Africa on rural and agricultural development? Is there a policy block, or is it just that that is the way things have been done in the past and it is very difficult to change them?
    Mr. Raison: I am ready to consider proposals for increased and further agricultural aid, because I agree with the hon. Gentleman that it is very important. However, one has to remember that it is a question not only of this country accepting proposals but of the recipient Governments making a commitment to agricultural proposals as opposed to others.

    Voluntary Agencies
    Mr. Stuart Hollandasked the Secretary of State for Foreign and Commonwealth Affairs whether he intends to make increased provision to the voluntary agencies concerned with development over the next three years.
    Mr. Raison: The voluntary agencies provide very cost-effective aid to some of the poorest communities in the developing world. Our support for the agencies has increased considerably in recent years, and I expect to continue to offer them substantial financial support in the future.
    Mr. Holland: Will the Minister come clean about how much he will contribute, because he did not in his reply say how much that might be? Does he intend at least to keep the increase in contributions in line with inflation? If not, in effect there will be a real cut. Despite all that he has said about his support for such excellent intitiatives as Sport Aid, if the Government's contributions to voluntary agencies cannot be increased in real terms, Sport Aid is the privatisation of what should be the Government's support policy.
    Mr. Raison: It is not the Government's practice to publish detailed figures for three years ahead. If the hon. Gentleman looks at our record in the voluntary sector since 1979, he will find that our support for the British volunteer programme has increased by no less than 101 per cent. in real terms and that our support for the joint funding scheme has increased, again in real terms, by 41 per cent. That represents a major increase in support to the voluntary sector.
    Mr. Forman: Does my right hon. Friend accept that many of his right hon. and hon. Friends think that to increase the provision for the voluntary agencies is a most cost-effective way of using the funds that are available for the aid programme? Does he take heart from the paragraph in the Tokyo summit declaration that makes it clear that the Prime Minister and all the other Heads of Government are committed to maintaining and, where appropriate, increasing official aid from this country and from the other countries involved?
    Mr. Raison: I am grateful to my hon. Friend for his remarks about the Government's support for the voluntary sector. I have already said that our support has been outstanding. I, too, was heartened by the Tokyo summit communiqué.

    Equatorial and Tropical Forests
    Mr. Spearingasked the Secretary of State for Foreign and Commonwealth Affairs what is his policy towards aid projects which affect the conservation of equatorial and tropical forests.
    Mr. Raison: Our policy is to support the wise use and replenishment of the forests. In doing so we have accepted the Food and Agriculture Organisation's tropical forest action plan as a valuable framework for our actions.
    Mr. Spearing: I thank the Minister for that reply. 'Will he assure the House that special attention will be given where there is objection to any aid project for which he is responsible which does not comply with the criteria that he has laid down? What action are Her Majesty's Government taking in respect of aid projects from other countries which do not meet the criteria which he outlined?
    Mr. Raison: I accept that it is important that our aid projects should have full regard to environmental and human factors. As I have told the House, I have made representations to the president of the World Bank stressing our belief in the importance of giving proper regard to the environmental factors in respect of other aid programmes; and, of course, we are happy to discuss that with our fellow donors through the various means of donor co-ordination.

    Public Expenditure (Aid)
    Mr. Altonasked the Secretary of State for Foreign and Commonwealth Affairs what proportion of total public expenditure was spent on overseas aid in 1985.
    Mr. Raison: For the financial year 1985–86 provisional figures indicate that overseas aid accounted for 0·84 per cent. of total public expenditure.
    Mr. Alton: I thank the Minister for that reply. Will he confirm that as a percentage of GDP that is a lower precentage than in the late 1970s, and, despite Live Aid, Band Aid and the famine in africa, we are spending less now in real terms than we were then? Do the Government have any plans for increasing the amount of money spent on overseas aid?
    Mr. Raison: There has been a fall in percentage terms since 1979. On the other hand, the aid programme is now broadly stable as a proportion of planned public expenditure, and we have had an increase in real terms this year over last year.

    South Africa
    3.31 pm
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): With permission, Mr. Speaker, I should like to make a statement on South African incursions into Botswana, Zambia and Zimbabwe.
    As the House knows, a number of locations in Botswana, Zambia and Zimbabwe were attacked early this morning. The South African defence forces have acknowledged that they were responsible for these attacks, full details of which are not yet available.
    My hon. Friend the Member for Wallasey (Mrs. Chalker) has already summoned the South African chargé to ask for an urgent explanation. She expressed to him our grave concern. Our ambassador in South Africa has been instructed to seek an early call on the South African Foreign Minister.
    Our high commissioners in Gabarone, Lusaka and Harare have been instructed to convey to their host Governments the British Government's concern at these attacks and to seek further details about them, including any indication of casualties.
    We have always made plain our opposition to cross-border violence and have consistently condemned the resort to force by South Africa against her neighbours. Today's attacks by the South African defence forces represent a plain violation of the sovereignty of three fellow Commonwealth countries It is particularly' deplorable that they should have taken place while the Commonwealth Group of Eminent Persons were in South Africa, seeking to promote a process of dialogue which would lead to the ending of apartheid, in the context of a suspension of violence on all sides. Today's events underline the urgent need for just such a suspension of violence.
    Mr. Donald Anderson: Yet again the South African Government have committed acts of aggression against front-line states. Yet again the sovereignty of independent Commonwealth Governments has been infringed by acts of state terrorism by the South African Government. Following President Botha's speech last Thursday, when he spoke against meddling foreigners, does that not show that South Africa is rejecting possibly its last chance of proceeding to a relatively bloodless evolution to majority rule via the mediation of the Eminent Persons Group, which, after all, our Prime Minister put forward at Nassau last October as a means, in her isolation, of preventing effective sanctions against South Africa?
    President Botha, by this raid, has sent us a clear message. What a limp message the Foreign Secretary has sent in reply. Is the Foreign Secretary aware that Bishop Tutu has just said that the world awaits what the Prime Minister and President Reagan will do now, as always in the past the Prime Minister and President Reagan have vetoed mandatory sanctions against South Africa?
    Does the Foreign Secretary not recognise that because of what happened at the Tokyo summit, and because of our isolated stance at the Luxembourg meeting last September with EEC Foreign Ministers and our isolated stance at the Commonwealth Heads of Government meeting in Nassau last October, we are perceived in the world as South
    20
    Africa's best friend? The Foreign Secretary proposes to show our disapproval of this incursion by' asking the Minister of State to wag her finger at the South African chargé d'affaires. This is an absurdly weak response, but how typical of the Government.
    Will the right hon. and learned Gentleman now take the lead in seeking the full implementation of the range of measures agreed at Luxembourg in September and at Nassau in October? In the letter and spirit of Luxembourg, how can he justify the South African military attachés accredited to Britain remaining en poste in London? In the light of the decision at Nassau last October, how can we still allow the importation of Krugerrands? Will he now send to President Botha a message that he will understand? What better reason than this aggression is there for immediately proceeding with selective sanctions against South Africa?
    Sir Geoffrey Howe: I can understand the indignation that the hon. Member for Swansea, East (Mr. Anderson) seeks to express in his questions. I deny absolutely the suggestion that the Government have adopted an isolated stance. We have condemned apartheid, and shall continue to condemn it, without reservation, and we wish it to be abolished as soon as possible. We wish that abolition to be achieved without the condemnation of all the peoples of South Africa to a bloodbath of violence. For that reason, the Prime Minister and the Government were able to take the lead at Nassau and in the European Community in promoting an effective opportunity for a peaceful solution through the Commonwealth Eminent Persons Group. When it has suited them, Opposition Members have been only too willing to endorse the legitimacy and effectiveness of that group. Let us start from the common ground.
    We wish to bring about an early end to apartheid in South Africa. We wish that to be brought about by peaceful means, and the Eminent Persons Group is the most effective instrument devised so far for achieving that. As I said in my statement, it is for that reason that we regret this series of attacks. I have described as particularly deplorable the fact that they are taking place at this time. [Interruption.] If Opposition Members wished to address themselves seriously to trying to bring about what is necessary, they should stop shouting about it in their present absurd fashion. We have made our condemnation clear and will consider with our partners what further action may be necessary. Our objective will be to bring about a suspension of violence and a cessation of apartheid as soon as possible.
    Sir John Biggs-Davison: Should not our judgment of these matters be based, not on the merits or demerits of African Governments, but on international law? What is the international law on these matters? Was the air strike against terrorists in Tunisia consistent with international law?
    Mr. Geoffrey Howe: My hon. Friend raises the matter of the air strike against Tunisia. He will recollect that we condemned that air strike without hesitation as having no foundation in international law.
    Sir John Biggs-Davison: Libya.
    Sir Geoffrey Howe: My hon. Friend said Tunisia.
    Sir John Biggs-Davison: I apologise, I meant Libya.
    Sir Geoffrey Howe: Libya was quite different. There we had the plainest possible conclusion that state-directed terrorism was promoted, organised, sustained and directed by the Libyan Government, and it was universally recognised and condemned as such. That must be distinguished from what is happening in this case. One cannot conclude that any of the three Governments concerned have been promoting or inspiring, still less directing, terrorism in South Africa. In addition, we know that the Government of Botswana are at this moment considering with the South African Government means of curtailing terrorism. The circumstances could not be more different.
    Dr. David Owen: The whole House will join the Foreign Secretary in condemning this attack — [HON. MEMBERS: "No."] — this outrageous attack, particularly as it is not justifiable in international law. I am glad, at least, that the Foreign Secretary has not given us a justification in terms of article 51. Will he recognise that he will have to come before the House and the Security Council and agree now to a package of sanctions against South Africa? That is the logic of the present position. The South Africans deliberately undermined the Commonwealth peace initiative. That must now be met with sanctions, which must involve a banning of air flights to and from South Africa and a banning of new investment in South Africa.
    Sir Geoffrey Howe: I understand the point of view expressed by the right hon. Gentleman, but I do not depart from what I have said about the deplorable nature and timing of what has taken place, particularly because of the powerful efforts that my right hon. Friend the Prime Minister and others have made in trying to promote the work of the Commonwealth Eminent Persons Group. However, it is too early to come to a judgment on what action should be taken. Certainly the situation is very serious.
    Mr. Jerry Wiggin: What representations has my right hon. and learned Friend made to the Governments of the three Commonwealth countries concerned against the quite open and flagrant harbouring of Communist-assisted terrorists?
    Sir Geoffrey Howe: We have made plain our position over a very long period of time. We are opposed to cross-frontier violence of any kind, from whatever country, in southern Africa. Equally I must make it plain to my hon Friend that there is no evidence comparable to that cited in other cases that the front-line Commonwealth Governments concerned have been involved in the promotion, direction or inspiration of terrorism. Certainly there is nothing whatever to justify unprovoked attacks of this kind from South Africa.
    Mr. Merlyn Rees: May we come back to the point about international law? Is the Foreign Secretary saying on behalf of the Government that these violations of sovereignty are wrong and that the violation of the sovereignty of Libya, using aircraft from this country, was right?
    Sir Geoffrey Howe: I have already said in my statement that the attacks by the South African defence forces represent a plain violation of the sovereignty of three fellow Commonwealth countries, and they are to be deplored. I have made it plain to the House on other
    22
    occasions, and do so again, that in the case of Libya—a totally different case from this—there was the plainest possible evidence of a Government directing and promoting state-sponsored terrorism and attacks on innocent targets. In the case of Libya there is plain evidence of state-sponsored terrorism, but there is no evidence of that kind in this case.
    Mr. Tim Rathbone: Will my right hon. and learned Friend accept that there might be a more balanced view on this matter if the Government were in touch with the ANC and were able to talk to it and find out the reactions, not only from the terrorist parts of that organisation, but from the nationalist parts?
    Sir Geoffrey Howe: It was for that reason that we took steps to authorise contacts with the ANC at the time of my visit to Lusaka earlier this year and subsequently.
    Mr. Tom Clarke: Will the Foreign Secretary accept that those of us, including my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), who visited Gabarone last summer, after that infamous raid, and who saw rooms where young children had been shot in their own beds, regard South Africa as the focus of evil in the international society? Does not what has happened call for more than mere words and platitudes? Will the Foreign Secretary join the three Commonwealth countries concerned in demanding sanctions as the only real response to this outrage?
    Sir Geoffrey Howe: I entirely sympathise with the point expressed by the hon. Gentleman and by his hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) about the way in which the incident is bound to be seen in Botswana. I have discussed the earlier incident there on more than one occasion with my opposite number, the Botswanan Foreign Minister, and I know that throughout the earlier part of this year Botswana was engaged in discussions with the South African Government, through a joint commission and other means, about methods of preventing the risk of terrorist action across their frontier. In those circumstances, with a meeting of the joint commission due to take place at the end of this week, I have already deplored this action, particularly with reference to Botswana.
    Mr. Eric Forth (Mid-Worcestershire): My right hon. and learned Friend will recall that our American friends and allies persuaded us that Libya had mounted terrorist attacks from its territory, which justified an attack in turn on Libya. What opportunity has he given our South African friends to tell us of their evidence of terrorist attacks mounted on them from the three countries concerned?
    Sir Geoffrey Howe: We have, of course, been in touch with the South African Government on earlier occasions—
    Mr. Forth: This time.
    Sir Geoffrey Howe: Today, my hon. Friend the Minister of State has been in touch with the South African charge in London. I cannot emphasise too strongly the lack of similarity between the two events. There is almost universal recognition of sustained, direct, proclaimed Libyan state-sponsored terrorist attacks on innocent people outside that country. The two cases are as different as chalk from cheese.
    Mr. David Winnick: Leaving aside the fellow travellers of the South African regime who are sitting on the Tory Benches, do not the raids once again demonstrate that the South Africans have no more intention of observing international law than of respecting human and political rights in South Africa? When will the Foreign Secretary realise that a gentle rebuke now and again of the South African authorities is not sufficient? Much stronger action is required. When will the British Government face their responsibilities and recognise that far more effective measures including economic sanctions, are required against that apartheid regime?
    Sir Geoffrey Howe: If the matter were only one tenth as simple as the hon. Gentleman implies! The Prime Minister and I have made it plain to the South African Government on many occasions that there is an urgent need for them to take the necessary steps to bring apartheid to an end. To that end, with the support of Commonwealth and European Governments, we have promoted the energetic work of the Commonwealth Eminent Persons Group. We have invested a lot of effort in that exercise, and that is why we join the whole House in deploring the attacks that have taken place today.
    Mr. Richard Alexander: If terrorist raids had taken place from those three Commonwealth countries against South Africa's sovereign territory, it would surely have been with the connivance, at the very least, of their Governments.
    Sir Geoffrey Howe: I have already said that there is no evidence that any violence by the ANC or anybody else in South Arica is sanctioned, still less directed, by the authorities in Botswana, Zambia and Zimbabwe. At the very time when the attack took place, contacts were made between the Governments of Botswana and South Africa with a view to a further meeting of the joint commission directed towards joint action against such activity.
    Mr. Guy Barnett: Did the Foreign Secretary notice that when President Masire of Botswana surveyed the damage done by the brutality of South African troops he described the action as being "completely unprovoked and unwarranted"? He asked:
    "What have we done to deserve this?"
    Does that not sound like a cry for help to fellow Commonwealth countries? What practical contribution will the Government make to the Government of Botswana in order to repair some of the damage done by South African troops?
    Sir Geoffrey Howe: I have not yet seen the President's observation, but I can well understand why he made it. We shall have to consider that question, and several other matters arising out of it.
    Mr. Hugh Dykes: Is my right hon. and learned Friend aware that the fact that he has made a statement is appreciated in all parts of the House, especially as the United Kingdom Government is in a difficult position, which deserves some sympathy, but do not the raids conclusively show that the regime in Pretoria is not only extremely dislikable, but stupid? After all, it has perpetrated an act that will make it far more difficult for the Eminent Persons Group to reach a successful conclusion. Is there any prospect of this Government, as a leading Government in the Commonwealth, and as they are taking over the EEC presidency on 1 July, making sure
    24
    that there are renewed initiatives? Is my right hon. and learned Friend still hopeful that the Eminent Persons Group will be successful? Has not the day been brought inevitably closer when full sanctions will be imposed against Pretoria?
    Sir Geoffrey Howe: The Commonwealth Eminent Persons Group, the Governments concerned, and others, are bound now to consider how far, and in what way—if at all — the group can continue to play a part. We believe that it should be possible for it to play an important role in the search for a settlement, but obviously this series of raids underlines the urgency of its work. We have made absolutely plain to the South African Government our view of the gravity of the action that they have taken.
    Mr. A. J. Beith: Is it not likely that the raids will make it impossible for the CEPG to continue its work, and that the raids might have been designed for that purpose? If that work comes to an end, will that not represent a decisive change in the circumstances under which the Prime Minister said in Bermuda that she was not prepared to contemplate sanctions? Does the Foreign Secretary accept that the British Government's attitude must be completely reassessed if those circumstances arise?
    Sir Geoffrey Howe: I shall not undertake a reassessment of the Government's attitude in the House of Commons this afternoon. It is plain from what I have said already that the attacks, when the Commonwealth group is in South Africa, are to be particularly deplored. Plainly, they make a substantial difference to the atmosphere in which the group has been trying to do its work. We still believe that it is important to try, if it is humanly possible, to promote a peaceful solution to the troubles of southern Africa.
    Several Hon. Members rose—
    Mr. Speaker: Order. I have to take into account subsequent business being under the guillotine. I shall allow questions to continue until 4 o'clock, and then we must move on.
    Mr. Robert Adley: I welcome my right hon. and learned Friend's decision to make a statement today, and I welcome what he said. Will he please note that his description of state terrorism as perpetrated by the South Africans seems to be a more accurate use of such a phrase than on other occasions on which it has been used recently by Her Majesty's Government? Will my right hon. and learned Friend confirm that the South Africans have put themselves in exactly the same position as the Soviet Union in Afghanistan, the Vietnamese in Kampuchia and the Israelis in the Lebanon, Jordan, Egypt and Syria, in that they have deliberately invaded and occupied a neighbouring country because they do not like the nature of the regime there?
    Sir Geoffrey Howe: I have made plain our condemnation of the action. I urge my hon. Friend not to press his analogies too far, because what is plainly different is that incursions have taken place into three countries, but no attempt at occupation has been made. That is totally different from my hon. Friend's examples.
    Mr. Ted Leadbitter: The Secretary of State has said several times that he has condemned the action. The interesting question to put to him now is

    25
    simply this: if that is all that he is to do, what impact will that condemnation have on President Botha, and what impression will that condemnation, without any other action, have upon the Commonwealth countries affected?
    Sir Geoffrey Howe: If that were all that happened, the hon. Gentleman's question might have some sense in it. We are speaking less than 12 hours after the incident took place. I have already made it plain that we shall have to assess the situation carefully—not only on our own—with a view to deciding whether any further action is appropriate.
    Mr. John Stokes: Is my right hon. and learned Friend aware that Government Members understand the difficulties, particularly in view of our membership of the Commonwealth, but how long are this Government and country planning to behave towards South Africa as if we were a sort of nanny? Surely that independent nation should pursue its own salvation in its own way? Pious protests from us might be counter-productive.
    Sir Geoffrey Howe: There is no question of our proceeding as a "sort of nanny". We have important political and economic relations with South Africa, and a large number of British citizens are resident there. We have had historic connections over many years and a profound interest in the prospects of peace in southern Africa. For those reasons, we rightly interest ourselves in the future of that country.
    Mrs. Gwyneth Dunwoody: Is the Foreign Secretary not aware that this violent and brutal attack when the Commonwealth group of personages are in South Africa is no accident but is a deliberate policy of destabilisation? Those of us who saw the brutal attacks on people who had nothing to do with politics and the murder of a six-year-old in the street know exactly the degree of savagery of which the South Africans are capable. The right hon. and learned Gentleman must do more than talk.
    Sir Geoffrey Howe: I understand the hon. Lady's concern. We are all totally affronted and shocked by violence and savagery, in whatever form. For that reason, we have consistently called for a way forward in South Africa in the context of a suspension of violence on all sides. For that reason also, I have already made plain the extent to which we deplore the fact that the action took place while the Commonwealth group was in South Africa.
    Mr. John Browne: Does my right hon. and learned Friend accept that the ANC is heavily infiltrated by Soviet Marxist forces, which are anti-democratic, and are fulfilling a role of world terror? The raids emphasise only too clearly that the chances of a peaceful solution in South Africa are fast running out. Does my right hon. and learned Friend accept that the chances of a peaceful solution are based on power sharing that will protect minorities, and that such a solution has been adopted in the past by Switzerland, where the power is based on cantons? Does he believe that such a solution is applicable to South Africa? If so, will he agree to push for one?
    Sir Geoffrey Howe: Despite our close interest in the future of South Africa, we have, I think rightly, refrained from seeking to offer detailed prescriptions for the constitutional future of that country.
    Mr. Andrew Faulds: The right hon. and learned Gentleman has obviously heard of Libya, because he agreed to this country's bases being used in an attack on that country. Does the right hon. and learned Gentleman realise that had the British Government attempted to say no, Reagan would have gone ahead in any case?
    When will he stop trying to differentiate between state terrorism, whether launched by South Africa. Israel or America, in countries such as Libya and against a possible foe such as Nicaragua?
    Sir Geoffrey Howe: I can understand how anyone might be tempted to draw parallels and comparisons within the wide number of examples cited by the hon. Gentleman. It is not possible to lump them together in one general categorisation.
    Mr. Harry Greenway: Will my right hon. and learned Friend draw the attention of advocates of sanctions to the experience of the Wilson Government in the late 1960s, when they tried to impose sanctions against Rhodesia and failed completely, especially in respect of oil?
    Sir Geoffrey Howe: That is one of the reasons why our view of sanctions has always been as we have expressed it many times.
    Mr. David Young: Will the Secretary of State take on board the fact that, in the eyes of the world, we are on trial? The Commonwealth is looking at us to see to what degree we put words in place of action. The terrorists in South Africa, who are nothing but a lot of terrorist wolves, recognise a dead sheep when they see one.
    Sir Geoffrey Howe: I cannot accept the absurd proposition with which the hon. Gentleman started his question.
    Mr. Tom Sackville: Does my right hon. and learned Friend agree that the South Africans would be better advised to try to learn something from the remarkable reconciliation and co-existence between blacks and whites in Zimbabwe than to try to disrupt the whole region through such an attack?
    Sir Geoffrey Howe: My hon. Friend has made an entirely valid point.
    Mr. Tony Banks: As the Government in Harare have made it clear that Zimbabwe is not being used for attacks on South Africa, is the Secretary of State prepared to accept any requests from the Government of Zimbabwe, or of any Commonwealth country to erect British anti-aircraft missile systems around the capital cities? Is the right hon. and learned Gentleman prepared to send British military advisers to those countries to safeguard territorial integrity?
    Sir Geoffrey Howe: The points raised by the hon. Gentleman went a good deal further than the conclusions that we have drawn from our discussions.
    Mr. Tony Marlow: Will my right hon. and learned Friend expand on his answer to our hon. Friend the Member for Christchurch (Mr Adley) concerning the fact that the operation today is a lesser evil than the Israeli incursion into Lebanon? When my right hon. and learned Friend considers what action to take—

    27
    if he considers taking action—will he bear in mind the action that was taken in respect of the Israeli invasion of Lebanon?
    Sir Geoffrey Howe: I can understand why my hon. Friend attempted to draw every kind of parallel. It is not easy to deal with the matter in any sensible fashion at this length. The fact is that the Israeli invasion of Lebanon involved both an invasion and an occupation of Lebanon. That is to be distinguished from the incidents taking place today, however deplorable they may be.
    Mr. Martin Flannery: Does the right hon. and learned Gentleman agree that, to defend an indefensible regime, the South African Government are now thrashing round wildly in a way which is utterly unaceptable to the civilised world and which, I hope, is unacceptable to us, although it has massive backing on the Conservative Benches, as has been shown clearly today? Will he realise that platitudes give aid and comfort to the Pretoria Government, and that only when some action such as sanctions is taken, and only when the right hon. and learned Gentleman gets President Reagan to do something rather than helping UNITA, will South Africa be stopped from bombing places around them, bombing Angola and occupying Namibia, contrary to the wishes of the United Nations?
    Sir Geoffrey Howe: I have already made clear our view that these actions are a plain violation of the sovereignty of neighbouring countries and that they are especially deplorable in these circumstances. We shall have to consider what further action may be necessary. I am not prepared, however, to endorse the proposition offered by the hon. Gentleman and to align any of my hon. Friends with support for the apartheid regime, which is condemned and deplored on both sides of the House.
    Mr. Nicholas Fairbairn: Assuming that the attacks had not been against these
    28
    military camps, but from them and against South Africa, would my right hon. and learned Friend have made a statement, and, if so, what would it have been?
    Sir Geoffrey Howe: I am not able to follow my hon. and learned Friend's reference to attacks from and against South Africa. It seems to me to be a confusion of thought.
    Mr. Tam Dalyell: Will the Foreign Secretary reconsider his answer to my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees)? He said that Libya was as different from South Africa as chalk is from cheese. Is it not a fact that the Federal police in Germany—the Bundeskriminalamt—has said that it has found no connection whatever between the pretext for the bomb in Berlin and the Libyan connection and that Herr Lochte in Hamburg, the head of the Verfassungschutz who is in a position to know, has said that he—
    Mr. Speaker: Order. The hon. Gentleman's question must be related to South Africa.
    Mr. Dalyell: It is related to a statement by the Foreign Secretary which is just not true. He said—
    Mr. Speaker: Order. I have given the hon. Gentleman a good chance. He must get his question in order.
    Mr. Dalyell: The Foreign Secretary should not be allowed to get away with things that are factually inaccurate when answering my right hon. Friend the Member for Morley and Leeds, South. The fact is that a man who is in a position to know in the Verfassungschutz has said that he excludes any connection. It is intolerable that the Foreign Secretary should come to the House and by sleight of hand make statements for which there is no factual backing.
    Mr. Speaker: Order. I think that we have heard enough for the Foreign Secretary to make a brief reply if he wishes.
    Sir Geoffrey Howe: I do not.

    Social Security Bill (Allocation of Time)
    Ordered,
    That the Reports [6th and 15th May] of the Business Committee he now considered. —[Mr. Lennox-Boyd.]
    Report considered accordingly.
    Question, That this House doth agree with the Committee in its resolutions, put forthwith, pursuant to Standing Order No. 45 (Business Committee) and agreed to
    Following are the reports of the Business Committee:
    That—

    (1) The order in which proceedings on consideration are taken shall be New Clauses, amendments to Clauses Nos. 1 and 2, Schedule No. 1, Clauses Nos 3 to 6, Schedule No. 2, Clauses Nos. 7 to 36, Schedule No. 3, Clauses Nos. 37 to 46, Schedule No. 4, Clauses Nos. 47 to 49, Schedule No. 5, Clauses Nos. 50 to 63, Schedule No. 6, Clauses Nos. 64 to 68, Schedule No. 7, Clauses Nos. 69 to 73, Schedule No. 8, Clauses Nos. 74 to 77, Schedules Nos. 9 and 10, Clauses Nos. 78 to 81 and New Schedules.

    (2) The allotted days which under the Order [15th April) are given to the proceedings on consideration and Third Reading shall be allotted in the manner shown in the Table set out below and, subject to the provisions of that Order, each part of the proceedings shall be brought to a conclusion at the time specified in the third column of that Table.

    TABLE

    Allotted day

    Proceedings

    Time for conclusion of proceedings

    First day

    Consideration

    Midnight

    Second day

    Consideration

    8 pm

    Third Reading

    10 pm

    That the Resolution of the Committee reported to the House on 6th May be varied by substituting the following provisions for those in the Table at the end of that Resolution:—

    TABLE

    Allotted day

    Proceedings

    Time for conclusion of proceedings

    First day

    New Clauses

    7 pm

    Amendment up to the end of Clause 18

    9 pm

    Amendments up to the end of Clause 21

    10.30 pm

    Amendments up to the end of Clause 27

    Midnight

    Second Day

    Amendments up to the end of Clause 33

    6 pm

    Amendments up to the end of Clause 42

    7 pm

    Remaining proceedings on consideration

    8 pm

    Third Reading

    10 pm

  Orders of the Day

    Social Security Bill
    [IST ALLOTTED DAY]
    As amended (in the Standing Committee), considered.
    4.5 pm
    Mrs. Margaret Beckett: On a point of order, Mr. Speaker. I am not sure whether this is the right time to raise this matter, but I am sure that you will tell me if it is not.
    Since the Business Committee met to consider the order in which the Bill would be debated and the way in which it would be taken, there have been two important developments. First, the Government have tabled a new clause which reschedules a debate which would have come tomorrow. Secondly, the Government have made an important announcement, of which we had no warning, which makes a difference to the length of a debate which might otherwise have been proposed and possibly accepted. I wonder whether there is any possibility of the Business Committee reconvening to consider the order — I refer to its doing so much later tonight, not immediately.
    Mr. Speaker: It might have been a little easier for me if the hon. Lady had raised her point of order before I had put the Question on the motion. I shall look carefully at my selection tomorrow, hopefully to meet the hon. Lady's point. Will that help?
    Mrs. Beckett: I am not sure that it will unless starred amendments are taken. I apologise. I had intended to raise the matter earlier, but we were discussing at what point to raise the matter when you put the Question on the motion. I apologise. That was my fault.
    Mr. Speaker: I shall look carefully at any starred amendments tomorrow and I hope that that will help the House.
    Mr. Archy Kirkwood: On a point of order, Mr. Speaker. The Clerks have laboured hard and honourably, but my name has slipped to the tail of amendment No. 60 and I wonder whether, for the avoidance of doubt, it could be removed in due course.
    Mr. Speaker: I shall ensure that it is.

    Social Security Bill

      New Clause 20
      ACTUARIAL TABLES
      '(1) Regulations prescribing actuarial tables for the purposes of any of the provisions to which this section applies—

      (a) shall be made only after consultation with the Government Actuary; and

      (b) shall not be made unless a draft of them has been laid before Parliament and approved by a resolution of each House.

      (2) This section applies—

      (a) to sections 44, 44ZA, 44A and 45 of the Social Security Pensions Act 1975; and

      (b) to section 5 above.

      (3) The tables—

      (a) shall embody whatever appears to the Secretary of State to be the best practical estimate of the average cost, expressed in actuarial terms and relative to a

      31
      given period, of making such provision as is mentioned in section 44(5)(a) or (b), 44ZA(11)(b), 44A(3) or 45(2) of the Social Security Pensions Act 1975 or in section 5(12)(b) above, as the case may be; and

      (b) shall assume for any period an average yield on investments which is not less than the average increase during that period in the general level of earnings obtaining in Great Britain,

      but the regulations may provide for them to be adjusted according to whatever is from time to time the actual yield on prescribed investments or the average yield, as shown in prescribed published indices, on prescribed classes of investments.
      (4) The Secretary of State may from time to time, and shall when required by subsection (6) below, lay before each House of Parliament—

      (a) a report by the Government Actuary on any changes in the factors affecting any of the actuarial tables prescribed for the purposes of any of the provisions to which this section applies; and

      (b) a report by the Secretary of State stating whether he considers that the regulations ought to be altered in view of the Government Actuary's report and, if so, what alterations he proposes.

      (5) The changes referred to in subsection (4)(a) above are, in the case of the first report under that paragraph, changes since the last report under section 46(3)(a) of the Social Security Pensions Act 1975 and, in the case of a subsequent report under this section, changes since the preparation of the last such report.
      (6) The Secretary of State shall lay the first report under this section not later than 6th April 1987 and subsequent reports at intervals of not more than five years.
      (7) If in a report under this section the Secretary of State proposes alterations in the regulations, he shall prepare and lay before each House of Parliament with the report draft regulations giving effect to the regulations and to be in force—

      (a) from the beginning of such tax year as may be specified in the regulations not earlier than the second tax year after that in which the regulations are made; or

      (b) where it appears to him to be expedient for reasons of urgency, an earlier date not earlier than the date on which the regulations are made.

      (8) If the draft regulations are approved by resolution of each House, the Secretary of State shall make the regulations in the form of the draft.' [Mr Major.]
      Brought up, and read the First time.
      The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Major): I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to take Government amendments Nos. 18, 34, 117 and 133.
      Mr. Major: I hope and believe that we can commence the Report stage on a non-contentious note in regard to policy.
      There are circumstances in which it is desirable for premiums to be paid to the state effectively to buy people back into the state earnings-related pension scheme as if they had never been contracted out. That would happen, for example, when schemes ended, and the provision is wholly beneficial.
      The cost of the premium is calculated by using actuarial tables that are prescribed under section 46 of the Social Security Pensions Act 1975. The new clause replaces section 46. All the provisions concerned refer to the cost of providing a guaranteed minimum pension. The actuarial tables include adjustments that are aimed at ensuring that schemes make neither a profit nor a loss as a result of changes in market yields on investments over the period of employment. The new clause reflects that more explicitly, as set out in subsection (3). It also eliminates the need to produce two sets of tables for each type of
      32
      premium, which was required by the previous wording. It also allows the regulations to be made at a time other than the quinquennial review of the contracted out rebate, although I reassure the House that the quinquennial review will continue.
      The new clause deals with existing premiums and those proposed in clause 5 and schedule 2 for protected rights premiums. The amendments in this group are consequential repeals and deletions and lead to what should be a simplification and improvement of present provisions.
      Mr. Michael Stern: I am grateful to my hon. Friend for his explanation of the new
      clause.
      The actuarial profession has featured increasingly frequently in debates on social security legislation, and it has been put to me by a few members of that profession that they are beginning to feel somewhat over-regulated.
      I wonder whether my hon. Friend would care at some stage to bring together all the provisions in the Social Security Act 1985 and its accompanying regulations, and what will be the Social Security Act 1986 and its accompanying regulations, which will be published in the next few years, to show the extent to which he is attempting to vary standard practice in the profession.
      Mr. Major: My hon. Friend has raised a detailed, technical and interesting point. I understand the observations that he has made on behalf of the actuarial profession. I cannot give him a commitment to respond as he requests, but we will consider the matter carefully.
      Mrs. Beckett: We appreciate the Government's deciding to pursue this course, and especially the proposal that the draft order should be laid before the House. That will give us more of an opportunity to scrutinise what is proposed.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

      New Clause 21
      CROWN EMPLOYMENT
      '(1) A person who is employed by or under the Crown shall be treated as an employed earner for the purposes of sections 1 to 15 above.
      (2) A person who is serving as a member of Her Majesty's forces shall, while he is so serving, be treated for the purposes of sections 1 to 15 above as an employed earner in respect of his membership of those forces.
      (3) The provisions of this Act relating to family credit apply in relation to persons employed by or under the Crown as they apply in relation to persons employed otherwise than by or under the Crown.
      (4) Subject to subsection (5) below, the provisions of Part V of this Act apply in relation to persons employed by or under the Crown as they apply in relation to persons employed otherwise than by or under the Crown.
      (5) The provisions of that Part of this Act do not apply in relation to persons serving as members of Her Majesty's forces, in their capacity as such.
      (6) For the purposes of this section Her Majesty's forces shall he taken to consist of such establishments and organisations as may be prescribed, being establishments and organisations in which persons serve under the control of the Defence Council.'. [Mr. Major.]
      Brought up, and read the First time.
      Mr. Major: I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to consider the following:

      33
      Government new clause 22—Application of Parts I and V to special cases.
      Government amendment No. 56.
      Mr. Major: Amendment No. 56 deletes the present clause 16 and enables it to be replaced by clauses 21 and 22 respectively. Clause 16 dealt with Crown employment and requires replacement following changes to the Bill made in Committee. In particular the introduction of statutory maternity pay in part V of the Bill meant that we were faced with either having a second clause dealing with Crown employment or, alternatively, removing the existing provision in clause 16 and introducing a new provision. We have chosen to do the latter as the neater way of achieving our aim. That is the substance of this grouping.
      As the House will know, it is normal in social security legislation to apply to Crown employees and members of Her Majesty's forces only those provisions that affect them through their contracts of service where that would be in their best interests. Where it is more advantageous for them to be excluded from the general arrangements that is also generally and traditionally done. For this Bill we are sure that it is right that these groups should be able to participate in the new personal pension scheme arrangements and also in family credit. Consequently, subsections 1 to 3 of the new clause will make that possible.
      I should say, in order to eliminate questions, that income support in this regard is not relevant since members of the forces are in full-time employment and special arrangements will exist for rental assistance for service men and women in Crown property. Therefore, housing benefit is also excluded. The special assistance is broadly similar to rent allowances.
      Statutory maternity pay is also excluded. For many years it has been the arrangement that members of Her Majesty's forces are excluded from sickness benefit and, in more recent years, from statutory sick pay as well as maternity allowance. There is nothing malign or difficult about this proposition. It is because there are alternative arrangements made for them which are far more convenient for all concerned. It is for that reason only that we have decide to excluded members of Her Majesty's forces from statutory maternity pay and to continue their exclusion from maternity allowance. Subsections (4) and (5) of new clause 21 effectively include Crown employees for these benefits but excludes members of Her Majesty's forces.
      New clause 22 gives the Secretary of State powers to make regulations to modify the pension provisions of part I and statutory maternity pay so as to make them suitable for mariners, airmen, people outside Great Britain and workers on oil rigs. In seeking the powers, the Government are simply ensuring that regulations can be made, if necessary, to iron out any awkwardness that might arise in adapting the personal pensions and maternity pay proposals for those people who are not employed in conventional jobs on mainland Britain. It repeats the provision which was formerly in clause 16 of the Bill for pensions purposes and it follows the wording of section 22 of the Social Security and Housing Benefits Act 1982, which made the same provision for statutory sick pay.
      I should emphasise again that there is no special reference to income-related benefits in new clause 22
      34
      since, whatever special protection may be necessary, can be made under other powers in the Bill. The new clauses do not enter any fresh note of contention into our proceedings and I commend them to the House.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

      New Clause 22
      APPLICATION OF PARTS I AND V TO SPECIAL CASES
      '(1) Regulations may modify Parts I and V of this Act, in such mariner as the Secretary of State thinks proper, in application to any person who is, has been, or is to be—

      (a) employed on board any ship, vessel, hovercraft or aircraft;

      (b) outside Great Britain at any prescribed time or in any prescribed circumstances; or

      (c) in prescribed employment in connection with continental shelf operations.

      (2) Regulations under subsection (1) above may in particular provide—

      (a) for any provision of either of those Parts of this Act to apply to any such person, notwithstanding that it would not otherwise apply;

      (b) for any such provision not to apply to any such person. notwithstanding that it would otherwise apply,

      (c) for excepting any such person from the application of any such provision where he neither is domiciled nor has a place of residence in any part of Great Britain;

      (d) for the taking of evidence, for the purposes of the determination of arty question arising under any such provision, in a country or territory outside Great Britain, by a British consular official or such other person as may be determined.

      (3) In this section `continental shelf operations" means any activities which, if paragraphs (a) and (d) of subsection (6) of section 23 of the Oil and Gas (Enterprise) Act 1982 (application of civil law to certain off-shore activities) were omitted would nevertheless fall within subsection (2) of that section.'. —[Mr. Major.]
      Brought up, read the First and Second time, and added to the Bill.

      New Clause 29
      EARNINGS FACTORS
      'The Social Security Act 1975 and the Social Security (Miscellaneous Provisions) Act 1977 shall be amended in accordance with Schedule (Earnings factors) to this Act in relation to earnings factors.'. —[Mr. Major.]
      Brought up, and read the First time.
      4.15 pm
      Mr. Major: I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to take Government amendments Nos. 144 to 148 and Government amendment 143.
      Mr. Major: New clause 29 is a fiendishly complex provision for which the hon. Member for Derby, South (Mrs. Beckett) can take part of the blame or credit, according to her own inclination. The hon. Lady teased my hon. Friend the Minister for Social Security in Committee with the complexity of the provisions that had to be introduced last year following the 1985 Budget changes in national insurance contributions. I could understand why she did so and, I recall, she did so rather effectively. She will be glad to know that we are now introducing new clause 29 and its accompanying schedule,

      35
      which will greatly simplify the position. Let no one, least of all the hon. Lady, doubt that we are a listening Government in this respect.
      At present, both flat rate and earnings-related benefit depend on an individual's earnings in any one year on which national insurance contributions are payable. However, the legislation is cast in terms of contributions and that is what employers and the Department of Health and Social Security computers record. To make the link between contributions and earnings, the Social Security Act 1975 and the Social Security Pensions Act 1975 use a device called earnings factors as a multiplier to derive from contributions paid a figure approximating to the earnings on which they were payable. The earnings factors then become the buildings blocks of benefit entitlement. The House may well think that this is a tortuous way round, and I agree. However, that is what the legislation at present does.
      The introduction in the 1985 Budget of lower rate contribution bands without any alteration in benefit entitlement did, as the hon. Member for Derby, South (Mrs. Beckett) intimated in Committee, throw considerable complexity in what was already complicated machinery. Because differential rates of contribution are paid for those with different levels of earnings the value of contributions now gives no exact indication of the earnings to which they relate and hence, the amount of benefit entitlement. Without modification that would have meant that people with lower earnings, whom the national insurance contribution concessions were intended to help, would lose benefit entitlement.
      To overcome that problem we introduced, as a temporary expedient in 1985, regulations to allow the earnings factors to be boosted. They were rather complex regulations, but they were introduced so that no one would lose out on benefit. That was intended only as a temporary expedient until the primary legislation could be amended. New clause 29 and its schedule now seek to derive earnings factors directly from the earnings on which class 1 contributions are payable and thus avoid the need for the boosting regulations we currently have. Therefore, to that extent only is it a deregulatory measure. I think that it will be generally welcomed in the House, without exception.
      Unfortunately, the House does not have visual aids. Were it to have them I would be able to show an immensely large and complex set of regulations which we hope, in due course, will no longer be needed. Social security legislation tends to complexity, if not opacity, too. Regulations expressed entirely in algebraic formulae do nothing to make the law understandable to those affected by it or those administering it, with the possible exception of my hon. Friend the Member for Bristol, North-West (Mr. Stern) who showed a remarkable facility for such regulations in Committee. This amendment will remove the need for the artificial boosting arrangements and will enable earnings factors to be calculated more simply. Contributors will still have the advantage of lower rate contributions if they have low earnings, and their earnings-related benefit will link directly to their earnings, as was the case before last year's budget changes.
      Therefore, this new clause enshrines the beneficial effect of the reduced rates of national insurance contributions. I hope that the House will agree that this is a sensible amendment which ties up the loose ends left
      36
      over from the 1985 contribution changes. It is a change which we would have included in last year's Social Security Act, if there had been sufficient time to sort out the details of this rather lengthy amendment, which would simplify life for employers and for the DHSS. Moreover, it will reintroduce precision into the calculation of earnings factors. The present boosting regulations are, for all their complexity, clumsy and are no more than a stop-gap. They were never believed to be more than that. Beneficiaries will continue to receive the benefit to which their contributions properly entitle them. Therefore, I commend the new clause to the House together with amendments Nos. 143 to 148 inclusive, which are technical, and consequential.
      Mrs. Beckett: The Minister suggested that the existence of this new clause shows that this is a listening Government. It appears to me that its necessity shows the danger of listening to the Treasury, since it was clearly the Department's inability to convince the Treasury of the problems which might arise from the way in which the national insurance contributions were hastily shoved into last year's Bill which has led to the problem. However, we are glad to see it resolved to a degree at least, especially if it makes regulations less complex.
      Mr. Stern: Echoing the comments of the hon. Member for Derby, South (Mrs. Beckett), one is delighted to hear that this is a listening Government. However, from my hon. Friend the Minister's introduction to the clause I would suggest that the Government do not always listen to their own Department.
      The Inland Revenue is currently carrying out a review of the complex area of the extent to which benefits should be included in earnings for national insurance purposes. The results of the review are not expected for some months, if not longer. I entirely welcome the intention of my hon. Friend the Minister in the new clause, not only to simplify the present complex regulations, but to bring the simplification in from April 1987, but I wonder whether he is underestimating the complexity that already exists, and the extent to which any regulations introduced at this stage in connection with earnings will be outdated in the near future by Inland Revenue practice. I commend my hon. Friend's effort, but I wonder whether it is not a little premature.
      Mr. Roger Freeman: I concur with my hon. Friend the Member for Bristol, North-West (Mr. Stern) in his comment about the complexity of the regulations. I did not have the honour to serve on the Standing Committee that examined the Bill, much to my regret, but surely my hon. Friend's general point is right, that for the ordinary member of a pension fund—either a member of an occupational pension fund, or an employee who merely has the benefit of having made national insurance contributions enabling him to receive the basic state pension or the earnings-related state pension — the calculation of some of those figures is almost beyond comprehension.
      I should like to make a suggestion to the Minister, because it is difficult to explain complicated issues such as those in new clause 29 in relation to the calculation of earnings factors. We expect literature from the Government about the specific provisions for portable pensions, which are greatly to be welcomed, and which the House has already dealt with in two earlier new clauses.

      37
      I urge the Government, particularly the Department of Health and Social Security, to be extremely clear and brief in the publications and advice offered not only to employers, who have the responsibility for making many of the calculations involved, including those entailed in new clause 29, but to employees, such as those in occupational pension schemes.
      Those employees will shortly be faced with the important decision about whether to opt out of or join an occupational pension scheme, and will want to know exactly how they will be affected by the calculation of the guaranteed minimum pension, for example. The effective date for the 2 per cent. incentive payment that is to be made to those who establish their own personal pensions has already been reached—the scheme has run from 1 January this year. Therefore, important decisions will have to be taken, and it is important that all Government documents and advice given by the DHSS and Ministers to employers and employees is crystal clear.
      Mr. Stern: I should like to reinforce my hon. Friend's point. From his accountancy background, which he shares with me, does he agree that the definition of "earnings" has exercised the courts for about 100 years, and that it is generally acknowledged that no satisfactory definition yet exists? In the light of that, does he agree that, given that we are now importing the same difficulty into social security regulations as already exists in taxation law, we are stepping into a minefield in which we need to go extremely carefully?
      Mr. Freeman: My hon. Friend is absolutely right. With respect to my colleagues, I find that few understand the basis of calculation of the guaranteed minimum pension. Earlier this afternoon we debated the effect on the actuarial profession, which is being consulted not only about the actuarial tables involved in an earlier new clause, but about other provisions, for example, the precise requirements to be laid upon the trustees of occupational pension funds in calculating transfer values. Those actuarial calculations are extremely complex. I am sure that my hon. Friend will agree that we should pay tribute to the actuarial profession for its contribution so far to the deliberations not only on the Bill but on some of the proposed regulations to be issued under it.
      I support my hon. Friend the Member for Bristol, North-West in his main point, about the documents to be issued by the Government later this year in relation to the calculation of earnings factor and also the advantages and disadvantages of personal pensions. I hope that the regulations and explanatory documents will be as clear as I know the Government can make them. This will be an important decision for many people. I hope that the Government will take that point on board.
      Mr. Major: I entirely understand the blandishments of my hon. Friend the Member for Kettering (Mr. Freeman), and will consider them. I agree that seeking to provide simplicity in Government communications is necessary and throughly desirable, particularly in complex areas. We have engaged consultants to advise on a whole range of communications, including pensions. I should like to précis their brief in a single word—simplicity. I hope that that thought will commend itself to my hon. Friends the Members for Kettering and for Bristol, North-West
      38
      (Mr. Stern). We entirely understand what underpins their remarks, and we shall attempt to meet them as far as we can.
      Employers will not be involved in calculations under new clause 29. They will merely have to record the amount of earnings on which contributions have been paid. It will not affect personal pensions. The definition of "earnings", to which my hon. Friend the Member for Kettering referred, will be the definition that is already used for contributions.
      My hon. Friend the Member for Bristol, North-West, referred to the Inland Revenue review. He may have misread the intent of the regulations, as I am advised that they will not be affected by the review that is now being carried out by the Inland Revenue. Here, we enter an extremely arcane area. It might be most appropriate if I were to write and set out to my hon. Friend precisely why we believe that the Inland Revenue review will not be germane to the regulations.
      Mr. Stern: I am grateful to my hon. Friend for his comments and his offer, but his comments are a little surprising. I shall await his letter with greater interest given that I think that the Inland Revenue review strikes at the heart of what my hon. Friend is trying to do. The review is trying to determine which earnings, in the form of non-cash earnings, should or should not rank for national insurance contributions. Given that we are discussing earnings factors that will be based on the earnings that rank for contributions, I am surprised to learn from my hon. Friend that the review is not germane, but I shall await his letter with great interest.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

      New Clause 30
      REVIEWS
      '(1) A social fund officer—

      (a) shall review a determination made under this Part of this Act by himself or some other social fund officer, if an application for a review is made to him within such time and in suet form and manner as may be prescribed by or on behalf of the person who applied for the social fund payment to which the determination relates; and

      (b) may review such a determination in such other circumstances as he thinks fit;

      and may exercise on a review any power exercisable by an officer under section 33 above.
      (2) The power to review a determination conferred on a social fund officer by subsection (1) above includes power to review a determination made by a social fund officer on a previous review.
      (3) On an application made by or on behalf of the person to whom a determination relates within such time and in such form and manner as may be prescribed a determination of a social fund officer which has been reviewed shall be further reviewed by a social fund inspector, and the Secretary of State shall appoint officers to be so called for the purpose of conducting such reviews.
      (4) On a review a social fund inspector shall have the following powers—

      (a) power to confirm the determination made by the social fund officer;

      (b) power to make any determination which a social fund officer could have made;

      (c) power to refer the matter to a social fund officer for determination.

      (5) In determining a question on a review a social fund officer or social fund inspector shall have regard, subject to subsection (6) below, to all the circumstances of the case and, in particular, to the matters specified in section 33(9)(a) to (e) above.
      (6) An officer or inspector shall determine any question on a review in accordance with any general directions issued by the Secretary of State under section 33(10) above and any general directions issued by him with regard to reviews and in determining any such question shall take account of any general guidance issued by him under that subsection or with regard to reviews.
      (7) Directions under this section may specify—

      (a) the circumstances in which a determination is to be reviewed; and

      (b) the manner in which a review is to be conducted: — [Mr. Newton.]

      Brought up, and read the First time.
      The Minister for Social Security (Mr. Antony Newton): I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to take the following: Amendment (a) to the proposed new clause, in subsection 1(b) leave out
      "such other circumstances as he thinks fit"
      and insert "prescribed circumstances".
      New clause 15—Appeal against social fund officers' determination—

      `(1) A claimant may appeal against any determination made by a social fund officer under this Part of this Act.

      (2) Any appeal under subsection (1) above shall be to a social security appeal tribunal under the procedure laid down in sections 100, 101 and 104 of the Social Security Act 1975 and section 15 of the Social Security Act 1980, and any reference to "adjudication officer" in those sections shall be construed as including reference to a social fund officer.

      (3) Section 33(12) of this Act shall only be operative insofar as any determinations made under that section comply with the procedure established in subsection (2) above.'.

      New clause 16 — Appeals against housing benefit determination—

      `(1) A person who has claimed housing benefit may appeal against any determination of that claim.

      (2) Any appeal under subsection (1) above shall be to a social security appeal tribunal under the procedure laid down in sections 100, 101 and 104 of the Social Security Act 1975 and section 15 of the Social Security Act 1980, and any reference to "adjudication officer" in those sections shall be construed as including reference to the appropriate authority responsible for administering housing benefit under section 28 of this Act.

      (3) Section 29(3) of this Act shall only be operative insofar as any regulations made under that section comply with the procedure established in subsection (2) above.'.

      New clause 27 — Determinations by Social Fund Officers (Appeals) —

      `(1) The Secretary of State shall make arrangements for appeals against determinations by Social Fund officers to be heard by inspectors acting as his deputies.

      (2) The recommendations of the inspectors (and the final decisions of the Secretary of State, if different) shall be communicated to the appellant in writing.

      (3) The Secretary of State shall present to Parliament an annual report on the operation of the Social Fund and the appeals procedure.'.

      (5)Amendment No. 155, in clause 33, page 40, line 37, after 'shall', insert 'in the last instance'.
      No. 156, in page 40, line 38, at end insert
      `(2A) Sections 100, 101 and 104 of the Social Security Act 1975 relating to a claimant's rights of appeal shall apply to decisions taken by the Social Fund Officers.'.
      No. 158, in clause 49, page 55, line 7, at end insert—
      '(9) Regulations shall provide for a claimant or applicant to have a right of appeal to a social security appeal tribunal constituted under the Social Security Act 1975 against

      (a) any determination or direction (including a determination to refuse to review a determination or direction) of a social fund officer under section 33 of this Act.

      40

      (b) any determination of a local authority (including a determination to refuse to review a determination) relating to housing benefit.'.

      Government Amendment No. 162.
      Amendment No. 80, in clause 33, page 42, line 3, at end add
      'but shall in all cases provide for an appeal to a person independent from the Social Fund Officer who made or refused the award in question'.
      4.30 pm
      Mr. Newton: The new clause deals with the important subject of the review of social fund decisions. It was extensively debated in Committee. It seeks to make a response to the debate in Committee along the lines of my comments in Committee, and taking into account the views of hon. Members on both sides of the Committee.
      It might be sensible if I started by outlining formally the provisions of the new clause. It provides for review by a social fund officer of determinations made under clause 33, either on application or on behalf of the person to whom the determination relates, or when he feels that the circumstances justify that. The clause provides that there can be a further review—this point specifically reflects the anxieties expressed in Committee—by a social fund inspector. It sets out the powers of the social fund inspector and provides that a social fund officer or inspector shall be subject to the directions and guidance issued by the Secretary of State.
      Subsection (1) provides that a social fund officer shall review a determination of an application in the prescribed manner and time by, or on behalf of, the person to whom the determination relates. He can also review a determination if the circumstances justify that. The subsection also provides that when reviewing a case the social fund officer continues to exercise his usual powers under clause 33.
      With regard to the use of the regulation-making power, it is intended that, as the regulations provide for adjudication of weekly social security benefits, the regulations will set out time limits within which an application may be made, and details such as the application being made in writing.
      Subsection (2) provides that the ability to review a determination applies also to one that has already been reviewed. Subsection (3) provides that when a determination has been reviewed by a social fund officer, if a further application is made within the prescribed manner and time, it will be further reviewed by a social fund inspector. These inspectors will be appointed under the subsection. The use of the regulation-making powers will be in line with that which I have already described under subsection (1).
      Subsection (4) describes the powers of a social fund inspector. These state that he can confirm the determination, make a determination which a social fund officer might have made, or refer the matter to a social fund officer to determine. Subsection (5) provides that, subject to the following subsection, social fund officers and inspectors, when reviewing a determination, shall have regard to all the circumstances of a case and specifically to the matters referred to in subsection (9) of clause 33.
      Subsection (6) provides that social fund officers and inspectors shall be subject to general directions and guidance issued by the Secretary of State under subsection (10) of clause 33. These can include specific guidance and

      41
      directions on reviews. Subsection (7) provides that the Secretary of State can issue directions on the circumstances in which cases are to be reviewed and on the procedures of review.
      In an attempt to save time, I should like briefly to refer to Government amendment No. 162, which is part of the group of amendments that we are discussing. The amendment seeks out to leave out subsection (12) of clause 33. It is consequential on the proposition of the new clause and leaves out from clause 33 the previous provision which enables the Secretary of State to issue directions on the procedure as to how a review shall be conducted. That provision has been overtaken by the tabling of the extensive new clause.
      Mr. David Winnick: Will the Minister tell the House where the social fund officer will be based? Will he be based in the office where the original decision was made, or will that have been taken at regional level? Will the Minister also say where the inspectors will be based? However inadequate the Opposition consider the review to be, what rights will the person making the appeal—if it can he described as such—possess? Will he be able to appear in person before the social fund officer, or will he be represented?
      Mr. Newton: I shall come to some of the points which the hon. Gentleman has raised in my description of the provisions of the proposed new clause.
      Before technically describing the clause, I said at the outset that the procedure under which a person unhappy with the decision of a social fund officer can seek a review was the subject of considerable discussion in Committee. I shall not rehearse now the arguments that were expressed in Committee on that subject, although I accept that I may need to do that as the debate progresses. The arguments in Committee led us to the conclusion that the adjudication machinery appropriate to a regulated system of benefit, and specifically appropriate to the regulated system of weekly rates of benefit, was not appropriate for the essentially discretionary decision-making machinery that we have proposed for the social fund.
      It has always been our intention—I hope that this was clear in Committee—that there should be clear and proper rights for those who felt that the decision by a social fund officer in respect of possible payments by way of grant or loan under the social fund was wrong to have that decision properly reviewed and re-examined. One clearly significant point which gives greater emphasis to that in the new clause is that the clause confirms a clear statutory right for the claimant to require the social fund officer to review the decision if application is made. We would intend to set out in regulations the procedures for that right to be exercised.
      We have considered the fact that the procedure for review must reflect the specific nature of the social fund and the fact that it is not based on a set of regulations. We believe that the review procedures should be within the same general framework as the fund and operate consistently with the way in which the original decision was taken. We therefore suggest that the logical procedure for review—this covers one of the points raised by the hon. Member for Walsall, North (Mr. Winnick) —should initially be at the local office level at which the original decision was taken. This has the advantage, which is part of the advantage that we see for the social fund
      42
      mechanism as a whole, that the review will he close to the point of the decision and the person undertaking the review will himself or herself be aware of the local circumstances and the considerations affecting the social fund in the office where the decision was taken. There will therefore be a greater chance of a quick and flexible response.
      Under the new clause we propose that the review at the local level should still be the first mechanism for the review of decisions. As I said in Committee, at greater length than I intend to repeat this afternoon, that will do no more than build on the procedure that already exists in relation to nearly all social security decisions. If a query is raised, the first step is normally for the person who took the decision or someone senior to that person in the local office, or possibly both these people, to take a further look at that decision. In other words, when an appeal is lodged within the system, the first step is that the decision is re-examined.
      In the case of single payments, under the present system twice as many appeals have their decisions revised at that stage without ever reaching the formal appeal machinery. They are reviewed when the appeal comes in. Twice as many decisions are revised at that stage as are successful if they go on to be heard by an appeal tribunal. In practice, many decisions are reviewed as a result of an appeal being entered and never go to appeal. We would envisage that that would be part and parcel of the process. There should be an initial review at the same level as is the case for social security decisions.
      Mrs. Elaine Kellett-Bowman: If, at the end of a financial year, when the fund is perhaps almost exhausted, will there be any danger that an officer will be reviewing cases with one eye over his shoulder, so to speak, to see whether there is any money in the kitty?
      Mr. Newton: My hon. Friend raises a legitimate point, but it concerns the different and somewhat wider question of the budgeting arrangements. We have made it clear that in drawing up the budget proposals for the social fund our aim, particularly in the early stages, will be to proceed with flexibility. We expect to have arrangements for reserves at various levels rather than a completely rigid allocation down to every level of the system ab initio. It is to that point, rather than to the reviews, that my hon. Friend's remarks are directed. I acknowledge the importance of the point that she raised, but it is slightly aside from the review process that we are specifically discussing.
      Mr. Seamus Mallon: I take the Minister's point about the number of cases that are reviewed before the rates tribunal; but does he accept that. by and large, such reviews are carried out as a result of representations made by outside agencies — such as citizens advice bureaux, politicians who are doing their job properly or trade unions—and that such an independent element will not be involved if the new clause is agreed to?
      Mr. Newton: I am not absolutely sure that I understand the hon. Gentleman's point. I accept that questions about social security benefit decisions are raised by a variety of people. Sometimes they are raised by the claimants themselves, sometimes by the claimants with advice from a wide variety of people, and sometimes by others on behalf of the claimant—be it citizens advice bureaux,

      43
      Members of Parliament, local councillors or a variety of others, including social workers, probation officers and so on who, in one way or another, come into contact with the claimant.
      There is no suggestion that timplow system will be different in that respect. It will still be open to a wide variety of people to raise questions about a decision, and in our expectation the response of the local office will be precisely the same as under the present system. In other words, if questions are raised, the first stage is to take another look at the decision that has been made.
      Mr. Andrew Bowden: Will my hon. Friend confirm that, if a request for review is unsuccessful, the applicant will get a written report explaining why the application was not successful? If such an applicant took his case to a Member of Parliament, who then took it to a Minister, would that Minister agree to review it at that stage?
      Mr. Newton: My hon. Friend brings me to the next points that I wish to raise. I have described what normally happens in social security decision-making and the extent to which decisions are reviewed as a result of an application to appeal. That is an important part of understanding the problem that we face as well as the working of the system.
      I was about to say that we have listened carefully to the arguments that have been put during the continuing consultation since the publication of the White Paper and the Bill. Not least, we listened to what was said by hon. Members on both sides of the Committee about the fact that, alongside the process of review—including formal review by a senior officer within the local office—there had to be some clearly established machinery that was separate from and outside the normal management chain of the administration of the social security system. In other words, it was argued that, whether or not the process of review within a local office was satisfactory, there should be a more clearly distinct mechanism for review to provide the kind of confidence that hon. Members felt was necessary to show that an element of independence was being applied.
      As I said in Committee, we were impressed by the constructive way in which a number of hon. Members on both sides—not least my hon. Friend the Member for Halifax (Mr. Galley) and others—tabled an amendment calling for the establishment of a group of social fund inspectors who would be independent of ordinary line management, in order to bring this additional element of independence to the review of social fund decisions.
      4.45 pm
      Essentially that is what we have sought to provide in the new clause. We have provided for a further review by this body of social fund inspectors. They will be officials of the Department, and the new clause provides for their appointment — [Interruption.] Perhaps hon. Members will allow me to continue, as it may be more sensible if they make their speeches, so that I can reply to them more systematically at a later stage.
      These officers will be officials of the Department, and the new clause provides for their appointment by the Secretary of State. They will not be attached to one local office, nor will they operate within the management chain.
      44
      They will therefore provide a check that is precisely related to the concern that was expressed in Committee —that a revised confined to local office level would be thought to be, even it were not the case, merely the local office manager confirming the decision taken earlier by his own staff.
      Like the social fund officers, the inspectors will also be subject to the directions and guidance of the Secretary of State and will need to pay regard to the same kind of criteria as the social fund officers. I am sure that my hon. Friends will at least agree that that is the only way in which this will make sense, given the nature of the fund, which is not a regulated system which is appropriate to the normal form of adjudication mechanism.
      The House will also note that an inspector is given three powers. First, he can confirm the decision. Secondly, he can refer the case back to the social fund officer for him to redetermine. For example, that procedure will be followed where the inspector feels that on the evidence before him he cannot endorse the decision, but is not in a position to make a final determination on the case. Thirdly—this is essential to avoid the possible yo-yo effect if the only power were to refer the decision back —he can also determine a case in the same way as a social fund officer. The inspector's decision would then be substituted for the disputed decision.
      I am anxious to keep my remarks brief, because I recognise that hon. Members will wish to raise a number of points. I hope the House will recognise that the new clause provides the kind of procedure that was urged in Committee, especially by some of my hon. Friends. It goes considerably beyond what was in the Bill in the first place, and that is right. It provides a statutory right to request a review, and a further review if it is felt that the first review is still unsatisfactory. Most important of all, it creates a new tier of reviewing such decisions that is outside the local office and the normal social security management chain. It is a significant and important response to the concerns that have been expressed, and I commend it to the House.
      Mrs. Beckett: The Minister has given a whole range of reasons for the proposals in new clause 30 — all except the one that most hon. Members who served in Committee believed to be the real reason. In a sense the hon. Member for Lancaster (Mrs. Kellett-Bowman) put her finger on the point when she asked about cash limits.
      Many aspects of the social fund have caused widespread anxiety both inside and outside the House. They include the facts that it is discretionary and that it may provide loans rather than grants, and the size of its budget. However, the two aspects which have caused most anxiety and which are inextricably linked are the twin issues of cash limits and the way in which appeals against decisions made under the social fund will be considered. They are inextricably interlinked because the more we listened and studied the arguments in Committee, the more the essential problem seemed to be that, if the Government conceded a right of independent appeal, each case must perforce be considered by those who serve on the independent appeal body on its merits and as a request for help, and the cash limits, which are so crucial to the Government's proposals and so much a part of what they seek to do, could not bite.
      The Government have introduced this compromise proposal to give the impression of more independence—

      45
      at least the matter is not confined solely to a local office —but without there being a right of true independence through a judgment being made outside the' local office and the Department within which the decision has been made. The sum left in the fund and the time of year will be crucial. In Committee, the Minister argued that one of the advantages of the social fund was its local nature, so there was no need for an independent right of appeal. He has now conceded that it would be seen to be unjust if the fund were maintained purely at a local level, but he is not prepared to concede a fully independent appeal procedure, because that would breach the principle of cash limits.
      We are extremely worried about the scope and implications of the proposal, and therefore about the appeal procedure which will be applied. People—for example, refugees—often need help urgently. The death grant and maternity grant will be dealt with under the social fund, although they will not be subject to cash limits in the same way,. At present all those areas of decision-making carry the right of appeal to an independent tribunal.
      The hon. Member for Newry and Armagh (Mr. Mallon) asked how people could appeal to their Member of Parliament, as they do now, and obtain some sort of review or appeal procedure in that way. That will not apply in the same way because the Secretary of State will not be involved in the decisions and will not be able to overturn them. The local office, which will be at the root of decision-making, will be blamed and will carry the responsibility. As a cosmetic gesture, the Government are introducing a system of inspectors.
      When my hon. Friend the Member for Walsall, North (Mr. Winnick) pressed the Minister to say exactly how local the appeal procedure would be, the Minister's answer was not particularly clear. I think that the person who reviews the case will not be in the local office, so there will be some opportunity for the case to be reviewed by someone who is not necessarily in the immediate vicinity. However, the case will not be reviewed by anyone who has any considerations in mind other than the Department's guidelines and interests. That person will be a civil servant with an innate tendency to back his colleagues who made the decision, and not someone outside.
      The right of appeal which is being withdrawn has existed for more than 50 years, as the Government have been reminded more than once, but not too often. This is a major withdrawal of a civil and legal right. It has been said that under the present procedures some reviews and appeals succeed prior to an appeal hearing before a tribunal. In Committee, the Minister conceded, as he has today in effect conceded, that many cases which succeed before the appeal comes to a hearing do so because the officer involved knows that it will go to a tribunal. Therefore, he takes a further look at the case, because naturally, he does not wish to lose the case before a tribunal. In 1984, some 19,000 cases were successfully reviewed in that way.
      If there is no right to an independent tribunal beyond the initial decision, that pressure will be substantially reduced, if not removed altogether. Some 8,000 cases were overturned by tribunals, which is a success rate of between 20 and 25 per cent. The new clause means that the possibility of an independent review will be lost, and that 8,000 people will more than likely not have their decision beneficially reviewed and overturned.
      46
      The Government's comments and justifications for trying to abolish the right of appeal have been interesting, but weak. In the Green Paper they suggested:
      "The present appeal arrangements … can have a sledgehammer effect. The full weight of legal consideration can be brought to bear on matters which may involve small sums."
      What are small sums to those in well-paid work can be crucial to individual claimants, especially the long-term unemployed whose income is already below the poverty line. The fact that they are small sums in general terms and in the scope of the Government's Budget does not mean that they are not desperately important to the individuals who make claims and have them reviewed.
      In the White Paper the Government said:
      "The decisions which turn on whether or not it is reasonable to give or deny help in a particular case lend themselves far less readily to a separate external assessment than do matters which turn on more specific criteria."
      The existing social security appeal tribunals already deal with such matters and must interpret words, such as "reasonable", which occur frequently in social security regulations. The Government sought to argue that independent appeals were not feasible because the decisions would be discretionary.
      The Council on Tribunals, which is the expert body on these proposals, has made it absolutely clear that it does not accept almost any aspect—not a jot or tittle—of the Government's argument. Some months ago, after much consultation with the Secretary of State, it took the exceptional step of publishing a strong report, criticizing the way in which the Government intended to proceed. It states:
      "It is perfectly feasible to have independent appeals against discretionary decisions, as is shown by the system which operated before 1980 and by other appeal systems. In some ways it is even more important with discretionary decisions."
      We wholeheartedly endorse that point of view.
      Through amendment (a) we have sought to make a minor change in the Government's proposals. In Committee, we asked for the power to overturn decisions to be granted to whatever review system may exist. We asked for it to be made plain that if an independent right of appeal existed and the Government proposed to introduce a social fund inspectorate, the inspector would have the power to overturn the initial decision. That is contained in the new clause, but, as the new clause is drafted far too wide, it will allow the withdrawal of an award which had already been made for any reason, good or bad.
      As the new clause is drafted, there is no scope for any restriction to be placed on the nature of the decision to overturn, or on the reasons for it to be taken. For that reason we propose amendment (a) to new clause 30, which allows, for example, for the grounds on which a decision might be overturned to be prescribed and, indeed, prevents the withdrawal of a payment, if an unfavourable decision should be made. Otherwise, an applicant could not rely on an award that had been made.
      The main point of criticism remains unsatisfied by the new clause. The review procedure being devised will not be independent and will be seen not to be independent.
      Control is what matters most to the Government—in particular, control of cash limits. Neither Ministers nor an independent authority will have the right to overturn this decision. The cash limits will prevail. I quote again from the words of the Council on Tribunals:
      "The people most affected by this proposal are among the most vulnerable in society. Very good reasons are needed before

      47
      abolition of the right to an independent appeal in such circumstances … It is for these reasons that we are so critical of the proposal"—
      which is highly retrograde. The council urged that this proposal should be reconsidered, and the right of independent appeal retained. We urged this in Committee and we continue to urge it in the House.
      5 pm
      Mr. Roy Galley: New clause 30 is greatly to be welcomed and my hon. Friend the Minister has responded flexibly and sensibly to the strong volume and quality of arguments put to him in Committee. He has accepted the essential point that we were trying to press upon him. The hon. Member for Derby, South (Mrs. Beckett) was less than gracious in her response to this concession.
      Some of the points of concern that I raised in Committee are not dealt with by the new clause. Nevertheless, the remarks of my hon. Friend the Minister have overcome some of my concerns and anxieties. It would have been preferable to put some other provisions in the new clause and on the face of the Bill; I hope that in any regulations made under the new clause my hon. Friend will be able to go a little further than he has done today to bolster confidence in the new appeal system. His intentions are in the right direction and his heart is in the right place.
      My hon. Friend has not quite accepted the principle that the appeal shall be to the Secretary of State, with the social fund inspectors acting as deputies of the Secretary of State, which would make them at one more remove from the management structure than the new clause suggests. I agree that my hon. Friend has accepted that the social fund inspectors shall be, in large measure, independent of the local and regional management structure, and that is vital. It would have been preferable to have a system more akin to town and country planning, where there is an appeal with an independent inspector, employed by the Secretary of State, but nevertheless independent of him, against a local decision.
      New clause 30 goes a long way to meet that system, but not as far as new clause 27, which would have given greater confidence to appellants and those involved in appealing against social fund decisions, in the quality of the decisions that were made. It would have eased some of the enormous responsibility that social fund officers will have to shoulder as a result of the powers being given to them by Parliament under the Bill.
      I hope that it will be possible, as the appeals system develops, for my hon. Friend to introduce regulations to provide that decisions will be in writing, with the reasons for them fully set out. I hope also that it will be possible for appellants to obtain a hearing, with a friend or representative accompanying them if they so wish, and for the social fund officer to defend his decision at the hearing.
      I understand why my hon. Friend does not wish to have the whole panoply of a tribunal system, and perhaps by this openness we may be moving towards such a position. However, it would give more confidence if there were the ability to challenge decisions and to hear the arguments of those most intimately connected with the proceedings when the appeal decision was being made. The rights of
      48
      the appellant are not clearly set out in the new clause, and I hope that as the system evolves those rights will become more clear.
      It is suggested that there should be established an annual report to Parliament on the operation of both the social fund and the appeal procedure, so that again there is openness and confidence in the way that the system is handled. My right hon. Friend the Secretary of State may be prepared to do this on a voluntary basis without it being written on the face of the Bill, but it would be useful, if no more, to have a report to the House setting out how many applications and appeals there have been, what responses there have been, and how decisions were reached. Although it is not immediately germane to the new clause, there would be more confidence in the expenditure and cash-limiting elements to which my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) referred. We need to know in monetary terms how the fund is working and whether the system of back-up resources is being handled appropriately by the Department.
      I welcome the new clause, but I hope that it will be possible, under the regulations, for my hon. Friend to go a little further to bolster confidence in the appeals system, which we welcome.
      Mr. Kirkwood: It would be churlish not to recognise that the Government have made some movement in the direction of the sentiments expressed in Committee, where debates were both useful and constructive. However, I am sorry to have to tell the Minister that if the clause is pushed to a Division, I shall vote against it. The system is still not adequate.
      First, the need for an independent system in the review process has not been displaced by the proposals. Claimants need an environment for telling their story which is entirely separate from the DHSS, which takes the initial decision. I can tell a short story from my practical experience to show why that should be so. I used to be an honorary advisor to the citizens advice bureau in Hawick and we had a good young volunteer counsellor who was a conscientious DHSS officer. By chance, one day a claimant came into the CAB straight from the DHSS, steam coming out of his ears because of the treatment that he had had under the system. He ran into the young CAB counsellor who was the same person who had seen him in the DHSS office. The discussion in the CAB was full of sweetness and light, and the claimant was helped considerably because he was out of the context of the DHSS and being given advice from the CAB. The Government system will allow no circumstances where such things can happen.
      Will the review process whereby a social fund inspector refers back a decision, to be reviewed again, be published and made available to advisors, claimants and others? It is essential that that should take place, to try to build up a picture of how the review procedure that has been announced in new clause 30 is working.
      Secondly, I have severe worries, based on the experience of the special case officers since 1980. This small highly trained cadre of DHSS officials has been under tremendous pressure. If the Minister expects the social fund inspector that he is creating, through new clause 30, to function under that pressure, the social fund review process will fall apart at the seams. How many

      49
      inspectors does the Minister consider will be needed to operate new clause 30? How much time will they have, and what training can they expect to receive?
      On the principle of the need for an appeal, the nature and quality of the decisions taken by inspectors is vital. The Green Paper advanced three main reasons against an independent system: first, that it was basically inappropriate; secondly, that it was a sledgehammer approach; and, thirdly, that it would involve inordinate delay. Those reasons were all discredited in Committee.
      An independent review is essential for four reasons: first, it considers the substance of the matter and the decision taken; secondly, it reviews the facts—a very important process—on which the initial decision was based; thirdly, it produces an element of quality control and introduces some consistency and a cross-check on decisions taken by social fund officers; and, fourthly, and most important, it offers the applicants or claimants a review that will take the heat out of the matter.
      I accept that a management review might be able to deal with the first three essential features, but I underline the fact that the prospect of an applicant or a claimant being told that if he does not like the decision he can take it to an independent appeal process would defuse any problems. That has been my experience in many cases.
      The Green Paper's claim that an independent review is inappropriate is wrong. There is an element of discretion in the system. Words such as "reasonable", "appropriate" and "thinks fit" abound in some single payment regulations, and at present the adjudication officers must pick their way through the regulations using their discretion against the background of the guidance, the statutory instruments and the policy statements issued from head office. A move to discretion is nothing like enough justification for removing such cases from the tribunal system.
      As the hon. Member for Derby, South (Mrs. Beckett) said on the sledgehammer argument, the sums of money involved may not be large in arithmetical terms, but there are broader social and political objectives in the set-up which an independent tribunal and appeal process creates. The sledgehammer argument is not conclusive for that reason.
      The delay argument is also weak, if not irrelevant. The social security appeal tribunals do not produce unreasonable delays. If there are any delays in the tribunals, recent research shows that they are caused in the DHSS offices and are not the fault of the independent appeal tribunals. More recent research shows that similar delays occur where appeals are disposed of administratively. There are delays when administrative proceedings take place to review decisions. Those delays will be made considerably worse if not enough social fund officers and inspectors are made available to conduct the in-house reviews.
      Tribunals can take decisions in principle to be implemented if resources are available. The Government could easily have taken that option. They should have left the independent appeal procedure in place. I accept that a major anxiety in the Minister of State's mind, if not in his mouth, is the money restraint, but the Government could have adopted the suggestion that I have just made.
      The Minister will need stronger arguments before he can persuade me that new clause 30 is supportable. The hon. Member for Derby, South mentioned the persuasive arguments of the Council on Tribunals.
      50
      Will the Minister consider new clause 16, which relates to the housing benefit appeal process? We discussed the possibility of the Government's bringing housing benefit into the independent appeal process. Will the Minister say something about that?
      Sir Geoffrey Finsberg: When I read the Bill for the first time, I was worried that there appeared to be no form of appeal in such cases. When I met deputations on the subject, I understood the worries which were affecting people. I read the standing Committee reports and found a wide divergence of view, not so much about whether there should be an appeal, but about the nature of the appeal that should be inserted in the Bill. I tabled amendment No. 80 to try to get an appeal independent of the originator of a decision.
      5.15 pm
      I observed that the Association of Metropolitan Authorities briefing said that my amendment should be regarded with caution. I am grateful that the AMA should think it worthy of comment. The association could have telephoned me, as a previous deputy chairman of the Association of Municipal Corporations, but it chose not to do so.
      Like the hon. Member for Derby, South (Mrs. Beckett), I have read the special report from the Council on Tribunals, but I have also read the council's annual reports. Hardly a report goes by without the council criticising some aspect of Government policy that impinges upon its work. The only difference on this occasion is that it has taken the trouble to issue a special report. It is not the first time that it has cri6cised Governments of all colours during the past 15 years, so I do not place as much credence upon its remarks as the hon. Lady did.
      I tabled the amendment in that form because of my experience when working as a Housing Minister on the right-to-buy legislation, which provided for an appeal against the district valuer's determination. That appeal was to be to another member of the staff of the district valuer. During the four years that the legislation has been in place, I know of no complaint that the reviewing district valuer merely followed the advice of his colleague. As a former DHSS Minister, I consider it rotten of Opposition Members to say that DHSS officials would whitewash the decision of a colleague just because they come from the same Department. That may be how Transport House works; it is not the way in which the DHSS works. It has a large body of loyal, dedicated officials who are determined to do a good job and not just rubber-stamp the views of their colleagues.
      Having said that, I can appreciate the Minister's difficulty. I examined with as much care and understanding as I could the somewhat complex new clause that he has tabled to try to understand exactly what he means and to see whether it goes some way towards providing the second view of a case for which so many people have asked.
      The deputations that I have met wanted a proper second look at cases. If the Minister is not prepared to have a wholly independent review, with all the accompanying paraphernalia of setting up a new panel completely separately staffed, which might become cumbersome and bureaucratic, he has found an acceptable compromise. It is not the best by any means, but it is acceptable. Provided that hon. Members do not denigrate DHSS staff who are

      51
      asked to review the working of the social fund, and say that they will not be independent, I believe that my right hon. Friend has found a way through the difficulty which will satisfy most people.
      Reference has been made to an annual report and to the figures that might be made available. Legislation is on the statute book that covers a wide variety of DHSS subjects. If, after a year or so, it were found that the new clause was not providing adequately for a proper review, there would be plenty of opportunity to change it. We ought to go along the road that my right hon. Friend has suggested. Therefore, I do not intend to press amendment No. 80. I shall support the new clause.
      Mr. Mallon: This is the first time that I have had the opportunity to speak on the Bill. Therefore, I am tempted to say everything that I should like to say about it, but I shall resist the temptation and will try to deal only with the way in which it will affect Northern Ireland. Circumstances are different in Northern Ireland; 26 per cent. of all household incomes there are derived from social security payments. In my constituency, 25 per cent. of the people are unemployed. Single payments in Northern Ireland amount to £25·5 million. In my constituency alone they account for £2·5 million. I shall consider the implications of the new clause against that background.
      I am worried most of all about the lack of an independent review. That is very' difficult to accept. I spent many years dealing with social security problems and found that the person who is properly represented at a tribunal has a much better chance of succeeding than the person who is not properly represented. That is a proven fact. It is also a proven fact that the person who receives good advice is much more likely to succeed. We deserve an answer to the question: at what stage will an independent input be available? At what stage will it be possible to avail oneself of the expertise that is available from citizens advice bureaux, trade unions, interested politicians and various other sources?
      I pay tribute to the managers of Northern Ireland's social security offices for the way in which they have administered the single payments. However, it is interesting to note that when people applied for single payments and sought political assistance to obtain them, it was found in a large number of cases that another type of social security payment was available to them but that they were not claiming it. The benefit of the independent input and review will be lost in the implementation of the discretionary loan system or social fund system.
      This is a crucial factor. We should not consider only how it will operate in the case of those who make a claim. We have to consider the implications for those who do not make a claim. There is a new type of need in our society. I call it the "lace curtain poor". Those who have tremendous pride and who have never had to go to a social security office will not like the discretionary system. Therefore, they will not ask for a loan or for charity from that system.
      The begging stigma is to be introduced into a statutory entitlement. For that reason, many people who are entitled to assistance, and who receive it if they obtain help from an independent source, will not receive it if the independent source no longer exists. Therefore, we must
      52
      remove the begging stigma from the term "social fund", or "discretionary loan system", or whatever name is eventually accepted by the public at large.
      The absence of an independent tribunal is a grave mistake. Area boards have been created in Northern Ireland. By and large, they do a very good job. They administer efficiently social security, education and various other aspects. If, however, the Minister says that no appeal can be made to him because a "crunch" problem is a matter for the area board, the individual will have no ultimate arbiter. The area board will take the decision. There will be no ultimate arbiter and no ultimate right of appeal to a tribunal. The independent element will no longer exist.
      Something has happened already in Northern Ireland which I do not like. There has been an increase in the number of applications for licences to lend money. I repeat that I live in an area where a great many people depend upon social security payments. The new clause will encourage the loan sharks in Northern Ireland. The absence of an independent tribunal will edge many people towards asking for a loan from the independent loan merchants rather than from the social fund.
      I see that right hon. and hon. Members are shaking their heads. However, very many people, especially those who have never asked for social security because their pride will not allow them to do so, are getting into the hands of the loan sharks. That will happen increasingly because of this one element in the Bill. I discussed this matter early today with someone whose views I do not fully share. However, he made a very apt remark. He said, "It is the difference between being mugged and having your pockets picked." I hope that we shall be able to avoid both.
      Mr. Stern: I am grateful to you, Mr. Deputy Speaker, for the opportunity to make a brief contribution to the debate on this new clause. I shall be brief. Many of the hon. Members who served on the Standing Committee had an opportunity to contribute to the debate that gave rise to new clause 30. Therefore, we are grateful for the opportunity to hear the comments of other hon. Members — for example, the hon. Member for Newry and Armagh (Mr. Mallon). I appreciated his comments about loan sharks, but he was a little unfair to the Government in suggesting that the Bill would contribute to the increase in their numbers. The Bill is at least a year and a half away from implementation. Nevertheless, that is important in areas where there is a high level of dependence on social security, and it is something that we shall have to look at closely in the regulation of the Bill because it is an ever-present danger.
      5.30 pm
      I welcome new clause 30 because it follows from an undertaking given by my hon. Friend the Minister in Committee and it meets my objections to the clause as originally drafted. The hon. Member for Derby, South (Mrs. Beckett) dealt briefly with the fact that the clause, unlike formal appeal systems, recognises one essential fact of the social fund system. A decision by a social fund commissioner or a decision on a review by an inspector or other official will not be based on a fixed view of the facts, or even on a correction of a view of the facts, but will be an expression of opinion.
      I was accused by the hon. Member for Birkenhead (Mr. Field), who, unfortunately, is not in his seat, of metaphysics when I raised that matter in Committee. Any

      53
      decision based on opinion is just as good as and no better than anyone else's. The fact that we are setting up a review system rather than an appeal system recognises that at the end of the day we shall merely be substituting one opinion for another—or not, as the case may be—rather than attempting to apply precedent or a finer view of the facts than those that were applied to the original decision.
      I welcome the new clause because it is a full and fair recognition of the fact that an appeal system would be inappropriate for a social fund, and at the same time it gives the maximum opportunity for the factors put forward by the claimant to be taken into account. Throughout our legal system that distinction between a fresh look at the facts and a fresh look at the law relating to those facts is applied. It is in the High Court where the jury sits that the facts are finally decided. The whole purpose of the appeal system, as I understand it—I am not a lawyer—is to look at the way in which the law is applied to those facts rather than to take a fresh look at the facts. That is the system that we have at the moment in social security. We are replacing that with an opportunity to look again not at the law but at the facts.
      I should like my hon. Friend the Minister to clarify one point which, again, follows from a point made in Committee. It has been generally welcomed that the inspector will be independent of the social fund officer whose decision is being reviewed. But one question that was left open in Committee, to which I ask my hon. Friend to return, is how far, within the social security network, the inspector will be removed from the social fund officer who took the original decision. For example, I see every advantage in an expert on housing benefits in Newcastle being called in to review a social fund decision in Cornwall and vice versa.
      The one point that worries me about an internal review system is the extent to which the ethos and methods of operation of a particular local social fund and its officers will carry over into the review decisions made by the inspectors. We need to use the breadth of the facilities of the DHSS, which, after all, is the largest spending Government Department, to make sure that the inspector's remit in any decision on the social fund is as far removed from that of the social fund officer as possible. Indeed, I hope that in the administration of new clause 30 there will be a positive instruction to social security officers that they should not bring in as an inspector on a particular social fund anyone who has any other connections with that social fund or, indeed, the area.
      Subject to that, I welcome the new clause. In introducing the new clause my hon. Friend has shown himself to be responsive to the worries that were expressed about the original clause and he has produced a system which will meet those worries.
      Mr. David Winnick: New clause 30 must be seen against the background of the social fund and the proposals which, as we know, give a great deal of discretion to the local DHSS office, the cash-limited social fund and, in many cases, the loans which are replacing the present practice. Understandably, we consider the social fund itself to be an onslaught on the poorest section of our community. That point has been made time and time again by Labour Members.
      The new clause in no way deals adequately with the need for an independent appeal. The social fund officer is bound to be seen as part of an administration within the
      54
      local office. In reply to an intervention of mine, the Minister said that the social fund officer would be based in that office. Clearly, he or she will be seen as part of the normal administration. Therefore, the refusal will come from the local office and a decision to turn down a claimant's appeal will come from the same office. In the eyes of the claimant there will be no distinction.
      Mr. Newton: There may simply be a semantic confusion here. The social fund officer is the name given in the new system for what is the adjudication officer in the existing system and, by definition, in the local office. There is no change, other than a change of nomenclature. However, the inspector would not be in the local office.
      Mr. Winnick: I take that point, but the first stage will clearly be to someone based in the local office.
      The new clause, it should be remembered, has been put forward only after repeated criticisms. The Government did not intend to do anything of the kind. However, they now recognise that the original provision was totally inadequate.
      I repeat my earlier question. Will the claimant whose application for assistance has been turned down be able to see the social fund officer, or will there be only written communications? If the claimant can be seen, can he take along someone to represent himself? That is important.
      The social fund inspector is also part of the DHSS machinery. The Minister has just told us that the social fund inspector will not be based in the local office, but that is no substitute for an independent appeal. To use the old cliché which nevertheless remains true, justice not only needs to be done but needs to be seen to be done. Those whose review is turned down by a social fund inspector will only come to the conclusion that there has been no independent review of the claim, merely one by the regional machinery of the DHSS.
      I stress that we are dealing with matters of tremendous concern to many claimants. Hardly a single week goes by when I do not receive letters from constituents on supplementary benefit who require assistance on essential items such as furniture, bedding and clothes. Those are matters of crucial importance to such people. We can debate what the Minister has referred to as a matter of semantics, whether it is a social fund officer or otherwise, but this is a matter which concerns the poorest in our community. They do not want to be in that state. Many are forced to apply for essentials because they are unemployed and, like those in my part of the world, have no opportunity of getting a job.
      If a claim is turned down there should be every opportunity for that claim to be looked at properly, and for that to be done there needs to be—as there is now— proper independent machinery to assess whether the refusal was justified. Like my hon. Friends, I believe that what is proposed is in no way an adequate substitute for what has hitherto been a form of independent machinery.
      Many of our fellow citizens are now forced to live in widespread poverty. That should be a cause of great anxiety to us all, although I wonder whether it is of much concern to Government Members, including the Front Bench. Who would have thought just a few years ago that so many people with no other means of support would have had to apply for single payments for furniture and clothing and the like? It is an indictment of Government

      55
      policies that in the last seven years many more people have been forced to live in those circumstances than was previously the case.
      All that the Opposition can do is to spotlight the difficulties faced by many of our constituents and also to press as now for a system under which there is a reasonable chance for the people who need such help to receive it. If a claim is turned down the claimant must be able to appeal in a proper way. I agree with my hon. Friends that new clause 30 is no substitute for that which we have been seeking, and there is every reason to reject it.
      Mr. Lewis Stevens: I should like to thank my right hon. Friend the Minister for introducing new clause 30 and for moving a long way towards the point made on the Government side of the Committee about some form of review over and above that of local officers. The new clause moves a long way towards that, but perhaps not quite as far as some of us had anticipated. It is important, as the clause lays down, that the social security inspector carrying out the second stage of a review should be seen as quite divorced from the local office and should be accepted as someone distinctly outside the normal DHSS claims machinery. That meets most of the worry that we had. It is important that someone who is a specialist within those functions related to the social fund can make decisions quite independently of the local office. That will give considerable confidence to those people who had, as they thought, a just claim that had been turned down at some stage of the procedure.
      It is important to consider for the future the point made by other hon. Members about the representation of people during the various stages of the initial application. Many people need some sort of support, either formal support from a legal representative or from an organisation or even in some cases merely from members of the family. That needs to be spelt out in the regulations that will eventually appear, because we need to know exactly who can help these people and can meet the inspector, the Secretary of State or the social fund review officer. I hope that will become part of the procedure for looking at these cases. It is not quite fair for some members of the Opposition to dismiss an inspector by saying that because he would be an employee of the DHSS he could not look properly at cases. The hon. Member for Walsall, North (Mr. Winnick) said he was anxious that cases should be looked at properly.
      Mr. Winnick: Independently.
      Mr. Stevens: The hon. Member said properly, and it can be done quite properly within the scheme suggested by the Minister in the new clause. An officer who is dealing with cases time and again and looking at the social fund and becoming an expert on it, can look properly at a specific case and make a decision which is fully in the interests of the people concerned. It will not be a biased decision, as has been suggested, made purely in the interests of the Department. To suggest that is a slight upon the DHSS officials. It is not right to suggest that they do not exercise care and attention.
      Mr. Winnick: In no way could my remarks be seen as a criticism of DHSS officials. My criticism was of Government policies and was not intended as a slight to
      56
      those who are forced to carry out Government policies. If the hon. Member is keen to see that everything should be looked at properly perhaps he could explain why he is not in favour of an independent review.
      Mr. Stevens: Perhaps I cannot explain that fully, but the assumption that all tribunals, because they have some independent magic about them, necessarily perform the task in every case successfully and better than an employed officer is false. Many tribunals do not work as satisfactorily as they should. There have been cases where there was as much criticism after the result of a tribunal as there was of any decision made in the courts.
      5.45 pm
      Within the scheme that the Minister has suggested, there is the possibility that we could have a slicker operation than has been seen in many tribunals. The tribunal system does not always work and tribunals can become routine in the way they deal with cases just as individuals can become routine in making judgments. Tribunals do not have the magic that has been suggested — that merely because they are independent they are always successful.
      When the scheme is working I hope that the Minister will look carefully at the possibility of the advertising that needs to be carried out about exactly what the procedures are. Such advertising is needed both for claimants and for officials in the Department. Despite a lot of work, the DHSS still suffers from a lack of understanding about how to set about various procedures. We are debating a new and extensive Bill, and I hope that the rules about the social fund and the reviews of appeals by claimants against decisions will be made simple and clear for the claimants and for the Department so that the scheme can be operated successfully. As I said before, the clause does not go quite as far as some of us had hoped, but I thank the Minister for moving towards what we were seeking in terms of a review outside the Department's local office area. New clause 30 meets that point and perhaps with care and a careful look at the procedures we will have a system that is satisfactory and helpful. It must be helpful to those who ask for their cases to be reviewed.
      Mr. Charles Kennedy: I know that some hon. Members, including myself, are anxious to have a chance to debate child benefits and the cold climate allowance, and I shall therefore be brief. I endorse everything that was said by my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood). I share with him a reluctance to be churlish, but it is inevitable to be so. I am not convinced by what the Minister said because I do not believe that the Minister was convinced by his own argument. From the time some months ago when the reviews and initial reports were announced and presented, the Minister has argued against any form of review or appeal. Now he tries to sound convincing or to be convinced himself, and to do that he has had to discard all those arguments or turn them on their heads.
      There is no internal consistency in the case that the Minister tried to advance. That is because, as has already been noted in the debate, the Council on Tribunals has said that the Government are removing a right of independent appeal which has existed in law for 50 years. The Minister himself highlighted the central conundrum: that a regulatory system is to be replaced by a discretionary

      57
      system. He told us that the review mechanism he is introducing confers on claimants clear statutory rights. There can be clear statutory rights for people in a regulated system, but there can be no such thing as clear statutory rights for people under a system based on human discretion. That has the logic of trying to compare Locke to Leviathan, which is what the Minister did in his speech.
      There is a need for an independent appeal. The compromise that the Minister is hailing is nothing of the sort; it is a cosmetic effort, attempting to dress up an inadequate and unsatisfactory system. The new clause should be defeated and the Minister should be made to go away, think again and come hack with a proper system that respects human decency.
      Mrs. Virginia Bottomley: The debate highlights the fact that our social security system has lost all sense of proportion. After all, we are discussing appeals about single payments and not about the basic rate of income, which is where our energies should be directed.
      Frogs may sleep with their eyes shut, but hon. Members should not close their eyes to what has been happening to single payments, which have more than doubled in the past year. There may have been great enthusiasm among those interested in lodging appeals and going through the tribunal system to see whether, for example, someone who, like Anne Boleyn, has six fingers can have a special payment for his or her needs or difficulties, but the system is losing all sense of proportion.
      Having been involved for many years as a social worker with the complexities of our social security system, and knowing that many people find it extremely difficult to understand, I believe that continuing with the existing cumbersome mechanism is out of all proportion to what needs to be done. I greatly welcome the introduction of the social fund, which will allow greater discretionary power and local flexibility. Opposition Members cannot have it both ways. If we go for a regulatory system, we cannot have the flexibility and local variation which others, including myself, would value. More fundamentally, I believe that the fact that so much energy is going into the administration of single payments detracts from the underlying need to have an adequate basic income maintenance system, with premiums for those with special difficulties.
      I applaud the Minister for having introduced the new clause and I welcome the words of my hon. Friend the Member for Hampstead and Highgate (Sir. G. Finsberg) who said that it was possible and acceptable for social security officers to act independently within the system. The new clause will clear up the expectations and rights of claimants and will introduce an element of proportionality into a system which has recently been losing all sense of proportion and cannot be said to be serving the claimants whom we all hope to help.
      Mr. Geoffrey Lofthouse: A serious situation is developing in my area and, I am sure, in many other parts of the country. In the area covered by the Wakefield metropolitan council, a backlog of single payment applications has been building up and the situation has become so serious that one area office has had to advertise in the local press asking people to be patient because it cannot deal with all the single payment applications.
      My worry is that pressure will build up and the officers will be pushed into making unfair decisions because they
      58
      do not have enough time to consider cases properly. The thousands of people whose cases are awaiting decisions should have an independent appeal procedure.
      I have heard from an old gentleman who says that he has not had a new suit for 20 years and that, although he takes size 8 shoes he is having to wear size 9 shoes, which he buys at the market. A dear old lady of 83 told me that she has never applied for social security, but now needs some clothing to make her feel respectable when she goes out. Another lady aged 80 told me that she has been saving money to go on only the third holiday of her life, but is now having to spend it on household necessities.
      Those applications and many others are in the queue at social security offices. If they are turned down because officers do not have time to look into them, there should be a right of appeal. We believe that there ought to be a safeguard, and I hope that the Government will share our view.
      Mr. Newton: I, too, will try to be brief, and I hope that the House will understand the reasons for that.
      A number of comments, especially those by the hon. Member for Derby, South (Mrs. Beckett) and other Opposition Members, have been directed to the basic proposition whether there should be an appeal to the independent appeal tribunals that we have for the present regulated system and will have for the regulated parts of the system in future. We went over that ground exhaustively in Committee and it would be wrong for me to rehearse all the arguments, especially given the time constraints faced by the House.
      However, I ask the House to consider whether, after all the trouble that we have gone to in trying to improve—I think that it is widely acknowledged that we have succeeded—the appeal tribunals which take decisions within sets of regulations passed by Parliament, to improve the legal quality of those decisions by importing legal chairmen and to relate the system more closely to a regulated system, we would be doing anyone a favour by asking those tribunals to take a completely different decision, not within regulations passed by Parliament. but under directions and guidelines, including budgetary guidelines, made by the Secretary of State.
      I suspect that it would be a cause of anxiety if we asked tribunals to do two different jobs, and it might undermine some of the improvements that we have made in their work. I know that some hon Members do not accept that view, but it cannot be dismissed.
      I also ask hon. Members to bear in mind the fact that part of the background to the move to a regulated system in respect of single payments and other parts of the system in 1980 was dissatisfaction with the way in which the previous discretionary system, with appeals to the previous supplementary benefit appeals tribunals —which were not subject to the discretionary guidelines of the Supplementary Benefits Commission—was working and the extent to which it was leading to variable decision-making throughout the country. The previous Government found the position so unsatisfactory that they set up the social assistance review in the late 1970s which led t, s into the present, more regulated, system.
      I shall look into the points made by the hon. Member for Pontefract and Castleford (Mr. Lofthouse) about the working of the single payments system in his area. En the past few weeks my right hon. Friend the Secretary of State

      59
      has announced a substantial increase in the number of DHSS staff throughout the country, and that may encourage the hon. Gentleman.
      The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked me about his new clause 16 and housing benefit appeals. He will know what I said in Committee, and that I held out the possibility of making some sort of amendment on Report. However, I think he will acknowledge that I spoke in very cautious terms. As it would be necessary to talk the matter through with the local authority associations, particularly as those who make housing benefit decisions at present are not adjudication officers, and as there are clearly several very difficult issues to be resolved, I did not think it right to bring forward an amendment on Report. That is not to say that I have forgotten the problem or dismissed it. We are continuing to look at it very carefully, as I understand the points made by hon. Members on both sides of the Committee.
      6 pm
      I think that there is a little misunderstanding between hon. Member for Newry and Armagh (Mr. Mallon) and me. I recognise that he does not entirely agree with me, but I repeat that there is no reason why our proposals should deprive people of the type of independent advice that they get from bodies outside the Department, which will, and can, operate regardless of the review or appeal mechanism within the Department. There will continue to be a role for citizens advice bureaux, Members of Parliament and others within whatever system we have.
      I was asked several questions, not least by my hon. Friend the Member for Halifax (Mr. Galley), about what notification of the review would be given to people. I assure my hon. Friend that those seeking a review will receive a formal notification, by which I mean a written notification, of the outcome of the review, both at local level and following a review by a social fund inspector. Procedures for that will be set out in directions. We envisage that the review by a social fund officer will be on the basis of the person seeking the review being able to be heard and to take a representative with him.
      Several hon. Members, including my hon. Friend the Member for Bristol, North-West (Mr. Stern), asked about inspectors. The intention is for inspectors to be stationed at regional level, and at a significant distance from the local office.
      I think that I have touched, albeit briefly, on most of the points raised in the debate. I hope that hon. Members will understand if I have been unable to respond to them all, but I shall read the debate carefully afterwards.
      Mrs. Beckett: The Minister referred again to the fact that people objected to the discretionary system that existed before the present system of single payments with statutory regulations. He is perfectly well aware that people objected, not to the method of the appeal, but to the discretionary nature of the system. Yet that is what the Minister is restoring, without even the benefit of a right of appeal to an independent body.
      The only other observation that I have time to make involves a point made by the hon. Member for Surrey, South-West (Mrs. Bottomley). She referred rather unkindly to Members of Parliament closing their eyes to the fact that the number of single payments has increased.
      60
      Opposition Members are very conscious of the way in which the number has increased. We deplore the fact that this is due to increased poverty and to the vastly increased level of unemployment. It is extraordinary that she should chide hon. Members about closing their eyes to the facts, when she apparently is quite content to close her eyes to the observations made by the Council on Tribunals and to the removal of an independent right of appeal that has existed for 50 years.
      Mrs. Virginia Bottomley: Does the hon. Lady agree that a disproportionate amount of energy goes into fighting over single payments compared with the amount that should be going into discussing the basic rate? That is particularly true given the small number of people who claim single ayments and the proportion of the budget that goes towards them. There is an unfair mechanism within the social security system. We should be talking about basic rates of income support rather than about single payments.
      Mrs. Beckett: I accept that we should be talking about basic rates of income support. Indeed, Opposition Members do talk about that. Next time the Opposition table an amendment on extending the long-term rate of supplementary benefit or the equivalent, for the long-term unemployed, I hope that the hon. Lady will come into the Lobby with us. We would certainly appreciate that.
      We would very much like to press this matter to a Division, but we have one reason for not doing so. Since the timetable motion was agreed, the Government have tabled two new clauses, including this one, which have substantially pre-empted time which might otherwise have been devoted to major debates. We are most anxious to reach new clause 1, so we shall not take 15 minutes for a vote. However, that is our only reason for not dividing the House.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

      New Clause 31
      ENTITLEMENT TO MOBILITY ALLOWANCE-GENERAL
      `(1) In paragraph (a) of section 37A(2) of the Social Security Act 1975 (duration of inability or virtual inability to walk for the purposes of entitlement to mobility allowance) for the words "time when a claim for the allowance is received by the Secretary of State" there shall be substituted the words "relevant date".
      (2) The following subsections shall be inserted after that subsection—
      "(2A) Subject to subsection (2B) below, in subsection (2)(a) above "the relevant date" means the date on which the claimant's inability or virtual inability to walk commenced or the date on which his claim was received or treated as received by the Secretary of State, whichever is the later.
      (2B) Where—

      (a) a claimant is awarded an allowance for a period; and

      (b) he subsequently claims an allowance for a further period;

      the relevant date is the first date not earlier than the end of the period for which the allowance was awarded on which the claimant was unable or virtually unable to walk.
      (2C) Regulations may make provision

      (a) for permitting an award on a claim for a mobility allowance to be made either as from the date on which the claim is received by the Secretary of State for a period beginning after that date subject to the condition that the person in respect

      61
      of whom the claim is made satisfies the prescribed requirements for entitlement when benefit becomes payable under the award;

      (b) for the review of any such award if those requirements are found not to have satisfied.'.

      (3) Section 37A(7) (under which, except so far as may be provided by regulations, the question of a person's entitlement to a mobility allowance falls to be determined as at the time when a claim for the allowance is received by the Secretary of State) shall cease to have effect.
      (4) Where—

      (a) it has been determined that a person was entitled to mobility allowance; and

      (b) the claim should have been determined as at the date when it was received by the Secretary of State, but was determined as at a later date.

      the fact that the claim was determined as at that date shall not invalidate the determination.'—[Mr. Newton.]
      Brought up, and read the First time.
      Mr. Newton: I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to discuss the following: new clause 5—Removal of Age Barrier to Mobility Allowance—
      `() From and after this Act, no application for Mobility Allowance shall be treated as ineligible solely on the ground that the applicant had not established a claim prior to the age of 66 years.'.
      New clause 23—Mobility allowance—
      'At the end of section 37A(1) of the Social Security Act 1975 there shall he inserted the words "or unable to make progress on foot in an intended direction, unaided by another person, without risk or substantial danger to oneself or others".'.
      New clause 24 — Mobility allowance: ability to walk—
      `()After section 37A(2) of the Social Security Act 1975 there shall be inserted
      "(2A) In determining whether a person is unable, or virtually unable, to walk, account shall be taken of

      (a) the distance, speed, time and manner in which he can make progress on foot without severe discomfort;

      (b) the need for guidance or assistance;

      (c) the ability to conceive and achieve a desired destination.".'.

      New clause 25 — Mobility allowance: mental handicap—
      () After section 37A(2) of the Social Security Act 1975 there shall be inserted:
      "(2A) An applicant shall be entitled to consideration for mobility allowance, notwithstanding an ability to undertake the physical movements of walking, if, because of mental or physical disorder, he cannot control the destination to which he moves without the guidance or assistance of another person.".'.
      Government amendments Nos. 187, 188 and 186.
      Mr. Newton: I hope that I will be in order if I spend a few moments explaining the reasons behind the new clause and then describe its provisions briefly.
      The existing legislation for mobility allowance ties consideration of a person's entitlement to the allowance to the date that his claim is received. If the conditions are not satisfied on that date, they cannot be considered on any other date and the claim fails.
      There has been some uncertainty about the matter, and last year a tribunal of social security commissioners held that medical appeal tribunals, the highest of the independent adjudicating appeal authorities, could consider whether a claimant satisfied the medical conditions for the allowance from a date later than the date of his claim. If he did, the allowance could be awarded from that later date. Following that decision, a number of
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      claimants were awarded the allowance in that way. That was then followed by an event in the Court of Appeal earlier this year, when the court overruled the commissioners' decision and held that entitlement could be considered only as at the date of claim.
      We are introducing this legislation in order to re-establish the commissioners' view against the finding of the Court of Appeal. We do not in any way criticise the Court of Appeal, but it found that the law was something that we did not wish it to be. I am sure that the House shares our view. The new clause is intended to put the matter back to where the commissioners left it
      The new clause restores the power of medical appeal tribunals to decide medical conditions from a later date, extends that power of later-date determination to the other independent adjudicating authorities dealing with mobility allowance claims, and enables regulations to be made permitting the allowance to be awarded from the first date, the date of claim or a later date, on which the conditions for entitlement are satisfied. That means that claimants who are not found unable or virtually unable to walk as at the date of claim, but whose ability to walk is deteriorating, can be found to satisfy this condition at a later date and can be awarded the allowance from that date.
      In that way, the need for such claimants—most hon. Members will have come across this problem—to make repeated claims in the hope that one will be received on the day that they are unable or virtually unable to walk will be removed. The new clause will also enable more claims to be dealt with successfully and speedily by the lower tiers of the independent adjudication system. I hope that the House realises that that will be of benefit to mobility allowance claimants generally.
      I shall give a brief outline of the new clause. Subsection (1) changes the time from which, as a condition of entitlement to mobility allowance, the period of 12 months or more over which inability or virtual inability to walk is likely to persist, has to be reckoned. That is to bring this entitlement condition into line with the other changes proposed.
      Subsection (2) inserts three new subsections in section 57A of the Social Security Act 1975. New subsections (2A) and (2B) define the "relevant date" of the start of the 12-month period in relation to first claims and renewal claims. New subsection (2C) enables the introduction of regulations to allow mobility allowance to be awarded from a date later than the date of claim.
      Subsection (3) repeals section 37(A)(7) of the Social Security Act 1975, which at present limits consideration of a person's entitlement to the date when his claim is received.
      Subsection (4) validates retrospectively awards of mobility allowance made from a date later than the date of claim following the decision of the social security commissioners.
      Government amendments Nos. 187, 188 and 186 are all consequential on the introduction of the new clause. The new clause is a modest proposal which falls a good deal short of some of the other new clauses that Opposition Members have tabled. However, I hope that it will at least be seen as an unqualified goody, and that, for once, I shall get a modest pat on the back for introducing the measure.
      Mr. Jack Ashley: New clause 23 is necessary because of the continued controversy about

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      eligibility for mobility allowance. The Department, its commissioners, the House of Lords and many lawyers are in endless dispute over the existing law and regulations and what they mean. Costly time is being wasted and, more importantly, this terrible confusion and uncertainty is resulting in many severely disabled people being deprived of mobility allowance when they should be receiving it.
      The fundamental controversy is about what is meant by the phrase
      "unable or virtually unable to walk."
      It has been held that there is a distinction between cannot walk and will not walk. One gives eligibility and the other does not.
      The mother of the 12-year-old severely mentally handicapped boy who featured in the "Link" television programme on the subject would find legal mumbo-jumbo laughable but tragic. Her child is so strong that he has pulled her to the ground. He has the ability to walk, but his frequent random refusal to do so makes it more difficult to cope with him. He is a strong, powerful young man, and it is much more difficult to cope with him than with a child whose disability weakens or confines him to a wheelchair. But that boy and his mother are refused the mobility allowance.
      A social security commissioner, with the subsequent approval of the House of Lords, held that if the legislation intended to include the inability to direct one's walking, it would have done so. The new clause responds to that. It clarifies the situation and makes it clear that the mobility allowance is about the social loss of being unable to walk in an intended direction rather than the physical loss of being unable to put one leg in front of the other.
      The mobility allowance grew out of the three-wheeler car provision, which shows that its intended, if unspecified, aim was to enable people to go from A to B. Being
      "unable or virtually unable to walk"
      should have been a convenient means of identifying those requiring help to get from A to B. It has proved to be a net with a larger holes through which deserving cases easily fall.
      Many mentally handicapped people—those who are autistic, hyperactive or blind or who have other handicaps such as deafness or mental handicap—are quite unable to move in any intended direction without personal care and attention which is sometimes extremely demanding. Yet they often do not receive mobility allowance, and if they have received it they are at risk of losing it.
      The new clause provides for the mobility allowance to go to those who are unable to make progress on foot in an intended direction without risk of substantial danger to themselves or to others. It will clarify the eligibility provisions for mobility allowance and ensure that those who desperately need the allowance will receive it.
      6.15 pm
      Mr. John Hannam: I congratulate my hon. Friend the Minister for Social Security on his concession in the Government new clause. I support the three new clauses which seek to amend an unsatisfactory arrangement. Most hon. Members will have received representations from constituents who have been refused mobility allowance on the judgment that they are able to walk satisfactorily and therefore do not require it.
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      It is easy for hon. Members to judge, by looking at and talking to constituents, that they are able to walk and are therefore ineligible for the allowance. We usually advise such people to come back after six months if their conditions worsen. However, we have received representations from those who suffer from severe sensory or mental handicaps which make it impossible for them to walk properly without assistance. When such people are refused mobility allowance, we must conclude that something is drastically wrong with the qualifying conditions in the regulations.
      The problem lies in the interpretation of the words "to walk". Our new clauses seek to remove the anomalies which surround the literal interpretation of those words. They are designed to extend the meaning to cover what was originally intended by the mobility allowance regulations to help disabled and handicapped people who are
      "unable to make progress on foot … without risk or substantial danger to oneself or others."
      Mr. Andrew Rowe (Mid-Kent): Does my hon. Friend agree that this affects not only the award of mobility allowance? I am taking up a case against an ambulance authority which refuses to provide an ambulance for people who are capable of putting one foot before the other but have little ability to determine in which direction they should go.
      Mr. Hannam: That highlights the anomaly in the interpretation of the legislation.
      The numbers involved are not large, but we should try to help the sensory or mentally impaired. The right hon. Member for Stoke-on-Trent, Central (Mr. Ashley) referred to the difficulty and the hon. Member for Caernarfon (Mr. Wigley), in his new clause refers to the mentally handicapped. No one has greater knowledge of their problems than he. However, other small groups are desperately in need of our help, particularly the deaf and blind, the blind and mentally handicapped and autistic children.
      In recent years some deaf and blind persons have properly been granted the mobility allowance in some areas. In other areas people with the same handicaps have been refused mobility allowance. That discrimination is unacceptable.
      Mr. Peter Thurnham: Does my hon. Friend agree that one of the most difficult examples is of someone who has been granted the mobility allowance and then loses it? People are unable to understand why the allowance is taken away, because the medical evidence has not changed.
      Mr. Hannam: I was about to discuss that. Organisations such as SENSE, which represent the deaf-blind, tell me that officials say that no decision can be made until test cases have proceeded through the courts. The recent House of Lords test case has resulted in further confusion. People who have been granted mobility allowance are being turned down when they try to renew it.
      The present regulations are based on an unstable, unsure and unacceptable basis. A rejigging of the regulations must be worked out so that it is clearly shown that the inability of a person to achieve reasonable mobility without help must be the criterion for the granting of mobility allowance. I hope that my hon. Friend the

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      Minister, who has done so much for the disabled, will heed the call of all organisations representing disabled people and do something to sort out this serious anomaly in the system.
      Mr. Dafydd Wigley: I support and lend weight to the comments made by the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) and the hon. Member for Exeter (Mr. Hannam) for the Minister for Social Security to continue along the lines on which he introduced the debate, to respond to problems with the working of the mobility allowance and to look at the specific points that have been raised. I will not talk about the problem of people between the ages of 65 and 75 and of those above 75 years, which new clause 5 deals with, other than to mention, as a benchmark, that there is reason for dissatisfaction. I will not talk—as the hon. Member for Exeter did—about the real problems of blind people and blind people with other disabilities.
      Some people who need assistance have not received it. I refer to those who suffer from mental handicap, to which new clauses 24 and 25 relate. I have concentrated on that area because there has been a tremendous amount of uncertainty and people have lost out. There appears to have been a move backwards. On 11 June last year, the Under-Secretary of State for Health and Social Security, the hon. Member for Wycombe (Mr. Whitney), wrote to me, saying:
      "there have been difficulties in recent times over the interpretation of the qualifying conditions for the allowance. The case-law has been in an unsatisfactory state because there have been doubts about the extent to which the need for assistance from another person whilst walking could be taken into account."
      The problem goes back at least to the case from Worcester, of which the Minister will be aware, R(M)2/78. That led to the amendment of regulations in 1979 to clarify the qualifying conditions. That is when factors such as distance, speed, length of time and manner were introduced, and they are featured in my new clause. In other words, I am trying to get back to what we thought we had established in 1979.
      Unfortunately, the Lees case came forward and raised the question of the ability to perform the physical act of walking, rather than the ability to make purposeful use of walking. That is the differentiation to which reference has been made. In a letter dated 11 November, the Under-Secretary of State for Health and Social Security, the hon. Member for Huntingdon (Mr. Major), said:
      "The application of the judgment in cases where there are behavioural limitations on a claimant's walking ability has evidently raised a point of law of special difficulty."
      He continued:
      "When the Commissioners have given their decision, we will then decide whether there is anything further we need to do to clarify the situation."
      The tribunal of commissioners gave its decision in CM/173/85. It appears that only those whose behavioural difficulties cause frequent interruptions to the physical act of walking will qualify. That was a move backwards. The Under-Secretary's letter continued:
      "I hope that the background which I have described shows that the intention of the allowance, and the basic qualifying conditions, remain as they have always been."
      That is not so. The qualifying conditions are not the same as they have always been. When my two boys were alive, they received a mobility allowance, not because they could not undertake the physical act of walking but because they could not go in a meaningful direction. If they were alive and were to apply for a mobility allowance now—I see
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      similar cases to theirs—they would not receive it. Some people who were eligible a few years ago are not eligible now. The law has become an utter tangle. I hope that at the very least, the Minister will undertake to bring forward a remedy to ensure that the people who deserve and need mobility allowance will receive it.
      Mr. Thurnham: The matter goes back some time. In an Adjournment debate on 13 November 1984, the Minister for Social Security promised to review the guidelines pending the Lees case, which had riot at that stage been announced. I put a question to him and he was kind enough to answer it on 10 April this year. He said that recent decisions had clarified the law and should help adjudicating authorities. However, it does not seem to me that matters have been clarified. In fact, in a telephone call to a local DHSS office on 8 April, two days before the answer was given, I was told that the Department did not know how to interpret the Lees decision, and things seemed to be completely up in the air. I ask the Minister to consider the matter further and perhaps undertake to bring in further amendments when the Bill goes to another place. There is great confusion. I draw the Minister's attention to early-day motions 656 and 847 which I tabled and which have been supported by hon. Members on both sides of the House. I hope that the Minister will offer some help in this area.
      I should declare a personal and a constituency interest in the matter. The constituency interest arises in the case of Daniel Heaton, aged 9½ years, who was granted mobility allowance in a decision made on 12 December 1984. The medical appeal tribunal granted the allowance for two years only, on the basis that within the next year or two years he would be admitted to a residential home on a permanent basis, whereupon the benefit to be derived from an allowance would be uncertain. When I corresponded about the case with my hon. Friend the Under-Secretary of State for Health and Social Security, the hon. Member for Huntingdon (Mr. Major), he said that the possibility of admission to a residential home should not have been a relevant factor as it would not have affected entitlement to the allowance. The Heatons are now confused, because the allowance has not been continued, despite the fact that further medical examinations have shown that Daniel Heaton's position medically is the same as it was.
      Daniel was re-examined by a general practitioner on 25 November last year. The adjudicating officer referred him to the medical board. The medical board examined him on 12 January 1986, but again the adjudicating officer decided to refer the case to the medical appeal tribunal. In March this year, the Heatons were told by the tribunal that no date could be set for a hearing until the Lees decision had been clarified by a tribunal of commissioners. The tribunal of commissioners made a decision the day before the letter was sent. Presumably, that would have helped to clarify the position.
      My constituent, Daniel's mother, is in a state of complete confusion. She wrote to me saying:
      "they are making us go through all the hearings we went through last year."
      It is impossible for my constituent to see the need for that when the medical evidence is the same as it was earlier. Obviously, the costs incurred by the Heatons in looking after Daniel are based on the fact that they would receive the allowance. The Minister will he aware of the costs

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      incurred if a child such as Daniel were to go into a residential home. The fact that it was mentioned earlier should be borne in mind in asking for further guidance to be given in such cases.
      The confusion is confirmed by the number of people who have written stating that it is a difficult and contentious area. I received a letter from the Spastics Society dated 16 May, which stated:
      "it is particularly unfair that those who have physical disabilities in their legs should qualify for the allowance, whilst others who though in theory are able to 'walk' cannot do so because of a mental handicap or a combination of disabilities cannot qualify."
      The Spastics Society went on to say that the Lees case seems to have added to the confusion. I think that the society helped to word some of the amendments which are on the Amendment Paper.
      I draw the Minister's attention to a letter which was sent to him by the Disability Alliance and refer him to the number of people who have signed the letter. The letter from the Disability Alliance was signed by the Campaign for People with Mental Handicaps, the Child Poverty Action Group, Down's Children's Association, the Royal Society for Mentally Handicapped Children and Adults, the National Association for Mental Health, the National Autistic Society, the National Federation for the Blind, the National League of the Blind and Disabled, the Royal Association for Disability and Rehabilitation, the Royal National Institute for the Blind, the National Deaf-Blind and Rubella Association. If all those organisations are as concerned as they say they are about the need for better guidance. I earnestly request my hon. Friend the Minister to see whether he can provide further clarification outside the Bill or as part of it through an amendment introduced in another place.
      Mr. Kevin Barron: I support new clauses 23, 24 and 25 and the removal from section 37 of the Social Security Act 1975 of the anomalies regarding mobility allowance.
      The evidence has been presented well today. I am sorry that the Minister chose to help only in a small way and in another respect, and did not clear up the anomaly. Hon. Members on both sides of the House will know of people who have been refused mobility allowance because they suffer non-physical handicaps. They might have gone to a medical officer and been refused mobility allowance because they have normal gait.
      I had such a case, which ended up at the regional medical appeal tribunal. I represented the people concerned and we won. We argued that the family, with an eight-year-old daughter, as she was then, ought to have mobility allowance to help her and the whole family. The father and the mother were unemployed and they had two other children. Although we won the case, there was initially an objection by the Minister to the appeal going in their favour. Next year, or the year after, however, when the matter comes up again, we do not know whether the family will be able to receive the help.
      The Minister is presenting major changes in the law, but he has missed a golden opportunity to amend the 1975 Act fairly and properly so that people with other than physical handicaps are no longer discriminated against.
      6.30 pm
      Mr. Galley: When moving the motion, That the new clause 31 be read a Second time, my hon. Friend the Minister for Social Security suggested several minor, technical, but helpful and useful changes to mobility allowance, and it is singularly graceless of the Opposition not to have referred to those improvements.
      There are, nevertheless, serious worries about mobility allowance, and I should like to emphasise some of the arguments that have already been made so that my hon. friend the Minister is fully aware of the breadth of concern about the elegibility criteria for the allowance.
      There will always be some definition problems and borderline cases, however the legislation is written, but it is clear that the current criteria about being unable, or virtually unable, to walk are not adequate to determine whether somebody should be eligible for mobility allowance.
      We all have constituents whom any layman would say are unable to walk. We all have constituents who obviously need some assistance with mobility but who, because of the interpretation of definitions, are not entitled to mobility allowance. It is important that my hon. Friend the Minister should give us an assurance that he will reconsider the matter. I understand that he may not be able to accept new clauses 23, 24 and 25 now, but they embrace important considerations which I hope he will examine to see whether we can improve the wording of the eligibility criteria.
      None of the new clauses will open the floodgates to people who would, by reasonable criteria, be ineligible. The numbers will be small and it would be a sensitive response to a small problem for my hon. Friend to give us an assurance that he will re-examine the definitional problems.
      The hon. Member for Caernarfon (Mr. Wigley) spoke to new clause 5. There is an important principle here and, as we are having a rare debate on mobility allowance, we should not skate over the fact that somebody who has passed his or her 66th birthday is not entitled to claim mobility allowance although his or her need for it may be as significant as that of somebody who was recently 65—or more so.
      A number—I do not wish to exaggerate—of elderly people have considerable difficulty with mobility and are beleaguered in their homes. There is little help for people aged over 66 who are immobile. The elderly have growing expectations in terms of mobility, activity and the richness of life, so we must consider such groups who are significantly disadvantaged because of lack of mobility.
      Such a change obviously has resource implications, and I can understand my right hon. and hon. Friends being anxious about ramifications to the tune of some £300 million for the social security budget arising from significant changes in eligibility for mobility allowance for people aged over 66. I am not asking my hon. Friend to accept the principle and go ahead straight away; merely that he should give greater thought to the mobility needs of elderly people when no other source of help is available.
      There might come a time when we have the resources to allow a wider interpretation of the mobility allowance for elderly people.
      Mrs. Renée Short: We shall need a change of Government before that happens.
      Mr. Galley: The hon. Lady often interrupts me in the Social Services Select Committee, and she is doing it again now. That comment was unworthy of her and inaccurate.
      New clause 5 has significant resource implications, but improvements in social security have come one by one. The hon. Member for Eccles (Mr. Carter-Jones) is fond of telling us that he is in favour of what he calls the salami approach of improvements for the disabled. He argues that improvements come slice by slice. I hope my hon. Friend will consider that extending the mobility allowance to the over-65s should be the next improving slice.
      Mr. Gordon Wilson: I should like to speak in support of new clause 5. I do not have to say too much about the generality, as the hon. Member for Halifax (Mr. Galley) has just urged the Minister for Social Security to take account of the needs of the elderly.
      I should like to spotlight another anomaly. Is there any reason why people who have not applied for mobility allowance should not be eligible between the ages of 65 and 75, when people who have received it before the age of 66 are able to have it, provided that the medical criteria are satisfied, until they are 75? I cannot understand why that should happen.
      I should like to give the example of an injustice which was brought to my attention. Someone consulted his general practitioner about four years ago when he was still under 65. The general practitioner failed to diagnose a medical condition and, by the time it was diagnosed and a specialist had confirmed it, the gentleman had lost his claim to mobility allowance, He applied, went to the tribunal and got a lot of sympathy. However, he did not get any money at the end of the day. The people concerned feel very strongly about this injustice.
      A letter from the consultant physician said that he suffered from chronic bronchitis and emphysema and was significantly disabled to the point where he was breathless after walking a short distance on level ground. The letter said:
      "His illness represents one which has progresed slowly over a period of years. He is markedly disabled now but was significantly disabled several years ago before he reached the age of 65. I can most strongly support his claim for Mobility Allowance on Medical grounds."
      That is what the consultant physician said, and the tribunal agreed. However, he did not succeed in his claim, simply because he was over 65. I do not see how the Minister can justify this dreadful situation anyway. I hope that he will do something this evening to give some hope to the elderly who are disabled and immobile.
      Mrs. Edwina Currie: There is no doubt that mobility allowance is one of the most useful, best understood and widely used of all the benefits that have been introduced in recent years. I hope that it will not put anybody's back up on Conservative Benches if I say that and pay tribute to those elsewhere who took the time and trouble to introduce it. However, I confess to a sense of disappointment that my right hon. Friend the Secretary of State has not yet managed to make major progress on the entitlement to mobility allowance of mentally handicapped people.
      My right hon. Friend will recall debating with me late one night, I think it was in 1984, the case of Shelley and Russell Tulloch, who are my constituents in Melbourne near Derby. They are mentally handicapped adults
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      suffering from a congenital disease which was not discovered until after the younger one was born. The disease means that they have progressively become more mentally handicapped and increasingly difficult to manage. They are cared for by devoted parents who have applied for mobility allowance and who raised the question with me. After several attempts they were eventually granted the mobility allowance and the DHSS then appealed against the decision and took the case to higher authorities, at which point they were refused mobility allowance.
      The family receives a great deal of help and assistance. The two young people receive non-contributory invalidity pension, the family has the assistance of Derbyshire social services and they have access to a day centre and training centre. There is no doubt that the fact that the young people are mentally handicapped and quite severely restricted in what they can do is known and noted and is very much a part of all the assessments that have been done of the family. When I debated the case with my right hon. Friend, the family were sufficiently devoted to come down to listen to what was being said and advise me.
      Therefore, I take a close interest in the subject and I hope that the day may come when both sides of the House can welcome the opportunity for mobility allowance to be paid not only to people who cannot walk, but to those with other problems.
      If Shelley and Russell were here now they could walk through this Chamber as readily as anybody—that is, if they could understand what the Chamber was and what was being asked of them. They could manage to put one foot in front of the other. There is no doubt about that, although their ability so to do is becoming increasingly restricted. They would need to be on somebody's arm. They would need to be assisted and aided, not by a walking stick, a frame or a zimmer, but by a caring person, especially a relative or someone they could trust in order to make progress of any kind, even of a few yards. It is impossible for them to travel or use public transport unaided or to use the minibus without an escort. Therefore, it follows that they need help with transport.
      Some years ago when I was involved in social services in Birmingham we were able to make use of a different piece of legislation to aid such people. We were able to grant bus passes to such people under the transport legislation of 1976. That gave us greater leeway. Apart from anything else, it gave more power to local councillors and, provided we kept within the broad letter of the legislation, we were able to decide whether we felt that someone would benefit from a bus pass. There were occasions when we watched somebody walk into the office to see whether we thought he needed a bus pass. We always watched them from the window as they walked out again because we were well aware that some people would abuse the system.
      We were able to use this facility to grant assistance to families with mentally handicapped members. We were quite sure that the wording of that legislation enabled us to use our power to pay the transport authority for a free bus pass so that a mentally handicapped person could use it and be assisted in that way. I hope that my right hon. and hon. Friends will explore the ways in which local authorities can use their powers and see whether they could be extended in some way to mentally handicapped people.

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      6.45 pm
      Various additional criteria for deciding whether someone should claim mobility allowance are proposed in the new clauses, especially that of the hon. Member for Caernarfon (Mr. Wigley) with which I have a great deal of sympathy. I am sure that my right hon. Friend the Secretary of State would agree that the current criteria are restrictive and increasingly seem old-fashioned. A disabled person is now recognised not just as someone who cannot walk very well. These days we regard as disabled those who cannot make as full use of facilities as the rest of us can, and somebody who is mentally handicapped, not just physically handicapped.
      Although the legislation was not written all that long ago, in the days when it was written, when mental handicap was beginning to be recognised as a problem for which the whole community should be responsible, a very large proportion of the mentally handicapped people, such as Shelley and Russell Tulloch, would have been in institutions. Therefore, there would have been no need for them to have mobility allowance or to try to find ways of living in society. They no longer go into institutions, and the whole thrust of our policy is to get them out of them and into the community. Therefore, it behoves us, in so far as we can, to ensure that they have the same rights as everybody else in the community and that their disability enables and entitles them to the same sort of help.
      A full review of disability is currently under way. I have asked and pleaded in this House before that we should include the mentally handicapped in the general word disability. I believe that my right hon. and hon. Friends have taken careful note of that. I hope that the day will come when they will feel able to add criteria to the granting of mobility allowance which will recognise that walking unaided does not just mean walking without a stick. It may also mean needing to walk with an escort. Travelling unaided may mean not just being able to get on the bus by oneself but perhaps requiring some assistance and guidance and an escort at all times in order to be able to do that. Therefore, I hope that in the current review the question of mobility allowance is being looked at seriously and that at some point we may look forward to proposals by my right hon. and hon. Friends on the Front Bench in order to allow the payment of this important and valuable benefit to those who are mentally handicapped and could make use of it.
      Mr. Alfred Morris: Time is at a premium and I shall be studiedly brief. My main concern is with new clause 23 and the others so ably explained by my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) and the hon. Member for Exeter (Mr. Hannam). There is now widespread and increasing concern about current restrictions on entitlement to mobility allowance. It has been put to the House strongly again today by the Spastics Society. The Society's concern is shared by many other organisations. What seems particularly unfair to the organisations is that those who have physical disabilities in their legs qualify for the allowance while others, who in theory are able to walk but cannot do so because of a mental handicap or a combination of disabilities, do not. That rankles also with the families of many disabled children.
      There has been reference to the legal confusion which surrounds entitlement to the allowance. To some extent that confusion stems from various interpretations of the
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      verb "to walk". It is argued that the needs of many disabled people could be met if "to walk" was defined in the regulations as meaning:
      "to make progress on foot in an intended direction, unaided by another person, without risk or substantial danger to oneself or others".
      Those are the words of new clause 23.
      This would be a simple amendment to introduce, and would clarify the current confusion. It would also remove an anomaly that causes considerable distress to severely disabled people and those who care for them.
      The mobility allowance is a child of which many people have claimed paternity, such has been its success. Having legislated for the allowance, and having then moved regulations that extended it to some people with mental handicaps, I very much hope that our plea will be accepted. Certainly, if everyone who has claimed paternity were now to vote for the redefinition that we are seeking, there could be no doubt whatever that it would be approved.
      Mr. Eric Forth (Mid-Worcestershire): I should like to add a few words, as someone who has listened to the debate and who was not privileged to be on the Committee. Therefore, I hope that my words will carry a slightly different emphasis from the words of those who served many long hours in Committee and with whose views Ministers are familiar.
      I ask why we should risk giving any impression that we are not willing and prepared to give the maximum help to those in society who most need it. I favour concentrating that help and the resources that are available most on those who are least able to help themselves. That category is headed by the disabled. In using the word "disabled", I agree with all my hon. Friends and Opposition Members who have given the widest possible definition of "disablement" in this context, because I believe that if we allow the law and regulations to continue, as they have in the past, to be drawn in the most narrow way and therefore to seek to exclude people from the category of those who need help, we are open and vulnerable to criticism—and rightly so.
      I say that the more so because I believe that it is that category of people in society who, in many ways, are the most easily enumerated and quantified. We should be able to identify them very well, with regard to the age limit and physical disabilities; we should be able to quantify them and therefore make estimates and allowances of the resources required to give them the help that they need and deserve.
      I agree with the point that was made by the hon. Member for Caernarfon (Mr. Wigley) about the age limit. In that category more than any other we are well able to identify those who would qualify were we to change the ridiculous regulations, and therefore build into our estimates of the resources coming under this heading what was required to give those people the help that they need. That is an easy case. A more difficult case is one that requires a definition of mobility or immobility, or the ability to walk. Again, I agree with many Opposition Members and my hon. Friends. Surely in that case we should be able to make the definition more generous rather than narrower. Even if we did that, we should still be able to quantify with reasonable accuracy the number of people who might qualify for the benefits, assistance and help.
      On these occasions, I am always the first to say to people who want more resources for any aspect of social

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      security services: where would the money come from? I am prepared, in a rare act of generosity, to offer my hon. Friends some advice and guidance. I am referring to the next new clause that we shall discuss, which is about child benefit.
      I give a small trailer to my speech by telling Ministers that we could start to find the resources required by not giving child benefit to those who do not need it. In other words, why should we give child benefit to the relatively well off when there are disabled people and people in genuine need of help and resources, people who deserve the resources of the social services much more than do wealthy people with children? My positive and helpful suggestion to my hon. Friend the Minister is along these lines. I believe that we could legitimately transfer to where they are needed a large quantity of resources presently going to where they are not. I support what all Opposition Members and my hon. Friends have said on this important subject.
      Mr. Christopher Chope: I welcome new clause 31, which seems to introduce common sense into an area where the Court of Appeal has intervened and threatened an over-legalistic approach. I am sympathetic towards the common sense expressed in new clauses 23 to 25. It seems to me that one can or cannot walk. One could ask someone in the street whether he realised that the following person is not eligible for mobility allowance—someone who is
      "unable to make progress on foot in an intended direction, unaided by another person. without risk or substantial danger to oneself or others".
      I think that the man in the street would be extremely surprised at that.
      I am also sympathetic to the concept in new clause 5. If someone reaches the age of 68 and is unable to get around by himself, it is odd that his entitlement to mobility allowance depends on whether he was able to get around by himself at the age of 65. That is another anomaly that the Government should examine.
      Mr. Newton: This has been an important debate. However, there has been very little discussion of the proposition with which we started — the relatively modest but generally welcome new clause that I moved. The debate has ranged across many broader issues, as I expected, following the court decisions to which reference had been made.
      Before I comment on what hon. Members on both sides of the House have said, I should like to say a word about the Heaton case which was raised by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham). He will understand that it would not be appropriate for me to attempt to discuss the details of an individual case at length on the Floor of the House, certainly not in present circumstances. I should make it clear that on the initial claim, as my hon. Friend knows, the independent adjudicating authorities decided to make an award for two years only. They do not have to give reasons for that. The fact that the claimant was going into residential accommodation should not have been a factor, as payment of the allowance is not affected by that. My understanding is that there has been no final decision on the case to which my hon. Friend referred. It is still before a medical appeal tribunal.
      The major issue that has been raised by hon. Members is related to new clause 23 and the two other new clauses
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      of similar character, including the one tabled by the hon. Member for Caernarfon (Mr. Wigley). There is also the slightly different issue raised by the hon. Member for Dundee, East (Mr. Wilson) in his new clause 5.
      The House will be aware that since mobility allowance was introduced in 1976 by the then Labour Government — indeed, by the right hon. Member for Manchester, Wythenshawe (Mr. Morris)—the basic qualification has been the inability or virtual inability to walk. New clause 23—as well as new clauses 24 and 25—is directed to the meaning of the phrase "virtual inability to walk" as interpreted by the House of Lords in the Lees case, and by the social security commissioners in the Hilton case.
      In the case of Christine Lees, as the House will be aware, the judgment of the House of Lords was that the ability to walk referred to locomotion, not to the ability to direct one's steps to a desired destination. In the case of Mark Hilton, the decision of the tribunal of social security commissioners showed that mentally handicapped people, despite their physical ability to walk, can be entitled to mobility allowance if they are affected by what the commissioners describe as
      "temporary paralysis as far as walking is concerned",
      which has a physical cause.
      I acknowledge that the views expressed by a number of organisations outside the House and by some hon. Members tonight—
      Mr. Michael Meacher: On a point of order, Mr. Speaker. Can you advise me whether it is in order, when the guillotine motion falls at 7 o'clock, for the Opposition to move new clause 1 formally, to secure a vote on the clause? It is clear that there has been a filibuster by the Government on the new clause to prevent a clear humiliation by a vote on this important issue, which will now not be debated.
      Mr. Speaker: I have no authority to do as the hon. Gentleman wishes. If the Minister were to resume his seat before 7 o'clock and there was time to move the new clause, that would be a different matter.
      Mr. Newton: I recognise the difficulty, but I stress that I spoke for only a short time in moving the new clause less than one hour ago. The issues that have been raised are extremely important and complicated, and there is much anxiety outside the House—
      It being Seven o'clock, MR. SPEAKER proceeded, pursuant to the Order [15 April] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.
      Mr. Meacher: Further to my earlier point of order, Mr. Speaker. Would it be in order now for the Opposition to move new clause 1 formally to allow a vote on the matter? There has already been a great deal of discussion on this matter. We believe that it is proper that the House should have the opportunity to declare a view on this crucial issue. Can there now be a vote on new clause 1?
      Mr. Speaker: I am sorry to disappoint the hon. Gentleman, but I am bound by the rules of the House and I have no authority to go beyond the guillotine motion that has been agreed by the House.
      Mr. Barron: Further to that point of order, Mr. Speaker. We have just had a debate on new clause 31,

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      which totalled 57 minutes. Forty-three minutes were used by the Government Benches for speeches to filibuster and stop us getting to new clause 1. This is a disgraceful state of affairs. The Minister spoke for 11 minutes. The hon. Member for Mid-Worcestershire (Mr. Forth) spoke about child benefit, knowing that we would not get to new clause 1 because he was filibustering.
      Mr. Speaker: I cannot recognise a filibuster. Hon. Members who have spoken have done so very briefly.
      Mrs. Kellett-Bowman: Further to that point of order, Mr. Speaker. May I add my words to those of Opposition Members who are disgusted at the way in which the discussion on child benefits in new clause 1 has been avoided.
      Mr. Speaker: There is always the chance of such sadness when a guillotine motion is in force.

      Clause 1
      MINIMUM CONTRIBUTIONS TO PERSONAL PENSION SCHEMES
      Mr. Major: I beg to move amendment No. 1 in page 1, line 15, leave out from 'election' to 'and' in line 16 and insert
      'which is still operative that her liability in respect of primary Class 1 contributions shall be a liability to contribute at a reduced rate'.
      Mr. Speaker: Before we discuss Government amendment No. 1, it would be right for me to tell the House that I have reconsidered my provisional selection of amendments. I have selected amendment No. 206 in the name of the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and his hon. Friends. This amendment will fall for debate immediately after Government amendment No. 59, that is, after the 9 o'clock guillotine.
      Mr. Harry Cohen: On a point of order, Mr. Speaker. In view of the importance of the comments which have been made about child benefit and the fact that you have just added to your selection of amendments to be discussed, will you consider adding the debate on child benefit under new clause I later in the evening so that the House can give a view on the matter?
      Mr. Speaker: The hon. Gentleman has been a member of this House for long enough to know that we move forward and not backwards in this place.
      Mr. Major: This is a drafting amendment which clarifies the intent of subsection (1)(b) of clause 1 which states that married women and widows who have opted to pay reduced rates of national insurance contributions are excluded from receiving the contracted-out rebate. This is not a piece of miscellaneous beastliness but simply reflects the fact that they are not covered by SERPS and consequently have no SERPS pension to contract out of. It would therefore be extremely odd to pay a rebate. I draw to the attention of the House that an optant who wishes the DHSS to pay minimum contributions to her personal pension will first need to end her election.
      Amendment agreed to.
      Mr. Major: I beg to move amendment No. 189, in page 2, line 12, at end insert—
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      `(4A) If the Secretary of State pays art amount by way of minimum contributions which he is not required to pay, he may recover it from the person to whom he paid it or from any person in respect of whom he paid it.
      (4B) If he pays in respect of an earner an amount by way of minimum contributions which he is required to pay, but does not pay it to the trustees or managers of the earner's chosen scheme, he may recover it from the person to whom he paid it or from the earner.'
      Mr. Speaker: With this it will be convenient to discuss Government amendments Nos. 190, 191 and 194.
      Mr. Major: These amendments ensure that the Secretary of State has a legal right to recover any wrong payments of minimum contributions through the contracted-out rebate under clause 1 or incentive payments—the 2 per cent. incentive under clause 7—and to restore to the national insurance fund the amounts recovered. They also clarify that regulations under the Social Security Act 1975 can enable amounts owed by a person to the Secretary of State to be offset against a refund of overpaid national insurance contributions to that person.
      I shall give examples of how this will work if pressed, but it is a fairly straightforward and non-contentious proposal and, for the present, I merely commend the amendments to the House.
      Amendment agreed to.
      Mr. Major: I beg to move amendment No. 2, in page 2, line 30, leave out from 'date' to end of line 32 and insert
      'some other appropriate scheme is the earner's chosen scheme'.
      This is a drafting amendment which is required for clarification because clause 3 does not provide for exceptions to clause 1 as the existing words may be read to suggest. The substituted words in amendment No. 2 achieve the intended effect that a person cannot nominate a personal pension scheme to receive his minimum contributions from DHSS Newcastle without cancelling a previous nomination which is still valid.
      Amendment agree to.

    Schedule 1
    APPROPRIATE PERSONAL PENSION SCHEMES
    Mr. Major: I beg to move amendment No. 192, in page 82, line 9, leave out pargraph 2 and insert—
    '2. The Secretary of State may prescribe descriptions of persons by whom or bodies by which a scheme may be established and, if he does so, a scheme may only be established by a person or body of a prescribed description.'.
    Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to discuss Government amendment No. 193.
    Mr. Major: Paragraph of schedue 1 provides a power to prescribe who may establish personal pension schemes. The amendments extend that power, adding a general power enabling requirements to be placed on personal pension schemes as a condition of them becoming appropriate to receive minimum contributions from the DHSS Newcastle. The amendments also reword paragraph 2 so that the Secretary of State need not exercise the power given there to prescribe who may establish a personal pension scheme if that proves unnecessary to enable the new providers—unit trusts, banks and building societies—to participate in personal pensions.
    Our intention is to use the power in the new paragraph 5(b) set out in amendment No. 193, to make regulations

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    about the form and nature of appropriate personal pension schemes. For example, they are likely to specify that schemes which are authorised unit trusts under the financial services legislation, or which offer special kinds of contract under insurance company legislation, may be appropriate. That approach will enable us to ensure that the investor protection provisions that apply to existing forms of investment business will apply automatically to personal pension schemes receiving the minimum contributions.
    We had a lengthy and interesting debate in Committee about investor protection and we regard that as critically important in the provision of pensions. I am sure that that view is supported by all hon. Members. Together with other legislation, for example the Building Societies Bill, the proposed regulations will show that the route for the new providers to become involved in the provision of personal pensions is by setting up or by being associated with suitable forms of investment business offering such pensions.
    Amendment agreed to.
    Mr. Newton: I beg to move amendment No. 3, in page 82, line 11 leave out paragraph 3.
    Mr. Deputy Speaker: With this it will be convenient also to discuss Government amendments Nos. 5, 8, 24 and 25.
    Mr. Newton: These amendments meet a point that was raised by Opposition Members during the Committee stage. The Government undertook to discuss these points with the parliamentary draftsmen. The amendments ensure that the minimum contributions to a personal pension scheme and the corresponding minimum payments and incentive payments to a money purchase occupational scheme are used for the benefit of the member concerned. That anxiety was expressed in an amendment in Committee. The amendment also paves the way for other amendments to clause 6 and schedule 2 which meet a related point raised in Committee by my hon. Friend the Member for Bristol, North-West (Mr. Stern).
    Appropriate personal pension schemes and money purchase contracted-out occupational pension schemes will not, as the Bill presently states, have to provide only money purchase benefits. They will also be able to provide some defined benefits provided that the minimum contributions are applied — subject to permitted administrative charges—to providing money purchase benefits. I hope that that explanation will assist the House to form a favourable view of the matter.
    Mrs. Beckett: I listened with interest to the Minister's explanation of the reasons for the amendment, and the debate affords an opportunity to the Opposition to draw attention to a couple of defects that we still see in the scheme.
    The Minister said that the amendment would allow occupational pension schemes to give defined benefits as well as only money purchase benefits, which might have been the case previously. We are concerned that the part of the Bill that is now being amended will allow schemes to be contracted out on the basis of minimum contributions rather than, as in the past, on the basis of the much higher standard of defined benefits.
    Most people who were anxious when the Government proposed the abolition of SERPS might have felt some
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    sense of relief that they now propose only to modify that scheme. But such relief will rapidly evaporate once it is realised that as a quid pro quo for having a modified earnings-related pension scheme within the state sector the standards that occupational pension schemes are expected to meet are significantly lowered. Rather than merely making the state pension worse, the Government have effectively lowered pensions right across the board, but, as that is the clear intention of their overall policy, I suppose we should not be surprised.
    The Minister also said that another intention of the amendments was to try to ensure that benefits were more definitely devoted to the interests of the member. That goes to the heart of our concern about the proposal to introduce personal pensions.
    In Committee it was noteworthy that all the amendments that sought to introduce some guarantee—even insurance—that people would not be able to sign away all their pension rights, thereby finding themselves destitute when they retired, were repulsed. The Government made it very clear that personal pensions were a risk — although they described it as an opportunity—and that the full burden of that risk should be borne by the individual who chose to take out a personal pension. To be completely fair to the Government, that was made plain in their first consultative document, but it has been far from the forefront of their remarks ever since.
    Mr. Freeman: As I did not serve on the Committee I did not have the benefit of hearing the arguments that I am sure the hon. Lady deployed with great skill. However, I am concerned about the line of her argument. She has expressed fears — which I do not share — about the introduction of personal pensions. This is a marvellous opportunity to encourage those who are not already in occupational pension schemes to make provision for themselves. Will the hon. Lady enlighten us by explaining the risk that she thinks will be borne by those who take out personal pensions? Perhaps she will bear in mind that before such a pension is taken out there are restrictions on those who may offer such schemes and limitations on the amount and timing of the benefit to be received. The hon. Lady should also bear in mind that those already in occupational pension schemes might think carefully about withdrawing from such generous schemes, particularly those which are non-contributory.
    Mrs. Beckett: I am grateful to the hon. Gentleman, who has led me to my next point. I shall tell him why the Opposition and others are concerned about personal pensions and why some of the major insurance companies have expressed reservations. I can do no better than quote the CBI. The hon. Gentleman may not have much sympathy with my views, but I am sure that he sympathises with the view of the CBI. It states that relying solely on personal pensions could leave people and their families less well off and inadequately provided for in later years because they do not provide a pension based on final salary or average earnings, as would an occupational pension; they do not include discretionary increases to keep pace with inflation; and they do not provide life assurance, and so on. The CBI also draws attention to the danger that younger employees may be tempted to leave their occupational pension schemes. When we are young, we are less worried about our pension provision and are

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    much more likely to be tempted by cash in the hand. Many people are extremely concerned about the dangers that could be incurred as a result of unwise investments.
    7.15 pm
    There are other problems, as well as the possibility of not getting an adequate pension because of poor investments. The Minister said that it was intended to try to obtain better value for money, but he must be aware that the overheads of personal pension schemes are likely to be substantially higher than those of occupational pension schemes, and infinitely higher than those of SERPS, which is the most efficient way of providing a good pension and good value for money. After all the things that they have said, it is extraordinary that a Conservative Government should be insisting on people getting poor value for their investments.
    There is the danger that people may be misled into taking out personal pensions, without realising the risks that they will incur. I draw the attention of the House to an advertisement that appeared shortly after we finished debating these matters in Committee. It is almost as misleading as an advertisement for pensions could be. It says that SERPS is unfair and poor value for money. That is totally untrue. Even Conservative Members would not argue that. They would complain that it is too good value for money, which is why it must be reduced. The advertisement lists all the advantages that would accrue to someone setting up or taking out a personal pension.
    One of the most disturbing things about that advertisement is that it is placed by a company which has in its title the word "Crown". Its logo is very like the HMSO logo. It looks very much like a Government-sponsored advertisement. But it is a misleading attempt to draw someone into taking out a personal pension that might well be to his or her disadvantage. I know that the Government intend to control misleading advertising, and the sooner they start the better.
    We are also concerned about what is likely to happen at a time when unemployment is high and is likely to remain high even when, after the next election, we have a Government who will bend all their efforts towards reducing it.
    In Committee we discussed whether the value of someone's personal pension would be treated in the same way as other insurance policies are now—for example, whether as a capital resource it would deprive someone of entitlement to income support, housing benefit, and so on. I am not sure whether the Minister has wholly met that concern, but we will not know what the dangers are until we see how the value of personal pensions is assessed.
    I am much more concerned about the fact that someone who is unemployed is unlikely to be able to maintain the contributions. People will then be in danger of effectively losing all of their supplementary pension entitlement.
    The hon. Member for Kettering (Mr. Freeman) spoke of the opportunity of encouraging people who have no occupational pension. But if, having taken out such a pension, they become unemployed for a sustained period and are forced to give up the scheme to which they have contributed, they will then have no state earnings-related supplement and no occupational pension supplement either. That is a serious danger that the Government have effectively ignored.
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    Later amendments deal with what the Government call a 2 per cent. incentive, but what we call a 2 per cent. bribe. The proposal to give people extra contributions to attract them into such schemes is particularly invidious because those people are in serious danger of providing themselves with an inadequate pension. It seems wrong for the Government to seek to give someone a cash incentive which will ultimately leave that person in poverty in retirement.
    I shall draw attention to the observations of the United Kingdom steering committee on superannuation about what are and what are not advantageous proposals and what is and what is not in the public interest. During the Committee stage, and again on report, that committee wrote saying that its views have not changed. It draws attention to the fact that, the Secretary of State has claimed that the proposals will foster industrywide schemes, but that it believes that damage could accrue to industrywide schemes, especially specialised ones for the police and firemen.
    In Committee the Minister said that no one in the police or the fire service would be so unwise as to leave an occupational pension scheme, and we hope that no one will do so. However, those who represent the police and firemen and their pension schemes are worried about the temptation to do so. They draw attention to the fact that contributions to the police scheme are 11 per cent. per annum for men and 8 per cent. per annum for women, and 10·75 per cent. per annum for both male and female fire fighters. Those figures represent considerable sums. such as would cover the cost of running a car. They think it is likely that some young people will be tempted to take out proposals of the type envisaged in this section of the Bill. Our anxiety, like theirs, remains unassuaged by our discussions in Committee.
    Although we shall not vote against the amendment, we believe that it is right to express our anxiety at the damage that the Government are doing to pension provisions.
    Mr. Freeman: I did not have the benefit of listening to the arguments of the hon. Member for Derby, South (Mrs. Beckett) in Committee, but I disagree with two of her criticisms of the provisions for personal pensions in this amendment, with which I agree.
    The hon. Lady cited the anxiety of the Confederation of British Industry, which I believe is misplaced. I have read the article in question. If I have understood her summary of the argument correctly, it is that if an individual leaves an occupational pensions scheme and makes a money purchase provision for his personal pension, it would not be as good as a final salary or defined benefit scheme. That misses two points.
    First, about 11 million employees — a goodly proportion of whom are admittedly on extremely low pay, such as married women who work, and for whom discussion of the provision of a personal pension is not entirely appropriate—are not covered by occupational pension schemes. Therefore, the introduction of personal pensions is a major breakthrough which will be popular with the electorate during the next few years and as the schemes get going. Those who are not covered by occupational pension schemes will mainly be attracted to personal pension schemes. Therefore, The CBI's argument is not relevant to them. Surely the objective is to bring in as many people as possible who have no provision made for them by their employer, perhaps

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    because they work in a small firm or for an employer who does not have a final salary scheme. Many small and medium firms have money purchase schemes only and do not have defined benefit and final salary schemes.
    Mrs. Beckett: I take the hon. Gentleman's point but I am sure he will recall the two arguments expressed by those worried about personal pension schemes. He said that many people did not have occupational pensions. We do not think it matters what type of pension one has, so long as it ensures an adequate income. We do not agree with the Secretary of State that sticking a different label on a rose makes it smell different. We believe that a poor occupational pension is disadvantageous. The hon. Gentleman also pointed to the stop in growth of occupational pensions. He will be aware that it is widely believed that, as the state scheme has been so good, there is no need for an expansion of occupational pension schemes.
    Mr. Freeman: My experience does not bear out what the hon. Lady says. It is wholly at variance with hers.
    Some analysis is needed of the central point of the hon. Lady's speech. She expressed the fear that some people would leave a relatively good occupational pension scheme which provides two thirds of final salary after 40 years of service and an indexed pension or one increased by a minimum of 5 per cent. per annum. She feared that people nearing retirement might be induced away from the relatively generous benefits of that scheme and seek to make their personal pension provision, ending up worse off than if they had remained in the occupational pension scheme.
    The fallacy of that argument is the implicit belief in a relatively high rate of inflation. The hon. Lady will agree that if one assumes that inflation will remain below 5 per cent. and an economic growth of 2 to 3 per cent. per annum, a money purchase scheme will provide adequate benefits compared with the best occupational pension scheme on a final salary basis. One would be substantially worse off only if there was a high rate of inflation. The Government's proposal contains the implicit assumption that inflation has been licked, thus providing the economic background for pension provision with inflation under control and sustained economic growth.
    We must consider the young person who leaves, or never joins, an occupational pension scheme, and makes his own personal pension provision. It must be remembered that we are not dealing with an economy where a person joins an employer at 18 and stays until he retires. We must deal with a flexible employment career where a person is in employment, is unemployed temporarily, and moves to a different employer. Gone are the days when a person joins an employer and remains with the company for the whole of his working life.
    I hope that before a young person opts out or decides not to join a generous occupational pension scheme, he will think carefully about it. He may decide not to join, based on a correct assessment of all the facts. Earlier I alluded to my belief that the literature presented by employers and those selling personal pensions should be clear and enable those who are considering them to reflect properly and with due regard to the seriousness of their decision. The legislation that the Government have enacted, coupled with the Financial Services Bill, fulfils those objectives.
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    The second objection of the hon. Member for Derby, South concerned what she described as the unemployment problem. We have unemployment problems, as dc many other countries in the Western world, but she must distinguish between the long-term unemployed and those who are moving out of employment temporarily and will go back into other employment.
    I grant that there is a problem in pension provision for the long-term unemployed. However, those who move out of employment for a few months before finding other employment, and who are making provision for their personal pension under a money purchase scheme, will find that when they go back into employment they can probably increase their contributions for a short time up to the Inland Revenue limits. That will allow them to catch up for the period when they were not making provision. Therefore, when it comes to retirement, their prevision will be adequate. The results of the original clause and the amendments now tabled to it are wise and beneficial and will be popular with the electorate.
    7.30 pm
    Mr. Newton: The hon. Member for Derby, South (Mrs. Beckett) ranged widely in her comments and made almost a Second Reading speech. I hope that she will not expect me to respond in the same way to everything that she said.
    Once again, in the Opposition's response to these amendments, which are quite modest in themselves, we have had a clear illustration of how they dislike offering people a wider choice in making provision for themselves and their pensions. The experience of the past 10 or 20 years shows that such behaviour will carry a penalty, in that it will make it more likely that people who should have access to occupational or personal pensions will not have such access, simply because schemes in which they could participate will not be there. We believe that it Js right to open up those choices, for the reasons on which my hon. Friend the Member for Kettering (Mr. Freeman), with his particular expertise, touched.
    We have to accept that many purchase schemes cannot, by definition, give the same guarantees that can, at least purportedly, be given by the state earnings-related pension scheme. Its ability to deliver depends on the capacity and willingness of future generations of taxpayers and contributors to find the money. We accept that there is a different balance of considerations for purchase schemes, occupational money purchase schemes and personal pension schemes. I hope the hon. Lady will at least acknowledge that although she talks relentlessly as if it were all downside risk, a good money purchase scheme or personal pension scheme will bring significant additional rewards for those who have made that choice. We simply think that those opportunities should be made available.
    I shall not proceed further down that almost Second Reading line of argument, but will move on to some more particular issues raised by the hon. Lady. Money purchase schemes, both occupational and personal pensions, will have to provide widows' and widowers' benefits in circumstances which parallel those required from salary-related schemes. The hon. Lady seems not to have sufficiently appreciated that point.
    The hon. Lady spoke about representations on behalf of some of the local government schemes. We have already made it clear that we do not expect people in good occupational schemes to leave them and take personal

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    pensions, and that would apply to the special pension schemes for policemen and firemen, which provide rapid accrual. It is significant that the examples quoted by the hon. Lady are all from the public sector, which returns us to my earlier point. Without the option of money purchase contracted out, there is no real prospect of the sort of growth in private-sector, industrywide schemes which we, and many others, would wish to see. As I understand what the hon. Lady was saying, she was not seeking to attack or resist our amendments, but rather to use them as a peg on which to hang some wider points. I commend the amendments to the House.
    Mrs. Beckett: With the leave of the House, Mr. Deputy Speaker, I shall make a few brief observations on what the Minister said.
    It still remains significant that the Government have refused at any stage to accept any proposal that people should have any minimal guarantee. In their consultation document, the Government said that if a personal pension scheme failed to provide people with adequate income, that would be hard luck. They did not phrase it quite like that, but that is what they meant.
    Both the Minister and the hon. Member for Kettering (Mr. Freeman) asked how anybody could think that people might get poor pensions. I draw the Minister's attention to the fact that when the Government initially put forward these proposals, everyone throughout the pensions world, and everyone who wrote to us or whom we consulted, could not understand why the Government were making these proposals, because they were likely to provide so much lower pensions than SERPS. Much of the comment on the Minister's consultation document drew attention to that fact. Therefore, it is not merely the Opposition who think that people are likely to get a lower pension as a result of these changes.
    The Minister talked about the way in which the Government wanted to extend freedom. That is an objective with which we agree. They want to extend the freedom to make people destitute in their old age. We see no qualms of conscience in resisting that.
    Amendment agreed to.
    Mr. Major: I beg to move amendment No. 4, in page 82, line 25 after 'member', insert—
    `(aa) of any income or capital gain arising from the investment of payments such as are mentioned in paragraph (a) above;'.
    In Committee hon. Members were concerned, as are the Government, to ensure fair and proper control of administrative charges. The amendment extends the power to control such charges in respect of personal pension schemes and contracted-out money purchase occupational schemes. The practical effect is to include in the controls any deductions from income and capital gains arising from investment of members' contribution. As the House will know, there is already a power in schedule 1(5) to control charges deducted direct from contributions or benefits.
    This new power is entirely beneficial to the potential holders of pensions. Without the extended power it might not be possible to make effective regulations controlling the administrative charges on schemes offering benefit in the form of a declared interest or bonus, for example with a with-profits insurance contract. In such cases, the
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    charges are not explicity or overtly deducted from contributions or benefits, but are taken into account in deciding what benefits or returns are declared.
    I must emphasise again, as we made clear in Committee, that all the power of schedule 1(5) may be kept in reserve if we are satisfied that the combined effect of disclosure and extra competition will be sufficient to keep charges down to reasonable levels. Equally, if we are not sure that that will happen, we shall not hesitate to exercise the power from the outset. The amendment ensures that the power will serve as a catch-all should we need to use it.
    Amendment agreed to
    Amendments made; No. 5, in page 82, line 31 at end insert—
    '5A.—(1) Subject to sub-paragraph (2) below, all minimum contributions which are paid to a scheme in respect of one of its members must be applied so as to provide money purchase benefits for or in respect of that member, except so far as they are used—

    (a) to defray the administrative expenses of the scheme; or

    (b) to pay commission.

    (2) If regulations are made under paragraph 5 above, minimum contributions may be used in any way which the regulations permit, but not in any way not so permitted except to provide money purchase benefits for or in respect of the member.'.
    No. 193, in page 82, line 31 at end insert—
    `5B. A scheme must satisfy such other requirements as may be prescribed.'.
    No. 6, in page 82, line 35 after `rights', insert 'to money purchase benefits'.
    No. 7, in page 82, line 38 after 'his', insert `to money purchase benefits'.
    No. 8, in page 83, line 7, after `member', insert `to money purchase benefits'.—[Mr. Major.]
    Mr. Newton: I beg to move amendment No. 9, in page 83, line 9, leave out 'or' and insert `and'.
    Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 10, 14, 15, 16, 17, 30, 31, 32, 33 and 106.
    Mr. Newton: Amendments Nos. 9 and 10 are minor drafting amendments. The Bill as drafted provides power to require that the protected rights which result from the minimum contributions to a personal pension scheme are calculated in a way approved by an actuary, and power to prescribe who may act in that capacity. it will not always be an actuary who is the appropriate person to ensure that the protected rights are calculated properly. In many money purchase schemes, it is more likely to be an accountant or auditor. The amendments generalise the power in the Bill, so that "persons" can be prescribed for this purpose. They also correct some minor drafting errors, bringing the wording into line with similar provisions about the calculation of transfer values in paragraph 14 of schedule 1 A to the Social Security Pensions Act.
    Amendments Nos. 14 to 17 and 30 to 33, among other things, meet a query which was raised by Opposition Members about the drafting of clause 5(9). They clarify the fact that someone other than the member himself or herself can top up the amount of a protected rights premium. They also correct other unintended effects of the drafting so that, where a person wishes to top up the premium, he need not include the value of his other rights

    85
    in the scheme if he does not want to; nor will he be obliged to make a topping-up payment just because he has expressed a wish to do so.
    These are matters of some complexity, but I hope that the House will accept that the amendments are moved in good will with the aim of doing good, and will accept my brief explanation.
    Amendment agreed to.
    Amendment made: No. 10, in page 83, leave out lines 11 to 21 arid insert—
    '(5) The power to make regulations conferred by sub-paragraph (4) above includes power to provide that protected rights such as are mentioned in sub-paragraph (2) above are to be calculated and verified in such manner as may be approved in particular cases—

    (a) by prescribed persons; or

    (b) by persons with prescribed professional qualifications or experience; or

    (c) by persons approved by the Secretary of State, and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.'.—[Mr. Major.]

    Mr. Major: I beg to move amendment No. 11, in page 83, line 26 leave out 'only'.
    Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendment No. 12.
    Mr. Major: Amendments Nos. 11 and 12 reorganise the order and wording of paragraph 8 of schedule 1 to ensure that it works properly as intended. They meet a point which was made by Opposition Members in Committee by clarifying that the pension or annuity paid to a widow or widower in respect of a person's protected rights in a scheme is subject to the same conditions as the pension or annuity paid to the member.
    That will be generally welcome to the Opposition. It responds to the anxiety that they expressed in Committee, and I commend the amendments to the House.
    Amendment agreed to.
    Amendment made: No. 12, in page 83, line 31, leave out from beginning to end of line 15 on page 84 and insert
    `or
    (b) in such circumstances and subject to such conditions as may be prescribed, by the making of a transfer payment—

    (i) to another personal pension scheme; or

    (ii) to an occupational pension scheme, where the scheme to which the payment is made satisfies such requirements as may be prescribed.

    (1A) If—

    (a) the rules of the scheme do not provide for a pension; or

    (b) the member so elects,

    effect may be given to protected rights by the purchase by the scheme of an annuity which—

    (i) complies with the requirements of sub-paragraphs (2) and (3) below; and

    (ii) satisfies such conditions as may be prescribed. (1B) If the annual rate at commencement—

    (1B) If the annual rate at commencement—

    (a) of a pension under sub-paragraph (1) above; or

    (b) of an annuity under sub-paragraph (1A) above, would not exceed a prescribed amount, effect may be given to protected rights by the provision of a lump sum calculated in a manner satisfactory to the Occupational Pensions Board by reference to the amount of the pension or annuity and payable on the date on which the member attains pensionable age or on such later date as has been agreed by him.

    (IC) If the member has died without effect being given to protected rights under sub-paragraphs (1), (1A) or (1B) above, effect may be given to them in such manner as may be prescribed.
    (1D) No transaction is to be taken to give effect to protected rights unless it falls within this paragraph.
    (1E) Effect need not be given to protected rights if they have been extinguished by the payment of a personal pension protected rights premium.
    (2) A pension or annuity complies with this sub-paragraph if—

    (a) it commences—

    (i) on the date on which the member attains pensionable age; or

    (ii) on such later date as has been agreed by him, and continues until the date of his death.

    (b) in a case where the member dies while it is payable to him and is survived by a widow or widower—

    (i) it is payable to the widow or widower in prescribed circumstances and for the prescribed period at an annual rate which at any given time is one-half of the rate at which it would have been payable to the member if the member had been living at that time; or

    (ii) where that annual rate would not exceed a prescribed amount, a lump sum calculated in a manner satisfactory to the Occupational Pensions Board is provided in lieu of it.'.—[Major.]

    Clause 3
    AMOUNT OF MINIMUM CONTRIBUTIONS
    Mr. Kirkwood: I beg to move amendment No. 160, in page 4, line 10, at beginning insert
    'subject to subsection (5) below'.
    Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 161, in page 5, line 4 at end insert—
    '(5) Subsection 1(b) above does not apply in respect of an earner who is a non-qualifying earner.
    (6) Regulations may provide for—

    (a) notice that an earner is a non-qualifying earner to be given to the Secretary of State by such person, in such manner and within such time as may be prescribed;

    (b) such additional modifications to the definition of "connected employer" as may be prescribed.

    (7) In subsections (5) and (6) above—
    "non-qualifying earner" means, in relatior to a tax week, an earner who at any time after 31st December, 1985 but before that tax week—

    (a) has elected to cease to be a member of a relevant scheme which is contracted-out in relation to his employment; or

    (b) does not fall within (a) above, has ceased to be a member of a relevant scheme which was contracted-out in relation to his employment but receives within six months of such cessation an offer of membership made by or on behalf of the trustees or managers of a related scheme by reference to which his employment would be contracted-out employment (if he accepted that offer) and does not within one month of its being made accept that offer.

    "relevant scheme" means an occupational pension scheme which is a contracted-out scheme under Part III of the Social Security Pensions Act 1975.
    "related scheme" means, where an earner has ceased to be a member of a relevant scheme which was contracted-out in relation to his employment, a relevant scheme which is for the time being specified in a contracting-out certificate issued to—

    (a) the person who was the employer of the earner in relation to his first period of employment; or

    (b) a connected employer,

    as a scheme by reference to which the earner's employment would be contracted-out employment if he became a member of that scheme
    connected employer" has the meaning given to it for the purposes of section 51A of the Social Security Pensions Act 1975 with such modifications as may be prescribed.'.
    Mr. Kirkwood: The House will realise that the amendments seek to change the Government's proposals to introduce an incentive for persons to move into personal pension schemes. The purpose of my amendment is straightforward. It is to restrict that 2 per cent. incentive—or, as some might describe it, bribe—to cases that I consider to be of genuine concern to the state. That means employees who are accruing benefits under SERPS and, therefore, increasing the state's long-term liabilities. The amendment seeks to do that by creating a new category of non-qualifying earners, or earners to whom the incentive will not be paid. Non-qualifying earners are people who opt for an appropriate personal pension although they are currently contracted out of SERPS and accruing guaranteed minimum pensions under contracted-out schemes.
    To pay the 2 per cent. incentive, or bribe, as required by clause 3 would be wrong for three reasons. First, the decision that people who are in that position must take is between an occupational pension scheme and a personal pension plan. It will not affect the long-term liabilities of the state earnings-related pension. It is essentially a choice between two forms of private sector saving. It is legitimate for people to make up their minds about that, but incentives funded by the state will merely upset the free market economy and the forces of free competition. It is strange for the Government — we rehearsed these arguments in Committee — to deny the free market economy and the forces of free competition.
    7.45 pm
    Secondly, the incentive is wrong because it is payable from the national insurance fund, which is contributed to by everyone through national insurance contributions and is effectively taxpayers' money. At a time when insufficient resources are available for all the demands placed on the social security system, it is wrong in principle and reprehensibly wasteful to use some of those resources to sway private sector decisions which will not reduce the state's liabilities.
    Thirdly, it is wrong to introduce the incentive because, whatever view one has of personal pensions — I am prepared to countenance them—there is a risk in taking out a personal pension contract. The rewards may be great, but in some cases the losses would seem fairly difficult to bear, especially for dependants and spouses, who may lose the minimum of the death benefits payable under contracted-out schemes. It is risky to induce people by means of an incentive payable from state funds to give up a guaranteed minimum pension.
    I believe that the amendment is legally permissible—at least I would not like to think there was a technical reason for refusing it — but it has an additional advantage in that it brings the incentive under clause 3, which is payable to those opting for personal pensions, more closely into line with that available in clause 7, which is payable to members of newly contracted-out occupational pension schemes. It is clear from examining the details of the clause 7 incentive that it is payable only where the member has not, since the beginning of this year, already been contracted out in the employment concerned under another occupational scheme. Therefore, it is intended only to persuade employers to take out of SERPS those employees who are accruing SERPS benefits.
    88
    The Government will be aware that they have caused much worry in the occupational pensions industry. I favour personal pension schemes, and it is right for people to have that choice, but I do not share the Government's confidence that occupational schemes can thole the results of the incentive, which puts them at a massive disadvantage.
    The occupational pensions industry is also worried about the restructuring effects of some company plans and schemes that may accrue from some of the take-up of the personal pension plans. The Secretary of State may become a victim of his success because if many people dive out of their present occupational schemes into personal pensions, it may destabilise the occupational pensions industry. That would be a retrograde step. The Government actuary may have underestimated the take-up of the scheme. If that is so, it would put at risk some of the valuable and good occupational pension schemes. That would be a retrograde step.
    Therefore, I hope that the Secretary of State will look carefully at the amendment. It is drafted with as much precision as possible. It seeks not to damage either personal schemes or occupational schemes, but to redress the imbalance and unfairness that I submit will be created by the introduction of the 2 per cent. incentive. I hope that the Government will look very carefully at this amendment.
    The Secretary of State for Social Services (Mr. Norman Fowler): The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that he would broadly countenance personal pensions, which I interpreted as Liberal language for support, but then he made it quite clear that he favours the concept of personal pensions.
    The effect of his amendment would be to withhold the 2 per cent. incentive addition to personal pensions held by people who, since 1 January 1986, have opted to leave a contracted-out occupational scheme, or have refused to join one within six months of leaving another contracted-out scheme that is operated by the same or an associated employer. I shall deal in a moment with why I am not entirely happy with that formulation.
    We believe that it is important to give people the new option of a personal pension. At present the only alternative to remaining fully within the state earnings-related pension scheme is to belong to a salary-related occupational scheme. That option is open only to half of the work force. There are still "two nations" in pensions. That has been the case for the last 20 years. There are those who get a pension from their jobs and there are those who have no alternative but the state system.
    The provisions in the Bill will do a great deal to change that. It will be easier and more attractive for employers to provide schemes. They will be able to contract out without the open-ended commitment of providing the salary-related pension which must not deter many small employers. The rules for contracting out will be made much simpler for those who want to offer salary-related pensions.
    However, even those improvements do not go far enough. They will not give a pensions choice to everyone. Even with these reforms and changes, not all employers will offer schemes. In any event, occupational schemes may not be the best option for some people. To make choice for all a reality, we are seeking to allow people to contract out of the state scheme by choosing an individual

    89
    personal pension scheme with which to save for their retirement. The Bill will provide everyone with the opportunity to choose a personal pension and the type of body with which they want to save. It will give them some say in how their savings are invested and, above all, it will provide them with the scheme that suits them best.
    Most of those who are now in schemes are expected to stay in them. The market research that we carried out in 1983–84 showed a high level of satisfaction among scheme members, but many of those without an occupational pension, and others — such as those who expect to change their job frequently — will want to take advantage of the opportunity that personal pensions offer. For that reason, we have put forward personal pensions. The concept of personal pensions is accepted and recognised not just by the hon. Member for Roxburgh and Berwickshire but by the public and commentators generally.
    The 2 per cent. incentive payment, which is the guts of this amendment, is a small feature of the strategy to encourage the expansion of occupational schemes. When we reach clause 7, we shall explain why we think that an incentive is necessary to ensure the expansion of occupational schemes.
    Much the same reason lies behind our approach to personal pensions. Employees who are not in an occupational scheme already have access to a sort of personal pension—the so-called section 226 retirement annuity contract. However, its take-up has been very disappointing. Less than 5 per cent. of the employees who are not in schemes have taken out a section 226 policy, despite very generous tax treatment and the wide range of schemes that are on offer.
    There are features of the section 226 schemes that limit their attraction. They cannot be contracted out from SERPS and employers cannot contribute to them. The personal pensions that are provided for in the Bill will have a substantial edge on section 226 policies on both counts. They will be contracted out from SERPS, and we made it clear in the White Paper that the tax rules will allow employers to contribute to them. These improvements will make personal pensions a much more attractive investment than section 226 policies. However, we believe that something extra will still be needed to set the ball rolling. That is the reason for the 2 per cent. incentive.
    I do not believe that anyone has seriously argued that the 2 per cent. incentive will not be effective. The concern of the hon. Member for Roxburgh and Berwickshire, and of other hon. Members, is that it will be too effective. The hon. Gentleman referred to me as being the prisoner of my own success. The arguments that have been put forward at length tonight by various pensions industry spokesmen have been directed mainly at the fact that, as clause 3 stands, the 2 per cent. incentive will go to everybody with a personal pension, whether or not they were previously in a contracted-out occupational scheme.
    It has been claimed that this incentive will pose a serious threat to occupational schemes. Those claims are very much overdone, and I made my views clear in Committee. I view the claims made with a great deal of scepticism. I find it hard to believe that employees will be tempted out of a good occupational scheme just to take advantage not only of a modest incentive—2 per cent.—but of a temporary incentive, because it lasts only for five years. Employees may have other reasons for preferring a personal pension, such as the expectation that
    90
    they will frequently change their jobs. If they left an occupational scheme, they might be giving up the promise of pension contributions from their employer and they would have no statutory right of return to their employer's scheme. That is a matter that they will have to weigh in the balance.
    I acknowledge that there still fears in the pensions industry that the incentive will damage existing occupational schemes—for example, by tempting young employees out of occupational schemes. Those who take that view also voice doubts about the strength and sincerity of the Government's commitment to existing occupational schemes. Throughout the pensions inquiry we made it absolutely clear how strongly we value occupational schemes and how much we are indebted to them for the progress that has been made. It has never remotely been part of the Government's policy or approach to threaten their stability. Everything in the Social Security Act 1985—especially the improvements for early leavers—and the new requirements and options for occupational schemes in the Bill should considerably strengthen occupational schemes.
    I do not want to close the door to any change, and I shall think about what has been said. However, as it stands, the amendment is unacceptable. It would be far too rigid in its application. It would deny the incentive payment to someone who was in a contracted-out scheme for just a week — to someone who literally had joined a contracted-out scheme, had been a member of it for just a week and had then decided he had made the wrong decision and that he wanted to opt for a personal pension. I do not believe that the hon. Gentleman would want that kind of inflexibility to be incorporated in the Bill. I shall certainly think about what the hon. Member for Roxburgh and Berwickshire has said. He has made clear his support for the concept of personal pensions. I welcome that, and I believe that it will be a fresh and attractive option to the British public.
    Amendment negatived.

    Clause 5
    PERSONAL PENSION PROTECTED RIGHTS PREMIUM
    8 pm
    Mr. Major: I beg to move amendment No. 13, in page 6, line 12, after 'under', insert `section 52C of or'.
    Mr. Deputy Speaker: With this it will he convenient to take Government amendments Nos. 29 and 103.
    Mr. Major: Amendment No. 13 and the associated amendments are purely technical amendments which correct a possible inconsistency in the discharge of liability given to trustees or managers of schemes when a member's rights to benefits are secured by an insurance policy or annuity contract. The amendments make it clear that the purchase of such policies or contracts will also discharge trustees or managers of liability for the payment of state scheme premiums.
    Amendment agreed to.
    Amendments made: No. 14, in page 6, line 17, leave out
    'Subject to subsection (9) below'.
    No. 15, in page 6, line 21, leave out subsections (9) and (10).
    No. 16, in page 7, line 17, after 'premium', insert

    91
    `together with, if the person in respect of whom it falls to be paid gives notice to the prescribed person within the prescribed period—

    (i) the cash equivalent, calculated and verified in the prescribed manner and paid to the Secretary of State within the prescribed period, of any other rights which he has under the scheme and specifies in the notice, and

    (ii) the amount of any voluntary contribution paid to the Secretary of State within the prescribed period by, or in respect of, the person concerned.'.

    No. 17, in page 7, line 30, at end insert—
    '(15A) The power to make regulations conferred by subsections (8) and (12) above includes power to provide that cash equivalents are to be calculated and verified in such manner as may be approved in particular cases—

    (a) by prescribed persons;

    (b) by persons with prescribed professional qualifications or experience; or

    (c) by persons approved by the Secretary of State,

    and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.'.
    No. 18, in page 7, line 41. leave out subsections (17) to (19).—[Mr. Major.]

    Clause 6
    MONEY PURCHASE OCCUPATIONAL PENSION SCHEMES
    Mr. Major: I beg to move amendment No. 19, in page 8, line 21, leave out from 'effect' to end of line 24 and insert
    `to make amendments of the Social Security Pensions Act 1975 in relation to the contracting-out of schemes which provide money purchase benefits'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 20 to 23, 26 to 28, 35 and 38.
    Mr. Major: Amendment No. 19, with the extensive selection that follows it, appears at first glimpse rather daunting, but, in reality, it is not. The amendments simply make a number of drafting changes to clause 6 and schedule 2 so as to allow occupational pension schemes which provide money purchase and defined benefits to contract out by satisfying the money purchase conditions.
    I am grateful to my hon. Friend the Member for Bristol. North-West (Mr. Stern) for raising in Committee the position of such schemes. I explained at that time that we had received representations from the pensions industry on the same subject and we recognise that there is a clear case for allowing such schemes to contract out either by providing guarenteed minimum pensions, as they would have to do now, or by satisfying the new money purchase conditions. I said then that many detailed drafing amendments would be needed to achieve that object. The amendments in front of us are clear evidence that that supposition was correct.
    The amendments also have the virtue of meeting the point made by the hon. Member for Derby, South (Mrs. Beckett) that money purchase contracted-out schemes should not be exempt from section 40(1) of the Pensions Act. That section required that a contracted-out scheme is financed at least in part by the employer. I promised that we would consider what the hon. Lady said about that. When we did we found that it made good sense. I am grateful to the hon. Lady. I commend the amendment to the House.
    Amendment agreed to.

    Schedule 2
    MONEY PURCHASE OCCUPATIONAL PENSION SCHEMES
    Amendment made: No. 20, in page 85, leave out lines 34 and 35 and insert
    'an occupational pension scheme which, in relation to the earner's employment, is a money purchase contracted-out scheme, then, for the purposes of this section'.
    No. 21, in page 86, line 17, leave out from `to' to 'scheme' in line 19 and insert
    'a money purchase contracted-out'.
    No. 22, in page 87, line 30, leave out paragraph 5.
    No. 23, in page 88, line 2, leave out from 'schems)' to end of line 11 and insert—

    '(a) in subsection (2), the words "or it satisfies subsection (2A) below." shall be inserted after paragraph (b) (but not as part of it);

    (b) the following subsections shall be inserted after that subsection—

    "(2A) An occupational pension scheme satisfies that subsection only if—

    (a) the requirements imposed by or by virtue of Schedule 1 to the Social Security Act 1986, modified under subsection (2B) below, are satisfied in its case;

    (aa) it complies with section 40(1) below; and'.

    No. 24, in line 25 leave out 'and' and insert—
    `(aa) that for the references in paragraph 5A to all minimum contributions there shall be substituted references to all minimum payments (within the meaning of the Social Security Pensions Act 1975) and any payments by the Secretary of State under section 7 of this Act.'.
    No. 25, in line 33 leave out from 'the' to 'which' in line 34 and insert 'member and any rights of the member to money purchase benefits'.
    No. 26, line 43, at end insert—
    '(2C) A contracting-out certificate shall state whether the scheme is contracted-out by virtue of subsection (2) or subsection (2A) above; and where a scheme satisfies both of those subsections the trustees or managers, in their application for a certificate, shall specify one of the subsections as the subsection by virtue of which they desire the scheme to be contracted-out.
    (2D) A scheme which has been contracted-out by virtue of one of those subsections may not become contracted-out by reason of the other, except in prescribed circumstances.'.
    No. 27, line 43, at end insert—
    '6A.—(1) The words "which is not a money purchase contracted-out scheme" shall be inserted after the words "occupational pension scheme" in—

    (a) section 33(1);

    (b) section 36(1);

    (c) sections 40(3) and (4);

    (d) section 41A(1);

    (e) section 42(1);

    (f) section 44(1);

    (g) section 44A(1);

    (h) section 45(1);

    (j) section 51;

    (k) paragraphs 4(1) and (2) of Schedule 2.

    (2) If section 9 above comes into force after this paragraph, the amendment to section 36(1) made by sub-paragraph (1) above shall be made in the subsection both as amended by section 9 above and as unamended.
    (3) The words "or a money purchase contracted-out scheme" shall be inserted after the words "public service pension scheme" in—

    (a) section 40(2);

    (b) section 41(1);

    (c) section 41E(1).'.

    No. 28, line 45 leave out from 'a' to end of line 46 and insert
    'scheme which is or has been a money purchase contracted-out scheme'.
    No. 29, in page 89, line 20 after 'under', insert 'section 52C of or'.
    No. 30, in line 32 leave out 'Subject to subsection (8) below,'.
    No. 31, in line 37 leave out from beginning to end of line 6 on page 90.
    No. 32, in page 90, line 32 after 'premium', insert 'together with, if the person in respect of whom it falls to be paid gives notice to the prescribed person within the prescribed period—

    (i) the cash equivalent, calculated and verified in the prescribed manner, and paid to the Secretary of State within the prescribed period, of any other rights which he has under the scheme and specifies in the notice; and

    (ii) the amount of any voluntary contribution paid to the Secretary of State within the prescribed period by, or in respect of, the person concerned,'.

    No. 33, in line 47 at end insert—
    '(14A) The power to make regulations conferred by subsections (7) and (11) above includes power to provide that cash equivalents are to he calculated and verified in such manner as may be approved in particular cases—

    (a) by prescribed persons;

    (b) by persons with prescribed professional qualifications or experience; or

    (c) by persons approved by the Secretary of State,

    and power to provide that they shall be calculated and verified in accordance with guidance prepared by a prescribed body.'.
    No. 34, in page 91 leave out lines 10 to 30.
    No. 35, in page 91, line 46 leave out from beginning to end of line 25 on page 92 and insert—
    '(a) the following paragraph shall be substituted for subsection (1)(b)—
    "(b) there has not been a payment—

    (i) of a premium under section 44 above in respect of each person entitled to receive, or having accrued rights to, guaranteed minimum pensions under the scheme; or

    (ii) a premium under section 44ZA above in respect of each person who has protected rights under it or is entitled to any benefit giving effect to protected rights under it;";

    (b) in subsection (2)(a) after the word "above" there shall be inserted the words "or, by virtue of subsections (2A) and (2B) of section 32 above, paragraph 9(1) of Schedule 1 to the Social Security Act 1986"; and
    (c) in subsection (5), "32" shall be substituted for "33".
    10. At the end of subsection (3) of section 50 (alteration of rules of contracted-out schemes) there shall be added the words "or any person has protected rights under it or is entitled to any benefit giving effect to protected rights under it".'.—[Mr. Major]
    Mr. Major: I beg to move amendment No. 36, in page 92, line 26, at end insert—
    '() the following definition shall be inserted after the definition of "accrued rights"—"'average salary benefits' means benefits the rate or amount of which is calculated by reference to a member's average salary over the period of service on which the benefits are based;";'.
    Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 37, 94, 96 and 104.
    Mr. Major: The effect of amendment No. 36 and the related amendments is to alter the definition of "money purchase benefits" in all the places where it appears in the Bill and in the Pensions Act 1975 so as to ensure that it does not include "average salary benefit".
    A few schemes provide what are known as "unrevalued average salary benefits", where members pay a percentage of their earnings as a contribution, and the benefits are then calculated as a straightforward multiple of those contributions. These are not "money purchase benefits" in
    94
    the sense we intend in the new pension arrangements provided by this Bill, because they are fixed in value and there is no element of investment return. In effect they are salary-related benefits.
    These amendments make sure that they are excluded from the definition of "money pruchase benefits", so that—for example—they are not satisfactory benefits for the purpose of money purchase contracting-out, and minumum contributions cannot be channelled into this kind of benefit.
    Amendment agreed to.
    Amendments made: No. 37, in page 92, line 35, at end insert
    'other than average salary benefits;'.
    No. 38, in line 36 leave out from 'purchase' to end of line 38 and insert
    '"contracted-out scheme" means an occupational pension scheme which is contracted-out by virtue of satisfying section 32(2A) above'.—[Mr. Major.]

    Clause 7
    SCHEMES BECOMING CONTRACTED OUT BETWEEN 1986 AND 1993
    Mr. Major: I beg to move amendment No. 39, in page 8, line 25, after 'below', insert
    'and except in such cases as may be prescribed'.
    The amendment provides a power to make exceptions to the circumstances in which the 2 per cent. incentive payment will be made to newly contracted-out occupational pension schemes.
    At present the Bill provides in clause 7 for the incentive payment to go to schemes which are newly contracted-out since January 1986 in respect of each job they cover which is also newly contracted-out since then. The incentive will apply for the five years, April 1988 to April 1993, as the House will be well aware.
    There are cases where it will not be appropriate to make the payment. For example, it will not be appropriate where there might be a business take-over of a firm which had a contracted-out scheme for its employees. This might result in employments and a scheme which were newly contracted-out in the strict legal sense, but which were really the same jobs as before. It would not be appropriate to pay the incentive in this case. I think that I will carry all hon. Members with me in that observation.
    The amendment provides the power to clarify that position beyond doubt, and I commend it to the House.
    Amendment agreed to.
    Sir David Price: I beg to move amendment No. 195, in page 8, leave out from end of line 28 to first 'the' in line 30.
    Mr. Deputy Speaker: With this it will be convenient to take amendment No. 196, in page 8, leave out lines 37 to 40.
    Sir David Price: As the House will appreciate, these are probing amendments. They follow logically from the amendments moved by the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). They are, as it were, the other side of the coin. They are an alternative method of dealing with the problems that he identified, to which my right hon. Friend the Secretary of State responded with sympathy and understanding, and even with a promise that the last word had not been said on that. It is in that spirit that I can be remarkably brief, which will be to the relief of the entire House.

    95
    The purpose of my amendment is to offer a subsidy to all those who contract out of SERPS, whether they go to the occupational scheme or the personal pension scheme. In other words, the amendment takes up my right hon. Friend's concern about those people who have neither an occupational pension scheme nor a personal pension scheme. We know, as he pointed out in his Green Paper, that that has been a static situation for the past 10 years. All of us who care about the second pension want to see that opportunity opened up further. Part of the purpose of this Report stage is to throw out to my right hon. Friend different methods by which that can be achieved.
    If my amendments were to be accepted they would avoid discrimination against those employees who have already joined occupational schemes. They would also avoid the undermining of such schemes, which in many cases have been set up with great care to ensure that members get the best possible pensions in later years.
    The hon. Gentleman dwelt a little on that point. I shall not detain the House on it. I am sure that my right hon. Friend and his Department know my point. There is a feeling in the occupational pensions industry that particularly young members of this scheme could leave their existing scheme, go into a personal pension scheme and find themselves in the long run worse off, although in the short run they might contribute less. The House will understand that retirement is probably a more real matter to me than to the hon. Gentleman, who, I suspect, is a year or two lighter than I am. One should reflect on the measure of the scope of a pension scheme.
    I think that most hon. Members would feel that any form of occupational or personal pension scheme should provide for a proper pension. Ideally, the best way is based on final salary or average earnings. It should include discretionary increases to keep pace with inflation. It should provide life assurance benefit, which is a new practice that has come in more recently. It should allow for earlier retirement, and it should provide widow's benefit. Those are the sorts of features that most of us today expect to see in pension schemes.
    The case has not been made for discriminating in the incentive between either the occupational or the personal scheme. The object of my amendments is simply to raise the possibility that it would be better to give the incentive to both rather than to discriminate purely in favour of the personal scheme.
    Mr. Fowler: There is no difference of opinion between my hon. Friend and me, because we both want to encourage the maximum number of good occupational pensions. The effect that my hon. Friend intends to achieve by this amendment seems to be that all members of all contracted-out occupational pension schemes should be able to qualify for the 2 per cent. incentive payment which is at the moment intended only for new schemes and newly contracted-out jobs. I am afraid I have to use the time-honoured phrase that the amendment is technically defective and would not achieve what is desired.
    We estimate that at the moment the 2 per cent. incentive for pensions might cost about £60 million per year under our proposals. We further estimate that the amendment would increase the cost to about £1·5 billion per year and would mean nearly 1 percentage point more on national
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    insurance contributions. For that variety of reasons I must upstage my hon. Friend and tell him that I am not able to accede to his request.
    I think I have made it clear to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) that I do not want to close the door on any change in the area of the 2 per cent. incentive. I shall reflect not only on what he has said, but on what my hon. Friend has said, and especially on the principle of what my hon. Friend has set forward. Perhaps my hon. Friend will understand if I advise the House to resist his amendment.
    Sir David Price: Given the spirit of my right hon. Friend's reply, and in the knowledge that I am probably being rather more generous than usual in pushing my luck with the Treasury, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment made: No. 190, in page 9, line 46 (Clause 7], at end add—
    `(7) If the Secretary of State makes a payment under this section which he is not required to make, he may recover the amount of the payment from the person to whom he paid it or from any person in respect of whom he paid it.
    (8) If he makes in respect of an earner a payment under this section he is required to make, but does not make it to the trustees or managers to whom he is required to make it, he may recover the amount of the payment from the person to whom he paid it or from the earner.'.— [Mr. Fowler.]

    Clause 9
    GUARANTEED MINIMUM PENSIONS
    Mr. Major: I beg to move amendment No. 40, in page 10, line 31 leave out first 'subsection' and insert 'subsections'.
    Mr. Deputy Speaker: With this we may take Government amendment No. 41.
    Mr. Major: This amendment relates to the growth of guaranteed minimum pensions when receipt of the pension is postponed beyond the normal retirement age. The amendment ensures that when those increments are calculated they are based on the value of the guaranteed minimum pension as increased annually by the lesser of 3 per cent. or the increase in prices during the period in which it was postponed, and not on its value at pension age. This corresponds with the arrangements for SERPS increments. It has always been the intention that the increments would be worked out in this way, but the amendment puts the matter beyond doubt. It is a wholly beneficent amendment for pensioners.
    Amendment agreed to.
    Amendment made: No. 41, in page 10, line 37, at end insert—
    '(6B) Where one or more orders have come into force under section 37A below during the period for which the commencement of a guaranteed minimum pension is postponed, the amount of the pension for any week in that period shall be determined as if the order or orders had come into force before the beginning of the period.'.—[Mr. Major.]
    Mr. Newton: I beg to move amendment No. 42, in page 11, line 36, at end insert '() section 26(2);'.
    Mr. Deputy Speaker: With this we may take Government amendments Nos. 43 to 45.
    Mr. Newton: This technical amendment ensures that the definition of a guaranteed minimum pension in section

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    26(2) of the Social Security Pensions Act 1975 is widened to cover widowers as a result of the introduction of widowers' guaranteed minimum pensions by clause 9(3).
    Perhaps I might also say a brief word about amendments Nos. 43, 44 and 45. The intention of amendment No. 43 is to make it clear that schemes are not required to increase the rate of guaranteed minimum pension under clause 9(7) for periods before pensionable age or date of widowhood. Arrangements already exist for protecting the value of guaranteed minimum pensions before those times.
    As guaranteed minimum pension increases will take place from the beginning of a tax year, but the uprating of state pensions will not take place until the first Monday of a tax year, the guaranteed minimum pension increase will, in some years, be a week earlier than the state scheme uprating. This amendment ensures that where this happens the pensioner's SERPS pension is not reduced on account of the guaranteed minimum pension increase until his SERPS entitlement has been uprated. This will prevent his net SERPS pension temporarily going down.
    Amendment No. 45 is a minor technical amendment. It simply widens the scope of the cross reference in subsection (7) of new section 37 so that it refers to the whole section rather than to subsection (3). That sounds rather like the ultimate drafting amendment.
    Amendment agreed to.
    Amendments made: No. 43, in page 12, line 38, leave out from 'rate' to end of line 41 and insert
    'of that part of guaranteed minimum pensions which is attributable to earnings factors for the tax year 1988–89 and subsequent tax years for—

    (a) earners who have attained pensionable age; and

    (b) widows and widowers.'.

    No. 44, in page 13, line 10, at end insert—
    '(6A) Where the benefits mentioned in sections 16(2B). 28(7A) and 59(1A) of the Social Security Act 1975 and section 29(1) above are not increased on the day on which an order under this section takes effect, the order shall be treated for the purposes of those subsections as not taking effect until the day on which the benefits mentioned in them are next increased.'.
    No. 45, in page 13, line 13, leave out 'subsection (3) above' and insert 'this section'.—[Mr. Newton.]
    8.15 pm
    Mr. Major: I beg to move amendment No. 46, in page 14, line 5, leave out
    'increase the rate of pensions under the scheme'
    and insert
    'make an increase in the rate of pensions currently payable to the members of the scheme who have attained pensionable age or to the widows or widowers of members'.
    Mr. Deputy Speaker: With this we may take Government amendments Nos. 47 and 48.
    Mr. Major: These technical amendments correct defects in drafting and clarify the arrangements for annual increases of guaranteed minimum pensions, with particular regard to those occupational pension schemes which already provide increases in the rates of their pensions, so that they do not have to provide two separate increases in a year.
    Amendment agreed to.
    Amendments made: No. 47, in page 14, line 9, leave out
    'in that tax year to make under this section'
    and insert
    'to make under this section in the tax year 1990–91'.
    No. 48, in page 14, line 10, leave out from 'Where' to `the' in line 12 and insert
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    'the trustees or managers of such a scheme make an increase otherwise than in pursuance of this section in a tax year subsequent to 1989–90, they may deduct the amount of'.—[Mr. Major.]
    Mr. Newton: I beg to move amendment No. 49, in page 14, line 15, at end insert—
    '(8) In section 59 of that Act (increase of official pensions) the following subsection shall be inserted after subsection (5) —
    "(5A) Nothing in section 37A(12) or (13) above authorises any deduction from an increase in the rate of an official pension under this section.".
    (9) In section 59A of that Act (modification of effect of section 59(5)) the following subsection shall be inserted after subsection (2)—
    "(2A) Where in any tax year—

    (a) an increase is calculated in accordance with a direction under this section; and

    (b) the amount by reference to which the increase is calculated, or any part of it is increased in that tax year under section 37A above,

    the increase calculated in accordance with the direction shall be reduced by the amount of the increase under section 37A above.".'.
    This is a technical amendment which ensures that special arrangements which currently apply to the inflation proofing of the guaranteed minimum pension element of a public service pension continue to work when public service schemes become responsible for increasing the GMP by up to 3 per cent. under clause 9(7). The amendment ensures that the public service pensioner will continue to receive full inflation proofing of his occupational pension.
    Amendment agreed to.
    Mr. Major: I beg to move, amendment No. 50, in page 14, line 15, at end insert—
    '(14) Where by virtue of subsection (12) or (13) above guaranteed minimum pensions are not required to be increased in pursuance of this section, their amount shall be calculated for any purpose as if they had been so increased.'.
    The purpose of this amendment is to make it clear that although schemes need not increase the GMPs separately from the remainder of the occupational pension, the GMP's value shall nevertheless be calculated, for all purposes, as if it had been separately increased each year.
    The reason for the amendment is to make it clear to contracted out occupational schemes that although they need not increase GMPs in April of each year if they have already provided for an increase in the rate of pension in the preceding year, the pension from then on must always include the GMP element as increased in line with the lesser of the RPI or 3 per cent. This will also be the amount that will be deducted from the pensioner's SERPS pension and the amount that a scheme must secure or buy back from the state scheme if they cease to be contracted out.
    Amendment agreed to.

    Clause 11
    CONTRIBUTIONS
    Mr. Newton: I beg to move amendment No. 51, in page 14, line 21 leave out from 'prescribed,' to end of line 26 and insert
    `and except so far as is necessary to ensure that a personal or occupational pension scheme has, or may be expected to qualify for, tax-exemption or tax-approval, the rules of the scheme—
    (a) must not impose, or allow any person to impose, any upper or lower limit on the contributions which may be paid by a member and which are additional to the contributions that must be paid as a condition of membership of the scheme;'.

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    This is a drafting amendment which replaces some of the opening words of clause 11. The Inland Revenue applies limits to the total amount of benefit a person can receive from a pension scheme, as well as to the contributions he can make to it. It is therefore necessary to allow both these kinds of limit to constrain the otherwise unlimited "additional voluntary contribution" facility which schemes will now be required to provide. As currently drafted, clause 11 would allow only the Revenue contribution limits to be observed.
    The amendment also improves the drafting of clause 11(1)(a) to achieve the intended effect that, apart from complying with Revenue requirements, the rules of a pension scheme must not impose, or allow anyone to impose, an upper or lower limit on the additional voluntary contributions which may be paid.
    Amendment agreed to.

    Clause 14
    TERMS OF CONTRACTS OF SERVICE RELATING TO MEMBERSHIP
    Mr. Major: I beg to move amendment No. 52, in page 17, line 13, after `made)', insert
    'or any rule of a personal or occupational pension scheme'.
    Mr. Deputy Speaker: With this we may take Government amendments Nos. 53 to 55.
    Mr. Major: The amendments make drafting changes to clause 14, which liberates employees from compulsory membership of an occupational pension scheme. In Committee my hon. Friend the Minister for Social Security said that we were discussing the wording of the clause with the parliamentary draftsman to ensure that it achieved our intention. The amendments are the result of that discussion.
    The amendments tighten up the wording in three ways. First, they ensure that scheme rules, as well as contracts of service, cannot provide for compulsory membership of a pension scheme. Secondly, they ensure that, subject to any prescribed exceptions, the rules or contract cannot insist that the employee belongs to any pension scheme at all, personal or occupational. Thirdly, the amendments to clause 14(2) ensure that the clause could not have the unintended and unwelcome effect of requiring an employer to increase pay in lieu of pension contributions for an employee who decides not to join his scheme.
    Amendment agreed to.
    Amendments made: No. 53, in page 17, line 14, after 'of', insert
    'a personal or occupational pension scheme, of'.
    No. 54, in page 17, line 24, after 'required', insert
    ', when he would not otherwise be'.
    No. 55, in page 17, line 26, leave out
    'when he would not otherwise be so required'.—[Mr. Major.]

    APPLICATION TO SPECIAL CASES
    Amendment made: No. 56, in page 18, line 11, leave out clause 16.—[Mr. Major.]

    Clause 17
    RETIREMENT PENSIONS
    Mrs. Beckett: I beg to move amendment No. 57, in page 19, line 12, leave out clause 17.
    Mr. Deputy Speaker: With this, we may take amendment No. 58, in page 20, line 14, after 'cases', insert
    'which shall include unemployed people'.
    Mrs. Beckett: If we had to pick out the most obnoxious aspect of the clause—and, given the time constraints, we can pick out only one aspect—we would say that the most disadvantageous proposal is the change not merely away from the calculation of pensions on the basis of the 20 best years of earnings but right away from that to the calculation of pensions on the basis of earnings over a person's whole working life.
    I have never fully understood, nor do I recall having heard an argument on the matter from the Government, why if, as they argue—we do not accept their argument—one of the reasons why SERPS is so expensive is the 20-years provision, they did not merely increase it to a degree without going as far as the increase proposed in clause 17.
    The intention in making SERPS dependent on the best 20 years of earnings was a redistributive intention, aimed at benefiting people who, on the whole, did not enjoy a good pension entitlement. For example, the earnings of manual workers tend to reduce as they get older and it was suggested that they should be allowed to have a pension that was more related to the peak years of their earnings than would be the case under the scheme such as that proposed by the Government. Another example are women who take years out of the employment market and get a better pension by using the earnings of their best 20 years rather than the earnings over their whole working life.
    We are very worried about the implications of the Government's proposals and we are convinced that they will lead to far more pensioners being dependent on what we must learn to call income support. The Government have said in a parliamentary answer that about 1 million pensioners will still be dependent on supplementary benefits at the end of the century. We firmly believe that the number in that equivalent position — below the poverty line with their pension entitlement — will be significantly higher than 1 million after the Bill becomes law. We are encouraged in that supposition by the fact that the Government say that it is too difficult to answer all the questions that we have tabled on the subject, no matter how we have phrased them.
    A person who starts work after the Bill becomes law and is never unemployed or sick will find that the pension to which he would have been entitled before this measure became an Act will be halved. Indeed, that person's pension entitlement will be so reduced from what it would otherwise have been that, even on the Government's own figures, it is likely to be substantially less than even the basic state pension alone is worth today. We have substantial ammunition for our contention that the Government are returning pensioners to the poverty from which the scheme was designed in 1975 to rescue them — an intention which Conservatives supported at the time, but from which the Government have resiled.

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    People who have many years of unemployment will see their pensions reduced even more than the halving that is implicit in the Bill. Figures show the impact of the Government's proposals on someone who is unemployed for the comparatively short time of three years or six years. Obviously, those are much longer periods than any of us would find acceptable, but when we see the thousands of young people who have never had a job since they left school, one has to wonder how realistic it is to assume that they will be unemployed for as short a period as three years or six years over their whole working lives.
    Let us examine the case of a man who was 27 in November 1985 and who earns £120 a week for 23 years and £80 a week for another 23 years—perhaps because he is a manual worker and his earning capacity declines as he gets older—and has three years unemployment at some point in his working life. His additional pension will be reduced from £51·70 to £21·70. In other words, a young man now in the labour market who is unemployed for two or three years, could work for 46 years and still lose 58 per cent. of the additional pension to which he would otherwise be entitled. I am sure that that proposition would be greeted with amazement, shock and dismay by any of our constituents.
    If that man spent six years unemployed, he would receive only £19·70 — a loss of 62 per cent. of the pension to which he would otherwise be entitled. Those are significant sums and they demonstrate the impact of unemployment on a person's pension entitlement.
    Let us now examine the case of a woman who was 27 in 1985 and earns £80 a week for 24 years and £40 a week for 12 years and who, for eight years—for whatever reason—has no earnings. Her additional pension will drop from £17·70 to £9·70—a loss of 45 per cent. If she spent another six years unemployed her expected £15·70 would become £7·70—a loss of 51 per cent. We are talking about substantially reduced pensions which will be further dramatically reduced by the problems of unemployment which are so prevalent.
    In addition to the implications for people who are unemployed. women who work part-time are likely to lose substantially under the Bill. Women who work part-time, but have earnings above the lower earnings limit, will not be able to benefit from the home responsibility premium, and will not be covered by being out of the work force altogether, but will have the years in which they have part-time earnings taken into account—adding to their years in the work force, but incorporating lower earnings because they are working only part-time. Proportionately, they will lose substantially. The disabled are also likely to be losers. When we raised this point in Committee, the Minister said that half the women now in part-time work earned less than the lower earnings limit. He was good enough to say that that might not be a good thing. That may sound as though it is not too bad, but he failed to point out that although half of the women in part-time work would not be affected because their earnings were so low, 2·25 million women in part-time work would still be affected, and would see their pension entitlement reduced.
    8.30 pm
    Mr. Major: Many of those women would be in receipt of child benefit and would be receiving, therefore, home responsibilities protection. That should be borne in mind.
    Mrs. Beckett: That may be so, but it is not clear how many women will be affected. The figure of 2·25 million
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    is so substantial that obviously many women will be losers. At present, 40 per cent. of elderly women live at, or below, the supplementary benefit level. Millions more pensioners will be living at or below the poverty line as a result of the Bill, and as a result, in particular. of these provisions. Moreover, a significant number of them will be women. Instead of seeking to improve the clause, we have sought to delete it, as it contains proposals that are unbelievably damaging to the pension entitlement and standard of living of future pensioners.
    The Government's proposals seem to tie in well with the Government's other actions, with their intention to keep wages low, and with their attacks on the trade unions. Apparently, they want to return to the days when ordinary working people spent much of their lives in fear of unemployment, sickness, a lack of decent housing or not being able to educate their children properly. This provision returns us to the days when people lived in fear. They will start wondering how long they will live, how they will eke out their savings and how they will manage in their retirement. There is no doubt in our minds that the Bill returns us to the days of poverty pensioners.
    Mr. Jim Lester: I would not go as far as the hon. Member for Derby, South (Mrs. Beckett) in her opposition to the clause. As we know, the Bill changes the calculation of the additional payment under SERPS from the best 20 years to a lifetime's average earnings. The present scheme only requires contributions over 20 years for a full additional pension, but now contributions will be required over a lifetime. Therefore, those who, for any reason, spend years out of the work force could be disadvantaged. Indeed, in many parts of the country, such as the east and west midlands, unemployment is endemic. The new provision is therefore of considerable concern. Anyone who left the work force could be disadvantaged if he retired after 1998.
    The Government have acknowledged that some categories should be protected. For example, they say that they will protect the position of married women and lone parents, and that special arrangements will be made for those who take time away from work to bring up children. I am glad to say that similar protection will be given to disabled people and to those who are not earning money because they are looking after them. That is fine, but I have tabled my amendment because unemployed people will not be afforded the same protection.
    I have enormous respect for my hon. Friend the Minister of State. In Committee, he said:
    "Therefore while I do not in any way suggest that there may not be a problem in relation to this group in the early part of the next century, I think that it is a problem which can sensibly be examined in relation to the unemployment problems that exist at that time and is not one which we need to settle at this time."—[Official Report, Standing Committee B; 25 February 1986, c. 439.]
    I take exception to that. Obviously, we are trying to look a long way ahead. But my hon. Friend the Minister admitted that the Government sometimes had to make forward commitments, not least in respect of social security and pensions. He said that of necessity they had to be considered in the long term. I hope to persuade my hon. Friend to give a public commitment that the unemployed will have their situation taken into account when the time comes.
    The House should not accept that people are unemployed through their own deficiencies. The majority

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    of those who are unemployed have been made redundant. Consequently, I cannot see why those retiring should be additionally disadvantaged because they happen to come from an area of high unemployment. It is quite unacceptable to me that the 4,028 unemployed people in Broxstowe should be treated differently from those in the constituency of my hon. Friend the Member for Crawley (Mr. Soames), where far fewer people are unemployed. Why should people be additionally disadvantaged in retirement because they work in Cornwall, where the highest rates of unemployment were found in March to be 28·4 per cent. in Newquay, as against 5·6 per cent. in Crawley?
    Under the Bill, standard national insurance contributions are credited towards the basic state pension. Unemployed people can receive those credits. Thus, the Bill does not exclude them in the sense that the credits will not be allowed. The difference is in the earnings-related element. I should be delighted if the Government would correct my understanding that they intend to exclude the credits at a later regulatory stage. At this stage, I should like a commitment from my hon. Friend the Minister that he will not exclude unemployed people in terms of a special calculation for the period that they are unemployed.
    If the Government do not make that change, many people may be disadvantaged. Figures have been extrapolated for the number of those who may be unemployed for more than a year. They are based on the Department of Employment Gazette 1986. For 1996, the figure is 757,924; for the year 2006, the figure is 786,260; and for the year 2016, the figure is 1,160,667. Thus we are talking about substantial numbers. Unless the Government give a commitment to take into account a period of unemployment, just as married women and the disabled are taken into account, the unemployed may be materially disadvantaged.
    Among those unemployed people whose pension rights will be reduced may be older men and women in their fifties who have little chance of further employment before retirement. Some men who accept voluntary or forced retirement at 60 will be able to claim the lower rate pensioner premium in income support until they qualify for the basic state pension at 65. Their entitlement to the full basic pension will not be affected by years without work, but as each year goes by they will know that the expected additional pension will decrease. That is in sharp contrast to many people in occupational, contracted-out pensions who will receive a full pension after 40 years and the qualifying conditions for the basic rate pension will ensure that, for those whose working life is 41 years or more, the full pension can be received after a working life minus five years.
    The Prime Minister said at Perth that unemployment was an issue and a dragon to be slain. The Government have done many things to ease unemployment through training schemes and community programmes, but that will count as little if the Bill discriminates against the unemployed in relation to the state earnings-related pension. I request that the Minister responds positively to the amendment because not only is it in the interests of my party but, more materially, in the interests of the unemployed.
    Mr. Kirkwood: I listened carefully to the heartfelt plea by the hon. Member for Broxtowe (Mr. Lester) and I sympathise with his argument. I am sure that he will agree that the proposition is an inevitable consequence of any earnings-related scheme being attached to pension provision. That was one of the reasons why in 1975 when the original Bill was put together my former friends took the view that the earnings-related component was wrong because of the anomalies and costs. Eleven years later some of the chickens have come to roost because demographic changes have caused arguments about costs and anomalies. We have taken that view since 1965, and the alliance has thought the same in the last five years.
    I attempted to able amendments in Committee to persuade the Government to consider making the earnings-related element of the scheme proposed in clause 17 more redistributive and to work out a formula that would mitigate the earnings-related component. My argument was that if one was a director of ICI one could gain more from the state earnings-related pension scheme than a shop-floor worker could. Not surprisingly, the Government rejected that proposition, so we must face clause 17. The hon. Member for Derby, South (Mrs. Beckett) suggested that we should throw out clause 17. I sympathise with much of what she said, but I do not think that we should throw out the whole of clause 17. That would be throwing out the baby with the bath water.
    The Government are wrong to suggest the propositions in clause 17 against the background of the existing state pension level. The schemes in the Bill do nothing to alleviate the lot of basic state pensioners. Their lot will not be improved so long as we insist upon indexing their benefits only to the increase in prices, because they will fall behind earnings and outpace inflation over the next 15 or 20 years until SERPS comes into effect. Any proposal from any Administration should change the pension provision only after they had provided a basic state pension upon which people can live sensibly. The basic state pension does not allow that.
    We came forward with a plan to utilise the contracted-out rebate which could have financed substantial increases in the basic state pension. That did not find favour with the Government and our idea was rejected.
    8.45 pm
    The Social Democratic and Liberal parties are aware of the importance of having consensus about the way forward. If anything derived from the 1975 proposals, it was that they were agreed—with the exception of one dissenting voice — and that there was a reasonable prospect of the pensions industry settling down and prospering.
    That consensus is broken. We have fallen over backwards to achieve that consensus. I say to the Government that, even at this late stage, there must be some arrangement whereby the major political divisions can be bridged. I continue to be interested in talking about that possibility. Against that faint hope, I fear that we are faced with the deep blue sea, because if the amendment is pressed to a Division I regret that I shall have to advise my hon. Friends to abstain and vote neither for the abolition of clause 17 nor for the Government's new clause.
    Mr. Major: The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) gave a qualified welcome to some of our provisions, so I shall refrain from making

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    any remarks about the firm smack of decision in the alliance upon a clause which is a central part of the Bill's pensions provisions. Without any mockery, I must say to the hon. Gentleman that I am grateful to him for his qualified acceptance of reality. I commend his speech for the future, because I am sure that it will sit well with his being a prominent member of the Liberal party for some years to come.
    I recognise the strong feelings aroused by the changes in the state earnings-related pension scheme. It was reflected, although in a lower key than we might have expected a few months ago, in some of the speeches this evening. Our original proposition was for greater changes. Our current propositions are substantially different from those which originally saw the light of day in the Green Paper. [Interruption] I shall not be tempted by interruptions, because of the limited time available.
    The speech by the hon. Member for Derby, South (Mrs. Beckett) was a sustained plea for the status quo, irrespective of the probable effects, of the costs and of the difficulties, all of which have been exposed in debates over recent months. If we were to adopt amendment No. 57, to delete clause 17, the Bill would leave in place all the costly and over-generous features of SERPS which make it a commitment to the future which no responsible Government of any party could leave untouched. We would, in practice, be leaving open a blank cheque for future national insurance contributors. The very real threat that concerns us deeply is that of a future Government needing to break faith with future generations of pensioners if today's promises cannot be met. That is not a tolerable, let alone an attractive, proposition. I shall return, in good time, to some of the detailed points made by the hon. Lady.
    The amendment clearly illustrates the carefree "wait and see" approach of the Opposition compared with what we regard as our realistic and responsible approach.
    Mrs. Beckett: It is appropriate at this point to remind the hon. Gentleman that, because the Government have broken the link between pensions and prices, if they do nothing to SERPS and accept our amendment, the basic pension and the state earnings-related pension will steadily decline in value until they go back to the level of the basic pension now. The Government have already ruined the pension scheme. They are now compounding the felony.
    Mr. Major: We are not ruining it. We are placing it in a position in which it can be sustained so that pensioners may have security in future, not the possiblity of promises that may or may not be met by a future Government. It is all too easy to be irresponsible and say, "Wait and see," or, worse still, claim, as the hon. Member for Oldham, West (Mr. Meacher) has done occasionally, that there is not and there never will be a problem. I am bound to say that I regard that as a Scarlett O'Hara option. I shall explain precisely what that means. Whenever Scarlett O'Hara faced difficulties, she said, "I will think about that tomorrow." That is the Opposition's point of view. Whenever there is a difficulty, they say that they will think about it tomorrow. They will not plan for it today. It is wholly irresponsible to take such a view.
    It is not an easy option to make changes in SERPS. It is not, as the hon. Lady sought to demonstrate in recent months, necessarily a popular option to make changes in SERPS. We made the changes after careful and prolonged
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    study, because we concluded, in the interests of a Long-term, sustainable pension scheme that future generations could make, that we must take action now. None of us, not least my right hon. Friend the Secretary of State for Social Services, is under any illusion whatever that we would have had a much more comfortable time had we decided to adopt the "wait and see" approach that is so attractive to the Opposition.
    The fact is that pensions are long-term commitments, and the time for action and decision is now. People must be given time and opportunity to make additional or alternative provision for their retirement. The way in which SERPS works means that every year of delay leaves people clocking up expensive rights which must be honoured in future.
    It is relevant—I shall not dwell on the point for too long — that, if the amendment were to succeed and SERPS were left unchanged, the Government Actuary's modest assumptions show that costs would take off quite dramatically next century. By 2033, SERPS would be costing £25·5 billion compared with £200 million today. To put that another way, the combined cost of basic pension and SERPS pension as at today's prices would rise from £16 billion now to £49 billion by 2033. The Opposition have from time to time said that they are not perturbed by the potential impact of that increase on national insurance contributions. The Opposition may regard that as a defensible proposition, but we are in no doubt that the working population and employers may see it entirely differently.
    Other factors are involved in the changing cost scenario. The vast increase in expenditure would come at a time when there would be over 3·5 million more pensioners. Yet the number of workers supporting them is expected, on demographic figures, to remain approximately the same. The "pay-as-you-go" principle—that is undeniable from whatever point of view one has — means that there is no way of making advance provision to pay for SERPS promises. Advance funding is not a realistic option for a state-run scheme. By 2033, instead of there being 2·3 contributors to every pensioner, as there are today, there are expected to be only 1·6 contributors to every pensioner. That adds up to a substantial problem.
    I should also make it clear — perhaps not least because the Opposition decline to be swayed by cost arguments — that it is not just an argument about affordability. They must accept, even more crucially, that it is one about priorities. Even if SERPS were to continue unchecked and unchanged, with the cost implications I have outlined, there would be another practical effect. The practical effect would be that the pre-emption of such a huge amount for pensions would severely constrain future spending options of future Governments at a time when the pressure from the elderly for other services, such as health, social services and housing, is bound to increase, apart from the increasing demands of science and demography.
    The Green Paper made a convincing case for the total abolition of SERPS. We took account of the substantial body of opinion which favoured modifying rather than abolishing the scheme. In the White Paper, we concluded that our aims could be met by modifications rather than by abolition, provided it went hand in hand with realistic encouragement to extend occupational and personal pension coverage. The proposals embodied in clauses 9, 17 and 18 will reduce the emerging costs of SERPS by half

    107
    in 2033, bringing it down to about £12·5 billion. The commitment for future contributors will be set at a more acceptable level. We are cutting out—the hon. Member for Derby, South and my hon. Friend the Member for Broxtowe touched on this — some of the more extravagant features of the scheme while still providing a worthwhile second pension.
    The proposals in clause 17 should cut more than £10 billion from the emerging cost of SERPS by 2033. Over half of that comes from the most extravagant and badly targeted feature of the scheme—the 20 best years rule. That was invented with worthy enough motives. It was intended to protect mothers and other people with years out of the work force. Its main effect would come from topping up the pensions of people in good occupational pension schemes, where the guaranteed minimum was always intended to be continued on lifetime average earnings. Most people who favoured modifying SERPS took the view that the 20 best years rule was overgenerous.
    The hon. Lady asked whether we had considered increasing the 20 best years rule to an undisclosed future number of years—perhaps 30 years. We did consider extending the number of years, but to do so would simply reimpose—although perhaps not so badly—the poor targeting of the 20 best years. The beneficial results would apply without discrimination to everybody in SERPS so that, like the 20 best years, much of the cost would go on topping up good occupational schemes and there would also be all the anomalies which there would be with the 20 best years rule.
    My hon. Friend the Member for Broxtowe, who introduced amendment No. 58, spoke, as he always does, with considerable understanding of and compassion for the position of our fellow citizens who are unemployed. Before I turn to that aspect of his remarks, I thank my hon. Friend for his support for many of the forms of protection that are available for people in SERPS, although I understand his concern and the thrust of his speech that the unemployed are not included.
    I appreciate my hon. Friend's desire to see unemployed people specifically covered by the special protection provided by clause 17(3) for people who would have benefited from the 20 best years rule. He is obviously worried that unemployed people may be worse off if they retire after 1998. As we made clear in Committee, the abolition of the best 20 years rule will not begin to have any effect on people's state pensions until the end of the century, by which time many of today's long-term unemployed will have retired.
    We do not at present propose to extend to unemployed people the special protection that we intend to provide for people who spend time out of the work force because of disablement or for some other reason. Those contingencies tend to be much longer term and cover a larger proportion of the working life than periods of unemployment. It is right that we should make clear now our intention to protect people in those circumstances.
    As for what my hon. Friend said about unemployment, bearing in mind the difficulties with predicting unemployment levels and patterns accurately, we feel that it is better to wait until nearer the time when the SERPS
    108
    changes begin to take effect, when we, or our successors in government, will have a clearer measure of the extent of the problem if there should prove to be one.
    I can reassure my hon. Friend that any regulations needed to extend the protection may be made at any time until 1999. As we explained in Committee, we have ensured that the power in clause 17 is sufficiently wide to enable protection to be extended to any group of people deemed to be deserving of special treatment without the need for new primary legislation. I hope that my hon. Friend will welcome that enabling power.
    If protection is extended to unemployed people, the Department's records are held in such a way as to make it possible to identify anybody who is entitled to contribution credits for unemployment since 1978. I hope that my hon. Friend will find that reassuring.
    The hon. Member for Derby, South spoke of part-time—
    It being Nine o'clock, MR. SPEAKER proceeded, pursuant to the Order [15 April] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
    The House divided: Ayes 175, Noes 331.

    Division No. 184]

    [9.00 pm

    AYES

    Adams, Allen (Paisley N)

    Davis, Terry (B'ham, H'ge H'l)

    Anderson, Donald

    Deakins, Eric

    Archer, Rt Hon Peter

    Dewar, Donald

    Ashby, David

    Dixon, Donald

    Ashton, Joe

    Dormand, Jack

    Atkinson, N. (Tottenham)

    Douglas, Dick

    Bagier, Gordon A. T.

    Dubs, Alfred

    Barnett, Guy

    Duffy, A. E. P.

    Barron, Kevin

    Dunwoody, Hon Mrs G.

    Beckett, Mrs Margaret

    Eadie, Alex

    Bell, Stuart

    Eastham, Ken

    Benn, Rt Hon Tony

    Edwards, Bob (W'h'mpt'n SE)

    Bennett, A. (Dent'n & Red'sh)

    Evans, John (St. Helens N)

    Bermingham, Gerald

    Fatchett, Derek

    Bidwell, Sydney

    Faulds, Andrew

    Blair, Anthony

    Fields, T. (L'pool Broad Gn)

    Boothroyd, Miss Betty

    Fisher, Mark

    Boyes, Roland

    Flannery, Martin

    Bray, Dr Jeremy

    Foot, Rt Hon Michael

    Brown, Gordon (D'f'mline E)

    Forrester, John

    Brown, Hugh D. (Provan)

    Foster, Derek

    Brown, N. (N'c'tle-u-Tyne E)

    Foulkes, George

    Brown, R. (N'c'tle-u-Tyne N)

    Fraser, J. (Norwood)

    Brown, Ron (E'burgh, Leith)

    Freeson, Rt Hon Reginald

    Buchan, Norman

    Garrett, W. E.

    Caborn, Richard

    George, Bruce

    Callaghan, Jim (Heyw'd & M)

    Gilbert, Rt Hon Dr John

    Campbell, Ian

    Godman, Dr Norman

    Campbell-Savours, Dale

    Golding, John

    Canavan, Dennis

    Gould, Bryan

    Clark, Dr David (S Shields)

    Gourlay, Harry

    Clarke, Thomas

    Hamilton, W. W. (Fife Central)

    Clay, Robert

    Hardy, Peter

    Clelland, David Gordon

    Heffer, Eric S.

    Clwyd, Mrs Ann

    Hogg, N. (C'nauld & Kilsyth)

    Cocks, Rt Hon M. (Bristol S)

    Holland, Stuart (Vauxhall)

    Cohen, Harry

    Home Robertson, John

    Coleman, Donald

    Hoyle, Douglas

    Conlan, Bernard

    Hughes, Dr Mark (Durham)

    Cook, Frank (Stockton North)

    Hughes, Robert (Aberdeen N)

    Cook, Robin F. (Livingston)

    Hughes, Roy (Newport East)

    Corbett, Robin

    Hughes, Sean (Knowsley S)

    Corbyn, Jeremy

    Janner, Hon Greville

    Craigen, J. M.

    John, Brynmor

    Crowther, Stan

    Kilroy-Silk, Robert

    Cunliffe, Lawrence

    Lambie, David

    Cunningham, Dr John

    Leadbitter, Ted

    Dalyell, Tarn

    Leighton, Ronald

    Davies, Rt Hon Denzil (L'lli)

    Lewis, Terence (Worsley)

    109

    Litherland, Robert

    Roberts, Allan (Bootle)

    Lloyd, Tony (Stretford)

    Roberts, Ernest (Hackney N)

    Lofthouse, Geoffrey

    Robertson, George

    McCartney, Hugh

    Robinson, G. (Coventry NW)

    McDonald, Dr Oonagh

    Rooker, J. W.

    McGuire, Michael

    Ross, Ernest (Dundee W)

    McKay. Allen (Penistone)

    Rowlands, Ted

    McKelvey, William

    Sedgemore, Brian

    MacKenzie, Rt Hon Gregor

    Sheldon, Rt Hon R.

    McNamara, Kevin

    Shore, Rt Hon Peter

    McTaggart, Robert

    Short, Ms Clare (Ladywood)

    McWilliam, John

    Short, Mrs R.(W'hampt'n NE)

    Maddén, Max

    Silkin, Rt Hon J.

    Marek, Dr John

    Skinner, Dennis

    Marshall, David (Shettleston)

    Smith, Rt Hon J. (M'ds E)

    Martin, Michael

    Soley, Clive

    Mason, Rt Hon Roy

    Spearing, Nigel

    Maxton, John

    Stott, Roger

    Meacher, Michael

    Strang, Gavin

    Michie, William

    Straw, Jack

    Mikardo, Ian

    Thomas, Dafydd (Merioneth)

    Millan, Rt Hon Bruce

    Thomas, Dr R. (Carmarthen)

    Morris, Rt Hon A. (W'shawe)

    Thompson, J. (Wansbeck)

    Morris, Rt Hon J. (Aberavon)

    Thorne, Stan (Preston)

    Oakes, Rt Hon Gordon

    Tinn, James

    O'Neill, Martin

    Torney, Tom

    Orme, Rt Hon Stanley

    Wardell, Gareth (Gower)

    Park, George

    Wareing, Robert

    Parry, Robert

    Welsh, Michael

    Patchett, Terry

    White, James

    Pavitt, Laurie

    Wigley, Dafydd

    Pendry, Tom

    Williams, Rt Hon A.

    Pike, Peter

    Wilson, Gordon

    Powell, Raymond (Ogmore)

    Winnick, David

    Prescott, John

    Woodall, Alec

    Radice, Giles

    Young, David (Bolton SE)

    Randall, Stuart

    Raynsford, Nick

    Tellers for the Ayes:

    Redmond, Martin

    Mr. Frank Haynes and Mr. James Hamilton.

    Rees, Rt Hon M. (Leeds S)

    Richardson, Ms Jo

    NOES

    Aitken, Jonathan

    Budgen, Nick

    Alexander, Richard

    Burt, Alistair

    Alison, Rt Hon Michael

    Butcher, John

    Amess, David

    Butler, Rt Hon Sir Adam

    Ancram, Michael

    Butterfill, John

    Arnold, Tom

    Carlisle, John (Luton N)

    Ashby, David

    Carlisle, Kenneth (Lincoln)

    Atkins, Rt Hon Sir H.

    Carlisle, Rt Hon M. (W'ton S)

    Atkinson, David (B'm'th E)

    Carttiss, Michael

    Baker, Rt Hon K. (Mole Vall'y)

    Cash, William

    Baker, Nicholas (Dorset N)

    Chalker, Mrs Lynda

    Baldry, Tony

    Channon, Rt Hon Paul

    Banks, Robert (Harrogate)

    Chapman, Sydney

    Batiste, Spencer

    Chope, Christopher

    Beaumont-Dark, Anthony

    Churchill, W. S.

    Bendall, Vivian

    Clark, Dr Michael (Rochford)

    Benyon, William

    Clark, Sir W. (Croydon S)

    Best, Keith

    Clegg, Sir Walter

    Bevan, David Gilroy

    Cockeram, Eric

    Biggs-Davison, Sir John

    Colvin, Michael

    Blackburn, John

    Coombs, Simon

    Blaker, Rt Hon Sir Peter

    Cope, John

    Body, Sir Richard

    Cormack, Patrick

    Bonsor, Sir Nicholas

    Corrie, John

    Bottomley, Peter

    Couchman, James

    Bottomley, Mrs Virginia

    Cranborne, Viscount

    Bowden, Gerald (Duiwich)

    Crouch, David

    Boyson, Dr Rhodes

    Currie, Mrs Edwina

    Brandon-Bravo, Martin

    Dickens, Geoffrey

    Brinton, Tim

    Dicks, Terry

    Brittan, Rt Hon Leon

    Dorrell, Stephen

    Brooke, Hon Peter

    Dover, Den

    Browne, John

    du Cann, Rt Hon Sir Edward

    Bruinvels, Peter

    Durant, Tony

    Bryan, Sir Paul

    Dykes, Hugh

    Buchanan-Smith, Rt Hon A.

    Edwards, Rt Hon N. (P'broke)

    Buck, Sir Antony

    Eggar, Tim

    110

    Emery, Sir Peter

    Kershaw, Sir Anthony

    Evennett, David

    Key, Robert

    Eyre, Sir Reginald

    King, Roger (B'ham N'field)

    Fairbairn, Nicholas

    Knight, Greg (Derby N)

    Fallon, Michael

    Knight, Dame Jill (Edgbaston)

    Farr, Sir John

    Knowles, Michael

    Favell, Anthony

    Knox, David

    Fenner, Mrs Peggy

    Lamont, Norman

    Finsberg, Sir Geoffrey

    Lang, Ian

    Fletcher, Alexander

    Latham, Michael

    Fookes, Miss Janet

    Lawler, Geoffrey

    Forman, Nigel

    Lawrence, Ivan

    Forsyth, Michael (Stirling)

    Lee, John (Pendle)

    Forth, Eric

    Lennox-Boyd, Hon Mark

    Fowler, Rt Hon Norman

    Lester, Jim

    Fox, Marcus

    Lewis, Sir Kenneth (Stamf'd)

    Franks, Cecil

    Lightbown, David

    Fraser, Peter (Angus East)

    Lilley, Peter

    Freeman, Roger

    Lloyd, Ian (Havant)

    Fry, Peter

    Lloyd, Peter (Fareham)

    Galley, Roy

    Lord, Michael

    Gardiner, George (Reigate)

    Luce, Rt Hon Richard

    Gardner, Sir Edward (Fylde)

    Lyell, Nicholas

    Garel-Jones, Tristan

    McCrindle, Robert

    Gilmour, Rt Hon Sir Ian

    McCurley, Mrs Anna

    Glyn, Dr Alan

    Macfarlane, Neil

    Goodhart, Sir Philip

    MacGregor, Rt Hon John

    Goodlad, Alastair

    MacKay, John (Argyll & Bute)

    Gorst, John

    Maclean, David John

    Gow, Ian

    McLoughlin, Patrick

    Gower, Sir Raymond

    McNair-Wilson, M. (N'bury)

    Grant, Sir Anthony

    McNair-Wilson, P. (New F'st)

    Gregory, Conal

    McQuarrie, Albert

    Griffiths, Peter (Portsm'th N)

    Madel, David

    Grist, Ian

    Major, John

    Grylls, Michael

    Malins, Humfrey

    Gummer, Rt Hon John S

    Malone, Gerald

    Hamilton, Hon A. (Epsom)

    Maples, John

    Hamilton, Neil (Tatton)

    Marland, Paul

    Hampson, Dr Keith

    Marlow, Antony

    Hanley, Jeremy

    Marshall, Michael (Arundel)

    Hannam, John

    Mates, Michael

    Hargreaves, Kenneth

    Maude, Hon Francis

    Harris, David

    Mawhinney, Dr Brian

    Harvey, Robert

    Maxwell-Hyslop, Robin

    Havers, Rt Hon Sir Michael

    Mayhew, Sir Patrick

    Hawkins, C. (High Peak)

    Mellor, David

    Hawkins, Sir Paul (N'folk SW)

    Merchant, Piers

    Hawksley, Warren

    Miller, Hal (B'grove)

    Hayes, J.

    Mills, Iain (Meriden)

    Hayhoe, Rt Hon Barney

    Miscampbell, Norman

    Heathcoat-Amory, David

    Mitchell, David (Hants NW)

    Heddle, John

    Moate, Roger

    Hickmet, Richard

    Monro, Sir Hector

    Hicks, Robert

    Montgomery, Sir Fergus

    Higgins, Rt Hon Terence L.

    Morris, M. (N'hampton S)

    Hill, James

    Morrison, Hon C. (Devizes)

    Hind, Kenneth

    Morrison, Hon P. (Chester)

    Hirst, Michael

    Moynihan, Hon C.

    Hogg, Hon Douglas (Gr'th'm)

    Murphy, Christopher

    Holland, Sir Philip (Gedling)

    Neale, Gerrard

    Holt, Richard

    Needham, Richard

    Hordern, Sir Peter

    Nelson, Anthony

    Howard, Michael

    Neubert, Michael

    Howarth, Alan (Stratf'd-on-A)

    Newton, Tony

    Howell, Rt Hon D. (G'ldford)

    Nicholls, Patrick

    Howell, Ralph (Norfolk, N)

    Normanton, Tom

    Hubbard-Miles, Peter

    Onslow, Cranley

    Hunt, David (Wirral W)

    Oppenheim, Phillip

    Hunt, John (Ravensbourne)

    Oppenheim, Rt Hon Mrs S.

    Hunter, Andrew

    Osborn, Sir John

    Hurd, Rt Hon Douglas

    Ottaway, Richard

    Jackson, Robert

    Page, Sir John (Harrow W)

    Jessel, Toby

    Page, Richard (Herts SW)

    Johnson Smith, Sir Geoffrey

    Parkinson, Rt Hon Cecil

    Jones, Gwilym (Cardiff N)

    Patten, J. (Oxf W & Abgdn)

    Jones, Robert (Herts W)

    Pattie, Geoffrey

    Jopling, Rt Hon Michael

    Pawsey, James

    Joseph, Rt Hon Sir Keith

    Peacock, Mrs Elizabeth

    Kellett-Bowman, Mrs Elaine

    Percival, Rt Hon Sir Ian

    111

    Pollock, Alexander

    Stokes, John

    Porter, Barry

    Stradling Thomas, Sir John

    Portillo, Michael

    Sumberg, David

    Powell, William (Corby)

    Taylor, John (Solihull)

    Powley, John

    Taylor, Teddy (S'end E)

    Prentice, Rt Hon Reg

    Tebbit, Rt Hon Norman

    Price, Sir David

    Temple-Morris, Peter

    Proctor, K. Harvey

    Thomas, Rt Hon Peter

    Pym, Rt Hon Francis

    Thompson, Donald (Calder V)

    Raffan, Keith

    Thompson, Patrick (N'ich N)

    Raison, Rt Hon Timothy

    Thorne, Neil (Ilford S)

    Rathbone, Tim

    Thurnham, Peter

    Rees, Rt Hon Peter (Dover)

    Townend, John (Bridlington)

    Rhys Williams, Sir Brandon

    Townsend, Cyril D. (B'heath)

    Ridley, Rt Hon Nicholas

    Tracey, Richard

    Rippon, Rt Hon Geoffrey

    Trippier, David

    Roberts, Wyn (Conwy)

    Trotter, Neville

    Rossi, Sir Hugh

    Twinn, Dr Ian

    Rost, Peter

    van Straubenzee, Sir W.

    Rowe, Andrew

    Vaughan, Sir Gerard

    Rumbold, Mrs Angela

    Viggers, Peter

    Ryder, Richard

    Waddington, David

    Sackville, Hon Thomas

    Wakeham, Rt Hon John

    Sainsbury, Hon Timothy

    Waldegrave, Hon William

    St. John-Stevas, Rt Hon N.

    Walker, Rt Hon P. (W'cester)

    Sayeed, Jonathan

    Waller, Gary

    Scott, Nicholas

    Walters, Dennis

    Shaw, Giles (Pudsey)

    Ward, John

    Shaw, Sir Michael (Scarb')

    Wardle, C. (Bexhill)

    Shelton, William (Streatham)

    Warren, Kenneth

    Shepherd, Colin (Hereford)

    Watson, John

    Shepherd, Richard (Aldridge)

    Watts, John

    Shields, Mrs Elizabeth

    Wells, Bowen (Hertford)

    Silvester, Fred

    Wells, Sir John (Maidstone)

    Sims, Roger

    Wheeler, John

    Smith, Tim (Beaconsfield)

    Whitfield, John

    Soames, Hon Nicholas

    Whitney, Raymond

    Speed, Keith

    Wiggin, Jerry

    Speller, Tony

    Wilkinson, John

    Spencer, Derek

    Winterton, Mrs Ann

    Spicer, Jim (Dorset W)

    Winterton, Nicholas

    Spicer, Michael (S Worcs)

    Wolfson, Mark

    Squire, Robin

    Wood, Timothy

    Stanbrook, Ivor

    Woodcock, Michael

    Stanley, Rt Hon John

    Yeo, Tim

    Steen, Anthony

    Young, Sir George (Acton)

    Stern, Michael

    Younger, Rt Hon George

    Stevens, Lewis (Nuneaton)

    Stewart, Allan (Eastwood)

    Tellers for the Noes:

    Stewart, Andrew (Sherwood)

    Mr. Carol Mather and Mr. Robert Boscawen.

    Stewart, Ian (Hertf'dshire N)

    Question accordingly negatived.

    Clause 19
    INCOME RELA ED BENEFI S
    Mr. Major: I beg o move amendment No. 59, in page 22, line 17 a end insert—
    '(1A) he Secretary of S a e shall make copies of schemes prescribed under subsection (1)(a) or (b) above available for public inspection a local offices of he Department of Heal h and Social Security a all reasonable hours without payment.'.
    This is an entirely benevolent amendment, which we have introduced in response to an undertaking given by my hon. Friend he Minister for Social Security to the hon. Member for Derby, South (Mrs. Beckett) in Committee. I brings income support and family credit into line with housing benefit, by ensuring that copies of the two schemes are readily available for inspection by members of the public a he Department's local offices. I hope that the House will welcome that and I commend the amendment to the House.
    Amendment agreed to.
    9.15 pm
    Mr. Alfred Morris: I beg to move amendment No. 206, in page 22, line 17 at end insert—
    '(1A) The scheme prescribed in subsection (1)(a) above shall include a weekly payment of a community care addition to disabled or elderly people or in respect of disabled children or other disabled or elderly dependants in need of care and attention.
    (1B) Regulations shall provide that payments of community care additions made under subsection (IA) shall be payable at a rate that shall be determined by reference to:

    (a)The needs of he claimant in relation o his proper welfare and need for care and attention in a dwelling which he occupies or is to occupy as his home or in which he resides or is to reside as a member of a family; and

    the extent to which other benefits or payments that are payable under Part II or Part III of this Act fail to meet those needs.

    (1C) Payments made under subsection (IA) shall be payable in addition o any attendance allowance and mobility allowance that may be in payment.'.
    I do so in my name and those of right hon. and hon. Members on both sides of the House. For all of them I thank you most warmly, Mr. Speaker, for having selected what was unavoidably a starred amendment.
    The seventh report of the Select Committee on Social Services noted, and the Minister for Social Security agreed, that no premium for disability can cover the highest sums of additional requirements that individual disabled people in most need now receive. A small survey of the Disablement Income Group's existing case load has shown that payments for additional requirements range from 13 per cent. to 30 per cent. of a severely disabled claimant's total benefit income.
    Notable among the payments for additional requirements that cannot be covered by the proposed premium is that for domestic assistance, a weekly payment that can now amount to £44·90 a week Plus, of course, any employee's national insurance contributions. This crucially important benefit helps to keep many severely disabled people out of institutions. The payments now made will not be met by he social fund, despite the suggestion that the fund will be a means of helping to meet community care needs. Such needs cannot be met because the social fund will not cover regular payments. Moreover, the social fund is a wholly unsuitable vehicle for giving financial help to disabled people.
    As DIG stated in its response to the Green Paper, there are grave defects in he concept and details of the social fund, more particularly in relation to disabled people. In applying cash limits, the operation of the fund will introduce a new and undesirable concept into the social security benefit system. Instead of meeting all financial needs on the basis of pre-determined criteria, some financial needs in future will be me according to the availability of pre-allocated resources.
    The absence of a satisfactory appeal system will inevitably lead to injustices and bad relations locally between staff and clients. The local management of the fund will also lead to variations of treatment throughout the country, thus compounding existing variations in respect of the provision of services under the Chronically Sick and Disabled Persons Act 1970. Help for disabled people should depend on need, not on where they live, and the Bill shows a most worrying lack of understanding of what care in the community for severely disabled people really involves.

    113
    The amendment introduces a community care addition to augment the proposed inadequate basic income support payment and disablement premium. This addition would be to help meet the regular financial needs of disabled people trying to live outside institutions.
    Three examples from the current case load of the organisations that work to help disabled people illustrate the problems that will result if the amendment is no agreed. None of the three examples is extreme. There are many others showing potential losses of £40, £50 and even £60 a week.
    My first example is that of Miss Y who lives in a Sussex village. She is paralysed from the neck down following a road accident. She requires help with virtually all aspects of personal care. Miss Y was looked after by her elderly mother who became progressively more frail and unable to cope. Miss Y consequently had to spend weekends in bed before employing a domestic assistant. After intervention by DIG, her entitlement to a domestic assistance allowance of £20 a week was established. Her weekly income from supplementary benefits is £64·20, comprising £37·50 long-term rate, £5·45 for heating requirements, £1·25 laundry requirement and £20 domestic assistance allowance. Under the proposed income support scheme, she would receive £30·60 weekly rate and £12·25 disability premium — a total of only £42·85. That is a loss of £21·35. If Miss Y qualifies for the full rate of domestic assistance of £47·20, as DIG thinks probable, the loss to her would be £48·55.
    My second example is that of Mr. S who graduated from university in 1984. He is 24 years old and confined to a wheelchair. He needs help with washing, dressing and toilet, and must also be turned in bed at frequent intervals during the night. He receives the higher rate attendance allowance and the following amounts of supplementary benefit: long-term rate of £35·70, domestic care allowance of £40. minus available scale margin of £1, leaving him with £74·70. Under income support this would be reduced to personal allowances of £24 and disabled person's premium of £12·25, giving a total of £36·25. This young man's home care costs him more than £70 a week. Without maintenance in real terms of his current income from supplementary benefit, he would no longer be able to remain living in the community and will have to move into residential care.
    Thirdly, I turn to Miss A, who is 20 years old and, due to her disabilities, is confined to an electric wheelchair. She has very little strength or length of reach in her arms. She needs help in washing, dressing and using the toilet. She receives attendance allowance. Her present supplementary benefit weekly payment is as follows: long-term rate £35·70, domestic care allowance £44·90, diet allowance £3·60, heating allowance £5·20, bathing addition £1·50, minus available scale margin of £1, giving a total of £89·90. Under the income support proposals she would receive personal allowance of £24 and disabled person's premium of £12·25, giving a total of £36·25. Miss A left full-time education in 1984 and was de ermined to take her rightful place in the community. Her live-in care attendance costs currently amount to £40 per week plus board and lodging. So how can anyone, in these circumstances, retain his or her independence under his Bill as it now stands?
    It is the contention of every major organisation of and for disabled people in his country that it would cost more
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    in public expenditure terms to fund these three people, and very many others like them, in residential care than it would cost to maintain their benefits in real terms.
    Le me spell out the point in sharper terms. the Spastics Society provides residential care for severely disabled people at a cost of between £233 and £288·50 per week. Of these amounts, the DHSS currently pays £180 per week per person. This sum far exceeds the amount of supplementary benefit received in my three examples, who are all severely disabled but just managing to remain in the community. That is why the Spastics Society has put it to me that
    Independent living will no longer be possible for many severely disabled people if they are expected to live or. less money than they do now. It is our belief that by, in effect, reducing the incomes of such people … the Government will defeat its own objectives of 'Care in the Community'. The alternative will lead to considerably higher public expenditure."
    For the Government to reject this amendment would thus be self-defeating as well as inhumane. All hon. Members know that disabled people crave nothing more than to live independently and, wherever possible. in their own homes. Many will incontrovertibly he forced into institutions unless the Bill is amended. I implore both the House and the Minister to accept amendment No. 206. Let us a least all agree that there will be no point in sloganising about caring for severely disabled people in the community, ever again, if hey reject this amendment tonight.
    Mr. Hannam: This is a crucial debate for the most severely disabled members of our society, and I am extremely grateful to you, Mr. Speaker, for accepting our amendment.
    I am surprised that we are having to debate this matter, because it is a longtime since the all-party disablement group first began to express anxiety and to discuss with the various disability organisations the implications of the social security review, especially for severely disabled people. Under the present system severely disabled people receive a range of additional payments to cover the additional costs of living. However, they, or at least those who come into the scheme in future, will lose some of those benefits.
    Throughout last year my hon. Friend the Minister has signified his acceptance and knowledge of the matter and of the need to find a satisfactory solution. In our discussions with the group and to her organisations he has repeatedly implied that the Government hope to come up with a scheme to solve the problem. I sincerely hope that that proposal will not be long in coming. Indeed, I hope that it may be forthcoming tonight.
    The number in the group is no large. The Government estimate that we are talking about a total of 4,600 people who are severely disabled and are likely to lose by these proposals in the Bill. We cannot be sure that the figure is completely accurate. Indeed, they may be more than that. We are not talking about large numbers, and we are certainly not asking the Government for a large sum. Moreover, under the present system these severely handicapped people are judged to be in need of the various additional allowances that they receive.
    The righ hon. Member for Manchester, Wythenshawe (Mr. Morris) illustrated the type of people whom we want to help and who will suffer under these proposals. I have a further example. A married woman has a 14-year-old son who has multiple sclerosis and is chairbound. The family

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    receive a total of £109·55, whereas under income support that figure would be reduced to £81·10. Multiple sclerosis is a deteriorating condition, and in future additional allowances will be required. Certainly the family could not cope with any loss in their present income.
    All present recipients will continue to receive the existing level of allowances under the transitional arrangements, but those allowances will not keep pace with inflation as time goes by. Therefore, even existing recipients will suffer a steady erosion of their support income. I know that my hon. Friend the Minister recognises the problem, and has suggested that it can be met under the provisions of the social fund. However, there are a number of difficulties with this, as he knows. I would be much better to tackle the problem and to meet the financial needs of severely disabled people through income support schemes, as our amendment proposes.
    If we mean to encourage severely disabled people to live in the community, it is essential to provide them with the independence that they must have. If this is not done, they will have to resort to institutional or residential care or to residential homes, and we know what the cost of that will amount to.
    The present arrangements in the Bill mean that existing recipients of disablement benefits will continue to receive them as long as they do not visit hospital, but if they have to do so for further treatment, they will lose entitlement and will go on to the income support, which will be far less. There is an anomaly that we must resolve. New claimants will only have the disability premium, which for most severely disabled people will be inadequate to live on.
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    All the disability organisations have made strong representations on both these counts, as has the all-party group, to my hon. Friend the Minister, and I hope that we can have some sign of how he in ends o rectify the situation. He has shown by his replies that he recognises the problem and wants to do something about it. I am sure that he would not want to force people back into institutions at the same time as encouraging them to go out into the community, which is the Government's policy.
    There is a clear need for a regular, guaranteed payment each week, and our amendment will provide for a community care addition to be paid through the income support scheme to disabled or elderly people. It will be a weekly payment, and regulations will determine the rate of the payment, by reference to

    "(a) the needs of he claimant in relation to his proper welfare and need for care and attention in a dwelling which he occupies or is to occupy as his home or in which he resides or is to reside as a member of a family; and

    (b) the extent to which other benefits or payments that are payable under Part II or Part III of his Act fail to meet those needs."

    It is important that this is a weekly payment. Disabled people must be able to budget adequately for their day-to-day needs. For example, they need to pay for attendance, laundry, special diet and their additional heating, needs. They must know that they will be able to meet all those additional expenses if they are to continue to live at home.This is an important aspect of the community care addition, and I do no see a payment from the social fund being able to meet this requirement.
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    It is also essential that the community care addition is no open to discretion. If a disabled person is to continue to live in the community, he must be able to plan ahead. For instance, he needs to know that he will be able to meet the cost of an attendant in the long term, and any other domestic assistance that he may require. It would be impossible if his addition were subject to the discretion of a social fund officer every so often and he had no absolute knowledge of what he was entitled to. Faced with such uncertainty, many people would have no alternative but to live in an institution. It is obviously important that the regulations establishing the rate are flexible enough to allow for the varying needs of people with a progressive or intermittent disability, but people must know what they are entitled to and know that they will always be entitled to that.
    We recognise that it is intended for the social fund to meet various community care needs. For that reason, we have included subsection (b)so that account can be given to the extent to which the social fund meets those needs. However, at this stage we cannot see how the social fund will be suited to give a regular, guaranteed cash payment to enable severely disabled people to live independently in the community. Severely disabled people need this over and above any other back-up support that may be provided through the social fund.
    Our principal contention in the all-party group is that we wan disabled people to live in the community and we must ensure that they are entitled to sufficient means to be able to do this. In the longterm, it is both cost-effective and care efficient to give people sufficient cash to prevent them from having to live in an institution. The amendment emphasises the importance of this. It says that payments shall be made to meet the requirements of a disabled person living a home. I commend it to the House. I hope that the Government will be able to accept it.
    Mr. Jack Ashley: I endorse the constructive comments of my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) and those of the hon. Member for Exeter (Mr. Hannam), both of whom do such splendid work for the disabled.
    This amendment is vital. Without it, the most severely disabled people will lose the most. Simply to replace the flexible and sensitive additional payments under the supplementary benefit system with just one level of disability premium is an inflexible and insensitive decision. I do not believe that it is possible simply to average the needs of severely disabled people in this way. None of them is average. All of them are individuals and they should be assessed as individuals. Failure to assess and recognise their individuality is the hallmark of the unimaginative.
    It is impossible seriously to doubt the claim that, without cash from the community care addition, the severely disabled will be forced into institutions. Failure to recognise this fact is the hallmark of the illiterate, who cannot read case histories. It is also the hallmark of the innumerate, who cannot do simple sums, because the figures are there for all to see.
    Without this amendment, the most severely disabled lose from a few pounds to over £50 a week. That money has helped to keep many of them out of institutions. Without it, and without the community care addition that we recommend, they may be forced into institutions. If they are forced into institutions, the Government will have

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    to pay very heavily. Of course, the disabled will pay far more heavily because they are severely affected by being forced into institutions.
    Those of us who know severely disabled people know that they fight very hard for their independence and that they cherish it. If they are forced into institutions, they find that their independence is eroded and that it is insulting, demeaning and demoralising. That is why this Government, or any Government, at all costs should avoid forcing the severely disabled into institutions. To force, to impel or to compel one severely disabled person into an institution against his will is the hallmark of a ruthless person. I am not accusing the Minister, but I am saying that to force any severely disabled person against his will into an institution, simply for lack of cash, is the hallmark of a ruthless person.
    It is completely false to suggest, as I understand the Minister has suggested, that in the attendance allowance and the mobility allowance the most severely disabled people already have a premium, in the way that we understand it. It is wrong to make that claim. These essential allowances are made for a quite different purpose. It was never intended, either by the former Minister, or by the former Government, or by Parliament, that the cash from these allowances should be used for needs which ought to be met by supplementary benefit. I do not believe that that is in ended by his Government.
    However, the allowances are inadequate, in any case. The full attendance allowance for a very severely disabled person is a mere £30 a week. To qualify for the full allowance, those people must have constant care, day and night. Care costs some £2·50 per hour. There is nothing cheaper than that, even in poor areas. Therefore, £30 a week will pay for some 12 hours for someone needing constant care day and night who is severely disabled and unable to help herself or himself. That is quite wrong.
    Another poppycock suggestion that has been made by some Ministers— the Minister will have the chance to answer this if he thinks that I am doing him or the Government an injustice — is that severely disabled people can rely upon the social fund for their individual needs. That is rubbish because that fund does not provide weekly payments. It is limited and here will be enormous local variations. The difficulties of severely disabled people are far too intense for them to be left to flounder at the mercy of local officials.
    I conclude by suggesting that the unique problems of severely disabled people must be met by unique payments. Those payments should be in the form of the community care addition which has been suggested and spelt out in the amendment. I make it clear that this is not simply a financial test for the Government. This is a major moral test, requiring a specific and categoric response. An affirmative answer from the Minister would help to allay he anxieties of severely disabled people. Silence or an evasive answer will be unforgivable.
    Mr. Tim Yeo: I endorse what the right hon. Members for Manchester, Wythenshawe (Mr. Morris) and for Stoke-on-Trent, South (Mr. Ashley) and my hon. Friend the Member for Exeter (Mr. Hannam) have said. It is beyond doubt that a number of people will be financially worse off under the new proposed income support scheme. When my hon. Friend the Minister came to the Select Committee on Social Services to answer
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    questions about the proposals in the Bill, he assured us that, quite apart from protecting people during the transitional phase, there was the social fund.
    The social fund rests on a discretionary element which undermines the main objective of severely disabled people. The severely disabled are a group with whom I have had close personal contacts in the past five years. The overwhelming conclusion that I reached after working with a number of severely disabled people, with whom I developed a close relationship, was that of all the aspirations which they treasure, independence, which everyone else takes for granted, was the one which they held in the highest esteem.
    Nothing will undermine the independence of the severely disabled more than a feeling that their financial provision from the state is based upon some kind of discretionary handout element. It is critical to the feeling of dignity independence and self-respect, which I hope that the Government wish every British citizen to enjoy, that any financial benefits which they receive, and will need in order to maintain their present standard of living, should be paid as of right.
    This group of people is not enormous, so the cost of the necessary provision is not high. The Government do not wish to demean this group of people who have many other disadvantages. I cannot believe that they would wish to do so especially now. My hon. Friend the Minister, with this considerable knowledge and widely recognised sensitivity to the aspirations of disabled people, will see the merits of the amendment, and I commend it strongly to him.
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    Mr. Dafydd Wigley: I, too, support the amendment. From the large volume of correspondence that we received when he Bill was in Committee and until Reports age, there is no doubt that the matter touches a raw nerve and that more people are worried about it than are worried about almost any other part of the Bill There are many areas of concern in the Bill, but many organisations, as well as the right hon. Members for Manchester, Wythenshawe (Mr. Morris) and for Stoke-on- Trent, South (Mr. Ashley) and the hon. Member for Exeter (Mr. Hannam), have highlighted examples of individuals who stand to lose substantial sums.
    Of course, I am aware from discussions in Committee that those individuals will be safeguarded by some provisions, but a person in an identical position who develops a disability later will not receive the support that people get now. To that extent, the Bill is inevitably a major step backwards.
    We are not talking about small sums. Examples have been quoted of reductions of between £10 and £50 a week. That makes all the difference between being able to care and not being able to care. Although the Government have an understandable commitment to the voluntary sector, I do not believe that they intend to move away from paid services for people who clearly need them to saying, "It will have to be done for free by volunteers."
    Mr. Newton indicated dissent.
    Mr. Wigley: The Minister shakes his head. I accept that that is no his intention, but that will be the effect of the Bill.

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    In Committee and today we have heard about the Government's three proposals for making up the loss. Much emphasis was placed on the social fund. However, it is discretionary, inconsistent and uncertain. It will vary from area to area. It is cash-limited, and many local officers will not have the necessary expertise in profound handicap. That is one reason why the mobility allowance and attendance allowance schemes end to be administered from centres, not from local offices. People who need reliable, consistent services will have to depend upon ad hoc, day- o-day, hand- o-mouth services according to the resources that are available. It is ironic that we are discussing this in the context of a Social Security Bill when the proposal is profoundly anti-social and provides insecurity for disabled people.
    The evidence that we have received from many people points in the same direction. In its most recent memorandum to me, The Association of Directors of Social Services stated:
    "The most unacceptable aspect of the premium for the sick and disabled is that those with the highest needs will be amongst the highest losers. Those with disabilities that may prevent them from working but have no extra costs related to ill-health will receive the same benefit as a severely disabled person with high costs … The combined lack of support to carers and restricted help to the most severely disabled of claimants will result in the breakdown of much home-based care. If the Government has a genuine commitment to community care, adequate incomes for those in the community is the firs step."
    That underlines the depth of feeling among the professionals in this area.
    The right hon. Member for Stoke-on-Trent, South mentioned the other two palliatives that the Government have suggested to help severely disabled people — mobility allowance and attendance allowance. The Minister mentioned this in Committee on 11 March. But those two benefits are geared specifically for functions—mobility allowance to the ability to get around, and attendance allowance, as the right hon. Gentleman graphically illustrated, to the profound needs of those who qualify for them. These should not be regarded as making up for the loss of the provisions in current enactments. Taking away those provisions will leave a group of people in considerable doubt and insecurity about their future.
    The Government are showing a brazen and insensitive attitude to disabled people.
    Dr. Norman A. Godman: I seem to recall the Minister for Social Security talking about lump sum or intermittent payments being made to someone who leaves hospital with, say, severe brain damage or severe disablement. Surely there must be regular, adequate weekly payments.
    Mr. Wigley: Absolutely. That is not to say that there is no need for lump sum payments, but they will not make up for the regular, consistent availability of resources. I know from personal experience and from the experience of many friends and associates who have faced disability that there is a need for a person who can help consistently and regularly. That can be ensured only when resources are available to pay that person so that he or she will be available for certain hours on certain days, come rain or shine. If the resources are not available, paid people will
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    not be taken on to help with that work. No one would dare risk taking on those people and, therefore, the infrastructure that enables disabled people to remain in the community would be in danger of collapsing.
    I do not think that the Minister in ended having to defend that sort of possibility. I urge him to realise that if the Government's words about their commitment to care in the community are to mean anything, they must look again at this matter.
    Mr. Galley: I must be clear from our debates in Committee and on Report that firm arrangements will have to be made for the small groups of severely disabled people who may be disadvantaged as a result of the withdrawal of single payments.
    In Committee we spoke of groups of perhaps 2,000 or 4,000 people who can accumulate significant single payments, particularly those for domestic care and attendance. Those debates ended to concentrate on the social fund and not on an addition to income support.
    However one approaches the matter, there may be difficulties of definition and interpretation of terms such as "community care" and to other wide phrases such as those in the amendment, and, indeed, those in the amendment that I tabled to the social fund provision in Committee. It is abundantly clear that some method must be found to overcome the problem.
    The social fund may be a better, more appropriate and flexible way of dealing with the problem. The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) is wrong to say that it is rubbish to suggest using the social fund. It may be an appropriate way of solving the problem flexibly and sensibly. However, we need — tonight, if possible—assurances from the Government about how the social fund will be operated to meet these needs.
    From the Green Paper onwards, it has always been intended that an element for community care needs will be included in the social fund. The details have remained extremely sketchy, and perhaps there is still some thinking to be done, but I hope that my hon. Friend the Minister for Social Security will come to a conclusion in the near future about how the community care element of the social fund will be operated to give some security and confidence to severely disabled people who would lose out under the system that is currently proposed. There must be consistency between local areas. I hope that we shall not have to use the appeals procedure every time to achieve that consistency.
    The hon. Member for Caernarfon (Mr. Wigley) mentioned the problem of social fund officers having the medical or social work expertise to make the appropriate assessments for payments. One solution might be to set aside community care money within the social fund that could be operated voluntarily by experts who are somewhat independent of the Department. We need a firm, clear and secure arrangement, which involves regular, intermediate or instalment payments. I believe that my hon. Friend the Minister made some concessions to us on that point in Committee and that he is moving towards some regularity of payment. Indeed, there is an amendment that may take us in that direction and give us more flexibility.
    I turn again to the problems of the terminally ill and to the difficulties that they often face when claiming, for example, attendance allowance. Hon. Members should

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    remember the 26-week rule and the bureaucratic difficulties of obtaining such aid. Community care must take the needs of the terminally ill into account. I would be counter-productive if my hon. Friend did no make arrangements to keep people in the community with security of funding. The alternative is institutionalisation,
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    which is expensive, unnecessary, wrong for the person concerned and counter to Government policy. Therefore, some arrangements must be made for the sake of the individuals concerned and in the interest of the Government themselves.
    Mr. Kennedy: On this crucial issue, the mood of the House during this short debate is reminiscent of the mood during the debate on the Disabled Persons (Services, Consultation and Representation) Bill, or Tom Clarke Bill, which successfully passed through the House. Good sense and good will was apparent then, too, on both sides of the House. More importantly, generous, welcome and sensible commitments were made by he Minister.
    I shall be brief. We have seen good sense and good will. Let us hope that, even if we cannot obtain an absolute commitment from the Government, they will a least say that they are aware of the difficulty and will take steps to remedy it, if not tonight, then in the other place. In an earlier debate, in which I spoke just about as briefly, we discussed some form of appeal mechanism or independent review for the social fund. Some of us strongly opposed the measure, while some Conservative Members, perhaps understandably, welcomed it. Nevertheless, they expressed the hope that the Minister would go further. The difficulty highlighted in that debate must be multiplied a least tenfold in his debate, given the category of citizen involved. A fit and healthy person who enjoys his independence and the hings that perhaps we take for granted, will have difficulty with the social fund, how to appeal, and so on. How will people who see others enjoy independence and want to achieve it themselves react to the provisions? I find the thought distressing.
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    As the hon. Member for Halifax (Mr. Galley) said, the logic of the measure runs counter to Government policy. The amount of money to be spent in terms of the numbers involved cannot disrupt Government policy, because it will not significantly affect the amount of money allocated to income support.
    I hope that the Minister will be as constructive, generous and correct as he was that Friday morning a few weeks ago when we debated and passed the disabled persons measure. That did much in terms of needs and rights for disabled people. The amendment seeks to preserve and protect the needs and rights of severely disabled people.
    The Minister said that the social fund appeals mechanism conferred rights. The rights involved in his amendment are more fundamental than the right to an independent appeal. We are talking about the right to support under the legislation to give disabled people a sense of independence and security. I support the spirit and detail of what has been said about the amendment.
    Mr. Fred Silvester: I did not serve on the Committee on the Bill and so I am treading an area where other hon. Members spent many hours in discussion. I support the amendment. I hope that the Minister will address two crucial issues. Since we published the Green Paper concern has been expressed about those who are particularly dependent upon state benefit because of the multiplicity of their disabilities and their need for special support. The Government have said that they will consider the matter, which they recognise as important. We are now at the eleventh hour and we need a response. The Minister must make it clear that the Government intend to write greater safeguards in to the Bill.
    No one has suggested that the sums lost will involve the current holders of benefits. They are to be lost by people
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    of like kind in future. It is not suggested that economies should be made at the expense of current recipients. It is not suggested that people in receipt of such benefits do not need them.
    People have had benefits which we, by definition, agree that they need but which we know from the evidence are to be taken away from them and which the Government do not wish to take from them. We seem to be on all fours, but the Bill does not provide the security or knowledge that people require.
    I doubt whether the measure serves the Government's purpose because the social fund was setup to sweep together the multiplicity of applications covering a range of social security needs and to provide a mechanism so that people could get into the fund from time to time as needs arise. We are talking about a group of people whose needs are known for a long period, where the payment is not an individual or periodic payment but a continuous payment. If we know now that those continuous payments are needed at the present level or at that which we can afford, why can we no provide a means in the Bill whereby a continuous payment is made in future?
    It seems to me that, from the definition in the Green Paper, the social fund is not a sensible means by which to make the payment. It will complicate the administration of the social fund, which will not be to the benefit of the reform. We should provide a continuous means of income support for severely disabled people, administered by people who consider individual cases and know a lot of detail about disability, who will arrive at what they regard as a reasonable, continuous sum. We should use that highly concentrated and highly developed expertise for that purpose. I hope that the Government will find a way of providing an additional mechanism for continuous support outside the social fund that will give to the people concerned the sense of security that they so severely desire.
    Mr. Tom Clarke: The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) was most reassuring, because I rise with some trepidation in the knowledge that no only has the House heard some informed speeches, including that of the hon. Gentleman and those of hon. Members who have served on the important Committee, but that of my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) and those of members of the all-party disablement group, including my right hon. Friend the Member for Stoke-on- Trent, South (Mr. Ashley) and the hon. Member for Exeter (Mr. Hannam). They demonstrated to me during the passage of the Disabled Persons (Services, Consultation and Representation) Bill that it is one of the most effective groups in the House. Certainly, it is the best informed group in the House. Without wishing to be patronising, I think that the Minister for Social Security would be well advised to listen to the advice of that group, especially when the advice is as unanimous as it would appear to be regarding the clause.
    When the House discussed that Bill, hon. Members and I received correspondence which showed that the whole issue of community care, and how we as a society respond to it, is one of the most vital matters that disabled people face. This debate gives us an opportunity to ask the fundamental question: what does community care mean? What explanation do we offer when people ask about community care? How can we possibly have community

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    care in any meaningful sense if as the correspondence we all received suggests, we are not providing the resources which are essential if only to maintain the dignity of so many people who have given so much to our community. There is not the emphasis on care which the House would like to see.
    I support the amendment. I support it in the knowledge that we are dealing with about 4,600 people, which is the tip of the iceberg. The problems run far more deeply than we realise, but that it is right to accept that if people have to face the problem and the reality of disability, no just day after day but hour after hour, and if the problem grows with age, we should not impose the worry of how to pay for the next laundry bill or whether their heating charges will be so high that they cannot turn up their heaters, and in so doing act in conflict with the medical advice that they have been given.
    Additional community care recognition as advocated in the amendment represents a step forward. On the basis of representations that have been made to me and other hon. Members, I regret that such a facility has no existed before. I would be quite wrong to introduce any element of discretion into his Bill. Our method of dealing with these matters seems patchy in the extreme. Some of the people who did not agree that we should be doing a bit more than we are about carers seemed to come from parts of the country where carers were most in need of assistance, where ordinary domestic circumstances were so compelling that some of the information left us stunned. There is a challenge to try to do something as the amendment suggests.
    I agree that the choice is often between a reasonable approach—giving a bit of assistance to people who have done a sterling job, usually without complain — or opening the door to institutional care. We have two objections to the later. First, it is wrong for people to be compelled to go to institutions when it can be avoided and, secondly, community care with real meaning is something that we want to encourage.
    It seems insulting in the extreme to wave the banner of community care, knowing that it means that the House is washing its hands of the problem and saying that, if resources are necessary, they will have to be found elsewhere. There is a feeling of pride among the folks who we are discussing, and rightly so. I would be wrong for us to attempt to diminish that pride. I refer to pride in individual achievement and pride in spreading limited resources, and even spreading limited affection.
    There is a dignity there which the House should be encouraging. I know of the Minister's interest in these matters and I do not want to be insulting about this role. My regret is that the ability that the displays is being spent on matters such as this. He is capable of a much more constructive and helpful contribution and I am sorry that he has been chained to such legislation.
    With the amendment, however, the Minister has a chance to redeem himself, and I urge him to take that opportunity. Yesterday's The Sunday Times carried a profile of a very good friend of all of us—Mr. Brian Rix. It said that Mr. Rix will be advising the Prime Minister's advisers on Thursday on how the Government might be presented as more caring. I have not had an opportunity to have a word with Mr. Rix, but, knowing him, I suspect that he is likely to tell the Government that they could take a step in that direction by accepting the minor proposal in the amendment and by showing the
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    House and the country that, for once, they will encourage a new approach and that they believe that there is a place in society for those who ignore the concept that we should consider the price of everything and the value of nothing.
    Mr. Cohen: When I was at the shops this morning I saw a constituent of mine who is now in a wheelchair. I went over to speak to him, and he said "I'm finished". He meant that he would not walk again, but, chillingly, he mean much more than that. It was a sad assessment of his prospects in our current society.
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    People with disabilities can be helped to gain independence and contribute to society. Their hopes and aspirations for a full life are much the same as the rest of us. A caring society helps them to overcome the obstacles put in their way. My constituent assessed that we do not have much of a caring society and that those obstacles will finish him off. That was his instinctive feeling.
    Disabled people have a right to live a useful life in the community. They have a right to a decent income, which is essential for heir dignity and independence. My constituent and others like him who are disabled have a right to say, "I shall carry on, despite my disability", not to be forced to say "I'm finished."
    I welcomed the amendment to pay the community care addition as a weekly payment to the disabled. There is a clear correlation between poverty, low income and disability. The payment of this weekly benefit will help to tackle poverty and allow the disabled to build a life in the community with dignity.
    In the amendment there is also recognition of the role of some of the carers. They pay a high cost in stress for the job that they do. A recent survey showed 68 per cent. suffering physical illness, 48 per cent. suffering mental stress and many of them living in poverty and social isolation. A caring state should be encouraging the carers. They are the real community carers. That same survey showed that if 5 per cent. of them sopped working, the cost to the health and social services budge would double. Therefore, it is in the state's interest that carers should be encouraged with benefits of this type.
    Real community care does cost money. The Government want to do it on the cheap as an excuse for cuts. That is extremely short-sighted. If they do that, thousands of people will be thrust into the community without support. In those circumstances, many more of them will feel that they are finished, as does my constituent. I support the amendment.
    Dr. Godman: I warmly support the amendment. I remind the Minister that in Committee I mentioned the plight of some of my constituents who are serverely disabled and pointed out to him that some of them receive upwards of £20 by way of clothing allowances, let alone to her allowances. At one point during the Committee's deliberations the Minister replied that my constituents who are suffering from disabilities are covered by the transitional protection.
    I seems that people already on supplementary benefit will have the existing benefit protected, but only in cash terms. That means i will become steadily more inadequate to meet their needs. That point was repeatedly raised in Committee, but to my mind no solution was ever offered. Worse still, anyone who stops drawing benefit, even for a week or two-for example, because of admission to

    127
    hospital—may well lose even that form of protection. I should like to hear what the Minister has to say about the threat of the loss of protection.
    I should like to ask the Minister whether he and his officials have had time to reflect on his remarks about lump sums or intermittent sums given to those leaving hospital in a severely disabled condition. I recognise some of the problems associated with weekly additions, but what is needed is an adequate weekly income with, on occasion, some additional lump or intermittent sums, to use the Minister's words. I would welcome answers to those two questions when the Minister replies.
    Mr. Newton: Once again, the importance of the debate has left me relatively little time to respond to all the points that have been made, but first I should like to acknowledge the importance that I and the Government attach to this subject, which has been reflected in the debate.
    I should like to remind the House of something that could have been overlooked by anyone listening to the debate. Our proposals for the new income support scheme incorporate a significant number of improvements for the overwhelming majority of those classified as long-term sick and disabled, currently for supplementary benefit purposes, and under the Bill, under the income support scheme. People will receive the proposed disablement premium automatically where they are receiving a qualifying benefit such as attendance allowance or severe disablement allowance. Unlike the current position with the long-term rate, receipt by a partner of one of those benefits would passport the family as a whole to extra help.
    In cases where we retain time on benefit rules to deal with cases of people who are unable to work because of ill health or disability but who do not, for whatever reason, receive one of the qualifying benefits, we have, in effect, halved the qualifying period to 28 weeks instead of one year before they receive the premium rate. Those arrangements are consistent with criteria that we already adopt in other long-term sickness and disability benefits.
    It is also important to remember that our proposals on equal treatment should make it easier for a disabled partner to qualify the whole family for extra help. We are also proposing significant improvements in the treatment of part-time earnings of disabled people. This touches on the point raised by several hon. Members — we are committed to continuing the disregard of attendance and mobility allowance.
    This is not a point that I wish to labour too much, because of the shortness of time, but I must remind the House that, on the figures that we have published in the technical annex, illustrative though they are, we estimate that there will be an increase in expenditure of over £50 million a year for those eligible for the disability premium —in other words, £50 million a year overall for those who are classified as long-term sick and disabled. It is clear to anyone who has studied those illustrative figures in the technical annex that, on that basis, the great majority of long-term sick and disabled people would gain or face no change as a result of the proposals. The average improvement across the group as a whole, after allowing for everything in the illustrative figures — the least favourable way of looking at the figures—would be an increase of £4·60 per week.
    128
    That is an important part of the background to the issue, but I would not want to minimise or dismiss the genuine concern that has been expressed about the relatively small numbers of people receiving relatively large amounts of supplementary benefit in the form of some of the present additional requirements, particularly the domestic assistance addition, which must be the basis of much of what has been said by hon. Members on both sides of the House.
    From the debates in Committee, I think that the House, those who were members of the Committee and those who have studied the Committee proceedings, will know that from the information available the numbers involved with the specific problem on which the debate has focused are undoubtedly—and I emphasise that this does not dismiss the problem but puts it into perspective—quite small in comparison to the hundreds of thousands who receive supplementary benefits and the tens of thousands of long term sick and disabled people on supplementary benefit. From the latest information available—admittedly this is out of date—there were some 2,400 payments of the domestic assistance addition and the average payment was not at the level of £40, £50 or £60 a week that some hon. Members have referred to, rather there was an average payment of £3·59 a week. I accept that that information dates back to December 1983, but it shows the nature of the problem and the ease with which it can be exaggerated.
    Whether or not that problem can be exaggerated, that does not mean that it is not an important problem for those affected by the arrangements. It does not minimise the extent to which the Government are concerned to find a solution. However, I cannot accept that the amendment is a solution to the problem, because, in effect, it would entail going away from the basic structure of the Government's income support proposals, with all the advantages that they bring to the great majority of long-term sick and disabled people. The amendment would lead us straight back to the present tangle of weekly additional rquirements. Under these, we try to assess, for example, how many baths people need to take a week, peoples' laundry needs and all the other details that come into these matters.
    Those hon. Members who have spoken must recognise that we will either have the simpler and clearer structure of income support without the great tangle of additional requirements, with all the problems that that entails, or we will maintain that structure and have something similar to the present tangle. That would inescapably mean that many of the people that I have described as "gainers" would have their gains removed by the maintenance of the present structure.
    I hope that the House would recognise that if I were to come forward and say that the Government were abandoning the proposed disability premium and the many important elements of the proposed new structure, I would receive no thanks. Those who would expect to gain from the proposals would suddenly find that they would not. It is inconsistent with the basic nature of the Government's proposals to start tacking back on to the simplified structure that we are proposing, the weekly additional requirements proposed in the amendment.
    I hope that the House and my hon. Friend the Member for Suffolk, South (Mr. Yeo) will recognise that the notion that the amendment's proposal is in some way significantly different from a discretionary way of dealing

    129
    with the problem, whether through the social fund or in some other way, is far fetched if one considers the wording of the amendment. The amendment refers to
    "The needs of a claimant in relation to his proper welfare and needs for care and attention."
    That cannot be settled by a clerical officer in a DHSS local office on the basis of some handbook of regulations. That is essentially a discretionary assessment of the needs and requirements of a severely disabled person. That is a social work assessment. That is the kind of approach that we are trying to build into the system through the operation of the social fund and through the more trained staff that we would expect to have within the social fund.
    I would ask hon. Members to accept that what they are proposing through the amendment is not a continued regulated entitlement, it is simply the writing of what purports to be a regulation which includes a discretionary social work decision within it. It would require discretionary social work or social fund assessments to make it work.
    In response to the requests from my hon. Friends and others, I cannot tell the House that we have yet found a certain way of solving the problems that have been described. We will need to assess the implications of the more up to date information on the receipt of additional requirements as it becomes available.
    The House will know that we have been asked by disability organisations to consider proposals for improving transitional protection. That picks up a point raised by the hon. Member for Greenock and Port Glasgow (Dr. Godman). We have said that we shall look at what some of those organisations have said about improving transitional protection. We shall also want to consider the extent to which the social fund has a role to play in that area, and at some aspects of the developing debate about the Disabled Persons (Services, Consultation and Representation) Bill. Indeed, I must ask the hon. Member for Monklands, West (Mr. Clarke) to consider how far the principles and purposes of his Bill would be undermined by a proposal which enabled local authorities to pass all responsibility for—
    It being half past Ten 0' Clock, MR. SPEAKER proceeded, pursuant to the Order [15 April] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
    The House divided: Ayes 193, Noes 333.

    Division No. 185]

    [10.30 pm

    AYES

    Adams, Allen (Paisley N)

    Bray, Dr Jeremy

    Alton, David

    Brown, Gordon (D'f'mline E)

    Anderson, Donald

    Brown, Hugh D. (Provan)

    Archer, Rt Hon Peter

    Brown, N. (N'c'tle-u-Tyne E)

    Ashley, Rt Hon Jack

    Brown, R. (N'c'tle-u-Tyne N)

    Ashton, Joe

    Buchan, Norman

    Atkinson, N. (Tottenham)

    Caborn, Richard

    Bagier, Gordon A. T.

    Callaghan, Jim (Heyw'd & M)

    Banks, Tony (Newham NW)

    Campbell, Ian

    Barnett, Guy

    Campbell-Savours, Dale

    Barron, Kevin

    Canavan, Dennis

    Beckett, Mrs Margaret

    Cartwright, John

    Beith, A. J.

    Clark, Dr David (S Shields)

    Bell, Stuart

    Clarke, Thomas

    Benn, Rt Hon Tony

    Clay, Robert

    Bennett, A. (Dent'n & Red'sh)

    Clelland, David Gordon

    Bermingham, Gerald

    Clwyd, Mrs Ann

    Bidwell, Sydney

    Cocks, Rt Hon M. (Bristol S)

    Blair, Anthony

    Cohen, Harry

    Boothroyd, Miss Betty

    Coleman, Donald

    Boyes, Roland

    Conlan, Bernard

    130

    Cook, Frank (Stockton North)

    McNamara, Kevin

    Cook, Robin F. (Livingston)

    McTaggart, Robert

    Corbett, Robin

    McWilliam, John

    Corbyn, Jeremy

    Madden, Max

    Cox, Thomas (Tooting)

    Marek, Dr John

    Craigen, J. M.

    Marshall, David (Shettleston)

    Crowther, Stan

    Martin, Michael

    Cunliffe, Lawrence

    Mason, Rt Hon Roy

    Cunningham, Dr John

    Maxton, John

    Dalyell, Tam

    Meacher, Michael

    Davies, Rt Hon Denzil (L'lli)

    Meadowcroft, Michael

    Davis, Terry (B'ham, H'ge H'l)

    Michie, William

    Deakins, Eric

    Mikardo, Ian

    Dewar, Donald

    Millan, Rt Hon Bruce

    Dixon, Donald

    Morris, Rt Hon A. (W'shawe)

    Dobson, Frank

    Morris, Rt Hon J. (Aberavon)

    Dormand, Jack

    Oakes, Rt Hon Gordon

    Douglas, Dick

    O'Neill, Martin

    Dubs, Alfred

    Orme, Rt Hon Stanley

    Duffy, A. E. P.

    Park, George

    Dunwoody, Hon Mrs G.

    Parry, Robert

    Eadie, Alex

    Patchett, Terry

    Eastham, Ken

    Pavitt, Laurie

    Edwards, Bob (Wh'mpt'n SE)

    Pendry, Tom

    Evans, John (St. Helens N)

    Pike, Peter

    Fatchett, Derek

    Prescott, John

    Faulds, Andrew

    Radice, Giles

    Fields, T. (L'pool Broad Gn)

    Randall, Stuart

    Fisher, Mark

    Raynsford, Nick

    Flannery, Martin

    Redmond, Martin

    Foot, Rt Hon Michael

    Rees, Rt Hon M. (Leeds S)

    Forrester, John

    Richardson, Ms Jo

    Foster, Derek

    Roberts, Allan (Bootle)

    Foulkes, George

    Roberts, Ernest (Hackney N)

    Fraser, J. (Norwood)

    Robertson, George

    Freeson, Rt Hon Reginald

    Robinson, G. (Coventry NW)

    Freud, Clement

    Rogers, Allan

    Garrett, W. E.

    Rooker, J. W.

    George, Bruce

    Ross, Ernest (Dundee W)

    Gilbert, Rt Hon Dr John

    Rowlands, Ted

    Godman, Dr Norman

    Sedgemore, Brian

    Golding, John

    Sheldon, Rt Hon R.

    Gould, Bryan

    Shields, Mrs Elizabeth

    Gourlay, Harry

    Shore, Rt Hon Peter

    Hamilton, James (M'well N)

    Short, Ms Clare (Ladywood)

    Hamilton, W. W. (Fife Central)

    Short, Mrs R. (W'hampt'n NE)

    Hardy, Peter

    Silkin, Rt Hon J.

    Heffer, Eric S.

    Skinner, Dennis

    Hogg, N. (C'nauld & Kilsyth)

    Smith, C.(lsl'ton S & F'bury)

    Holland, Stuart (Vauxhall)

    Smith, Rt Hon J. (M'ds E)

    Home Robertson, John

    Soley, Clive

    Howells, Geraint

    Spearing, Nigel

    Hoyle, Douglas

    Steel, Rt Hon David

    Hughes, Dr Mark (Durham)

    Stott, Roger

    Hughes, Robert (Aberdeen N)

    Strang, Gavin

    Hughes, Roy (Newport East)

    Straw, Jack

    Hughes, Sean (Knowsley S)

    Thomas, Dafydd (Merioneth)

    Hume, John

    Thomas, Dr R. (Carmarthen)

    Janner, Hon Greville

    Thompson, J. (Wansbeck)

    Jenkins, Rt Hon Roy (Hillh'd)

    Thome, Stan (Preston)

    John, Brynmor

    Tinn, James

    Jones, Barry (Alyn & Deeside)

    Torney, Tom

    Kennedy, Charles

    Wallace, James

    Kilroy-Silk, Robert

    Wardell, Gareth (Gower)

    Kirkwood, Archy

    Wareing, Robert

    Lambie, David

    Welsh, Michael

    Lead bitter, Ted

    White, James

    Leighton, Ronald

    Wigley, Dafydd

    Lewis, Terence (Worsley)

    Williams, Rt Hon A.

    Litherland, Robert

    Wilson, Gordon

    Lloyd, Tony (Stretford)

    Winnick, David

    Lofthouse, Geoffrey

    Woodall, Alec

    McCartney, Hugh

    Young, David (Bolton SE)

    McDonald, Dr Oonagh

    McGuire, Michael

    Tellers for the Ayes:

    McKay, Allen (Penistone)

    Mr. Ray Powell and Mr. Frank Haynes.

    McKelvey, William

    MacKenzie, Rt Hon Gregor

    131

    NOES

    Adley, Robert

    Fairbairn, Nicholas

    Aitken, Jonathan

    Fallon, Michael

    Alexander, Richard

    Farr, Sir John

    Alison, Rt Hon Michael

    Favell, Anthony

    Amess, David

    Fenner, Mrs Peggy

    Ancram, Michael

    Finsberg, Sir Geoffrey

    Arnold, Tom

    Fletcher, Alexander

    Ashby, David

    Fookes, Miss Janet

    Atkins, Rt Hon Sir H.

    Forman, Nigel

    Atkinson, David (B'm'th E)

    Forsyth, Michael (Stirling)

    Baker, Rt Hon K. (Mole Vall'y)

    Forth, Eric

    Baker, Nicholas (Dorset N)

    Fowler, Rt Hon Norman

    Baldry, Tony

    Fox, Marcus

    Banks, Robert (Harrogate)

    Franks, Cecil

    Batiste, Spencer

    Fraser, Peter (Angus East)

    Beaumont-Dark, Anthony

    Freeman, Roger

    Bendall, Vivian

    Fry, Peter

    Benyon, William

    Galley, Roy

    Best, Keith

    Gardiner, George (Reigate)

    Bevan, David Gilroy

    Gardner, Sir Edward (Fylde)

    Biffen, Rt Hon John

    Garel-Jones, Tristan

    Biggs-Davison, Sir John

    Gilmour, Rt Hon Sir Ian

    Blackburn, John

    Glyn, Dr Alan

    Blaker, Rt Hon Sir Peter

    Goodhart, Sir Philip

    Body, Sir Richard

    Goodlad, Alastair

    Bonsor, Sir Nicholas

    Gorst, John

    Bottomley, Peter

    Gow, Ian

    Bottomley, Mrs Virginia

    Gower, Sir Raymond

    Bowden, Gerald (Dulwich)

    Grant, Sir Anthony

    Boyson, Dr Rhodes

    Greenway, Harry

    Brandon-Bravo, Martin

    Gregory, Conal

    Brinton, Tim

    Griffiths, Peter (Portsm'th N)

    Brittan, Rt Hon Leon

    Grist, Ian

    Brooke, Hon Peter

    Ground, Patrick

    Browne, John

    Grylls, Michael

    Bruinvels, Peter

    Gummer, Rt Hon John S

    Bryan, Sir Paul

    Hamilton, Hon A. (Epsom)

    Buchanan-Smith, Rt Hon A.

    Hamilton, Neil (Tatton)

    Buck, Sir Antony

    Hampson, Dr Keith

    Budgen, Nick

    Hanley, Jeremy

    Burt, Alistair

    Hargreaves, Kenneth

    Butcher, John

    Harris, David

    Butler, Rt Hon Sir Adam

    Havers, Rt Hon Sir Michael

    Butterfill, John

    Hawkins, C. (High Peak)

    Carlisle, John (Luton N)

    Hawkins, Sir Paul (N'folk SW)

    Carlisle, Kenneth (Lincoln)

    Hawksley, Warren

    Carlisle, Rt Hon M. (W'ton S)

    Hayes, J.

    Carttiss, Michael

    Hayhoe, Rt Hon Barney

    Cash, William

    Heathcoat-Amory, David

    Channon, Rt Hon Paul

    Heddle, John

    Chapman, Sydney

    Hickmet, Richard

    Chope, Christopher

    Hicks, Robert

    Churchill, W. S.

    Higgins, Rt Hon Terence L.

    Clark, Dr Michael (Rochford)

    Hill, James

    Clark, Sir W. (Croydon S)

    Hind, Kenneth

    Clegg, Sir Walter

    Hirst, Michael

    Cockeram, Eric

    Hogg, Hon Douglas (Gr'th'm)

    Colvin, Michael

    Holland, Sir Philip (Gedling)

    Coombs, Simon

    Holt, Richard

    Cope, John

    Howard, Michael

    Cormack, Patrick

    Howarth, Alan (Stratf'd-on-A)

    Corrie, John

    Howell, Rt Hon D. (G'ldford)

    Couchman, James

    Howell, Ralph (Norfolk, N)

    Cranborne, Viscount

    Hubbard-Miles, Peter

    Critchley, Julian

    Hunt, David (Wirral W)

    Crouch, David

    Hunt, John (Ravensbourne)

    Currie, Mrs Edwina

    Hunter, Andrew

    Dickens, Geoffrey

    Hurd, Rt Hon Douglas

    Dicks, Terry

    Jackson, Robert

    Dorrell, Stephen

    Jessel, Toby

    Dover, Den

    Johnson Smith, Sir Geoffrey

    du Cann, Rt Hon Sir Edward

    Jones, Gwilym (Cardiff N)

    Durant, Tony

    Jones, Robert (Herts W)

    Dykes, Hugh

    Jopling, Rt Hon Michael

    Edwards, Rt Hon N. (P'broke)

    Joseph, Rt Hon Sir Keith

    Eggar, Tim

    Kershaw, Sir Anthony

    Emery, Sir Peter

    Key, Robert

    Evennett, David

    King, Roger (B'ham N'field)

    Eyre, Sir Reginald

    Knight, Greg (Derby N)

    132

    Knight, Dame Jill (Edgbaston)

    Powell, William (Corby)

    Knowles, Michael

    Powley, John

    Knox, David

    Prentice, Rt Hon Reg

    Lamont, Norman

    Price, Sir David

    Lang, Ian

    Proctor, K. Harvey

    Latham, Michael

    Pym, Rt Hon Francis

    Lawler, Geoffrey

    Raffan, Keith

    Lawrence, Ivan

    Raison, Rt Hon Timothy

    Lee, John (Pendle)

    Rathbone, Tim

    Lennox-Boyd, Hon Mark

    Rees, Rt Hon Peter (Dover)

    Lester, Jim

    Rhodes James, Robert

    Lewis, Sir Kenneth (Stamf'd)

    Ridley, Rt Hon Nicholas

    Lightbown, David

    Rippon, Rt Hon Geoffrey

    Lilley, Peter

    Roberts, Wyn (Conwy)

    Lloyd, Ian (Havant)

    Roe, Mrs Marion

    Lloyd, Peter (Fareham)

    Rossi, Sir Hugh

    Lord, Michael

    Rost, Peter

    Luce, Rt Hon Richard

    Rowe, Andrew

    Lyell, Nicholas

    Rumbold, Mrs Angela

    McCrindle, Robert

    Ryder, Richard

    McCurley, Mrs Anna

    Sackville, Hon Thomas

    Macfarlane, Neil

    Sainsbury, Hon Timothy

    MacGregor, Rt Hon John

    St. John-Stevas, Rt Hon N.

    MacKay, John (Argyll & Bute)

    Sayeed, Jonathan

    Maclean, David John

    Scott, Nicholas

    McLoughlin, Patrick

    Shaw, Giles (Pudsey)

    McNair-Wilson, M. (N'bury)

    Shaw, Sir Michael (Scarb')

    McNair-Wilson, P. (New F'st)

    Shelton, William (Streatham)

    McQuarrie, Albert

    Shepherd, Colin (Hereford)

    Madel, David

    Shepherd, Richard (Aldridge)

    Major, John

    Sims, Roger

    Malins, Humfrey

    Skeet, Sir Trevor

    Malone, Gerald

    Smith, Tim (Beaconsfield)

    Maples, John

    Soames, Hon Nicholas

    Marland, Paul

    Speed, Keith

    Marlow, Antony

    Speller, Tony

    Marshall, Michael (Arundel)

    Spencer, Derek

    Mates, Michael

    Spicer, Jim (Dorset W)

    Maude, Hon Francis

    Spicer, Michael (S Worcs)

    Mawhinney, Dr Brian

    Squire, Robin

    Maxwell-Hyslop, Robin

    Stanbrook, Ivor

    Mayhew, Sir Patrick

    Stanley, Rt Hon John

    Mellor, David

    Steen, Anthony

    Merchant, Piers

    Stern, Michael

    Miller, Hal (B'grove)

    Stevens, Lewis (Nuneaton)

    Mills, Iain (Meriden)

    Stewart, Allan (Eastwood)

    Miscampbell, Norman

    Stewart, Andrew (Sherwood)

    Mitchell, David (Hants NW)

    Stewart, Ian (Hertf'dshire N)

    Moate, Roger

    Stokes, John

    Monro, Sir Hector

    Stradling Thomas, Sir John

    Montgomery, Sir Fergus

    Sumberg, David

    Moore, Rt Hon John

    Taylor, John (Solihull)

    Morris, M. (N'hampton S)

    Taylor, Teddy (S'end E)

    Morrison, Hon C. (Devizes)

    Tebbit, Rt Hon Norman

    Morrison, Hon P. (Chester)

    Temple-Morris, Peter

    Moynihan, Hon C.

    Thomas, Rt Hon Peter

    Murphy, Christopher

    Thompson, Donald (Calder V)

    Neale, Gerrard

    Thompson, Patrick (N'ich N)

    Needham, Richard

    Thorne, Neil (llford S)

    Nelson, Anthony

    Thurnham, Peter

    Neubert, Michael

    Townend, John (Bridlington)

    Newton, Tony

    Townsend, Cyril D. (B'heath)

    Nicholls, Patrick

    Tracey, Richard

    Normanton, Tom

    Trippier, David

    Onslow, Cranley

    Trotter, Neville

    Oppenheim, Phillip

    Twinn, Dr Ian

    Oppenheim, Rt Hon Mrs S.

    van Straubenzee, Sir W.

    Osborn, Sir John

    Vaughan, Sir Gerard

    Ottaway, Richard

    Viggers, Peter

    Page, Sir John (Harrow W)

    Waddington, David

    Page, Richard (Herts SW)

    Wakeham, Rt Hon John

    Patten, Christopher (Bath)

    Waldegrave, Hon William

    Patten, J. (Oxf W & Abgdn)

    Walden, George

    Pattie, Geoffrey

    Walker, Rt Hon P. (W'cester)

    Pawsey, James

    Wall, Sir Patrick

    Peacock, Mrs Elizabeth

    Waller, Gary

    Percival, Rt Hon Sir Ian

    Ward, John

    Pollock, Alexander

    Wardle, C. (Bexhill)

    Porter, Barry

    Warren, Kenneth

    Portillo, Michael

    Watson, John

    133

    Watts, John

    Wolfson, Mark

    Wells, Bowen (Hertford)

    Wood, Timothy

    Wells, Sir John (Maidstone)

    Woodcock, Michael

    Wheeler, John

    Young, Sir George (Acton)

    Whitfield, John

    Younger, Rt Hon George

    Whitney, Raymond

    Wiggin, Jerry

    Tellers for the Noes:

    Wilkinson, John

    Mr. Carol Mather and Mr. Robert Boscawen.

    Winterton, Mrs Ann

    Winterton, Nicholas

    Question accordingly negatived.
    Mr. Deputy Speaker (Mr. Harold Walker): I am now required to put the Question on the outstanding Government amendment in this group, namely, amendment No. 62.

  Clause 21
    INCOME SUPPORT
    Amendment made: No. 62, in page 26, line 11, leave out subsection (4).—[Mr. Newton.]
  Clause 23

    RECOVERY OF EXPENDITURE ON BENEFIT FROM PERSON LIABLE FOR MAINTENANCE
    Mr. Major: I beg to move amendment No. 63, in page 29, line 32, leave out 'subsection' and insert 'subsections (2), (3) and
    Mr. Deputy Speaker: With this it will be convenient to consider Government amendments Nos. 64 to 67 and 135.
    Mr. Major: Amendment No. 63 and the related amendments in this particular grouping are consequential amendments stemming from the passage of the Law Reform (Parent and Child) (Scotland) Act 1986. The effect of the Scottish Act is to remove the legal differences between legitimate and illegitimate children without conferring parental rights automatically on the fathers of all illegitimate children. I do not propose to deal with the contents of that Act. I shall say no more than that these amendments amend the Bill to take account of changes in the law in Scotland which deal with illegitimacy.
    Amendment agreed to.
    Amendment made: No. 64, in page 29, line 35, at end insert—
    '(9) On an application under subsection (1) above a court in Scotland may make a finding as to the parentage of a child for the purpose of establishing whether a person is, for the purposes of this section and section 25 below, liable to maintain him.'. —[Mr. Newton.]

  Clause 24
    AFFILIATION ORDERS
    Amendment made: No. 65, in page 30, line 41, leave out subsection (6).—[Mr. Major.]
  Clause 25

    FAILURE TO MAINTAIN—GENERAL
    Amendments made: No. 66, in page 32, line 9, leave out from 'father' to '; and' in line 10.
    No. 67, in page 32, line 12, at end insert—
    134
    '(4A) Subsection (4) above does not apply to Scotland, and in the application of Subsection (3) above to Scotland any reference to children shall be construed as a reference to children whether or not their parents have ever been married to one another.'.—[Mr. Major.]

  Clause 27

    PAYMENT AND RECOVERY OF FAMILY CREDIT
    Mr. Robin Squire: I beg to move amendment No. 68, in page 34, line 4, leave from beginning to `by' in line 5.
    Mr. Deputy Speaker: With this, it will be convenient to consider the following amendments: No. 69, in page 34, line 4, after `employer', insert
    'at the request of the claimant and, if he is a member of a married or unmarried couple, the other member'.
    No. 70, in page 34, line 7. leave out paragraph (b).
    Mr. Squire: The effect of these amendments is to return to the existing principle relating to those on family income supplement, namely that support for low income families is paid by the DHSS to the stay-at-home parent, who is usually the mother.
    I have read about the Herculean labours of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) in Committee—
    Mr. Jeremy Corbyn: What about the rest of us?
    Mr. Squire: I take the hon. Gentleman's point. Other hon. Members also played their part. However, I am sure that the hon. Gentleman will readily concede that the labours of my hon. Friend the Member for Kensington of which I speak were indeed prodigious. They were well directed and my hon. Friend made his case in Committee. Unfortunately, he lost the amendment concerned by a single vote. I am grateful for the opportunity this evening further to put the case and I trust that this time we shall be more successful. I am urging the status quo upon my right hon. and hon. Friends. I can hardly think of a more Conservative principle than that.
    To summarise my three main bones of contention, they are these. First, I believe that the Government's proposals, as drafted, will place a considerable administrative burden upon employers in general, particularly small employers. Secondly, as a direct consequence, particularly for small employers, there will be a reduced take-up, because some employers will not wish to become involved in benefit matters with their employers. Thirdly, I believe it to be a retrograde step to cease payments to the mother or caring parent. If we had had our expected debate on child benefit earlier this evening, I should have expected my hon. Friend the Minister forcefully defend the right for benefit to be paid to the caring parent. There is a more than strong argument that family credit should be treated in exactly the same way.
    Let me illustrate first the effect on employers by quoting some of the many submissions which my right hon. Friend the Secretary of State has received. The Confederation of British Industry was clear. It said:
    "The CBI does not consider that it is essential or appropriate for the proposed family credit to be paid by employers. Members do not believe the 'pay packet' is the proper vehicle for social security benefits; it is more appropriate for social security benefits be paid separately to wages and identified as money paid by the Government … Under this proposal there would be no

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    great administrative saving to the Government as the DHSS would undertake assessment of entitlement. Indeed, there would therefore be a duplication of effort."
    The Institute of Directors said simply:
    "Our one concern with the proposal for family credit to be paid through the employee's pay packet is the additional administrative burden this may place on employers."
    The National Farmers Union said that it
    "runs entirely contrary to initiatives from other Government departments to reduce the legislative and administrative burden imposed on business by the Government. The proposed family credit scheme will especially affect employers with small workforces, such as farmers, who do not have the time or personnel to spare to devote to such administrative tasks."
    The National Federation of Self-Employed and Small Businesses said:
    "From the employer's point of view, the fact that women do not receive the benefit and that child benefit may decrease will do nothing to increase the harmony of employee employer relationships when employers are responsible for meeting part of the needs of the family. In view of the above, we therefore see the proposed family credit benefit as a retrograde step for both employees and employers alike … it will just complicate the employment relationship."
    Those are hardly ringing tones of endorsement.
    As it happens, large employers will probably be able to handle the scheme, although I question whether they should be required to do so. More interesting comments, dealing with the effectiveness of the DHSS, have come from the National Association of Citizens Advice Bureaux which said:
    "The proposal to involve both the DHSS and the employer in the payment of family credit will simply serve to exacerbate the very worst elements of the FIS scheme and of means-tested benefits generally. For example, employees will still be required to apply to the DHSS who will be responsible for the assessment of entitlement to family credit. The DHSS will then have to liaise with the employer over payment. The extra administration required will increase the burden on already overworked local DHSS office staff."
    There can be few hon. Members who do not recall the problems in recent years—housing benefit being one obvious example—where a benefit or payment has been required to be linked up to two or more points of contact prior to payment. It was an interesting time. That is the fairest way that I can put it. I dread that we may be setting up here a repeat performance and I urge my hon. Friends to think carefully before they support it.
    In a sense, an even worse comment came from the same quarter. The NACAB said:
    "The scheme is open to substantial abuse by some unscrupulous employers who may be unwilling to administer it."
    It gave an example from its Prescot office and I urge hon. Members to bear this in mind. That office approached a local shopkeeper to test his reactions to the family credit proposals and the following conversation was reported:
    "I said employers would be asked to pay family credit to those entitled although the DHSS would work out the amounts to be paid. If that was the case, he said, without any prompting from me, he would enquire how old the children were if he was taking on new staff, and favour either young girls or older women to avoid the problem as he felt he had quite enough paperwork already and had no desire to probe into his employees' private lives. I discussed with him the possibility of discrimination against people with school-age children being illegal and he gave me an inscrutable look and said it would be difficult to prove if you worded your advert fairly broadly".
    Thus, rather than helping to alleviate unemployment amongst people with family responsibilities, family credit could aggravate their employment problems.
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    The last quote on this subject is from the same source, the National Association of Citizens Advice Bureaux, and it touches on the question of the confidentiality of employers and employees. The association said:
    "The lack of confidentiality implied by the involvement of the employer in the payment of benefit, the additional strain which this would place on a sometimes tenuous employee/employer relationship, the stigma associated with being on benefit and everyone knowing about it, as well as a reluctance by loyal employees to place an additional burden on hard-pressed employers, will undoubtedly serve to limit the take up of the new family credit."
    I now turn to the matter of the cessation of the payment of benefit to the mother which, in most cases, would flow from the proposals. This breaks virtually a 10-year cross party agreement on the payment of benefit. I regret that break. It also breaks what I see as the natural link with child benefit that we have rightfully confirmed and which my right hon. Friend regularly affirms will remain payable to the mother. On this issue equally hostile comments have come in. The National Council of Women of Great Britain said:
    "We take great exception to the statement that a disincentive to work and self-help has been 'exacerbated by the way that child benefit and FIS are paid, normally to the wife, so that wage earners may not be fully aware of total income which their family is receiving.' We stress that in many cases it is the wives who are not aware of total income the family is receiving."
    The National Federation of Women's Institutes said:
    "The strongest feeling in this area was over the proposal to enclose family credit in the pay packet of the main wage-earner, usually the husband. A very large majority of members were adamant that family credit should be paid to the mother, either in her pay packet or through the Post Office if she is not working.
    This issue brought almost unanimous protest from our members. It is vital that family credit should be paid to the mother, as happens now with family income supplement."
    Finally, the National Association of Citizens Advice Bureaux said:
    "The payment of family credit through the wage packet to the chief breadwinner rather than by order book to the principal carer (usually the mother) has been greeted with shock by the bureaux. This move will mean the transfer of essential income from the woman to the man, and in many cases, the loss of benefit to the children. This will have dangerous consequences."
    Mr. Nicholas Winterton: I know that my hon. Friend has done a great deal of research into this and allied subjects. In order to present a balance in his argument, could he tell us if any body or organisation has made representations to him in support of the proposal contained in the Bill?
    Mr. Squire: My hon. Friend the Member for Macclesfield (Mr. Winterton) has asked a revealing question. I am led to believe that the one submission that unreservedly supports the Government on the subject is the Monday Club. That is a grouping which I can best describe as not always identified with a caring approach to social matters of this ilk. The important point that my hon. Friend rightly makes is that a wide range of organisations, many of which are traditionally seen as supporters or at least friendly to our party, are hostile to this proposal. Only last week nine of these organisations, including the CBI and the National Farmers Union and others consisting of what I would term our Government's traditional supporters, wrote to my right hon. Friend expressing their deep anxiety. Also last week, even the Scottish Conservative party conference passed a motion congratulating the Government on the social security proposals but asking them to reconsider those for the family credit scheme. From all sides comes the cry, "Think again." I move the

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    amendments in the fervent hope that the Government, my Government, will react to the red warning lights ahead before it is too late.
    11 pm
    Mr. Meacher: I support the hon. Member for Hornchurch (Mr. Squire), but I intend to widen the argument beyond the restrictive dimension of the impact on employers.
    I endorse the argument so strongly and effectively put in Committee on an amendment that was lost by only one vote. I pay tribute to the general work done in Committee by the hon. Member for Kensington (Sir B. Rhys Williams) and to his support for the case.
    First, there is a case against payment through the pay packet. That is a deviation from the principle that has been widely supported throughout the country and accepted within the Conservative party that benefits for children should be paid directly to the parent who has regular, day-to-day responsibility for looking after the child. In most cases where there are two-parent families, the change will mean payments being made to the father, which will undoubtedly lead to greater hidden porverty among children and mothers in families where the income is not shared fairly. We know that, regrettably, there are many such families. The change will also deprive women at home of an important source of independent income, as many surveys have repeatedly shown.
    The Government's proposal is also likely to reduce take-up, because, contrary to what the Government have said, workers do not like their employers being involved in claims for means-tested benefits. Ministers tried to contest that argument in Committee, but it was widely felt by other members of the Committee that they were not convincing when they said that confidentiality should not be a problem.
    Although employers will not receive personal information about their employees, they will inevitably know who is receiving the benefit and the amount that he is receiving. Even if the employees' fears are irrational, they are certainly real enough and could influence their willingness to claim.
    The change will also create an administrative burden for employers, especially small employers.
    Mr. Stern: Will the hon. Gentleman comment on a matter that was not raised in Committee? Every employer receives a PAYE code number for each employee and, following the simplification of PAYE in the past few years, it is not too difficult for an experienced employer to work out the make-up of any code number and ascertain, for example, how much maintenance an employee is paying his ex-wife.
    Mr. Meacher: That is a very Jesuitical argument. I do not think that many employers will spend time and energy going through code numbers to detect payments that might be made for maintenance of a spouse or for any other similar purpose. If the hon. Gentleman is trying to suggest that because that can be done for other purposes there will be no disadvantage if family credit is paid through the pay packet, his argument does not succeed.
    The CBI said in March that it could not see that any improvement in take-up was likely to result from the Govenment's proposals. We believe that they will certainly result in a lower take-up.
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    The change is not designed to cope with frequent job changes, which, unfortunately, are a characteristic of thelow-paid, or with frequently changing employment patterns. I am delighted that the hon. Member for Macclesfield (Mr. Winterton) asked about the responses to the Green Paper. An analysis undertaken by the Child Poverty Action Group revealed that only one organisation — the Monday Club — unequivocally supported the Government's proposal.
    Employers are, I think, universally against the proposal. The Association of Independent Businesses called it
    "an unwelcome development … Increasing the burden to an employer should not be the tool through which integration is achieved".
    The National Federation of Self-Employed and Small Businesses—an organisation dear to the hearts of many Conservative Members — has dubbed it madness and argued that
    "from the employer's point of view, the fact that women do not receive the benefit and that child benefit may decrease will do nothing to increase the harmony of employee-employer relationships when employers are responsible for meeting part of the needs of the family … We therefore see the proposed family credit benefit as a retrograde step for both employees and employers alike."
    I shall take up briefly some of the arguments advanced by Ministers in Committee. I do not know whether the Secretary of State will repeat them, but I want to make it clear that we have not so far found any of the Ministers' arguments convincing. First, they said that family credit should be compared with supplementary benefit and that no one would suggest that children's supplementary benefit rates should be paid to the mother. Family credit and child benefit are alternative ways of assisting working families with children, and that is the relevant comparison. Even if comparison is made with supplementary benefit, family credit, unlike supplementary benefit, is confined to families with children. Surely it is valid to suppose that all of it is intended to meet children's needs. That is the distinction and that is why the comparison with supplementary benefit is not correct.
    Secondly, Ministers have said that payment to the mother is patronising and denies that parenthood is a shared responsibility. The Opposition agree that parenthood is a shared responsibility, but the reality is still that primarily mothers take the main responsibility, and in two-parent families the family income supplement is essentially a benefit for families where the mother stays at home. It is no more patronising for the law to encourage payment to be made direct to the caring parent than for it to decree that payment must be made through the pay packet to help low-paid workers to be more aware of the total family income, which is the main motive behind the Government's move.
    Thirdly, Ministers have said that mothers who work 24 hours or more a week will be able to receive the credit. That is so, but it will affect only about one in 10 of mothers in two-parent families. It is precisely in those families where the mother does not have a wage of her own that direct payment of benefit to her is most important
    Fourthly, Ministers argued that the Government's proposal is a step on the road towards integration of the tax and benefit system. The Green Paper on the reform of personal taxation makes it clear that there is no intention of wider integration of the tax and benefit systems. But even if tax and benefit were integrated, that would not be

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    incompatible with direct payment of family credit to the mother. That argument was accepted by the Select Committee that considered tax credit and by the 1970 Conservative Government. Even if it were the intention eventually to pay family credit automatically through PAYE, there is no reason why payment through the pay packet should start now, with all the attendant disadvantages and none of the advantages of an integrated scheme. In so far as there will be an illusion of integration as family credit appears as an offset against national insurance and PAYE on the wage slip, it will reduce the likelihood of the money being earmarked for the children.
    I turn to the real motive behind the Government's proposal, to which Ministers referred obliquely when they said that it would increase low-paid workers' awareness of total family income and therefore help tackle the unemployment trap. That is what it is all about. It is not a DHSS motive at all: it is a Treasury motive which the Government seek to impose for Treasury reasons. The aim is to make people accept work for low wages. It is nothing to do with family poverty and nothing to do with a policy of remedying the difficulties of low-paid workers. It has everything to do with pushing down wages even lower. That is why we oppose the proposal, why I hope that Government Members will support the hon. Member for Hornchurch—I give him credit for his amendment—and why we reject this retrograde step.
    Mr. Andrew Rowe (Mid-Kent): Every time I think that I shall be persuaded by the Opposition, I have only to listen to the hon. Member for Oldham, West (Mr. Meacher) to find my faith in what I was about to say rudely shaken. However, I must say again that the small businesses and the people who do not have the time or cash to join the relevant organisations are distressed by the thought that yet another function formerly discharged by central bureaucracy is to be discharged at their own hand. It is ironic that the Government have rightly paraded as one of the great triumphs of policy the creation of hundreds of thousands of small companies in the last two years. Every 100 firms which began on the enterprise alliance created 99 new jobs.
    Companies of that size not only do not want the additional paper work which would result from such schemes, but their perception is tharge if they make a mistake in the administration of the scheme they will lay themselves open not only to inspection but to the law. There are quite enough perceived and real impediments to setting up a small business for that to be an additional disincentive.
    Many small firms are teetering on the brink each day. They might have to go in the end. They might employ two or three people and many in charge are at an age when it is not easy to adapt to change and they are frightened of additional burdens. They might decide to bring forward by three or four years the day when they put up the shutters with the consequent loss of employment which we cannot afford at this time.
    I am practical enough to know that it is improbable that at this late state the Government will be able to reverse all that they said in Committee, although I hope that they will. At least may we have an assurance that the Government will look at the matter carefully and, if events turn out as I fear, that they will reverse the policy?
    Mr. Kirkwood: I agree with the tone adopted by the hon. Member for Mid-Kent (Mr. Rowe) because I think that hon. Members should pause and consider exactly what is happening to small business men. In Committee the Government relied heavily on the argument that statutory sick pay was a useful model, as was statutory maternity pay. They argued that businesses could cope. with no difficulty.
    In my experience, that is wrong. My constituency contains a high proportion of small businesses. There is a fear and misgiving about the administrative burden that the proposal will impose upon their daily lives. Government Members should think carefully before they support the Government on this matter.
    I have some sympathy with some of the family credit changes in other directions, but is irrelevant and unneccessary to pay it in the proposed fashion. It is not beyond the wit of man to retain the Government's family credit scheme—if that is what they are minded to do— without this method of payment. That point should be borne in mind by hon. Members opposite when they vote. They are inflicting agony and additional adminstrative burdens on many traditional supporters of the Conservative party, but they are not necessarily striking at the Government's main intention to introduce a family credit system.
    My additional fear about the system that the Government propose is that it will necessarily, de facto and in principle, affect the take-up provisions. We were told by the Government that there is a 50 per cent. take-up of family income supplement. Hon. Members on both sides of the House agree that the level of take-up is too low. The Government estimate that family credit will have a take-up rate of 60 per cent. I think that that figure is still too low. The figure of 60 per cent. is an optimistic one.
    I endorse what the hon. Member for Oldham, West (Mr. Meacher) has said thus far about the problems of the employee-employer relationship—an employee and an employer discussing intimately the details of family credit —and confidentiality. In my part of the world—I do not know about other Members' areas; the position may be different in their part of the world—it is a anathema for many employees to discuss such details with their employer. Because of their pride they would rather do without. That may be wrong, but it is a fact. We are not talking about substantial sums of money. Often, family credit payments will be only £2·50 or thereabouts.
    I ask hon. Members opposite to put themselves in the position of an employee having to approach his employer every 26 weeks and saying, "My assessment unit is so many people and my income is so much," and so on. I do not believe for one moment that take-up will not be affected. History will prove either me or the Government right. The Government will be lucky to achieve their target of 60 per cent. If they do not achieve it, the whole basis of their argument about family credit will be vitiated. Any benefit that the Government wish to accrue from the proposal will go straight out of the window. That is an important argument.
    I served on the Standing Committee. I was deeply impressed by the number of organisations which responded to the proposal. The organisations, which included the Salvation Army where not those normally associated with political lobbying. The organisations

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    represented an unholy coalition of all sorts of people— from political lobbyists down, or up, depending on how one looks at it.
    If the Conservative party intends to go down that road in the face of such opposition from people who are not necessarily involved in the day-to-day political process, it is making a sad mistake. For those reasons, I think that the Government should be forced to change their position— not that it will result in the Government losing the proposal, because that is not necessary. The Government could change the detail of implementing the proposal in a way that would satisfy everybody by accepting the amendment moved by the hon. Member for Hornchurch (Mr. Squire).
    Mrs. Kellett-BowmanI am very happy to support my hon. Friend the Member for Hornchurch (Mr. Squire).
    I am the more uneasy about the proposals on family credit, because we were prevented earlier this evening from discussing the proposals for child benefit. We cannot therefore be sure that child benefit will not shrink. If it does, it will be all the more important for family credit to be paid to the mother or normally caring parent. The overwhelming majority — about 90 per cent. — of families that would receive the benefit depend on the single income of the father.
    The Lancashire Federation of Women's Institute— down-to-earth women, sensible and exceedingly well informed—say firmly:
    "at best, giving family credit to the father will be an inconvenience for mothers; at worst, it may mean she will not receive the money at all."
    It would be tragic if women were deprived of an independent source of income.
    Some years ago, when discussing a rather different system of taxation, we were astounded at the number of women in all walks of life, from professors' wives to the lowest income families, who had no independent income except family allowance, as it then was. It would be deeply regrettable if we degenerated to that again. I therefore hope that the House will consider carefully and support the amendment.
    Mrs. Renée Short: The House will know that the Social Services Select Committee examined the Green Paper, the White Paper and then the Bill when it was published, and that we published our report in time for the work of the Standing Committee. It is a matter of great regret that so little attention was apparently paid to our recommendations.
    The Select Committee supported an integrated system of tax and child credits, but said that there was no reason why family credit, which replaces family income supplement for low-income families, should not be paid direct to the caring parent. We also drew attention to the complexities inherent in payment through the employer. An employee might change jobs, be laid off because of a shortage of work, become redundant or be on strike. All of that was discussed, as was the potential effect on the level of wages of paying family credit through the employer.
    I was pleased to see the hon. Member for Kensington (Sir B. Rhys Williams) propose an amendment in Committee to enable family credit to be paid direct to the person normally entitled to claim child benefit. That really means preserving the status quo. The amendment was defeated. I regret that that defeat was brought about by the
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    defection of a member of the Standing Committee who is a member of the Select Committee and by a member of the Standing Committee who is a former member of the Select Committee. The Opposition would have carried the amendment if those two hon. Members who, needless to say they are Conservative Members, had remained constant and true to the decisions of the Select Committee, to which their names were attached.
    In Standing Committee the Minister gave no indication that the Government would change their proposal to pay family credit through employers, but I understand that he gave an undertaking to look at the details, although I do not know how far that will take us. The Government's present proposal is deplorable. It is against women, against mothers and dismally retrograde in every respect. I hope that the House will throw it out and see that the Select Committee's proposal is supported.
    Mr. Winterton: I am grateful to the hon. Lady, who is a distinguished member of the Social Services Select Committee, of which I also happen to be a member, for giving way. Perhaps she should emphasise the fact that the thoughts, considerations, recommendations and conclusions of the Select Committee were representative of all parties in the House. Perhaps she agrees that it would be better if Governments allowed Select Committees to put their conclusions and recommendations on major legislation such as this to the Government before they reach fixed conclusions which are widely opposed throughout the country, even by people who traditionally support the Conservative party.
    Mrs. Short: I agree with the distinguished co-member of the Committee. All the members supported the Select Committee's recommendations. The House surely knows that there is a majority of Conservative Members on the Committee, and several parties are represented, but we were unanimous.
    It is a matter of great regret that the Secretary of State and Ministers do not pay more attention to united and unanimous reports from Select Committees, especially when, as I say, there is a majority of Conservative Members on the Committee. It is nonsense that so much time and effort are wasted in this way, when Secretaries of State could make their jobs much easier if they would follow our proposals.
    Mr. Keith Best (Ynys Môn): It sadly looks as though my right hon. Friend the Secretary of State will be standing all alone against the barrage of opposition from both sides of the House. I wondered whether I should rise to support him, but then I thought again. I thought again because, although I am always much persuaded by what my right hon. Friend has to say—I await with eager anticipation the words that I know that he will utter from the Dispatch Box in order to turn the barrage of dissension into a victory —I looked at the degree of opposition to this measure. My grave concern is that the good idea of family credit is likely to be hoisted on the petard of that opposition.
    I can live with the opposition of the catholic bishop's conference. That does not bother me very much. I can even live with the opposition of the Commission for Racial Equality. I can certainly live with the opposition of the Equal Opportunities Commission. I find it a little more difficult to live with the opposition of the National Association of Citizens Advice Bureaux. One may say that that is a constituency point because I have a citizens advice

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    bureau in my constituency. I wonder how many hon. Member do not have such a bureau in their constituency. I can live with the opposition of the Church of Scotland as that does not apply to me particularly. The Confederation of British Industry is not always regarded as the staunchest supporter of the Government in a somewhat confused way so perhaps one can discount that and I can certainly live with the opposition of the Institute of Directors.
    However, I am in grave difficulty with the National Farmers Union because of all the farmers in my constituency and I am in grave difficulty with the opposition of the National Federation of Self-employed and Small Businesses Ltd and with the National Federation of Women's Institutes. [Interruption.] My hon. Friend the Member for Harlow (Mr. Hayes) obviously has knowledge of that institution. Finally, I speak as a member of the Bar. How could I possibly rail against the opposition of the Law Society, my very bread and butter in an alternative profession?
    I am troubled by the sheer administrative burden that this is likely to bring about more than by all the opposition and all the points that have validly been made by hon. Members from both sides of the House. I shall put my right hon. Friend the Secretary of State out of his misery soon because I shall be sitting down so that he can rise. I hope that he will address his mind to that administrative burden when he comes to the Dispatch Box.
    To have to employ a lot of extra civil servants to check whether the DHSS is assessing the matter correctly, to pass it on to the employers, and then check on the employers to see whether they are making the right calculations and see that the recalcitrant employers are brought to book, apart from all the burdens that are being placed on the employers, seems to be contrary to the concept that the Government have courageously entertained throughout the past seven years. That concept is to cut the administrative burden, particularly in areas of social welfare, to ensure that the benefits go to the recipient rather than being spent on the administration. The proposal will create a bureaucratic mess of unparalleled proportions, by creating two bodies responsible for the administration of one benefit rather than one.
    I await my right hon. Friend the Secretary of State rising at the Dispatch Box and persuading me otherwise. He is a most persuasive speaker, but in the event of him not being able to do so, the general opposition of the bodies that I have mentioned, together with the views expressed by hon. Members on both sides of the House, must be persuasive in a way that defies all opposition.
    11.30 pm
    Mr. Corbyn: It is surprising to find Conservative Members working themselves up into a lather in defence of small businesses, when they are not prepared to criticise the fundamental nature of the family credit proposals and the poverty that they will bring with them. They seem to be trying to cash in on a bit of compassion on the issue without being prepared to attack the basis of the proposals. My hon. Friend the Member for Oldham, West (Mr. Meacher) was correct when he said that the proposals are, in effect, masking low wages. That is the issue that should be addressed.
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    It is important that the amendment be accepted, because if the proposals go through in their present form, there will be interference by employers in the social benefits that their employees get, which is serious. Much more serious is the proposal that the benefit should in most cases be paid to the man who is likely to be earning the money. Therefore, it is unlikely to get to the woman, and it is even less likely to get to the children at the end of the day—[Interruption.] If the hon. Member for Gillingham (Mr. Couchman) wishes to speak, I am sure that he has a tongue in his head. There is no need to mumble. It is clear that the losers will be the children.
    Dame Jill Knight: I want to press the hon. Gentleman on one point. Does he really think that it is unlikely that the fathers would pass on the money? I can imagine that it would happen in some cases, but I am concerned that he feels that it is unlikely.
    Mr. Corbyn: All the evidence in the past has been that when benefit is paid to the male parent, it is not passed on through the family network. I am saying not that all those men are particularly evil or greedy, but that all the other pressures of paying rent, rates and other bills will tend to take first place, and the children will lose out at the end of the day. If the hon. Lady looks at past evidence and representations that have been made by a wide range of organisations, she will be forced to agree that the Secretary of State's proposals in that respect are extremely bad.
    There is a further area that I hope the Secretary of State will be prepared to consider, because he did not give a satisfactory answer in Committee. I refer to the administration of the system. As has been said, many small companies strongly object to having this piece of administration thrust upon them. I object because it is wrong that it should be done through the employer; it should be done by the Secretary of State. I object also because the sheer inefficiency of many small companies will mean that benefit is unlikely to be paid.
    There is another serious aspect. Small businesses, particularly in industries such as the clothing industry, go out of business with monotonous regularity in areas such as mine. If the business goes bust on a Friday afternoon, and no wages can be paid to the workers, what happens to the family credit, which may not be paid until several weeks afterwards, when all the liquidation has been sorted out? That might seem a small point to some Conservative Members, but it is very important to people in my constituency. I hope that the Secretary of State will understand that the massive opposition to this proposal comes from those who are concerned about the cost of administration in this rather cock-eyed way and from those who are more fundamentally concerned that the benefit will not get through.
    When the benefits were originally paid via women, to ensure that they reached the children, that was an important step forward. We are turning our backs on the past 20 years of social service legislation with this proposal, as with so much else in this particularly nasty Bill.
    Mr. Geoffrey Dickens: I am sure that every sensible and reasonable person outside the House of Commons would believe that the best way of getting a benefit that is intended to help children is through the mother. Whether we like it or not, the majority of fathers would try to ensure that the benefit

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    reached the children. However, there are some families —for example, fathers in disadvantaged areas—where the father's self-discipline is modest. Often, this has to be said and we should not mince words about this, that money would go to the betting office or to the pub and would not get to the mother or the child. We must think very deeply about the operation of the benefit.
    We cannot dismiss the fact that we are putting a further burden on small businesses. I belong to a party that has boasted, year in, year out, that it would take the burdens off businesses, that it would water down the paper work and make it easier for people to run a business without having the Government on their backs. However, we are here again proposing to put a further burden on business which will prevent people from earning a living and from giving other people a living within their companies. The amendment proposes another burden that businesses could do without.
    I am sure that hon. Members have not received such large post bags from companies and the confederation of British industry, which is so opposed to this form of legislation. I do not disagree with the reform of the welfare state system. We would all agree that the system should no longer be universal. We should make it selective so that the benefit goes to those in most need. That is right and correct and all hon. Members would support that.
    Mr. Deputy Speaker (Mr. Harold Walker): I hope that the hon. Gentleman will address himself to the amendment. He is going very wide of it in his speech.
    Mr. Dickens: If Beveridge had been sitting in the Chamber tonight, he would have agreed with my comments.
    In conclusion, if we want to benefit the children, we should ensure that the money goes to the mother. By and large, the children will have more of a sporting chance of receiving that benefit if it goes through the mother than if it were paid through the father's pay packet where he has to tell the company all his business to achieve the benefit and where the company must do the paper work to ensure that the benefit at least starts from the right direction. That is my view of the matter.
    Mr. Bill Michie: I, too, shall be brief, because this is a controversial clause and amendment in a controversial Bill, which we have been fighting in Committee almost day and night.
    Many Conservative Back Bench Members have spoken about small business men, and I notice that we are talking about the effects not on small businesses but on small business men. I understand that there may be problems of administration and additional cost, but what about the families? We are interested in the problems that the provison is likely to cause families. We are not necessarily criticising men and saying that they are irresponsible. Obviously, problems are likely to arise because of the pressures put on them.
    The most crucial point is the transfer of child benefit from women to men. The child benefit scheme will not compensate for the lack of school meals, and charges for school meals vary greatly. That will cause problems. If I am a good lad today, Mr. Deputy Speaker, I shall no doubt be allowed to speak about school meals tomorrow.
    Some individual employers but not all, are likely to pay low wages and top them up with benefits because of inducements. It will be difficult for some employees to
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    work out whether their wages are as good as they should be compared with the national average because they must take those benefits into consideration. We need clarification. What happens to employees with two part-time jobs, to those who are laid off, to those whose marriages break up, and to those who have a succession of jobs? We need proper answers to those questions.
    It has been said that the various circumstances which I have just described are a nightmare for administration, but we are worried that they will be a nightmare for many British families.
    Mr. Kennedy: I support the amendment proposed by the hon. Member for Hornchurch (Mr. Squire).
    It is an anomaly for the Government to argue the need to lift the burden from small businesses while introducing a move such as this with all its consequences of bureaucracy, paperwork, overheads and time for small businesses. That must be obvious to the Secretary of State.
    Both sides of the House have pointed to the sense of ensuring that payments earmarked for children go specifically to the caring parent, which nine times of out 10 is the mother. That is surely overwhelmingly self evident and something which the Government should support.
    Finally, the hon. Gentleman said that the only representation he was aware of in support of the Government's proposal was from the Monday Club, and that at the weekend the Scottish Tory party, a soon to be extinct species, had said in a debate on the social security reviews that while it welcomed the reviews, this was one point on which it would agree wih the hon. Gentleman.
    Surely at this late hour Conservative Members can follow the advice of the Leader of the House and vote for a balanced ticket by supporting the hon. Gentleman.
    Mr. John Browne: I rise briefly to support the amendment in the name of my hon. Friend the Member for Hornchurch (Mr. Squire).
    I understood a fundamental principle of Conservative thought on social security to be that child benefit should be paid directly to the parent with day-to-day care of the child, who more often than not is the mother. The proposal will mean that in two parent families, in particular, the payment will more often be paid to the father. That will result in considerable hidden poverty for children and mothers in families where the income is not shared fairly.
    The other main reason why I object to the proposal relates to the additional administrative burden on employers. As chairman of the Conservative small business Back Bench committee, I am appalled at the proposal. I simply cannot support it. It is an administrative burden, which is a disincentive to the small business in particular. A recent study showed that the largest disincentive to new small businesses is not the lack of capital, or taxation but administrative burdens, particularly through Government legislation. The proposed change would be a classic example. Furthermore, it is a disincentive not just to smaller businesses but to all employers, and so a disincentive to employment in general.
    I support my right hon. Friend the Secretary of State in nearly all his main aims in social security and its revamping. I beg him to make a commitment that he will re-examine the mechanics of this proposed arrangement.
    11.45 pm
    Ms. Jo Richardson: The one thing that the Government did not do in our debates in Committee, and have not done throughout the argument that has been going on since the Green and White Papers were produced, is to say why payments should be made through the pay packet instead of the way that they are paid now. The Government's arguments in Committee focused more on countering our case, and that of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), than on making a case for the change. This is mystifying.
    On Second Reading the Minister said that it was an astonishing fact that so many organisations were against the change. It is not astonishing. Everybody is against it, except the Secretary of State, but he will not explain why he is taking away this bit of support for women in the family and giving it to the men. It is all the more mystifying because the Government have so frequently confirmed that they will not change the system of paying child benefit, and that they support and praise the system of payment that puts money into the pocket of the mother rather than of the father. If it is good enough for child benefit, why is it not good enough for family income?
    Most of the speeches that have been made tonight have concentrated on the disadvantages and the worries that will come to employers, and we all accept that that will happen. There is a missing element, and we have to point to the fact that, let alone the woman as the mother, the woman as a woman should be regarded as a person in her own right. One of the points about her collecting the family credit is that not only will she direct it to where it is of most use in the family, but she will have a bit of financial independence by helping to redistribute the income within the family.
    Several hon. Members have referred to the problem for far too many women who not only do not get the money for the housekeeping from their husbands, but very often do not know what the husband earns. If all the family credit goes through the pay packet, women will be in a much worse position. My hon. Friend the Member for Sheffield, Heeley (Mr. Michie) said that it would be a nightmare, and that sums up what will happen to women if this proposal goes through. I urge Conservative right hon. and hon. Members—I know that I have no need to do that to those on this side of the House—to support the amendment.
    Mr. Fowler: This has been an important debate, and I congratulate my hon. Friend the Member for Hornchurch (Mr. Squire) on the way in which he moved the amendment. I hope that what I say will meet his concerns and those expressed by my hon. Friends the Members for Mid-Kent (Mr. Rowe), for Lancaster (Mrs. Kellett-Bowman), for Littleborough and Saddleworth (Mr. Dickens) and for Winchester (Mr. Browne) and by the hon. Members for Ross, Cromarty and Skye (Mr. Kennedy) and for Barking (Ms. Richardson).
    Mr. Best: What about Ynys Môn?
    Mr. Fowler: And my hon. Friend the Member for Ynys Môn (Mr. Best). My diffidence about the pronunciation was the only reason for leaving it out.
    I begin by mentioning the background to the family credit proposals and highlighting one point that has not been made in the debate — the important areas of
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    agreement that exist. There is widespread agreement with the Government's central proposition that we should direct more help to low-income families with children. That analysis of need was set out in the Green Paper. The Green Paper proposals, which have been carried through into the Bill, were to meet the evidence of need through several strategies—by the continuation of child benefit, by a new family premium in income support and by a new expanded and improved family credit.
    There are three points of agreement. The first is that greater priority should be given to providing help for low-income families. Family credit will provide extra help. We estimate that it will reach about twice as many families as did family income supplement. More than 400,000 families will benefit, compared with about 200,000 now, and expenditure will, broadly, double.
    Secondly, family credit will significantly help with another of the Government's objectives, which is to improve the poverty and unemployment traps. By calculating the entitlement on the basis of net income after tax and national insurance, we shall effectively end the absurd position where an increase in gross earnings can leave a family worse off overall. That cannot be justified. By closer structural alignment with income support, it tackles the unemployment trap and provides better incentives to take work. Those central objectives have been widely welcomed, and the Social Security Advisory Committee, in its response to the Green Paper, concluded:
    "We agree with the Government's decision to concentrate extra help for children on low-income families, and in principle we welcome the attempt to expand the assistance given to people in work and to eliminate the worst of the poverty trap."
    Thirdly, there is widespread agreement on the inadequacies of the family income supplement. It was introduced about 15 years ago as a temporary stop-gap measure. It has served that purpose, and most people now agree that it should be replaced. The drawbacks of FIS are well established. There is poor take-up, its structure is not aligned with supplementary benefit, and it is assessed on gross rather than net income, which has created the more absurd examples of the poverty trap where families can be left worse off as a result of increased effort and higher pay.
    Those are some of the deficiencies of the present system. Our broad aims and objectives have been widely welcomed. The disagreement that has been expressed in this debate relates to the mechanism of how we achieve those goals. My basic point is that this debate has been about the mechanism of achieving the goals. There is no dispute about the fact that we wish to achieve those goals.
    One advantage that we wish to establish in proposing that family credit should be paid with wages is a link between the credit and work. Sometimes, it is too easy for someone considering taking a job, perhaps at relatively low wages, to consider simply the wages and the deductions from pay for tax and contributions.
    Another advantage is that payment with wages represents a step towards a closer alignment of the tax and benefit systems, a step which I am urged constantly to take. One of the absurdities of family income supplement is that members of one and the same family can be paying tax and other contributions to the state with one hand, while receiving income-related help from the state with the other. By paying the credit with wages, this unnecessary roundabout can be ended. We estimate that in practice about 60 per cent. of family credit recipients would simply

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    have their tax and contributions offset, in whole or in part. In about 40 per cent. of cases they would receive a net payment.
    Two further criticisms have been levelled against this mechanism during the debate: that payment with wages means payment to the man, and that it will mean additional work for employers and that will be unacceptable. I recognise those concerns and the depth of feeling, and I have no desire to minimise or to belittle them. However, I should remind the House that, even with payment with wages, many of the recipients of family credit will be women. About a quarter of the total will be working wives in two-parent families. In most cases, however, the partner in full-time work will be the husband. I appreciate the concern about whether he will hand over sufficient of the extra income to provide for the child. My personal view is the same as that of the hon. Member for Oldham, West (Mr. Meacher), that parenthood is a joint responsibility and, in all but exceptional cases, a joint activity. Mothers will continue to receive child benefit. I repeat that point, because sometimes it has been misunderstood.
    The Government will do everything that they can to avoid placing unnecessary burdens on employers, and we shall seek to change the system. Nevertheless, I appreciate the worries and the anxieties about how family credit should be paid. I take them even more seriously when they are expressed by my hon. Friend the Member for Hornchurch, who supports the family credit system. Therefore, I am prepared to reconsider the mechanism by which family credit is paid. I propose to invite to new discussions a number of organisations which are closely affected. They include the CBI, the National Federation of Self Employed and Small Businesses, the Equal Opportunities Commission and the Women's National Commission. My aim will be to examine whether we can agree a way forward. The discussions will take place speedily, so that time for amendment can be found in another place.
    I am prepared to undertake to reconsider this question. I do so on the basis that the Government stand by the concept of giving extra help to the children of families on low incomes. That is the essential purpose of family credit. More money will be spent, and more families will
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    be helped. That is essential, and I believe that it has the support of the House. I hope that my hon. Friend will accept my undertakings.
    Mr. Squire: It would be churlish of me not to rise to thank my right hon. Friend for his comments and for the way in which he made them. I think that he will have carried with him virtually every right hon. and hon. Member. I was prepared to put the matter to a vote, but in the circumstances and in the interests of arriving at the right answer I believe that I ought to seek the leave of the House to withdraw the amendment.
    Mr. Meacher: Before we complete the debate, will the Secretary of State clarify what he meant when he said that he proposed to review the matter? Will he review the fundamental point that we are all making, that family credit should be paid to the mother, or will he review whether it should be paid through the wage packet but in such a way as not to cause an administrative burden on the employer? Is it the first or the second?
    Mr. Fowler: I am prepared to examine from the beginning the mechanism whereby family credit is paid. I understand and appreciate the point that it should be paid to the mother. There is also the point about whether there should be a choice, as the hon. Gentleman's amendment states, or whether no payment should be allowed through the wage packet at all—
    It being Twelve midnight, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [15 April] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
    Amendment negatived.
    Amendment made: No. 71, in page 35, line 22, at end insert
    'and "employer", in relation to any person, means a person who under section 4 of the Social Security Act 1975 (liability to pay Class 1 contributions) is, or but for subsection (2)(b) of that section (exclusion of liability where earnings are below lower earnings limit) would be, liable to pay secondary Class 1 contributions in relation to any earnings (within the meaning of that Act) of the first-mentioned person'. — [Mr. Fowler.]
    Further consideration of the Bill adjourned. — [Mr. Boscawen.]
    Bill, as amended (in the Standing Committee), to be further considered this day.

  PETITIONS

    Social Security Reform
    12.1 am
    Mr. Tom Pendry: I beg to ask leave formally to present a petition on behalf of some 1,000 people in my constituency who live on just one housing estate, Hattersley, in the borough of Tameside in Greater Manchester. They are profoundly disturbed at the prospect of changes in the social benefit scheme as a result of proposed legislation currently before the House of Commons.
    The petition showeth
    That legislation based on the "Reform of Social Security— Programme for Action" White Paper would be extremely detrimental to the residents of the United Kingdom who are in receipt of Social Security benefits. Wherefore your petitioners pray that your Honourable House do not pass legislation arising out of the "Reform of Social Security" White Paper. And your petitioners, as in duty bound, will ever pray etc.
    To lie upon the Table.
    12.2 am
    Mr. Michael Meacher: I beg to present a petition which has been collected in my constituency of Oldham which includes 2,500 signatures. I also have a further batch of petitions which have been collected from all other parts of the country, totalling about 7,500 signatures, making 10,000 in all, from people who are equally concerned about the Social Security Bill. I repeat their words;
    Wherefore your petitioners pray that your Honourable House do not pass legislation arising out of the "Reform of Social Security" White Paper.
    The grounds that the petitioners give for the collection of the signatures and the protest that it represents are that legislation based on the reform of the social security "Programme for Action" White Paper would be extremely detrimental to the residents of the United Kingdom who are in receipt of social security benefit. I would add that that includes those who are in receipt of pensions, housing benefit and child benefit, as well as supplementary benefit.
    To lie upon the Table.

  Sports Clubs (Rates)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
  12.3 am
  Mr. Michael Forsyth: I wish to raise the important matter of the burden of rates on Scottish amateur sports clubs. I want to begin by expressing my gratitude to Alex Kilgour of the Kirkcaldy rugby club, Alan Grosset, the chairman of the Scottish Sports Association, and Bill Mann of Glasgow Academicals and Western Baths. They have been tireless in providing help and assistance to me and I pay tribute to the way in which they have campaigned in the interests of small clubs throughout Scotland. Scottish clubs are being suffocated by the rating system. The burden on them exceeds £5 million and to put that in context, it compares with the total Government subvention to the Scottish Sports Council of £4·3 million. These rates are a tax on the development of the sporting potential and the recreation of young men and women in Scotland.
  Clubs north of the border are disproportionately hit because of the valuation methods being used. It has been estimated that clubs in Scotland pay six to seven times as much as those in England and Wales. Perhaps I could give some examples. Kirkcaldy rugby club, a small club in the middle of a council park, is paying rates of £5,500 per annum. Bristol rugby club is England's largest with a ground capacity of 15,000 and it pays £4,500. Northampton and Leicester, which are major clubs by any standard, are paying £2,651 and £3,500 respectively. A comparable club to Kirkcaldy would be Keighley, and it pays £640 less a 50 per cent. rebate granted by the local authority.
  It is worth noting that in England clubs enjoy derating regardless of whether they have licensed premises, and local authorities seem to take a more enlightened view. Kirkcaldy pays more in rates in one month than Keighley pays in a year. To put it further into context, Watford football club in the English first division pays only £1,000 more than Kirkcaldy amateur rugby club. The Perthshire cricket club is also in a council park and pays £18,500 per annum in rates. Lords cricket ground, the headquarters of the game, has a huge pavilion, a dining complex, an indoor cricket school, squash courts, a museum and seating for 25,000 spectators. It is located in a 15-acre site in central London and pays £25,700, a mere 30 per cent. more than Perthshire cricket club.
  The Western Baths club in Glasgow is paying £19,500, yet the RAC in Pall Mall is 10 times as large and pays £35,000. Glasgow Academicals has three rugby pitches and pays £16,500. London Scottish in Richmond has seven pitches and premises twice the size of Glasgow Academicals and pays only £5,900 in rates. I am not speaking just about the well-known activities. Ardrossan indoor bowling club pays £16,500 while Darlington indoor bowling club which is approximately the same size pays £5,500. Abercorn tennis club in Edinburgh pays £6,500 and has five tennis courts, three squash courts and a pavilion. Winchester tennis and squash club has 19 tennis courts, eight squash courts and a pavilion and pays £3,000.
  According to some sources in Scotland, there is little rental evidence and assessors are inclined to use the contractors' principle to determine valuations. An estimate is made of the capital value of property and a percentage

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  is taken to arrive at a rental value. The effect of the application of this principle in Scotland is devastating. In England, some weight is attached to revenue factors. For example, infrequent use because sport by its very nature is a part time activity, the effect of climate on use and the number of people who derive benefit from the facilities are all taken into account. In Scotland, no account is taken of these factors, nor is account taken of how the capital is raised, whether by fund raising, grants or donations. People making donations to sport do not look for a return on their capital, yet the assessors look at the assets with the view that they do.
  So far I have quoted rates payable and no doubt my hon. Friend will point to the responsibility of high-spending Labour councils. As he knows, I share his view on that matter, but that cannot account for clubs having to pay five to six times as much as their counterparts in the south. Even if rateable values are considered and an adjustment made for the absence of a revaluation in England, the injustice is manifest. Troon tennis club has six courts and a rateable value of £2,250. Grove tennis club in Essex with five courts has a rateable value of £95. The indoor bowling club at Lanark has a rateable value of £22,500. The indoor bowling club in Carlisle, which is similar and which was built at the same time, has a rateable value of £2,000. Those examples show variations of 10 times and 20 times, where variations of four times might be expected as a result of the fact that there has been no revaluation in England.
  I hope that my hon. Friend the Minister will accept that the method of revaluation in Scotland has produced rateable values that are unfair, unrealistic and wholly out of line with the rest of the United Kingdom.
  Mr. Dennis Canavan: The hon. Member makes a good case in relation to the grotesque inequalities between the rating valuation of sports grounds in Scotland and in England. No one can deny that fact, and the injustice has been perpetuated and possibly reinforced by this wicked Tory Government, but will the hon. Gentleman at least have the decency to congratulate some local authorities, including his own — Stirling district council—on using their income from the rating system to try to improve sports facilities in their areas? For example, Stirling council has supported the excellent Stirling district sports council and a range of sport facilities in the district.
  Mr. Forsyth: I am grateful to the hon. Gentleman. I should emphasise that there are no party divisions in this matter, which enjoys support across the board. I shall come on to the record of Central region.
  My hon. Friend the Minister recognised the unfair nature of the methods of valuation in Scotland in section 19 of the Rating and Valuation (Amendment) (Scotland) Act 1984, but, as he must know, the weight of opinion expressed by the Assessors Association, the Sports Council and professional advisers is that section 19 is ineffective. While my hon. Friend adopts a wait-and-see policy, clubs are reaching onerous settlements with valuers, making it harder for others to use section 19 which restricts the use of English comparators to circumstances where there is no comparative evidence in Scotland or where such evidence is not adequate — whatever that means.
  While clubs run by volunteers and their professional advisers struggle to find meaningful comparisons with
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  England and Wales, taking into account the effects of revaluations, they continue to suffer serious financial problems.
  Wade Academy FP had loans from the Scottish rugby football union rescheduled. Its clubhouse consists of two cottages knocked together and its rates are £2,500. Strathmore rugby club has laid off staff and has riot yet paid its rates. Many others are in the same boat, with staff being laid off and the energies of leaders being diverted to fund-raising rather than training our youngsters. Be in no doubt, Mr. Deputy Speaker, that, if we lose these amateur clubs, the whole recreation structure in Scotland, which has already been damaged by the teachers' strike, will collapse and the burden will fall on local government and the state.
  I welcome the commitment in the Green Paper, which I hope that my hon. Friend will reiterate, to eliminate cross-border anomalies, but our clubs cannot wait that long. Interim help is required. Discretion is given to local authorities to give relief up to 100 per cent. to amateur sports clubs, and in case my hon. Friend is worried about opening Pandora's box a clear definition of that term has been produced by the sports associations.
  Unfortunately, few local authorities grant relief for sports clubs if they have a licence. In answer to the point made by the hon. Member for Falkirk, West (Mr. Canavan), that is particularly true in Lothian, Fife, Central and Strathclyde regions. Ironically, only miners' welfare clubs enjoy 50 per cent. derating as of right. The local authorities argue that they would be subsidising alcohol and that it would be unfair competition.
  The clubs are in a Catch-22 situation. If they give up their bars they will upset their members who wish to have a social drink after a game and lose income that they need to pay the rates, even if those are reduced as a result of their sacrifice.
  As for unfair competition, few, if any, clubs could be considered as competing with other licensed premises, especially following the Licensing (Scotland) Act 1976 which removed any advantage in opening hours. Most clubs probably open their bars only on training nights and after matches at weekends. In any case, clubs are rated far more highly per square foot per pound of turnover than are commercial licensed premises. Small wonder that the representatives of the licensed trade in Fife have expressed their support for derating. In England, where derating is common place, the clubs have an advantage when it comes to opening hours. In Northern Ireland, sports clubs are granted relief of 65 per cent. of the value of the property associated with the sporting element of the club, excluding the bar area. This might be a compromise for my hon. Friend to consider.
  I ask my hon. Friend to meet COSLA to secure agreement from the local authorities to exercise their discretionary powers for 50 per cent. derating of sports clubs, or 65 per cent. if they wish to follow the Northern Ireland example. I am led to believe that the cost will be about £2 million, but the cost of inaction will be very much higher and will be met by the youth of our country. Given good will and flexibility on my hon. Friend's part in considering the rate support grant, I am sure that an interim solution could be found.
  Mr. Roy Jenkins rose—
  Mr. Donald Dewar rose—
  Sir Hector Monro rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. Earlier in this Parliament Mr. Speaker established that any Member who seeks to contribute to an Adjournment debate should have the consent of the Member who initiated the debate and that of the Minister who was to reply. Does the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) have the consent of the hon. Member for Stirling (Mr. Forsyth) and that of the Minister?
  Mr. Michael Forsyth indicated dissent.
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram)indicated dissent.
  Mr. Roy Jenkins: No, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Does the hon. Member for Glasgow, Garscadden (Mr. Dewar) have their consent?
  Mr. Dewar: I understand so, yes, but I shall pass, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Does the hon. Member for Dumfries (Sir H. Monro) have the consent of the hon. Member for Stirling and that of the Minister?
  Sir Hector Monro: Yes, I have, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Very well.
  12.17 am
  Sir Hector Monro: I am delighted to support the strong case that has been made by my hon. Friend the Member for Stirling (Mr. Forsyth), who has highlighted the major anomalies of clubs in Scotland, England and Wales. For over 20 years I have been pressing the case for mandatory derating of 50 per cent. in Scotland. There is derating in Northern Ireland and a voluntary system is frequently found to exist in England and Wales. I had great hopes that the Rating and Valuation (Amendment) (Scotland) Act 1984 would remove the anomalies, but they appear still to exist.
  My hon. Friend the Member for Stirling has referred to the enormous differences in rating between similar clubs in Scotland and England. We must accept that the hopes for the 1984 Act have not yet been realised, and I hope that tonight my hon. Friend the Under-Secretary of State will try to explain why they have not. Rugby, cricket, bowls, tennis and other sports clubs are now in a desperate plight and facing a real financial crisis.
  Where has the procedure failed? The assessors are entirely independent, but they must have guidance on the operation of the 1984 Act. Does the fault lie with the appeals procedure? Has anyone reached that procedure? Unless the Act is shown to work, our efforts in Committee —many Members on both sides of the Committee spoke in support of the intended change—will have been in vain and we shall all be very disappointed.
  Even though there is an allowance of 10 per cent. while a case is being considered for appeal, 90 per cent. of the demand must be paid, and much of that percentage will be overdue by now. In the time that is left to him, I hope that my hon. Friend can explain in detail how the clubs should proceed if they are to obtain any benefit from the Act. I hope that he will tell us what advice the Government have been able to give to the assessors and local government generally, with local appeal courts being run by local authorities. Have the land courts been given advice on how the legislation should work? It has not
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  worked yet and many of us are desperately concerned, as are those who represent sport and recreation. We know that sport and recreation do so much for Scotland and local authorities are absolved from providing the most excellent facilities that are presently provided by private enterprise.
  12.19 am
  Mr. Donald Dewar: First, I congratulate the hon. Member for Stirling (Mr. Forsyth) on raising this important topic, which commands concern in every part of the House. The fact that many of my colleagues are in their places to listen to the debate underlines that concern. There is a long history to the matter. I have always felt that section 19 of the 1984 Act was a doubtful ally for sports clubs in Scotland. In a letter to me of 22 April the Minister took a cautious line about the prospects for that legislative innovation. The Minister said that it was largely untried and made it clear that it was up to the courts to decide. He ended his letter on a hopeful note—I stress this—by saying:
  "If adjustments are shown to be needed further changes in the appeals system will be considered."
  It is clear that there is no likelihood of redress for a number of reasons, which I cannot go into in the brief time at my disposal, but I hope that the Minister will look carefully at any changes which might be necessary, because a solution must be found to some grotesque anomalies.
  I endorse the plea by the hon. Member for Stirling that negotiations be opened with COSLA about some form of immediate and short-term help, perhaps by using the discretionary powers open to local authorities for rating relief.
  I hope that the Minister will not think that I am being partisan when I say that it is essential that further Government support be given in this climate of financial stringency. Some accommodation will have to be made in the rate support grant, or in some other form of Government aid. I hope that the Minister will look generously on any approaches.
  The Opposition would offer the Government strong support if they tried to find a solution. The search for that solution should be pushed energetically, given the difficulties facing so many sports clubs at present.
  12.22 am
  The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): I am grateful for the opportunity to respond to representations about the valuation and rating of sports clubs in Scotland. This is of considerable concern to my hon. Friend the Member for Stirling (Mr. Forsyth) and I congratulate him on securing this debate. I am aware from personal discussions and from the numerous letters which my right hon. and learned Friend the Secretary of State for Scotland has received that hon. Members on both sides of the House are worried about the rates burden on some sports clubs.
  It is important to remember that some of the smaller sports clubs, be they rugby, football, cricket, bowling, or whatever, have a significant social role to play in providing facilities which promote recreation in the communities which they serve. I wholeheartedly endorse that and applaud the efforts of the many ordinary club members who give voluntarily of their time, labour and money to help run amateur sports clubs. Their contribution to the well-being of local communities is not to be valued

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  lightly, and we in the Government have no wish to see these clubs hindered or prevented from functioning by an over-high burden of local taxation.
  The Government's practical concern for ratepayers has been shown, apart from the emergency measures that we took last year to introduce revaluation rebates, by our commitment in the Green Paper, "Paying for Local Government" to a better, simpler and fairer system of local government finance.
  The consultation period in which we invite responses to this Paper does not end until 31 July. I shall be particularly interested to see the comments which sports clubs submit. The fact that the present valuation and rating systems in Great Britain can lead to differences of the kind that my hon. Friend the Member for Stirling has highlighted today was one of the reasons why the Government have tackled the very difficult task of doing something about local taxation. I am confident that the Green Paper proposals will help sports clubs in Scotland, and we are moving as quickly as possible to bring them into effect. Although it may not be immediately apparent that the Green Paper addresses itself to the problems faced by sports clubs, it does address itself to the widespread complaints voiced by various groups of non-domestic ratepayers over recent months. In particular, the Scottish chapter of the paper explains that the Government see advantage in moving in time to a common non-domestic poundage in all areas and suggests that it may be desirable to harmonise valuation procedures to provide for a common standard, thereby meeting one of the sports clubs' complaints and the points raised by my hon. Friend tonight.
  Inevitably this will take some time to achieve, but in the interim the Government propose to control increases in existing non-domestic rates by linking them to some general index of price movements. This will protect all non-domestic ratepayers by removing control of their rate poundage from high-spending local authorities and offering a guarantee of stability in the scale of future rate demands upon them.
  I appreciate that there is a much more immediate problem. We are very concerned with the difficulties presently facing sports clubs. We are watching the situation closely and looking to see whether anything can be done. However, Government action would require primary legislation. Even were that possible, it would not provide an immediate solution. We must ask ourselves: what are the options available now?
  The problem of rates on sporting facilities has been with us for some time. Hon. Members will recall that, during the passage of the Local Government and Planning (Scotland) Act 1982, the question arose of extending mandatory rating relief to genuine voluntary organisations. That initiative led to a thorough review of the provisions pertaining to mandatory and discretionary rating relief, with particular reference to the position of local clubs which provide facilities for participation in recreational activities.
  Discussions took place at that time with bodies representative of sporting organisations, including the Scottish Sports Council. The review also involved the Convention of Scottish Local Authorities and a working party of Scottish Office and local authority officials. The conclusion, which was accepted by my right hon. and learned Friend's predecessor in office, was that the provisions for discretionary relief worked reasonably
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  satisfactorily and should not be altered. The decision was influenced by the advantages of leaving discretionary relief in the hands of local authorities, which are. after all, best qualified to administer it. Another strong argument against making the relief mandatory was the practical difficulty of turning a local discretion to favour some deserving clubs into a uniform obligation to relieve a whole class.
  It is as well to be clear that the present provisions for discretionary rates relief are just as wide today as they were when the review was concluded in 1983. Section 4(5)(c) of the Local Government (Financial Provisions, Etc.) (Scotland) Act 1962 enables Scottish rating authorities to reduce or even to remit in full rates in respect of
  "any lands and heritages occupied for the purpose of a club, society or other organisation not established or conducted for profit and which are wholly or mainly used for the purposes of recreation."
  In simple language, that allows each Scottish regional and islands council to remit part or all of the rates paid by non-profit-making recreational clubs in their area.
  Mr. Roy Jenkins rose—
  Mr. Ancram: The right hon. Gentleman knows that I normally give way to him, but the debate is constrained in terms of time, and I have a lot of ground to cover. I shall not give way.
  Rating authorities are already statutorily empowered to reduce or completely remit the rates payable by rugby, cricket, bowling, and other clubs. The authorities must simply satisfy themselves that the clubs are
  "not established or conducted for profit"
  and are
  "wholly or mainly used for the purposes of recreation."
  Each rating authority has total discretion as to how it applies the provision within its own area. It is hoped that the case for relief, which was so well made in the House tonight, and the good work done by local sports clubs, will be brought to the attention of rating authorities and that they will give the matter serious consideration.
  My hon. Friend the Member for Stirling asked whether I would be prepared to talk to COSLA. I should be happy to talk to COSLA about the way in which authorities are operating their discretionary powers to grant rate relief, and the matter could be placed on the agenda for the next round of regular meetings to be held in about a month's time.
  The Government consider it right that the rating authorities should retain the discretion to give this relief. The authorities are, after all. best placed to judge whether and how much relief should be given to individual clubs in their own areas. The legislation does not specifically disqualify from relief those clubs with licensed bars on their premises, although I understand that some rating authorities do not grant relief to such clubs.
  It may be that rating authorities also feel that, as some clubs derive considerable income from their bars, the statutory requirement that relief be available only to premises
  "wholly or mainly used for the purposes of recreation"
  should persuade them not to offer such clubs relief. Certainly, if this local discretion were to be replaced by a prescribed level of mandatory relief, I have no doubt that the class of recreation club to qualify for it would have to be more strictly defined. No doubt the possibility of seeming to promote unfair competition for the local

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  licensed trade would weigh heavily in hon. Members' minds. Also to be borne in mind in any considertion of changing from discretionary to mandatory rating relief is that any increase in the total amount of the relief is likely to increase other ratepayers' bills. Revenue lost through rating relief has, after all, to be made up in other ways.
  During the past year or so, sports clubs of various kinds have expressed anxiety about rates burdens. For example, Scottish senior football clubs, under the able leadership of the late Mr. Desmond White, chairman of Celtic football club, publicised the level of their rates bills and compared them with those of English league clubs. The Government had in the meantime acted to help by means of section 19 of the Rating and Valuation (Amendment) (Scotland) Act 1984, which enabled Scottish ratepayer valuation appeals to make comparisons with subjects in England if inadequate rental evidence for the type of subject in question existed in Scotland.
  Hon. Members who experienced the long and sometimes difficult passage of what is now the 1984 Act may remember that the main reason for section 19 was that a strong case had been made to the effect that premises valued other than by comparison with rental values were more harshly treated in Scotland than south of the border. My hon. Friend the Member for Stirling illustrated that again tonight. Ultimately, the relevance of section 19 to any appeal case must be for the appeals court to decide.
  Any complacency that I might have been tempted into has been overtaken by the representations made by other sporting bodies. Rugby clubs have been particularly and understandably vociferous recently, and I am sure that many hon. Members will have been impressed, as I was, by the representations made by the Kirkcaldy rugby football club and Glasgow Academicals club. I am sorry that I was unable to attend a meeting organised by the Kirkcaldy club's treasurer, Mr. Alex Kilgour, in March. I sent my regrets.
  There is one small note of caution that I should like to add about appeals which have yet to be heard. I understand that many of the sports clubs involved in representations
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  to my right hon. and learned Friend the Secretary of State or me, including Kirkcaldy RFC and Glasgow Academicals, have lodged appeals with the assessor against their rateable values. Clubs that have appealed will have an opportunity to argue their case fully before, in the first place, the local valuation appeal committee and, if they are still dissatisfied, the Lands Valuation Appeal Court.
  It is important to maintain the essential independence of the appeal system, and since appeals which have not yet been heard are in effect sub judice, it would not be proper for me to comment on particular cases. Some clubs which have appealed have told me that it might be some time before their appeals are heard. I have advised them, and I do so again tonight, to use, if necessary, a provision which was introduced in 1984 to accelerate appeal hearings — regulation 5(3) of the Valuation Appeal Committee Procedure (Scotland) Regulations 1984.
  The regulation enables an appellant to request the local appeal committee to hear his case within a specified period, which, for practical purposes, must be not less than 35 days from the date of the request. We expressly designed the regulation to help those who might suffer from a long delay. Until an appeal is determined, only 90 per cent. of rates are payable, but a rating authority is allowed to enter an agreement with a person bringing an appeal to pay less than 90 per cent., and appellant clubs under financial pressure might be advised to press their rating authority to exercise its discretion in that way.
  I hope that rating authorities, in their desire to promote the well-being of communities in their area, will welcome the opportunity which the discretion gives them to encourage the activities which amateur sports clubs provide.
  I welcome the debate because it has given us a chance to examine the position—
  The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-seven minutes to One o'clock.