HL Deb 07 July 1975 vol 362 cc639-705

5.40 p.m.

Lord STRABOLGI

My Lords, on behalf of my noble friend Lord Wells-Pestell, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, that the House do now again resolve itself into Committee.—(Lord Strabolgi.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord ALPORT in the Chair.]

Clause 17 [Invalidity allowance and disablement pension]:

Baroness DARCY de KNAYTH moved Amendment No. 4: Page 10 line 9, leave out ("40") and insert ("50").

The noble Baroness said: I am afraid I am not really prepared because this Amendment is one which my noble friend Lady Kinloss was going to move. However, we know that the noble Lord, Lord Wells-Pestell, mentioned that in the Bill as it stands the age at which one can benefit from the larger amount of invalidity pension has been reduced from 50 to 40. The original intention was that those who were disabled at an earlier age would not have had the opportunity of saving up money and therefore should have a higher rate of invalidity pension than those who became disabled at a later age. My noble friends and I feel that lowering the age to 40 would benefit those who are disabled at a later age because in many cases they have not been able to save up a worthwhile amount for their old age. This is particularly important now we know that the mobility allowance will not be given to women aged 60 and men aged 65. In fact, when they reach retirement age all their mobility assistance will be withdrawn. I feel that by increasing the pension we could at least partly alleviate their situation in old age—though one cannot really call it "old age" because noble Lords would not agree that a woman aged 60 or a man aged 65 had reached an age when they should be confined to their home and receive no benefit. Indeed, only a few weeks ago one of your Lordships demonstrated in a sense that life begins at 65. The noble Lord, Lord Thomson of Fleet, revealed that he had made more money between the ages of 65 and 70 than he had in the entire first 60 years of his life. I beg to move.

Lady KINLOSS

Surely age has very little to do with the onset of incapacity. While thanking the Government for raising the ages from 35 to 40 and from 45 to 50 respectively, I would ask them earnestly to consider the raising of the age from 40 to 50 in Clause 17(a). I agree that the older a person is at the onset of incapacity, the more likely he is to have been able to save up for his old age, yet the lower paid worker would most likely have been quite unable to do so. But need they be penalised for having endeavoured to save and thereby enjoy a few extra comforts in their old age, especially if they are incapacitated? As new recipients of the mobility allowance will from January 1976 no longer receive this allowance after the age of 60 in the case of women and 65 in the case of men, would it not be possible to give the higher rate of invalidity allowance for those up to the age of 50? This would enable them perhaps to save a little or to acquire a few extras before retiring age is reached.

The Countess of LOUDOUN

I should like to support my noble friends Lady Darcy de Knayth and Lady Kinloss. It appears ridiculous to argue that the rate should decrease as the age of the onset of incapacity increases. How many of us prepare ourselves in advance in case we should become disabled in later life? The lower paid worker would in most cases be quite unable to do this, even if he wished to. In my view, also, age has very little to do with it. Clause 17 goes some way towards easing the situation, but this Amendment, if accepted, would further relax the age criterion by making the higher rate payable to anyone if their incapacity began before they reach the age of 50. I hope your Lordships will be able to support us over this Amendment.

Lord WELLS-PESTELL

The Government have a great deal of sympathy with the Amendment. I do not always want to appear at this Dispatch Box and talk about money; but money is involved—several million pounds in fact. We have to look at this from the point of view of why the allowance is given. It is an invalidity allowance, which is given in addition to the invalidity pension. This was never intended to be a sum of money given in the same way as the invalidity pension is given; that is a great deal more. So far as I can remember, we have always had three levels of allowance because, rightly or wrongly, previous Governments—and it is a view shared by this Government—felt that the invalidity allowance is of far greater significance to a younger person. It had been fixed at 35, that is where the onset of the invalidity was before the 35th birthday of the person concerned. We are now raising it to 40. The middle rate is raised from 45 to 50 and the lower rate applies to women of 55 and men of 60.

The whole purpose of the invalidity allowance is to try in some small way to meet the little expenditures which are perhaps of greater significance when the onset of invalidity occurs at a much earlier age. For instance, a married man with a wife and several children who becomes an invalid before the age of 35 will be entitled to an invalidity pension. The whole idea was to put a further pound or two in his pocket so that he could buy the children something or give them an extra treat. We have raised the age now to 40. The middle one we have raised from 45 to 50. I think the invalidity allowance provisions reflect the general effect of incapacity on different age groups, and they do so in a graded way which does not draw too sharp and indefensible a line between sick people below and above pension age.

I would say to your Lordships that, however sympathetic one may be, here is a definite attempt to put a little more money into the pockets of a younger person who has certain responsibilities, where the onset of the invalidity occurs before the age of 40, to reduce it slightly where the onset of invalidity is before 50, and to reduce it still more when the onset of the invalidity is before 55 in the case of women and 60 in the case of men. If you look at the invalidity allowance quite separately from the question of the invalidity pension, and what it was designed to do, I think that few of your Lordships would not come to the conclusion that perhaps it is right to give a slightly higher amount to the younger invalids and to reduce the amount as one goes on. Perhaps people who are 50 or 55 do not have quite the same little things they want to do for those around them. The intention is to try to put the invalid person in the position where he or she can do little things for those around.

I ask my noble friend Lady Darcy de Knayth not to press this Amendment. As I say, several million pounds are involved. What we must try to do is to use whatever money is available to do something for most people. We can do this only if we have concern about the money we are spending. The money we spend must do the greatest amount of good for the greatest number of people. If we do not work on that basis it means of course that we have to restrict the amount of good and the help that can be given.

Lord SANDYS

We are not wholly convinced by the noble Lord's argument. He suggested to us that there would be few Members of your Lordships' House who would not agree with him. But we are not wholly convinced, for this reason. The age argument is a somewhat artificial one resting on the premise that it would be possible, perhaps, between certain ages to accumulate capital. Who can say nowadays that he makes provision for invalidity at any stage in his life beyond a general provision of life insurance? I am quite sure that as a basis of calculation it is probably one of those things which very prudent and cautious people do, and it is naturally an excellent provision to make. But it is a somewhat artificial argument to say that this provision should be written into the Bill; and therefore we support the Amendment as it stands.

Baroness DARCY de KNAYTH

I should like to thank the noble Lord for his reply. First of all, I would set the Record straight because I began by speaking about invalidity pension whereas of course I meant the invalidity allowance, but as your Lordships saw I was slightly caught on the hop. While I appreciate what the noble Lord has said about the importance of the little additional things the invalidity allowance can buy for younger disabled people, I feel that those who are older and who will be confined to their homes when the mobility allowance is withdrawn also could think of plenty of little things to do with it (to quote the noble Lord), and I feel they would benefit enormously from this extra money. However, in view of what several noble Lords have said, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 17 agreed to.

Clauses 18 to 21 agreed to.

Clause 22 [Mobility allowance]:

5.53 p.m.

Baroness DARCY de KNAYTH moved Amendment No. 5: Page 14, line 3, at end insert ("; provided that the appliance is related to the provision of mobility and cannot be used indoors.")

The noble Baroness said: Under the present wording of Clause 22(5)(b) a future Government would be able to withdraw altogether, or reduce, the mobility allowance paid to anyone in possession of any appliance issued by the Department of Health—a wheel-chair such as I am sitting in now, a Possum typewriter, a walking frame, crutches or an artificial limb, for example. We should realise that, almost without exception, anyone who has sufficiently severe mobility problems to qualify for the allowance will be in receipt of some form of appliance issued by the Department of Health. This means in effect that as the subsection stands now virtually anyone eligible for the allowance may run the risk of having this allowance withdrawn or reduced.

We have an assurance from the Minister for the Disabled, made during the passage of this Bill through another place, that the kind of appliance they had in mind was the occupant-controlled, powered, out-of-door wheelchair. I have also had an assurance from the noble Lord, Lord Wells-Pestell, in a letter following the Second Reading of this Bill two weeks ago that it is not the Government's intention to introduce abatement of the mobility allowance in respect of any articles now supplied free under the existing arrangements, including those powered indoor wheelchairs now on issue. While I naturally accept the noble Lord's assurances, I feel that no Government should enjoy such sweeping powers to withdraw or reduce the mobility allowance by Regulation.

If the intention is to reduce the allowance only in respect of expensive, out-of-door, mobility aids such as the occupant-controlled, powered, outdoor wheelchair this should be explicitly stated in the subsection. This is precisely what the Amendment seeks to do. The addition of the words: Provided that the appliance is related to the provision of mobility ensures that the allowance would not be withdrawn for, for example, a Possum typewriter. The further addition of the words, "and cannot be used indoors" does the same in respect of crutches, ordinary wheelchairs, artificial limbs, walking frames and such like. The noble Lord, Lord Wells-Pestell, explained in his letter that the Bill was not drafted in terms specifically excluding items now being supplied free because such terms might be constricting if, for example, some technical advance made it possible to supply a much better but much more expensive version of an existing item. I do not accept that such sweeping powers are necessary to cover any eventuality simply because one cannot forecast technological developments. Surely any future Government can amend the subsection at some future date to take account of any unforeseen development.

At Second Reading I said that the tax element in private motoring today could easily amount to between £155 and £175 per annum for a disabled driver or passenger, and that in some cases this tax element alone in private motoring would not be offset by the mobility allowance, which being taxable amounts to only £169 a year for those who are paying tax at the standard rate. We learnt from the noble Lord, Lord Wells-Pestell, at Second Reading (and he confirmed this in his letter to me) that the recipients of the mobility allowance will no longer be eligible for VED exemption—that is, road tax exemption. Thus, £40 are added on to this tax element at one stroke. This will be a very serious blow to many disabled passengers and drivers and I feel strongly that it is vital to protect the mobility allowance from any possible further erosion under this subsection.

This Amendment would ensure that the mobility allowance could be withdrawn or reduced only in the event of a genuine alternative form of outdoor mobility being issued. If however the clause stands unamended, Parliament will lose the power to prevent the mobility allowance from being reduced in respect of any aids at present issued by the Department of Health, should economic circumstances deteriorate further. I believe that Parliament should retain the power to ensure that disabled people do not suffer further in difficult times. I very much hope that noble Lords will support me on what I believe to be a really important issue, and that the noble Lord, Lord Wells-Pestell, will be able to accept this Amendment, which simply puts down in black and white the avowed intentions of the Government. I beg to move.

Lord SANDYS

From these Benches we should like to support the noble Baroness in her intention. She laid special stress on this Amendment. I think she nearly moved it on Second Reading because she gave us then a great deal of detailed information relating to it and, further, she sent a letter to the noble Lord the Minister about this subject; and he was kind enough to send a copy of his reply to us. So we have already a fund of documentation and details about this technical argument. We entirely agree that this situation looks for a remedy. The noble Baroness has moved her Amendment in a most reasonable manner and has underlined particularly the situation over the vehicle excise licence. There is no exemption, and this in itself is an important point. Notwithstanding what has been mentioned already, we wish to support the noble Baroness in what she has said.

Lord HOUGHTON of SOWERBY

I support this Amendment. Subsection (5) of Clause 22 contains the power to deprive a person of a mobility allowance or to reduce it. Paragraphs (a) and (b) of subsection (5) set out the conditions under which that may be done. The Amendment is to paragraph (b) which is of a sweeping character. Subsection (5) provides that Regulations may prescribe cases in which mobility allowance is not to be payable, or is to be payable at a reduced rate …". Under paragraph (b) that will apply to … any prescribed description of appliance supplied under the enactments relating to the National Health Service. It refers to "any prescribed description of an appliance."

This is a very sweeping power to put into the hands of the Secretary of State. He would have the power to do it by regulation. As the noble Baroness has pointed out, it could include literally any appliance that the Secretary of State felt moved to regard as providing some disqualification from receiving the mobility allowance or reducing the amount.

The Amendment seeks to qualify that power and I think it does so in a reasonable manner. It says, (; provided that the appliance is related to the provision of mobility and cannot be used indoors.) After all, mobility is related to outdoors. That is why there is a provision in paragraph (a) relating to an invalid carriage. It is not reasonable for the Secretary of State to take these powers by regulation against the possible contingency that technology may invent something different. If it does, then it can be taken account of when we see what it is and what it does.

I know that it can be argued that the Secretary of State would not behave in an irresponsible or absurd manner and would not therefore prescribe by regulation an appliance which disqualified a person from receiving the mobility allowance or reduced its amount if there was no real justification for doing so. Nevertheless, persons who are receiving the mobility allowance are entitled to feel a sense of security and not to be exposed to the modification or withdrawal of their allowance if the Secretary of State makes regulations which prescribe that any appliance shall be the basis for withdrawal or reduction of the allowance.

I hope that my noble friend will be able to accept this Amendment. We are not talking about money now; we are talking about safeguards. It seems to me that somebody has thought that there may be a conceivable contingency in which some new appliance may be invented which the Secretary of State may feel comes under the regulations provided for here. If the Amendment is carried, at least it will qualify paragraph (b) at the top of page 14. It will stipulate that if whatever may be invented relates to mobility in the home and not to mobility outside the home, it shall not be a basis for disqualification or for the reduction of the mobility allowance. I need scarcely say that certain noble Lords have been listening to the persuasive arguments of the noble Baroness for the last couple of hours and that we are persuaded that this Amendment is a worthy one. Unless I am very much mistaken, she has gathered together in this Committee of your Lordships' House quite enough support to give it a run for its money.

Baroness PHILLIPS

I should also like to support the noble Baroness in her Amendment and at the same time to correct my noble friend. I do not think that she has been speaking for a couple of hours! Although I am not speaking for the Sex Discrimination Bill, it is usual in your Lordships' House for the female Members to speak very shortly and to make their points much more alertly than some of the male Members! I listened very carefully to the arguments which were advanced by the noble Baroness during Second Reading and was impressed by them. The arguments advanced by the Government are those which have been brought forward many times in this House. Your Lordships will recognise that it is all too easy to say that one can refer to what has been said in Parliament at the time of the passing of an Act. Equally, we know that the real crux of the matter is reference to the Act—not to a copy of Hansard about the discussions which took place during the passing of that Act.

This is a very important Bill. We have gone through it at least three times and we hope that this time it will become an Act before the end of the Session. May I suggest that this is merely a tidying-up process which will protect those who are in sore need of protection. It seems very strange that anybody would resist having an appliance given to him which was an improvement; one has the picture of an appliance having to be removed forcibly because the individual who has received it does not want a technical improvement to be made to it. I cannot believe this to be true. I believe, with other noble Lords who have spoken, that we must make certain that both now and in the future all those who are in receipt of any kind of appliance which will be an improvement—I am thinking in particular of a typewriter which has made all the difference between being able to make a contribution to the community and being totally housebound and immobile—are protected. It is a very simple Amendment and I cannot believe that the noble Minister whom we all admire so much will have it in his heart to reject it.

The Earl of LONGFORD

I support very strongly the noble Baroness and others who have supported this Amendment. I do not intend to labour the points which have already been put so well. A word to the wise is enough and I feel sure that the noble Minister will be able to meet us.

Baroness WARD of NORTH TYNESIDE

May I also support this very important Amendment. My experience over very many years has led me to believe that however good the records in Hansard or, indeed, letters may be, Parliament attaches most importance to the Act. It seems a most reasonable Amendment that the noble Baroness has moved. I liked particularly her reference to the fact that there should be an annual review of the mobility allowance. That would make Parliament responsible for doing what has to be done by a Parliamentary Act. I would much prefer to have it in a Parliamentary Act than in Hansard, or in letters, or in anything else.

I should like to congratulate the noble Baroness for having introduced this very good Amendment and for the manner in which she has moved it. It is indeed true that the Minister has sympathy, but he may have difficulty with the Treasury. We cannot get at the Treasury so it is up to the Minister, now that he has the responsibility, even if the Treasury are not very happy about it, just occasionally to overcome the Treasury. I have great pleasure in supporting the Amendment.

Lord BANKS

I should also like to support this Amendment and I hope I shall please the noble Baroness, Lady Phillips, by doing so very briefly. The arguments have already been well deployed. The words "any prescribed description of appliance" require qualification. Also, it seems to me that the Amendment we have before us does so in exactly the way we wish.

Baroness NORTHCHURCH

May I also congratulate the noble Baroness for introducing this Amendment and tell her that I am very much behind her in what she has said. I hope that all will go well.

Baroness HORNSBY-SMITH

This is a bit of pernickety drafting. Everybody knows of the good will and the good heart of the noble Lord, Lord Wells-Pestell, in this matter. But as one who does a great deal of work for one organisation for the handicapped, the drafting of the present Bill has given rise to very serious misgivings indeed. A future Government might add to the ambit of regulations the number of appliances that could reduce or annul the allowance. The noble Lord at this moment, and in his letters to the interested parties, has made plain that this Government do not desire so to do. I hope that he will be able to accept the Amendment in view of the widespread feeling expressed in the House.

Lord DAVIES of LEEK

The noble Lord may take my speech as read!

Lord WELLS-PESTELL

I am not unmindful of the reactions of your Lordships to this Amendment. I am wondering whether I can go some way toward meeting the wishes of the noble Baroness.

A Noble Lord

Go all the way!

Lord WELLS-PESTELL

No, I cannot go all the way. Sometimes one must be thankful for small mercies. Perhaps I may satisfy the noble Baroness. There are certain difficulties. A number of noble Lords have criticised the wording of the Bill in relation to the Amendment. Let me say here and now that we are not ourselves entirely satisfied with the drafting. We have given a good deal of thought to the problem. I want to be perfectly frank to the House, as I always endeavour to be. We are anxious to have a reserve power so that we can use it if and when the occasion arises.

As I pointed out, there is no intention on the part of the Government to introduce charges for articles which are now supplied. But there is a good deal of investigation and research continuing in this field, and it is likely that a number of such articles will be very expensive. We shall need to examine whether these items can be made available without, in some way, affecting the mobility allowance. One piece of hardware which comes immediately to my mind in connection with the possible reduction of mobility allowance is the occupant-controlled powered outdoor wheel chair which at present costs a large sum of money. We are studying this matter carefully because we must be satisfied that if we are to issue such equipment it will not just be reasonably safe but entirely safe. It has to be able to negotiate kerbs and all kinds of obstacles. We shall have to ask ourselves, if this equipment is made available, whether or not the mobility allowance, wholly or in part, can also be made available. But this wheel chair is also a piece of hardware—I do not like the expression but it is the only one I can think of—that can be used indoors. I do not want to be unkind, but I think that the drafting of the Amendment of the noble Baroness is as defective as the Government's.

What I suggest is that, because we feel that her drafting is similarly defective, we should meet to discuss how best we may solve this situation. Then, at Report stage, the noble Baroness may consider tabling an Amendment in light of such a discussion, or the Government may table one, which will tighten the provision in the way that she requires and one which, obviously from what your Lordships have said this afternoon, will meet with general approval. So I ask the noble Baroness, in spite of what has been said, whether she would be willing not to press the Amendment but for us to meet instead to examine the whole matter fully and frankly because the Government are minded to do something along the lines which she has suggested.

Lord SANDYS

For the information of the Committee, could the noble Minister tell us what procedures will be applied to the regulations? This will lead us along a path which in this regard we can perhaps follow. Parliamentary control over regulations is particularly important, especially in a field where so many are to be drafted. I believe that the Committee will be much assured if the noble Minister will so explain.

Lord WELLS-PESTELL

Offhand I cannot oblige. Perhaps later in the Committee stage I might be able so to do.

Baroness DARCY de KNAYTH

I thank the noble Lord for his reply. One sentence of his frightened me—that about reserve power, if and when the occasion arises. I am interested in his offer to meet and discuss the position. I am, however, sorry that he feels my Amendment to be defective. I am aware that some out-of-door controlled wheelchairs can be conceivably used indoors. I think the effective ones which present a genuine alternative to outdoor mobility can be used indoors only with difficulty. Conceivably it might be used in your Lordships' House, but in a council flat such use would create havoc. Would the noble Lord consider that we might agree to an Amendment possibly running along the lines of the wording of "primarily for use out of doors", or some similar wording? Will the noble Lord indicate what he is considering.

Lord WELLS-PESTELL

If I may be honest, I do not wish to commit myself any further on this issue. If the noble Baroness would ask me privately I believe that we may well agree. But, if we are to consider this matter, it would be much better to get together and examine it in every detail. I do not believe that so far as this Amendment is concerned the noble Baroness will find the Government unsympathetic.

Baroness DARCY de KNAYTH

I thank the noble Lord, Lord Wells-Pestell, again. In view of what he says I feel reassured. If we can meet to discuss this point perhaps we shall make some headway. Also I thank noble Lords for their tremendous support, which has been of great value. In thanking the noble Lord once more, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.18 p.m.

The Countess of LOUDOUN moved Amendment No. 6:

Page 14, line 29, at end insert— ( ) Regulations may provide for the sum payable as a mobility allowance to be reviewed annually to ensure that its value to all recipients reflects any increases in both the cost of motoring and the cost of public transport and takes due account of the cost element of labour associated with both private motoring and public transport.

The noble Baroness said: I beg to move the Amendments standing in the names of my friend Lady Darcy de Knayth and the noble Lord, Lord Crawshaw, and at the same time to speak to Amendment No. 44, which I understand is consequential. I suspect that this Amendment may fall foul of the tight money No. 2 Resolution, but its purpose is just what it says, to enable the, mobility allowance to be reviewed annually to ensure that its value to all recipients reflects any increases in both the cost of motoring and the cost of public transport and takes due account of the cost element of labour associated with both private motoring and public transport". The cost of private motoring for a disabled driver or passenger has risen by 30 to 33 per cent. since September 1974 when the mobility allowance was first announced at £4 a week. It has since increased to £5 a week. Anxiety has been expressed about the need to enable the allowance in some way or other to rise in line with wages and prices. I beg to move.

Baroness DARCY de KNAYTH

My noble friend has referred to the speed at which motor costs are rising, and it is essential that the amounts of the allowance should be reviewed annually. The proposed amount of the mobility allowance will not, as I have said, in some cases even cover the cost of the tax element in private motoring now, and for some the introduction of the mobility allowance will straight away mean less help. In this case I am thinking of newly-disabled mothers in sole charge of a child for a substantial part of the day who will no longer be entitled to a small car. We must try to ensure that the amount of help provided by the allowance will not be further whittled down. If the mobility of many disabled drivers and passengers is not to be severely curtailed, it is vital to have an annual review of this allowance to ensure that its value keeps in step with the rising costs of motoring. I support my noble friend in this Amendment.

Lord SANDYS

I should like to support this Amendment, and I think to cast the ambit of it a little wider at this stage might be helpful. As a whole we are very much in favour of the scheme as proposed in Clause 22 whereby the former discretionary allowance is replaced by a statutory scheme; it removes an injustice between those who can drive and are disabled and those who are often even more seriously disabled but who cannot drive. At present the more seriously disabled may receive nothing at all—not even the cash allowance. What the noble Baroness has just said and what the noble Countess, Lady Loudoun, has referred to, concerns the imperative need to re-examine the situation every year. We are all too well aware that the cost of motoring is rising sharply. In her earlier remarks on Second Reading the noble Baroness referred to the fact, which I think is recognised by every noble Lord in the House, that although motoring may be regarded in Treasury circles as a luxury, to the disabled it is a necessity. If it is a necessity then surely the case for anual review is infinitely stronger.

I should like to refer to some remarks made by the Prime Minister in a speech at Oxford on 19th February 1974, when he referred to a display (as he conceived it) of meanness by the Conservative Government, as it then was, in their attitude towards disabled drivers. If there were—and we certainly contest it—any display of meanness towards disabled drivers at that time, certainly there would be a display today by the present Government in very much more difficult circumstances for the disabled drivers. I think the case for an annual review is self-explanatory. I do not wish to make a very long speech; I merely say this is a matter on which we feel strongly.

Lady KINLOSS

I should like to support this Amendment. The cost of maintaining and running a private car varies with the cost of whatever form of power is used. Some disabled drivers are unable to use any form of public transport other than taxi-cabs since, for one reason or another, they do not possess their own transport. I support the annual review of the mobility allowance.

Baroness PHILLIPS

I support this Amendment, for the reasons which have already been advanced. This is a very important piece of legislation and it will be a little while before it finally becomes law. In that event, those of us who remember working for the annual review of pensions will recall that Governments resisted this until, only very recently, it was finally effected. I can only say that if there is a necessity to review wages, salaries and prices for the fit and healthy, there is certainly a vital need to review annually—and, sadly, it may be necessary to do it more frequently—the needs of this particular group in the community. Once it becomes law this Bill will not be amended for a little while, so this is the moment to do it, and I strongly support this Amendment.

Lord DAVIES of LEEK

I will take only one minute of the Committee's time because most of the speeches have been self-explanatory, but as somebody who worked for a while as a Minister in the Ministry of Social Security, I can say that the fight for dynamising pensions and dynamising allowances like this has been going on for a long time. In our studies we found that in all the civilised and progressive parts of the world most allowances and pensions were now dynamised. I do not want to embarrass the Government at all—I know our difficulties—but I think this should be looked at seriously because it has a good purpose and should indeed increase the wealth of the country, because some of these people could thereby carry on constructive work for the nation.

Lord BANKS

May I briefly support the Amendment. I like the idea of linking the review to the cost of the service which the allowance is supposed to provide—not just to a general increase in the cost of living, but linked specifically to mobility—the cost of transport and of getting around.

Lord WELLS-PESTELL

I want to clear up one or two misconceptions with regard to the mobility allowance. I was interested to hear that the noble Lord, Lord Sandys, feels strongly in support of this. I hesitate to do so but I think I must say that it was this Government which introduced the whole concept of mobility allowance. Nobody seemed to feel strongly about it before then. I think that must be borne in mind, and let me add that we introduced it at a time of very grave financial restraint. It will give people who are entitled to it something like £260 a year. There are 100,000 of them, so the sum will amount to about £26 million a year. I think it has been estimated that only one-third of the 100,000 are car owners, and therefore would be using it in connection with the cost of the running expenses of their own car. I say this so often that I hesitate to say it again; this was never intended to be an allowance to assist people to buy a car, or for that matter to maintain their own car, and the vehicle excise duty really does not come into the matter in the strict sense. It was really designed to help the vast majority of disabled people who did not own a car or could not drive a car but who could find somebody who would allow them to go out in their car, to set off against the expenses.

The Amendment would enable regulations to provide for an annual review of the level of mobility allowance to reflect increases in the cost of motoring and of public transport and to take into account the cost of labour associated with those costs. We see the purpose and perhaps the need to do this. There is a case for putting mobility allowance in the same category as maintenance benefits and the attendance allowance and guaranteeing that it is increased at least annually in line with earnings. Mobility costs will rise if costs in general rise, and mobility expectations may to some extent rise if earnings increases outpace price increases; indeed, it can be argued that where mobility is related to ability to maintain oneself, because some severely disabled people will use the allowance to help meet their travel to work costs, any distinction between maintenance and mobility is a little artificial.

But the case for uprating is not more strong than the case for widening the scope of the allowance, which is also being strongly urged on the Government. We are not in a situation where we can do all the things for which there is a good, or even a strong case; of that I have to remind your Lordships from time to time. Noble Lords here could readily list half a dozen, if not more, projects near to their hearts that they would like to see implemented. We know this. Unfortunately, we have to be realistic and responsible, to look at the total situation and not just at the individual merits. As I said earlier, we have been able to introduce mobility allowance at a time of very serious financial restraint. We shall be phasing this introduction over a three-year period, which will spread the cost as well as spreading the administrative load.

Having said all that, may I say that we shall look at the need for uprating and, in doing so, shall take into account all the relevant factors. I do not think we would be allowed—and I am not sure that we should wish—to let long periods pass without any change in the level of allowances if costs of mobility continue to rise steeply. I ask noble Lords to accept that the price to be paid for getting anything at all in the present situation is acceptance of changes which are less than perfect, and which often do not really meet the need.

Moreover, it does not seem to me to be entirely consistent to make strong exhortations for massive cuts in public expenditure and to insist on further improvements immediately in each and every desirable social change that is capable of improvement. I can only ask your Lordships and the noble Baroness to accept my assurances on behalf of the Government that this is an allowance about which, as with a good many allowances in addition to pensions, we are concerned with what the real value is in terms of purchasing power. It is our intention to look at this. I cannot give an undertaking that we would uprate this annually; it would not be right for me to do so. We accept that this is an important allowance; that is why we have introduced it. But it is not on quite the same level or in the same category as pensions.

Having said that, I can only repeat what I have just said. This is an allowance which clearly is of no value at all if inflation increases and the amount stands still. The most I can say now is that the Government are aware of this. We will look at the allowance from time to time, but I do not think I can give an undertaking to your Lordships that, even if we review it annually, we shall be able to do what this Amendment has in mind.

The Countess of LOUDOUN

I thank the Minister for his answer, in view of which I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 22 and 23 agreed to.

Clause 24 [Power to modify provisions about graduated retirement benefit]:

Lord MELCHETT moved Amendment No. 7: Page 16, line 10, leave out ("Schedule 26 to the Social Security Act 1973 or").

The noble Lord said: This is a technical Amendment. Schedule 26 was repealed and replaced on consolidation of the social security legislation which took effect after publication of this Bill. There are now no regulations under that Schedule which continue in force Sections 36 and 37 of the National Insurance Act 1965. Accordingly, the reference to Schedule 26 is superfluous, and the Amendment therefore deletes it. I beg to move.

On Question, Amendment agreed to.

6.36 p.m.

Lord ABERDARE moved Amendment No. 8:

Page 16, line 27, at end insert— (d) for applying provisions similar to those of sections 124 to 126 of the principal Act to the amount of any Equivalent Pension Benefit which has arisen on the termination of Contracted Out Employment as defined in the National Insurance Act 1965.

The noble Lord said: I beg to move Amendment No. 8. Clause 24 concerns graduated retirement benefit, familiarly known as the Boyd-Carpenter Scheme. The clause, which is somewhat complicated in its drafting, allows regulations to be made which would allow graduated retirement benefit to be increased in line with the movement of prices, for increments to graduated retirement benefit to be calculated in the same way as for increments for the additional component of pension. The clause also allows for widowers, like widows at present, to become entitled to half the graduated retirement benefit earned by their late spouse. Therefore, in effect, it is an inflation-proofing of the graduated retirement benefit and is wholly beneficial, so we would welcome and support it.

However, we are worried that in doing justice to the State pensioner, it does injustice to those employers who con- tracted out of the original Boyd-Carpenter Scheme. This they were perfectly entitled to do—indeed, they were encouraged to do it. They took their decision at the time, on the facts as they were presented at the time, when there was no question of inflation-proofing. They entered into a contract with the Government on the basis of certain facts and figures. What has happened now with Clause 24 is that the Government have unilaterally broken that contract by undertaking to pay increased pensions to pensioners who remained contracted in; and those companies which contracted out are faced with a situation in which they are unable to provide the same benefits for their employees who were contracted out as will now be available to other employees who remained in the State scheme. The pensioners who have contracted out of occupational pensions schemes will suffer from the very fact that they were contracted out. This seems to me quite wrong and most inequitable.

The contract was struck at a time when everyone knew where they stood. Those pensioners who remained contracted in were looked after by the Government, and those pensioners who contracted out were looked after in exactly the same way by the employers. Now the Government have changed the basis of the scheme. because they have agreed to provide some inflation proofing for the pensioners for whom they are responsible, but have left the others high and dry, and there is nothing to be done to help them. This seems to me to be extremely unfair.

The point of the Amendment is to provide that regulations may be made so that the Government can put this matter right, and can provide for those pensioners who were contracted out the same benefits as those who remained contracted in. However, as I understand it, there is an alternative open to the employer. I understand the employer can buy his pensioners back into the State scheme, thereby ensuring that all his employees get the benefits promised by this clause. But I should have thought it would be much more preferable if the Government were to treat all graduated pension schemes alike and increase all their pensions, whether or not they were contracted out. I beg to move.

Lord BANKS

Clause 24 undoubtedly alters the balance of advantage, as the noble Lord, Lord Aberdare, said, on which the judgment had to be made when the Boyd-Carpenter Scheme was introduced in 1951. I speak as one who took part in a number of consultations at that time about the pros and cons of contracting in or contracting out. It is true that most of those who have been contracted out are probably better off than those who were contracted in, because the schemes of which they are members provide higher benefits than the minimum required. The right honourable lady Mrs. Castle has said that three quarters of a million people—and that is quite a sizeable number—are in schemes which give purely equivalent pension benefits; that is to say, they are minimum schemes at the minimum level necessary in order to be able to contract out.

It may be argued that these people are better off because the equivalent pension benefits which had to be guaranteed were based on the assumption that they were on the higher earning rate, even if they were not, in fact, so. Clearly those who were on the maximum earning rates are not better off. So far as the others are concerned, we would need to work out how long it would take for the inflation-proofing of the contracted-in benefit to bring the benefit up to the level of the contracted-out benefit. Undoubtedly, an advantage has been given to a number of people contracted-in; this is a retrospective advantage which upsets the balance which was agreed upon the basis of decisions taken in 1961.

I am not sure this Amendment is necessarily the best way to deal with the matter. It might be better to inflation-proof only the graduated benefits derived from the graduated contributions which both contracted-in and contracted-out have had to pay, and coupled with that raising the basic pension so that it represents a higher percentage of national average earnings. My complaint against the Bill is that it is unlikely that the second part of that proposal will be adopted, because if it is adopted it increases the earnings-related component—the seven times principle comes in—and therefore destroys the current balance. It is not merely a question of increasing the earnings-related component in relation to cost of living or earnings, but increasing it as a percentage of average earnings; that would mean eating into the occupational pensions field and upsetting the balance which is at present agreed. So, working within the framework of the Bill, the best thing is perhaps to support the Amendment.

Then the question arises as to whether the equivalent pension benefits should be inflation-proofed or whether it should merely be the amount which the individual would have had guaranteed if he had contracted-in, which for most is a lower amount. But since the Government originally said that these things are to be equated—that is to say, on the one hand contributions under the graduated scheme and, on the other hand, contracted-out schemes providing benefits as if on the highest rate in the graduated scheme—perhaps they should continue to equate them and it should be the equivalent pension benefits which are inflation-proofed.

6.43 p.m.

Lord MELCHETT

This Amendment follows from the argument that, if the value of graduated pensions is to be maintained, then in equity the equivalent pension benefits (EPBs) provided by contracted-out schemes should benefit similarly, and that the Government should meet the cost. But the question of equity between those who were completely in the State scheme and those who were not, and of the terms of the original contracting-out arrangements are not clearcut. I think the noble Lord, Lord Banks, touched on this. There are a number of strong arguments, in our view, against uprating and revaluing EPBs. First, as to equity, the fact is that EPBs were set at a maximum level for all those who contracted-out irrespective of what their earnings were; whereas graduated pension in the State scheme varies according to earnings. And, for the most part, people contracted-out were in schemes which provided pensions much above the EPB level. So, on the whole, those contracted-out got a fair bargain.

To touch on something which the noble Lord, Lord Aberdare, raised, I think it is putting it a little strongly to say that the Government are unilaterally breaking a contract. What they are doing is breaking a contract to benefit a certain section of people. The people who are contracted out are not losing something, they just are not gaining something. I think the noble Lord would accept there is a real distinction. Of course, there is nothing to stop companies which provided contracted-out schemes from also breaking the contract and inflation-proofing their own schemes, though, of course, I would not expect that they would do so unless the pensions were already inflation-proofed, and that is something I will come to.

Secondly, it is accepted that it would be difficult to put the cost on employers; they did not undertake to uprate or revalue the EPBs. Some pensions have been bought out as annuities; some employers are no longer in business, so the cost would have to be borne by the State, but the money could, in our view, be put to better use. Thirdly, in many cases uprating or revaluing has already been provided by the contracted-out scheme. In the case of final salary schemes, pre-award uprating of EPBs is provided, because the EPB slice of earnings is regarded as part of the final salary on which the scheme pension is based. And those schemes that pay cost of living or other increases after the pension is put into payment do so in respect of the EPB slice of pension and thus revalue the EPB as much as the rest of the pension. So uprating or revaluing of EPBs by the State would in many cases mean duplicating an existing benefit, or presumably a cutback in scheme benefits.

Fourthly, the operation would be administratively difficult to perform. To revalue EPBs on the same basis as for graduated pension it would be necessary to determine not the amount of the EPB but the amount that would have been payable if there had been no contracting-out. The Department's computer records do not contain details of a contracted-out person's earnings, and it would be necessary to examine 9 million records manually in order to obtain those details. The administrative costs would be high in relation to the cost of increasing the pensions.

Fifthly, apart from administrative costs, the amount of money needed to provide price protection for EPBs would be significant. In arriving at an estimate of the cost it has been necessary, of course, in the absence of individual records, to look at the average earnings of the contracted-out. On this basis we estimate that the cost of this Amendment would rise to about £22 million annually by the end of the century. Finally, I should point out that people who were contracted-out under the Boyd-Carpenter arrangements nevertheless were liable, from 1966 onwards, to pay some graduated contributions, and the graduated benefit arising from those contributions can amount at maximum earnings to £1.20 a week for men and £1 for women. These pension rights which are greater than the maximum level of EPB will be price-protected under the provisions of Clause 24, which, therefore, already confers a considerable amount of benefit on the group of people about whom noble Lords opposite, in tabling this Amendment, are showing themselves to be concerned. In view of what I have said, I hope the noble Lord will feel that this is not a good reason for further increasing public expenditure, and see fit to withdraw the Amendment.

Lord ABERDARE

I am very grateful to the noble Lord for having given a very full answer and put his point of view in great detail. As it is a complicated matter, I should like to have the chance to study more carefully what he said in Hansard. He was a little sensitive about what I said about the Government breaking a contract, but I still think there is a rather unpleasant taste about the matter. It is nothing to do with breaking a contract with the pensioner, so much as breaking the contract that was made with the employer who contracted-out. It was put to the employer who contracted-out that this was the scheme and if he wanted to contract-out on that basis he could do so. Having done so, many years later he now discovers that the terms that were offered at the time, from which he decided to contract-out have been unilaterally changed, and the Government are taking steps to inflation-proof those people who remain contracted-in. I think the noble Lord will agree this is not a very happy situation; long after an offer has been made on certain terms one party changes the terms. I think it is unfortunate. However, as I say, I should like to have a further look at what the noble Lord has said, and, for the moment, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 24, as amended, agreed to.

Clauses 25 to 27 agreed to.

Clause 28 [Review and alteration of contracted-out rates of Class I contributions.]

6.50 p.m.

Lord WELLS-PESTELL moved Amendment No. 9: Page 18, line 44, leave out ("fourth") and insert ("third").

The noble Lord said: With your Lordships' permission, perhaps I may be allowed to take Amendments Nos. 9, 10 and 11 together. These Amendments fulfil the undertaking made at Report stage in another place that an Amendment would be made to ensure at least twelve months' notice of any changes in the contribution reduction. In practice, we envisage that on average there will be about 18 months' notice. The first report will now be made as soon as maybe after the third anniversary instead of after the fourth anniversary, to allow for the longer period of notice. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL

I beg to move Amendment No. 10.

Amendment moved— Page 19, line 7, leave out from ("alteration") to end of line 8.—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Lord WELLS-PESTELL

I beg to move Amendment No. 11.

Amendment moved—

Page 19, line 10, at end insert: (" ( ) An order under subsection (4) above shall have effect from the beginning of such tax year as may be specified in the order, but not a tax year earlier than the second after that in which the order is made.")—(Lord Wells-Pestell.)

Lord DAVIES of LEEK

On this Amendment I should like to ask a question regarding the semantics, the verbiage. I have been looking at it a long time, parsing and analysing it. It reads very difficult, but does it mean in simple English that an order shall not have effect until the second year in which the order is made, thus giving that lacuna, or space, in between where an offer was made in another place that at least a year would pass before something came into effect? Have I the exact meaning? If I have, that is how it should be done.

Lord WELLS-PESTELL

I think that my noble friend's interpretation is perfectly correct.

On Question, Amendment agreed to.

Clause 28, as amended, agreed to.

Clauses 29 to 31 agreed to.

Clause 32 [Contracted-out schemes]:

6.53 p.m.

Lord ABERDARE moved Amendment No. 12: Page 22, line 41, leave out from ("schemes") to end of line 46.

The noble Lord said: This is a probing Amendment to try to find out exactly what is in the Government's mind. Clause 32(2)(b) provides, among other things, that a pension scheme can be contracted out only if the rules of the scheme applying to the requisite benefits are framed so as to comply with the requirements of any regulations prescribing the form and content of rules of contracted-out schemes"— we have no quarrel with that; but it goes on— and with such other requirements as to form and content (not inconsistent with regulations) as may be imposed by the Occupational Pensions Board as a condition of contracting-out, either generally or in relation to a particular scheme. Those are the words that we seek by the Amendment to leave out.

We quite understand that the Secretary of State should prescribe in regulations what are the requirements as to the form and content of rules for contracting-out, and equally we think it could be desirable for any such regulations to give the Occupational Pensions Board a discretionary power to relax those requirements in suitable cases; but we do not quite understand why the reverse of that is put in this subsection—that the Board should be able to impose additional requirements without any form of Parliamentary control, and the only condition being that they have not to be inconsistent with the regulations. I beg to move.

Lord WELLS-PESTELL

With the permission of your Lordships, as I am replying in the main to the noble Lord, Lord Aberdare, I wonder whether I might be allowed to use this opportunity to tell him of the result of my promise to him at the last Committee stage to see that my right honourable friend the Secretary of State was aware of his comments and observations with regard to the married woman's option. I have done as I promised, and made the noble Lord's view perfectly clear. The only thing I can say at this stage is, that now all the organisations have sent in their final views— and they have been to hand only a comparatively short time, as I think I mentioned to the noble Lord—it is the intention of my right honourable friend to make a decision and to make it known without further delay. If the noble Lord asks me what I mean by "without further delay" I am hopeful that the announcement will be made fairly soon.

In reply to the noble Lord in respect of his Amendment, as I understand the situation the effect of this Amendment would be to remove the Occupational Pensions Board's power to lay down requirements as to the form and content of the rules of contracted-out schemes additional to (but not inconsistent with) the requirements which will be laid down in regulations in relation to requisite benefits.

I imagine that this is probably a probing Amendment to discuss the Occupational Pensions Board. The Occupational Pensions Board will examine scheme rules when an employer makes an election to contract out. If the Occupational Pensions Board have any doubts whether the rules will ensure that a member require that the rules must be changed tial that they should have the power to require that he rules must be changed before a contracting-out certificate is issued. The form of scheme rules varies and it would be impractical to seek to lay down every detail of the requirements in the Bill or regulations. Without this kind of flexibility the work of issuing contracting-out certificates could prove very difficult and delays would inevitably occur, as I am sure the noble Lord would agree. This outcome would not be in the interests of employers or scheme members.

There was an exactly parallel provision—if the noble Lord does not mind my reminding him—in the 1973 Act, with almost identical wording (Section 51(4)(d) Social Security Act 1973). The Occupational Pensions Board used the power on that occasion to require a minimum bene- fit rule. While in the Government's Scheme the minimum benefit (guaranteed minimum pension) is written into the Bill, nevertheless they would wish to give the Board the same powers as the previous Government did to protect the interests of those contracted out and the same flexibility in dealing with applications by employers to contract-out.

Lord ABERDARE

I am grateful to the noble Lord for what he said about the point on the married women's option regulations for the interim period. I accept that he can only say that these decisions will be made as swiftly as possible. I repeat that I very much hope that this may be possible before the Bill leaves this House. I have listened with great interest to what he has said, and of course if this was in the 1973 Act that is good enough for me. I would also welcome anything that gives flexibility. I did not really appreciate that this was to help the Occupational Pensions Board in dealing with schemes where changes were required for the benefit of the scheme. I looked on this as being a further general requirement similar to those laid down in the regulations. However, from what the noble Lord has said, this is helpful and is something that gives greater flexibility. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 32 agreed to.

Clause 33 [Requisite benefit for earner]:

7.2 p.m.

Lord ABERDARE moved Amendment No. 14: Page 23, line 39, leave out first ("on") and insert ("within one month of").

The noble Lord said: This is an Amendment which is designed to assist schemes in paying pension for the first time. Subsection (2) states that the scheme must provide for the pension to commence on the date on which the earner attains pensionable age. However, many schemes have rules which state that, although the normal pension date is defined as, say, the 65th birthday, pensions are payable on a fixed day of the month. Normally it is the first of the month, with the first full payment due on the fixed date immediately following retirement. They would have difficulty in meeting the requirement for the pension to be paid from the actual pensionable date. I know that there would be ways and means by which this could be overcome, but it would cause a lot of extra difficulty administratively and would be an additional burden on contracted-out schemes. Not only would it oblige them to alter their rules, but it could also interfere with the established practices which are on the computer for the paying of pensions.

I hardly think that it is right to impose a considerable administrative burden on existing contracted-out pension schemes just to make sure that the date used is the day on which the person qualifies for his pension rather than the first of the month or whatever the scheme may provide following that date. I beg to move.

Lord WELLS-PESTELL

As we understand the Amendment, it would have the effect of delaying the commencing date of entitlement to guaranteed minimum pension by up to one month from the date of pensionable age. The Amendment also covers pension in excess of guaranteed minimum pension, but Clause 33(4) already provides for entitlement to this excess to be delayed for up to three months. Representations on this point have been made to the Department by one of the organisations representing occupational pensions interests. They have probably made their views known.

In general, occupational pension schemes pay their pensions once a month and the first payment is usually made on the first of the month following retirement. The pension is paid in monthly instalments and pension is not recovered for any odd days or weeks outstanding when a pensioner dies. On average, therefore, taking pensioners as a whole, this is generally fair. The provisions of the Bill would enable schemes to continue their present system of paying pensions, but they would have to pay arrears of guaranteed minimum pension from State pensionable age. The reason why arrears of guaranteed minimum pension would be payable is that the State scheme pays pensions weekly from the first pension pay day following retirement. The provision in Clause 33(2) is designed to bring payment of the guaranteed minimum pension into line with the payment of the State pension because it is being provided instead of the additional component. If this were not done, a pensioner could be worse-off by being contracted-out.

The pensions interests have said that to conform with the provisions in the Bill would cause administrative complications and the Government quite understand that they should want to avoid this. But the Government have to balance that consideration against the interests of the pensioners concerned. As I said during the Second Reading debate, one of the two main principles upon which the contracting-out provisions are based is that the position of the individual pensioners should be safeguarded by providing that they shall be no worse-off on account of contracting-out. To accent the Opposition Amendment would mean that some pensioners would be worse-off since they would have to wait longer before the first payment of guaranteed minimum pension became due than they would have to wait for the first payment of additional component to be due from the State scheme.

I cannot think that that is really what the noble Lord has in mind nor that he would wish this to happen. The Government have carefully considered the position and have come to the conclusion that their overriding aim must be to safeguard the interests of individual pensioners. Accordingly, I would ask the noble Lord, in view of what I have said, whether he would not feel it right in the circumstances to withdraw the Amendment.

Lord ABERDARE

I have listened with interest to the noble Lord, Lord Wells-Pestell. I appreciate that there is this difference. The point I was after was indeed the administrative point and the fact of schemes having to change their rules and alter their computer programmes. This was what was worrying me and I should like to look carefully at what the noble Lord has said.

Lord BYERS

May I just put this point to the Government? I am quite sure that there is no intention that the pensioner should be worse-off in the long run, but I have heard from a number of those running pension schemes of the extra administrative burden which this will put on them. Many of them pay on the first of the month, others pay on the 15th and so on. What worries me is that every additional burden which is placed on pensions schemes tips the balance between contracting-in and contracting-out. I should have thought that there must be some way in which, while the Bill is going through this House, we could get together to see whether something could be done. I do not want people to be deterred from contracting out of the State scheme.

Lord ABERDARE

I am very grateful for what the noble Lord has said. It was my feeling that this was a small and not very important point. It was merely to try to make it easier administratively for schemes to continue to operate. I hope, therefore, that the noble Lord may be kind enough to consider this point to see whether there is a way to obtain justice for the pensioner—we certainly do not want the pensioner to be worse-off—while, at the same time, avoiding the additional administrative burden of having to make considerable alterations in the arrangement of schemes.

Lord WELLS-PESTELL

We should like to look at this matter from the point of view of seeing whether the difficulty is so insurmountable, and certainly we should welcome any comment which the noble Lord, Lord Byers, may feel able to make. Perhaps when we have looked at it, if some useful purpose is served—I say this not unkindly, but kindly—by seeing the noble Lord, perhaps I may be permitted to do so.

Lord ABERDARE

I am very grateful for what the noble Lord said. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 33 agreed to.

Clause 34 agreed to.

Clause 35 [Earner's guaranteed minimum]:

7.10 p.m.

Lord ABERDARE moved Amendment No. 15:

Page 27, leave out lines 19 to 22 and insert— (" (a) 8 per cent, per annum compound for the period from the termination of service to the attainment of normal pension age; or (b) the amount by which an earnings factor for those years equal to that weekly equivalent would be increased ").

The noble Lord said: I beg to move Amendment No. 15 and perhaps it would be convenient for the Committee to consider at the same time the Amendment to leave out Clause 44, which is shown on the Marshalled List after Amendment No. 30, as these two matters go together. They deal with the case of the early leaver, the person who leaves an occupational pension scheme before reaching the normal retirement age and whose pension, under the Bill, has to be preserved and revalued in line with earnings. The White Paper Better Pensions put no limit on this commitment to revalue and occupational pension schemes were left with an open-ended commitment. It is in the very nature of an occupational pension scheme that an open-ended commitment is a nonsense. No actuary can possibly work on such terms.

The Bill has certainly improved the situation. Clause 35 provides that the employer may limit his liability to revalue the pension to 5 per cent. per annum compound as a maximum, but, in addition, under Clause 44, he has to pay a premium to the State to cover the cost to the State scheme of revaluing the balance in line with earnings. Here again there enters uncertainty and an open-ended commitment. The employer cannot be sure what this premium will be, as its terms can be altered periodically in the future, and if they are altered will apply to benefits that have already been earned under an existing scheme. In other words, there is an element of retrospection that would make it impossible for a scheme to be sure of its future commitments. Indeed, it would even make it difficult for the Occupational Pensions Board to give its certificate, as provided under Clause 40, that it is satisfied that the resources of the scheme are sufficient for meeting the various claims that may fall upon it when there is this unknown part of the contract: the need to provide a premium to the State in the case of an early leaver.

Any proposal that provides for such a premium involves payments from occupational schemes to the State scheme, and I should think that is the reverse of what we should be seeking to do. We should be anxious to keep the maximum amount of money in occupational schemes where it is available for productive investment, and not be returning it to the State. I certainly find it psychologically wrong to ask an employer to make a payment of this premium to the State every time someone leaves his service. This costs extra for him, and if it occurs at a time of economic recession, when people are leaving his service, when possibly he is least able to raise the money to make such payments, it could be damaging.

It could also lead to a certain amount of resentment on the part of other people employed by the same firm when they see sums of money being paid over to the State in respect of people who were leaving their employer's service before retirement age. The Amendment suggests what we regard as a preferable way of treating the problem of the early leaver. It is more equitable to limit the occupational scheme's revaluation commitment to 8 per cent. and to forget about the premium; to raise the commitment from 5 per cent. to 8 per cent. and abolish the premium. The final pension paid to the pensioner will of course remain the same; there is no question of his pension being affected. But the occupational scheme would know where it was. It would be committed to paying a revalued pension at 8 per cent., or less, of average earnings, if average earnings had increased less over the period from leaving to retirement; and any excess over 8 per cent. would be borne by the State.

As was evident at the time of Second Reading, there is a very great importance in encouraging the contracting out of occupational schemes if the Government are to achieve the partnership they are seeking. At present it is not very easy to detect much enthusiasm from either employers or their advisers, and the best that we can hope for is that those advisers will be able to discuss contracting out as a realistic option and will not be eventually induced to recommend an employer against it.

In these circumstances, it is most important that the real dangers, such as an open-ended commitment, should be avoided. I realise that this matter has already been considered in another place, but I hope that the Government will still give very careful consideration to this alternative method of dealing with the problem of the early leaver. It is so important at the moment; the climate is so bad; it is so difficult honestly to recommend contracting out when you see your pension schemes in their present state. Anything that savours of a premium that cannot be properly assessed at the moment must be an added disadvantage, whereas if an overall limit of 8 per cent. is imposed, without a premium, that would be a fair way of meeting the situation, and it would be much more encouraging to occupational schemes. I beg to move.

Lord BYERS

I do not want to repeat what I said in some detail on Second Reading, but I wish to endorse what the noble Lord, Lord Aberdare, said. The Government have improved the situation since the White Paper, but as the noble Lord, Lord Aberdare, said, one of the tasks to which we ought to address ourselves in this House is to attempt to remove the uncertainties which face the employer when having to make his decision to contract out; or which face the consultant who has to give the advice. I put forward privately, I think in January, that we should abolish the premium and go for something fixed and quantifiable, which the employer would know was there. He would not therefore have this open-ended liability. I come back to the point I made on the last Amendment: the more we can remove the uncertainties from the Bill, the better chance we have of a successful co-operation and partnership between the good occupational scheme and the State scheme, which is what most of us want. I do not want to be too repetitious but I would plead with the Government, wherever there is uncertainty, to try to make it quantifiable and reduce the doubt.

7.20 p.m.

Lord WELLS-PESTELL

I am sure that the noble Lord, Lord Byers, would be the first of your Lordships to say that the Government have made a sincere and sustained effort to try to meet any objections—and I use that phrase in the widest possible sense—so that we can have a first-class scheme. I wish that I could say something helpful on this matter to the noble Lords, Lord Aberdare and Lord Byers, but I cannot do so. The noble Lord, Lord Byers, knows that the Minister has had discussions with the major pensions interests and has made an effort to see whether this situation can be met along the lines indicated. The Government have considered all the views put forward and decided on the 5 per cent. revaluation plus the premium to cover the excess, and they feel that there is an overwhelming case for doing this. They have come to that conclusion in the light of the discussions that they have had with the specialists in the field.

The figure of 5 per cent. was chosen so that schemes retained a reasonable amount of the revaluation and because 5 per cent. was considered to be as high a rate as was reasonable in the long term. There could be no short-term changes in the rate since this would complicate the administration, both for the schemes and the Government, very significantly because there would be guaranteed minimum pensions revalued at different levels. It was then necessary to decide how schemes should pay for the excess revaluation over 5 per cent. To take account of this factor in the contribution reduction would mean spreading the payment over all contracted-out employees and their employers. This would mean that those firms with a low turnover would in effect be paying or helping to pay, for the revaluation of preserved pensions of those firms with a high turnover. Against this background, the Government decided that a premium was the fairest way of paying for all the revaluation over 5 per cent. If, as some suggested, the State were responsible for the full revaluation the premium would be much higher.

If this Amendment were accepted, a cost would fall on the State scheme in all cases where the increase in earnings over a period up to retirement exceeded 8 per cent. Would that be right? Under the Amendment, schemes would be able to pay whichever was the less, 8 per cent. over that period or the actual rate of interest in national average earnings. Even if the average increase for all those with preserved guaranteed minimum pensions was 8 per cent., schemes would not pay the average figure. Where for a particular earner the figure was less than 8 per cent., the scheme would take advantage of the lower figure, but for other earners for whom the figure was higher than 8 per cent., the extra cost would fall on the State scheme. If there is no premium from the scheme to cover this extra cost, either it becomes a cost which falls on all contributors to the State scheme, whether or not contracted out, or there would have to be a smaller con- tribution reduction for those who were contracted out.

This brings us back to the disparity in turnover between contracted-out schemes. Those with a smaller turnover would be paying for those with a larger one. I want to say very sincerely that we have given this matter careful consideration and have come to the conclusion that 5 per cent. revaluation plus a premium seems to the Government to be the right conclusion, and what is perhaps much more important, the fairest all round. There are sound reasons for it and the Government do not feel that they can be persuaded that it would be right to change it. In the circumstances, I cannot take it any further and I hope that the noble Lord, Lord Byers, will feel, however unsatisfactory the reply may be, that this is a matter to which the Government have given careful attention and cannot meet.

Lord ABERDARE

I am interested to hear what the noble Lord has said. This is very serious because there is a very great loss of confidence among those who advise employers on contracting-out. The current economic situation is such that they have lost a good deal of confidence and their difficulties are very grave when, as the noble Lord, Lord Byers, has rightly pointed out, there is some such provision for what is an open ended commitment and the exact amount of this premium cannot be foreseen. Actuaries who are responsible for working out the finances of a scheme are in a hopeless position when they cannot tell the employer exactly how much he is liable to find by way of premium in the case of an early leaver.

These small points are of enormous importance to the pension advisers and to the pension schemes. They will make all the difference as to whether or not people contract-out. Although I must confess that I am not a great expert, the people whom I have seen feel that the situation is very gloomy. I know that the noble Lord, like those of us on this side of the House, is anxious to find a means of forming a partnership between the State and the occupational schemes. Unless the Government are willing to give way a little more on these points where there is an open ended commitment I fear that their hopes for a partnership of any size may well be disappointed.

Lord WELLS-PESTELL

I think the noble Lord puts it too high when he says there is loss of confidence. This is not our information. There are people in your Lordships' Committee who know that there have been full, frank and deep discussions, and I think they would be tempted to say that the Minister concerned has tried, so far as possible, to meet many of those requests and that there is a good deal of common ground between them. I do not think the situation is acute and, as the noble Lord puts it, there is a loss of confidence. I accept that there is a great deal of disappointment, and if at this late stage something could be done about it no one would be happier than the Government.

Lord ABERDARE

I readily agree that the Minister has done all he can to try to meet these points, but I am afraid that the economic situation has deteriorated progressively while these talks have been going on and those who advise employers on their schemes are gloomy. That is a fact. However, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 35 agreed to.

Clause 36 [Requisite benefit for widow]:

7.30 p.m.

Lord WELLS-PESTELL moved Amendment No. 16:

Page 27, line 41, leave out from ("contain") to the end of line 5 on page 28 and insert ("rules whereby the annual rate of the pension will be not less than the requisite minimum under subsection (1A) below. (1A) The requisite minimum is one half of— (a) the annual rate of the pension to which the earner was immediately or prospectively entitled at the date of his death; or (b) if less, the annual rate of the pension to which he would have been so entitled, counting towards that pension only his years of service in contracted-out employment by reference to the scheme. (1B) To comply with subsection (1) above the scheme must also contain a rule to the effect that if the earner had a guaranteed minimum under section 35 above the weekly rate of the widow's pension will be not less than her guaranteed minimum, which shall be half that of the earner. (1C) Where it is a condition of the scheme that the earner shall complete a specified minimum period of service before qualifying for requisite benefits in excess of guaranteed minimum pensions the scheme need not contain the rules specified in subsection (1) above for the case of the earner's service being terminated (by death or otherwise) before completion of that minimum period.")

The noble Lord said: Your Lordships will see that this is a Government Amendment which fulfils an undertaking given during the Committee stage in another place that an Amendment would be moved to make it clear that the requirements to provide requisite benefits for a widow relate only to periods in which the earner was in contracted-out service. The Amendment also introduces a new subsection to take account of Clause 30(2) which was introduced at the Report stage in another place to cover schemes which have a waiting period before an earner qualifies for full scheme benefits. I beg to move.

On Question, Amendment agreed to.

The DEPUTY CHAIRMAN of COMMITTEES

Since Amendment No. 16 has been accepted I cannot call Amendment No. 17.

Lord ABERDARE moved Amendment No. 18:

Page 28, line 5, at end insert— (" ( ) Where a rule of the scheme provides or has provided for the payment to the earner of a lump sum either—

  1. (a) at or after normal pension age; or
  2. (b) at early retirement on grounds of ill-health or otherwise,
whether or not such lump sum is instead of any part of or is in addition to the pension required to be provided for him under section 32, the pension referred to in paragraph (a) of subsection (1) above shall include the pension equivalent of such lump sum; and the manner in which the pension equivalent is arrived at for the purposes of this subsection shall be such as to be satisfactory to the Occupational Pensions Board. ( ) For the purposes of determining the annual rate of pension which is referred to in paragraph (a) or subsection (1) above there shall be disregarded any purchased credits, where "purchased credits" has the meaning given in paragraph 5(2) of Schedule 16 to the Social Security Act 1973. ( ) Any question arising as to the member's entitlement or the amount of his accrued rights as the case may be under paragraph (a) of subsection (1) above at the date of his death shall be determined by the Occupational Pensions Board.").

The noble Lord said: If I cannot move Amendment No. 17 then I must move Amendment No. 18. The purpose of this Amendment (and indeed of Amendment No. 17) is to clarify and make rather simpler the provisions for the payment of widows' pensions. If I may mention Amendment No. 17 (although I am not allowed to move it) the point of it was to clarify the words in the Bill "immediately or prospectively entitled". It is not very clear what "prospectively" is intended to mean in this context. On the face of it, it might mean the pensions that a person would have received if he had stayed a member of the scheme until normal pension age; but, surely, what is meant is the accrued pension at the date of death to which he was prospectively entitled if he had lived until the normal age of retirement.

I see that the same words appear in the Amendment that we have just accepted under which he is "immediately or prospectively entitled". I do not know whether it is too late to ask the noble Lord whether he could clarify those words and confirm that they mean what I have said they mean; that is, the amount of pension earned up to the date of his death. The provision in the 1973 Act for the preservation of leavers' pensions have led, as I understand it, to very great difficulties already and much the same considerations will apply here in the case of death in service.

There are many differing views on how you calculate an accrued pension. We were hoping that Amendment No. 17, combined with the third subsection of Amendment No. 18, might have led to greater ease and flexibility in determining what the man's accrued pension should be for the purpose of determining the widow's pension. The last paragraph of Amendment No. 18 reads: Any question arising as to the member's entitlement or the amount of his accrued rights as the case may be under paragraph (a) of subsection (1) above at the date of his death shall be determined by the Occupational Pensions Board. This was a method of trying to give the Occupational Pensions Board rather more discretion, so avoiding all the difficulties that had arisen under the 1973 Act in respect of the preservation of leavers' pensions.

The first part of Amendment No. 18 deals with the payment of a lump sum. There is in some schemes a provision for payment of a lump sum. Where you have two people, one of them having in his scheme a full pension and the other provi- sion for a lesser pension plus a lump sum, then, when you are calculating the widow's pension, the widow whose husband had a lump sum due to him could come off worse because she would get only half the actual pension, which was less because of the lump sum. I do not know if I am clear, but it is quite a clear conception. The idea of this subsection was to include the lump sum when calculating the widow's pension so that the widow would get the same amount whether or not the man's scheme allowed him to get a lesser pension and a lump sum, or a larger pension.

The next sub-paragraph at the bottom of page 3 allows for the disregarding of purchased credit. This is another attempt to avoid difficulties which might arise in a case where a member had paid additional voluntary contributions for extra benefits. This is possible in many schemes and, as the Bill stands, these extra benefits must have widows' rights added to them. It would seem that this might lead to considerable complications, and it appears to us that it would be more sensible to exclude these purchased credits when calculating the widow's pension. I beg to move.

Lord WELLS-PESTELL

I must congratulate the noble Lord the Deputy Chairman of Committees because I certainly had not seen that if Amendment No. 16 was carried then Amendment No. 17 would fall.

The noble Lord, Lord Aberdare, asked whether the widow's benefit is based on accrued earner's pension as at the earner's death. The answer is, yes, it is. I shall endeavour to answer the various points raised by saying that representations have been made to the Government that there are a number of technical problems arising from the way in which Clause 36(1) is drafted. Having said that, may I go on to say that the Government are sympathetic to much of what the noble Lord has said. We are still considering the representations which have been made to us and we should also need to examine further whether the Amendments put down would themselves be acceptable. The position therefore is that the Government would wish to consider what has been said by the noble Lord on this subject and also to consider the representations which have been made before we arrive at any decision as to whether or not to amend this clause. If an Amendment is considered necessary then we should want to put it down in due course. At the moment I cannot go further than to give the assurance that we are considering not only the point raised by the noble Lord but the representations from other quarters.

Lord ABERDARE

I am grateful for the noble Lord's sympathy and his attitude to what are mainly bits of machinery in how you work out the widow's pension. I am sure it would be of advantage to find some way to overcome what has led to difficulties. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord MELCHETT

With the Committee's permission, I will move Amendments Nos. 19 and 20 together. These are drafting Amendments. I beg to move.

Amendments moved—

Page 28, line 7, after ("the" insert ("widow's"). Page 28, line 9, leave out ("the widow") and insert ("her").—(Lord Melchett.)

On Question. Amendments agreed to.

7.40 p.m.

Lord MELCHETT moved Amendment No. 21: Page 28, line 22, leave out from ("Board") to end of line 27 and insert ("contain provisions whereby, at the discretion of the trustees or managers, any other part of the pension required by this section is not paid to her, but instead comparable benefits are provided for one or more dependants of the deceased earner.").

The noble Lord said: This is also a drafting Amendment, designed to make it clear that payment of the excess over the guaranteed minimum pension to a dependent other than the widow is an alternative to paying it to the widow. I beg to move.

On Question, Amendment agreed to.

On Question, Whether Clause 36 shall stand part of the Bill?

Lord ABERDARE

I should like to raise one point with the noble Lord concerning widows. I should like to ask him whether it is logical or fair to place on an occupational scheme the obligation to pay a widow's benefit in the case of someone who has left an employer's service and married after leaving it. Indeed, I should like to ask whether it is equitable, logical or fair that an occupational scheme should pay a widow's benefit in respect of someone who has already retired on a pension from the firm, marries after leaving the firm and later dies, leaving a widow. To take the case of the person who leaves the firm's employment, whose pension is then preserved and who marries after he has left, may I ask whether it is then correct for that firm to provide the widow's benefit?

It really does not seem to be very logical that this should be done. After all, the man has left his employment and married subsequently. Surely any liabilities for subsequent payment of his widow's benefit should be the responsibility of the employer at the time of death—in other words, the employer he is then working for, if that employer is contracted-out. If the man is working for an employer who is not contracted-out, then surely it should be the obligation of the State. But I cannot see it is logical to ask this scheme to find a widow's benefit in respect of a person who has left their service and then marries.

In the case of a pensioner who marries after retirement and who then dies and leaves a widow, the requirement to provide a widow's benefit is still less logical, as there will be few if any cases where the widow will not be entitled to a pension or, if under retirement age with responsibility for dependants, other forms of benefit either from rights acquired by virtue of a previous marriage or from her own employment. There is no intention here of affecting the widow herself—she will get paid what is due to her under the scheme—but it is a question of whether that payment is made by the employer who employed the man before he married, by the employer who is currently employing the man, or by the State. I cannot see much logic in saying that a scheme should pay a widow's pension in respect of a man who married the woman after leaving the scheme. Nor, indeed, can I see much logic in saying that a firm should pay a widow's pension in respect of someone who was single when he left the employment and who subsequently married and then died, leaving a widow.

Lord DAVIES of LEEK

This is a very fascinating area. I would not wish to be dogmatic, but it is difficult to come to a conclusion about it on Whether the clause shall stand part? because constructive Amendments would have to be discussed in depth. I may be completely wrong, but I can foresee that the line of approach, to put it moderately, taken by the noble Lord, Lord Aberdare, might bring repercussions on the whole line of pensions. As somebody who at one time had responsibility for war pensions, I do not even know in the case of a warrior who was wounded and had a pension, whose wife died and who then married a second wife, whether his pension would go on to the second wife. This is a very involved question and I feel rather sorry for the Minister if he has to give an immediate constructive answer. All I would say is that to get a constructive, concrete answer on Whether the clause shall stand part? is very difficult with this kind of approach.

Lord WELLS-PESTELL

I am much obliged. In fairness, I think I should tell your Lordships that the noble Lord, Lord Aberdare, gave me very good notice that he was to raise this question and this has enabled me to get an answer for him. Whether or not he accepts it is another matter. The noble Lord has argued that it is not just to expect occupational schemes to pay a widow's benefit in respect of early leavers or retirement pensioners, when they marry after leaving service or after retirement. To accept what the noble Lord has said would mean that an unmarried man under pensionable age could not build up pension rights in respect of a future wife, although he pays the same pension contributions as a married man, except by continuing to work for the same employer, and the unmarried man over pension age could not marry in the expectation of his wife qualifying for a widow's pension, although he too may have paid the same contributions as a married man while at work. Moreover, if we were to deny post-retirement widows' pensions, we should be going back on the provisions of the 1973 Social Security Act, about which the noble Lord, I am bound to say, knows more than I do. That Act provides for post-retirement marriages in the same way that we are endeavouring to do here. I think I had better leave it at that point.

Lord ABERDARE

I accept that it had better be left there. I suppose I must say "stumped again!".

Clause 36, as amended, agreed to.

Clauses 37 and 38 agreed to.

Clause 39 [Financing and assurance of benefits]:

Lord ABERDARE moved Amendment No. 21A:

Page 31, line 9, leave out subsection (3) and insert— ("(3) For an occupational pension scheme to be contracted out it must contain a rule whereby certain liabilities of the scheme are accorded priority on a winding up over other liabilities under the scheme and those liabilities which are accorded priority must consist of or include—

  1. (a) pensions and other benefits in respect of which entitlement to pension has arisen;
  2. (b) guaranteed minimum pensions and accrued rights to guaranteed minimum pensions; and
  3. (c) equivalent pension benefits under Part III of the National Insurance Act 1965,
with or without priority as between particular liabilities.")

The noble Lord said: I beg to move this Amendment. This is merely to give the noble Lord an opportunity of putting on the record what I understand to be the case, because it has been said that from Clause 41 it seems that the three categories stated for priority should rank equally. This is objectionable in principle because we do not think there should be any suggestion of a reduction in the priorities granted to pensions already in course of payment, where a scheme commences to contract out. where the existing rules provide for this. We should like to return to the provisions under the Social Security Act 1973, which the noble Lord has been throwing at me all this time, which allowed any of the three categories mentioned in this clause to be ranked in any order. Additionally, under the winding-up provisions at present in the Bill, it will be necessary for the trustees of many schemes to obtain the consent of all their members to alter the winding-up rules on existing schemes. I hope that my fears can be put at rest and that the noble Lord can make some statement about this matter which will then be on the record. I beg to move.

Lord MELCHETT

I hope I can satisfy the noble Lord as to the relationship between this Bill and the previous Act. The noble Lord's Amendment, we originally thought, was designed to give a greater priority to pensions and benefits already in payment than to the guaranteed minimum pension, although in practice the priorities of paragraphs (a), (b) and (c) would rank equally; and that is of course the position in the existing Clause 39. There is nothing in the clause as drafted to prevent a scheme from giving greater priority to pensions and other benefits in respect of which entitlement has already arisen, provided that all the priorities listed in Clause 39(3) are still accorded priority over other liabilities in respect of benefits under the schemes. I think that that answers the noble Lord's question.

Lord ABERDARE

Yes, I think it does. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 39 agreed to.

Clause 40 (Sufficiency of resources]:

7.52 p.m.

Lord ABERDARE moved Amendment No. 22: Page 32, line 39, leave out subsection (5).

The noble Lord said: This is simply a probing Amendment. This clause gives the Occupational Pensions Board power partially or completely to prescribe the holding for a pensions scheme of "investments of a specified class or description" as a condition of contracting out or continued contracting out. I should welcome any information that the noble Lord could give me as to what is intended here. Trustees of pension schemes should be able to know what classes or descriptions of investments may be subject to prescription; and that such prescriptions should be by Regulation by the Secretary of State, perhaps, and accordingly subject to Parliamentary scrutiny. By this clause it will be simply the action of the Occupational Pensions Board. I should be grateful, therefore, if the noble Lord could go into a little more detail as to exactly what is intended in this clause. I beg to move.

Lord WELLS-PESTELL

The effect of this Amendment would be to remove the requirement that the Occupational Pensions Board should have regard to the investments held by the scheme in deciding whether the scheme has sufficient resources to cover the items listed in Clause 40(1). The Board would also be prevented from controlling the proportion of schemes' resources being held in one investment or from being able to require a scheme to dispose of certain kinds of assets. My information is that there was an identical provision in Section 59(8) of the Social Security Act 1973, and this has been embodied in this particular provision as well.

Clause 40 is to ensure that a scheme has sufficient resources to pay the guaranteed minimum pension to its members, to pay any State scheme premiums in respect of its members, and to cover the liabilities accorded priority under Clause 39(3) in the event of the scheme's having to wind up. This is essential if we are to secure that those who are contracted out have their pensions and pension rights safeguarded to the maximum extent possible. If subsection (5) were deleted, an essential part of the Occupational Pensions Board's powers of supervision would be removed, and the measure of security given to those contracted out would be reduced. We feel that this would not be advisable. The subsection is designed in particular to prevent excessive self-investment or excessive concentration of investment by a scheme. In either case a failure by the company invested in would have a considerable effect upon the scheme's fund and put the pension rights of scheme members in jeopardy. For those reasons we resist the Amendment of the noble Lord and hope that, on reflection, he will feel that we are right in doing so.

Lord ABERDARE

I was only anxious to have a further statement about this matter and I think the noble Lord went some way to helping me in what he was saying. What was worrying me particularly was the Board's powers to prescribe that: no part, or no more than a specified proportion, of the scheme's resources shall be invested in investments of a specified class or description". I was wondering exactly what was intended by that provision. The noble Lord has at any rate answered me in part, and I do not think the Amendment was well drafted. As the provision was in the 1973 Act I had better sit down. I beg leave to withdraw.

Amendment, by leave, withdrawn.

Clause 40 agreed to.

Clause 41 [Premium on termination of contracted-out employment]:

Lord WELLS-PESTELL

I think that your Lordships will see that Amendment No. 23 is purely a drafting Amendment, and I beg to move.

Amendment moved— Page 33, line 26, leave out ("which") and insert ("in respect of which the scheme").—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clause 41, as amended, agreed to.

Clause 42 [Premium under section 41: additional provisions]:

Lord MELCHETT

With your Lordships' permission I will speak to Amendment No. 25 while moving No. 24. These Amendments are to make it clear that "service" referred to in line 22 of Clause 42(4) is contracted-out service. I beg to move.

Amendment moved— Page 34, line 22, leave out ("length of") and insert ("lengths of relevant").—(Lord Melchett.)

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 25.

Amendment moved—

Page 34, line 25, at end insert— ( ) In subsection (4) above "relevant service" means service in contracted-out employment by reference to the scheme, together with any linked qualifying service in relation thereto."—(Lord Melchett.)

On Question, Amendment agreed to.

Clause 42, as amended, agreed to.

Clause 43 [Premium on termination of contracted-out scheme]:

7.59 p.m.

Lord WELLS-PESTELL

Amendment No. 26 is in the main a drafting Amendment, but it also adds administrative flexibility by providing that both accrued rights premiums and pensioners' rights premiums are to be paid by the "prescribed person". The prescribed person will normally be the employer, the scheme managers or the scheme trustees. I beg to move.

Amendment moved—

Page 35, line 7, leave out from ("otherwise)") to end of line 16 and insert ("then—

  1. (a) in respect of each earner whose accrued rights to guaranteed minimum pen- 686 sion under the schemes are not subject to approved arrangements; and
  2. (b) in respect of each person who has then become entitled to receive a guaranteed minimum pension under the scheme and whose guaranteed minimum pension rights are not so subject,
a state scheme premium shall be payable by the prescribed person.")—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

8.0 p.m.

Lord WELLS-PESTELL moved Amendment No. 27: Page 36, line 4, leave out from ("tables") to end of line 10 and insert ("as in force at the time when the scheme ceases to be contracted-out").

The noble Lord said: With your Lordships' permission, I should like to speak to Amendments Nos. 30, 31 and 33 with Amendment No. 27. These Amendments have been introduced in fulfilment of an undertaking given during Committee stage in another place. The new clause provides that the regulations prescribing actuarial tables have to be approved by an Affirmative Resolution in both Houses and that the procedure for changing the tables is the same as that for changing the contribution reduction. This means that changes to the actuarial tables can be made only after a report by the Government Actuary has been laid before both Houses of Parliament, together with the Secretary of State's proposals for implementing the report. If the tables are to be changed, this can be done only with the approval of both Houses of Parliament. A further result is that, as with the contribution reduction, a period of at least 12 months will elapse before revised tables come into effect. I am informed that in practice the waiting period is likely to be about 18 months.

As a consequence of making the regulations prescribing actuarial tables subject to the Affirmative Resolution procedure, a consequential Amendment is being made to Clause 60(2) so that the Secretary of State does not also have to send the regulations to the Occupational Pensions Board. The Amendments also make some drafting changes by bringing Clause 44(4) and part of Clause 43(7) into the new scheme. I beg to move.

Lord ABERDARE

As the noble Lord has said, this was a matter on which undertakings were given in another place, and I am grateful to the noble Lord for having moved these Amendments. Certainly this goes some way towards helping, in that the actuarial tables cannot be changed overnight. As I understand it, there will be some degree of warning which will vary between one year and two years, with an average of 18 months. It still does not go quite so far as we should have liked to see it go, and my next Amendment will try to extend it to three years.

On Question, Amendment agreed to.

Lord ABERDARE moved Amendment No. 28:

Page 36, line 10, at end insert— ("(c) shall be so framed that the tables applicable from time to time shall be consistent with the provisions of section 35(7) above. Any alteration of such tables shall only have effect from a date 3 years after their adoption and shall apply to benefits accruing after the date of the aforesaid adoption only.")

The noble Lord said: I am not sure how this Amendment now fits in, the Committee having accepted the Amendments which the noble Lord has already proposed, but at any rate the Chairman has not ruled my Amendment out of order! Its purpose is perfectly straightforward and, I think, clear; namely, to be consistent with the calculation of deferred pension in the case of early leavers and to ensure reasonable notice of any change in the amount of premium due as a result of the alteration of these actuarial tables. The noble Lord has said that there will be notice, as was agreed, fulfilling a commitment that was given by the Government in another place, and that alterations at the beginning of such tax years as may be specified in the regulations will be not earlier than the second tax year after that in which the regulations are made. So there will be a minimum of one year's notice.

I am suggesting that these are major matters for an occupational pension scheme where a premium is required. If the actuarial tables are changed, considerable calculations will need to be made and a great deal of work done before any decision can be made as to whether the scheme wishes to continue to contract out. If the notice is even as little as one year or 18 months, the temptation on a contracted-out scheme to say, "We have got to make a decision quickly, so we had better cease to contract out", will be strong. We would much prefer to see a rather more generous allocation of time for vital decisions of this kind to be made. An Amendment similar to mine in another place asked for a five years' notice period, which seemingly was a long time, but I should have thought that three years was reasonable; and again, I should have thought it was a concession which would be very helpful to those who are advising on the contracting out.

I wonder whether the noble Lord would have another look at this Amendment and consider whether or not it is one way in which he could encourage a little confidence among occupational pensions people.

Lord MELCHETT

I think I shall be able to be helpful to the noble Lord. When what is now called the open-ended commitment was discussed in another place, my right honourable friend gave an undertaking that he would go on discussing with the pensions industry the problems that they saw. This discussion has continued ever since and we have been made quite aware of the views of the pension industry. Among the solutions put to us which my right honourable friend has been discussing are those put down in these Amendments—that the tables should assume a rate of increase of not more than 8 per cent. a year; that these tables should be frozen for three years; and that each set of tables should apply permanently to benefits accruing during its currency.

The Government are still considering the various points made—and that is the helpful thing I have to say—and have not yet come to any final decision on whether any further amendment of the Bill is necessary to deal with the open-ended commitment. However, I must tell noble Lords that there are serious objections to all the points made in this particular Amendment An assumption of a maximum of 8 per cent. revaluation for the purposes of the premium tables could involve financial cost to the State scheme; and if this were attempted to be avoided by making it a fixed level, regardless of the actual movement of earnings, this could hardly be held indefinitely to the detriment of schemes; and if the level were changed from time to time this would lead to great complexity. I think the noble Lord will remember that problems of cost in relation to fixing an 8 per cent. level are something which my noble friend has already pointed out. He did so when the Committee were discussing Amendment No. 15.

As to the freezing of the tables by three years, this could make them out of date in some cases by as much as nine years. The noble Lord said he was not quite sure of the effect of accepting a previous Amendment. The view of the Government is that such a period is altogether too long. We think that our Amendment No. 31, which provides a period of notice which may be 18 months on average, is likely to be sufficient in practice for this purpose. The proposal that the tables should apply permanently to benefits accruing during their currency means that the payment of a single premium will he replaced by the payment of a number of smaller premiums, each applying to particular years of accrual. I need only to state that problem for noble Lords to see how complex it would make the situation.

For these reasons, the Government are bound to resist these particular Amendments, but that does not mean they have closed their minds to the possibility of any change whatsoever. If, as a result of further consideration of the industry and of what has been said this evening, the Government come to the view that some further amendment is necessary on top of the concessions already contained in the Bill, then we shall be ready to put down an Amendment at the next stage. In view of that assurance, I hope that the noble Lord will see fit to withdraw his Amendment.

Lord ABERDARE

I am grateful to the noble Lord for being willing to consider this Amendment further, and also for not throwing at me the 1973 Act! I gladly accept his assurance that these various matters are still under consideration. I think that it would be a great encouragement to those who work in the pensions field if additional help could be given with regard to the notice they get over the changing of tables. But I will have to leave it to the Government and hope that they will be able to come back with an Amendment of their own at the next stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 43, as amended, agreed to.

Clause 44 [Premium where guaranteed minimum, pension excluded from full revaluation]:

8.10 p.m.

Lord WELLS-PESTELL moved Amendment No. 29:

Page 36, line 37, at end insert— (" ( ) Where a state scheme premium is payable in respect of an earner under this section, and the case is one in which his service in contracted-out employment is terminated in consequence of the relevant scheme ceasing to be contracted-out, the costs referred to in subsection (2) above shall, if the employer so elects in the prescribed manner, be calculated on the basis that (disregarding any orders made under section 21 of this Act) the relevant earnings factors have been increased by 12 per cent. per annum in each of the five complete tax years before that in which the scheme ceases to be contracted-out.")

The noble Lord said: This is another Amendment which fulfils an undertaking given by my honourable friend the Minister of State on Report stage in another place. The Amendment provides that, where a scheme ceases to contract-out and opts, with the approval of the Occupational Pensions Board, to revalue and preserve guaranteed minimum pension under Clause 35(7) at 5 per cent. compound and pay a limited revaluation premium, the employer can elect to have the earnings, on which the guaranteed minimum pension is calculated, revalued at the rate of 12 per cent. for each of the last five years instead of in line with the general growth of earnings. This brings Clause 44 into line with the provision of Clause 43(6) which was approved on Report stage in another place. I beg to move.

On Question Amendment agreed to.

Lord WELLS-PESTELL

I spoke to Amendment No. 30 when I moved Amendment No. 27. With your Lordships' permission I beg to move.

Amendment moved— Page 37, line 5, leave out subsection (4).—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clause 44, as amended, agreed to.

Lord WELLS-PESTELL

I spoke to this Amendment when I moved Amendment No. 27. I beg to move.

Amendment moved— After Clause 44, insert the following new clause:

Provisions as to actuarial tables

.—(1) Regulations prescribing actuarial tables for the purposes of sections 43(7) and 44(3) above—

  1. (a) shall be made only after consultation with the Government Actuary; and
  2. (b) shall not be made unless a draft of them has been laid before Parliament and approved by a resolution of each House.

(2) The regulations shall be so framed that the tables applicable from time to time vary with the yield on such investments or classes of investments as the Secretary of State thinks fit.

(3) With any reports laid before Parliament under section 28 of this Act, the Secretary of State shall lay—

  1. (a) a report by the Government Actuary on any changes in the factors affecting the actuarial tables prescribed for the purposes of section 43(7) and 44(3); and
  2. (b) a report by the Secretary of State stating whether he considers that, in view of the Government Actuary's report, there should be any alterations in the tables and if so, what alterations are in his opinion required.

(4) The charges referred to in subsection (3)(a) above are, in the case of the first report under that paragraph, changes since the passing of this Act and, in the case of a subsequent report, changes since the preparation of the last report.

(5) If in a report under subsection (3)(b) above the Secretary of State states that he considers that there should be alterations in the actuarial tables, he shall prepare and lay before each House of Parliament with the report the draft regulations prescribing tables to be in force with those alterations 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.

(6) 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."—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clauses 45 to 59 agreed to.

Clause 60 [Consultation about regulations]:

Lord MELCHETT moved Amendment No. 32: Page 49, line 37, at end insert ("or contained in a statutory instrument which states that it contains only regulations to make provision consequential on regulations under that section").

The noble Lord said: The effect of this Amendment is to include among the categories of regulations not requiring prior submission to the National Insurance Advisory Committee regulations made in consequence of a change in the lower and upper earnings limits for liability for Class 1 contributions, to vary the tables showing the amounts of contributions payable on different amounts of earnings. These regulations are only of an arithmetical nature about which the Committee would not normally expect to be consulted. They are not required to be submitted to the Committee under the present provisions of the Social Security Act 1975 when the earnings limits are altered by an Order under Section 120 of that Act. The Amendment is merely to preserve this position when those limits are altered by regulations under Clause 1 of the Bill. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 33. My noble friend spoke to this Amendment with Amendment No. 27.

Amendment moved— Page 50, line 17, at end insert ("regulations prescribing actuarial tables or").—(Lord Melchett.)

On Question, Amendment agreed to.

Clause 60, as amended, agreed to.

Clauses 61 to 63 agreed to.

Clause 64 [Consequential amendments and repeals]:

Lord WELLS-PESTELL moved Amendment No. 33A: Page 53, line 1, after ("in") insert ("Part I of").

The noble Lord said: With your Lordships' permission, I wish to take this Amendment with eleven other Amendments; namely, Nos. 33B, 34A, 43A, 43B, 43C, 43D, 43E, 43F, 43G, 44A and 45A. These are all technical Amendments to make corrections and improvements in the text of some of the Acts which form part of the recent consolidation of the Social Security legislation. Most of the Amendments relate to such legislation for Northern Ireland. They derive from the special constitutional and legislative processes subsisting during the last three years between Westminster and Belfast. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL

I beg to move Amendment No. 33B.

Amendment moved—

Page 53, line 4, at end insert— (1A) The enactments mentioned in Part II of Schedule 4 to this Act shall have effect, and be deemed always to have had effect, with the amendments there specified, being amendments required for the correction in certain minor respects of the social security consolidation Acts passed in March 1975; and paragraph 1 of Schedule 5 to the Social Security Benefits Act 1975 (commencement orders) shall be deemed not to have been repealed."—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Clause 64, as amended, agreed to.

Clause 65 [Interpretation]:

On Question, Whether Clause 65 shall stand part of the Bill?

Lord SANDYS

We have no specific Amendment to this clause, but it is important to stress the part it plays in the Bill. The interpretation of a number of technical matters are dealt with here. I wish to draw your Lordships' attention to errors which have occurred. The first is in line 18. We have not tabled a specific Amendment, but the error is that the accrued rights occur in Section 37 and not in Section 35. Secondly, it is an omission, we feel, that although we have not specifically tabled an Amendment to it, the phrase "prospectively entitled" is not given an interpretation or definition. This occurred under Lord Aberdare's Amendment No. 17.

On the general point, I think that the Government should be a little more generous in their interpretation of phraseology. One recognises there must be a reference back, but nevertheless it is important to get the interpretation right in helping those who have to read this Bill in the future.

Lord MELCHETT

I have had a quick look at Clause 35. I cannot find mention of accrued rights in it, so I am sure that the noble Lord, Lord Sandys, is right, in which case I believe the Government will be extremely grateful to him for pointing out the error. I certainly take on board the point which he made in providing greater interpretation. If there is any specific point which he would like to raise with my noble friend or myself we should be only too willing to assist in any way that we can.

Clause 65 agreed to.

Clause 66 [Commencement]:

8.20 p.m.

The Countess of LOUDOUN moved Amendment No. 34:

Page 55, line 43, at end insert— ( ) Notwithstanding the provisions of section 14(5) of, and of Part I of Schedule 5 to, the Social Security Benefits Act 1975, as amended by the Social Security (Consequential Provisions) Act 1975 (which relate to commencement of certain provisions), section 36 of the principal Act shall come into force on 1st January 1976 in respect of entitlement to a non-contributory invalidity pension of a married woman who is incapable of performing normal household duties.

The noble Countess said: On Second Reading, in answer to one of my questions, the Minister indicated that there was no definite timetable for implementing the benefit for disabled housewives, and in fact there was little hope of it being implemented immediately. Apart from economic difficulties, it is our view that administrative difficulties prevent the disabled housewives' allowance being payable before the 1977–78 year. The main non-contributory invalidity pension for single men and women is due to become payable in November 1975, when single men and women will start receiving the non-contributory invalidity pension of £7.90 a week. There are said to be about 40,000 disabled housewives and if they are not phased in at the same time, these disabled women will lose their invalidity pension should they marry. The problems associated with cohabitation rules will also be unavoidable in the cirsumstances. I agree that it may take time to assess all the disabled housewives, but some are already known; for example, those in receipt of an attendance allowance, and surely these could be paid the disabled housewives' allowance immediately. After all, someone requiring attendance from another person day and night is bound to be unable to perform household duties and can therefore be paid the disabled housewives' allowance immediately without difficulty. This Amendment seeks the introduction of this allowance for all by 1st January 1976 and I hope your Lordships will support this. I beg to move.

Lady KINLOSS

I should like to support this Amendment. Would it not be possible to implement it in January 1976 for the disabled housewife who has young children and is already known to the local social security department? This non-contributory invalidity pension is urgently needed to take the financial strain off those families where the wife is severely disabled.

Lord SANDYS

I wish to support this Amendment and perhaps as a preamble I might tell the noble Lord how much we support it. At an earlier stage when we were dealing with the mobility allowance he cast Clause 22 in my teeth and perhaps I might return the service and say to him that in 1971 (I think it was) the Conservative Government introduced the invalidity allowance, so perhaps it may be remembered that we can all claim credit for certain pieces of legislation.

I should like to draw the attention of the Government to a very recent publication—the report by the Government Actuary on the draft of the Social Security Benefits Uprating Order 1975, published in June, Cmnd. Paper 6083, and I should like to draw your Lordships' attention to paragraph 11 on page 6 of that document and to read two sentences because I think it is very important: Estimates for 1974/75 and 1975/76 were given in my report in November 1974 on the Social Security Benefits Bill, 1974 (Cmnd. Paper 5788). At that time the surplus for 1974/75 was estimated to be £428 million whereas according to the latest information available the actual amount will he £647 million. The main changes appear to be that income from contributions was £150 million more than had been estimated and expenditure on benefits was £74 million less. Here is an occasion when we see just a little of the scene behind the very firmly closed doors of the Treasury as to how things stand. I feel that there is an argument here for supporting on financial grounds that this Amendment should be seriously considered by Her Majesty's Government. Here is the Government actuary saying that there is more money available in the immediate future. They further reinforce that in their tables to substantiate what has taken place. I believe this Amendment could play a very important part. The noble Countess has already referred to 40,000 housewives who would benefit from this and it seems to us to be an exceedingly worthwhile Amendment.

Baroness WARD of NORTH TYNESIDE

I should like to add my support to this Amendment, particularly after the speech made by my noble friend Lord Sandys, as it really produces an effective background for the new clause that we are discussing, which has been proposed by the noble Countess, Lady Loudoun. It is really most interesting that suddenly, out of the blue, it is found that the estimates which were originally made were too large and now there really is more money available. As that so rarely happens, it seems to be a very real reason for accepting this Amendment. I cannot imagine that the noble Lord, Lord WellsPesten, could possibly disagree with this Amendment and it would be very nice if, on the basis of the facts that have been adduced, it could be accepted.

Lord BANKS

I should like to associate myself with those who have spoken in support of this Amendment. During the discussions on the Social Security Benefits Bill there were requests for an early date for this benefit to become payable, and I am delighted that the noble Lord, Lord Sandys, has discovered how we can pay for it. When the noble Lord, Lord WellsPestell, replies I hope he will find that his figures agree with those put forward by the noble Lord, Lord Sandys, and that he will agree to accept this Amendment.

Lord WELLS-PESTELL

I think the first thing we should do is to look for this money that is supposed to be going around. I am in no way surprised to see this Amendment on the Marshalled List. Pressure on this point is perfectly proper as well as being inevitable. Since the Second Reading of this Bill. I have had a tremendous amount of correspondence from, I should think, every women's organisation in the country, to which as yet I have not been able to reply—if ever I am able to reply to it. We know the position of the disabled housewife. It has been championed in another place and it is quite properly being championed in your Lordships' House. But I have to say at the outset that the Government cannot accept the Amendment and there is no possibility of introducing the housewives' benefit on 1st January 1976—and I have got to be as definite about it as I sound. I know that if I mention administrative considerations I shall be told either that the Government are sheltering behind a conventional universal pretext or that the Department of Health and Social Security is not as efficient or as hard-working as it should be. So perhaps I could be more forthcoming. First, last September the Government announced a programme of improvements for disabled people to be meshed in with wider improvements, also of benefit to disabled people, and spanning a period of years. You just cannot introduce as many benefits as we have introduced recently and put them all into operation at the same time. It is only a few days ago that I reminded your Lordships—and you will forgive me for saying it again—that we have 26 major benefits in this country and this year they will cost £9,000 million. Put it down on paper and see what it really looks like.

We cannot hope to bring all these new benefits into being at once. If I may say so, the important thing is to get them through both Houses of Parliament and on to the Statute Book, and then to bring them in as soon as one possibly can. The order of events announced in the original programme was, first, the general non-contributory invalidity pension; second, the mobility allowance; third, the invalid care allowance and, fourth, the non-contributory invalidity pension for housewives—rightly or wrongly, this was the order of priority which the Government gave. It will be possible to introduce the first stage of the mobility allowance in January 1976 because the work is sufficiently far advanced. This in turn stems from the Government's order of priorities.

Work on the housewives' benefit is not sufficiently far advanced for a start in January 1976. This is because the Government's programme required that other things should be given priority, rightly or wrongly. Perhaps in passing I should make the obvious point, a point so obvious that it is regularly overlooked, that announcing a forward programme really does mean announcing an orderly sequence of improvements. During the period in which new cash benefits for the disabled are being introduced, and during the build-up to their introduction, we are also committed to a second 1975 uprating, to changes in the supplementary benefits disregards, to interim child benefit, to child benefit, to the start of the new pensions scheme, to further upratings, to changes consequent on the end of the transitional period which began in April 1975 under the revised contribution arrangements initiated by the previous Government and so on. Mechanisation has its part to play, but we are not yet able to design slot machines from which people can obtain their appropriate cash benefits. There has to be a very heavy investment in human time, and human beings do not have inexhaustible resources.

Thirdly, while I do not want to labour the complexities of the non-contributory invalidity pension for housewives, complexities with which we can and will cope when the time comes, I must point out that those other countries which provide far housewives find the task more demanding than the task of coping with normal invalidity pension claims. Special arrangements are needed, and although I do not know whether we shall want to make the same arrangements, it would be very rash indeed to assume that we shall he able to do simply what these other countries find themselves unable to do simply.

Fourthly, I must mention money, as I have already done. I have said that so far as the 1st January 1976 for this benefit is concerned, it is simply "not on." It is a sheer impossibility. I have not ruled out a later date in the 1976 financial year, after the invalidity care allowance has been introduced, nor have I indicated that the Government are firmly committed to some later year. Once we can announce a firm date, of course we shall do so. One of the factors influencing the decision will no doubt be money. In our own domestic spheres, we have to spread our financial liabilities and the Government, if they are not to be considered guilty of bad house-keeping, must do likewise. The cost of the housewives' non-contributory invalidity pension is likely to be relatively modest if compared with the total cost of the Bill. But even in this day and age, and particularly in the present financial circumstances, we just cannot write off £16 million a year as being an insignificant sum.

In short, I have noted the continuing pressure not to delay action for the housewives. I am reminded of this not only by your Lordships, but by every post I have, both at home and in your Lordships' House. The Secretary of State and the other Ministers are just as anxious not to delay as is any noble Lord in this House. I do not think I can take it any further than that. It is a matter which causes us some concern. We are hoping to bring this new benefit in at the earliest possible opportunity, and will do so, but it cannot be done on the 1st January next.

The Countess of LOUDOUN

I thank all those who have supported me on this Amendment. In view of the reply of the Minister. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.38 p.m.

On Question, Whether Clause 66 shall stand part of the Bill?

Lord ABERDARE

We talked about the commencement date for the contracted-out schemes on Second Reading, and the noble Lord spoke of the possibilities of 1977 as opposed to 1978. He himself pointed to the real difficulties about 1977, and said that he could not be too optimistic. He knows full well the difficulties of rearranging all these schemes. My only point is that when it comes to making a decision, which the noble Lord said would be made this autumn, I hope it will be borne in mind that the worst possible outcome would be to decide on the year 1977, and then find it impossible to achieve and postpone it to 1978, because a great deal of rushed work would have to be done for the 1977 target date, work that could not subsequently be put right.

Personally, I think that in present economic circumstances it is better to give a longer period to decide whether or not to contract out, but obviously the decision will be taken in the autumn. My point is that I hope it will not be put forward to 1977, which in some respects would be very nice, because everyone wants the pensioners to get their pensions as soon as possible, but it may be better to postpone it to a later date.

Lord WELLS-PESTELL

I am grateful to the noble Lord, Lord Aberdare, for his comments. The noble Lords, Lord Byers and Lord Banks, I believe are on record as having said that 1977 would be a desirable period, and I think we are in complete agreement as a Government. However, they and we know that it might not be possible, and it might well be 1978 before anything can be done. Obviously we are all in complete agreement that it must be brought in at the right time.

I am sorry that I did not deal with a question raised by the noble Lord, Lord Sandys, because I lost the paper. The figures quoted by the noble Lord about the financial position refer to 1974–75—he was perfectly right about that. But I should like to make it clear that in the same report the financial position for 1975–76 is now estimated to be some £200 million less favourable than earlier estimated. This means we have £200 million less to play with. This is apparently responsible for the situation.

Clause 66 agreed to.

Clause 67 [Short title, citation and extent]:

Lord MELCHETT

I beg to move Amendment No. 34A.

Amendment moved—

Page 56, line 11, leave out subsection (4) and insert— (4) Section 56 of this Act extends to Northern Ireland; and this Act extends to Northern Ireland so far as it—

  1. (a) amends sections 66, 67(4) and 89 of, and Schedule 17 to, the Social Security Act 1973;
  2. (b) amends section 99(1) of that Act by inserting definitions of "the Pensions Act" and "state scheme premium";
  3. (c) repeals Part III of, and Schedules 18 to 20 to, that Act;
  4. (d) by section 64(1A) and Part II of Schedule 4 amends the Social Security (Northern Ireland) Act 1975 and the Social Security (Consequential Provisions) Act 1975 and reinstates paragraph 1 of Schedule 5 to the Social Security Benefits Act 1975;
  5. (e) amends or repeals the Income and Corporation Taxes Act 1970;
  6. (f) repeals provisions of the Public Records Act 1958 and the House of Commons Disqualification Act 1975;
but subject to the foregoing provisions of this subsection and to subsection (3) above, this Act does not extend to Northern lieland.—(Lord Melchett.)

On Question, Amendment agreed to.

Clause 67, as amended, agreed to.

Schedule 1 [Deferred retirement]:

8.40 p.m.

Lord MELCHETT moved Amendment No. 35: Page 57, line 6, leave out from ("age") to second ("the") in line 7.

The noble Lord said: With your Lordships' permission, I will take Amendment No. 36 with this Amendment. These Amendments remedy an unintended omission from the provisions in the Bill which require that retirement must be deferred for at least a minimum period before increments to retirement pension become payable. The intention, both under the Bill and under the 1973 Act which preceded it, was that increments should not be payable until a person had built up entitlement to an increase amounting to at least 1 per cent. of his or her weekly pension. Since the rate of incremental return is set at one-eighth per cent. of the pension for each week of deferred retirement, this establishes a minimum period of 8 weeks before increments can become payable. The purpose of a minimum period is to avoid the administrative costs of having to calculate and pay very small sums.

In the Bill as drafted there is no such minimum period provided in the case where, although a pensioner has deferred his retirement for at least 8 weeks, some of the days in that period do not count for increments because of the provisions of paragraph 3 of the Schedule. The provisions in paragraph 3 are intended to cover days on which a person receives some other National Insurance pension or benefit because, for example, he has been unemployed or sick. As the Bill stands, a person might have only one day for which an increment was payable in this period of deferment of 8 weeks or more, and yet the Department would be liable to calculate and pay the tiny proportion of one week's increment for which the person had qualified. This simply does not make administrative sense, and the Amendment therefore deletes the reference to 8 weeks as the minimum period and instead specifies 1 per cent. of the weekly pension as the minimum increment entitlement. This achieves the intention of the Bill which was to continue in essence the de minimis provisions now operating under the principal Act. I beg to move.

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendment No. 36.

Amendment moved— Page 57, leave out lines 11 to 13 and insert ("but only if that amount is enough to increase the rate of the pension by at least 1 per cent.")—(Lord Melchett).

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendments Nos. 37 to 43:

Page 57, line 15, leave out ("week in his period of deferment") and insert ("incremental period in his period of deferment. (1A) In this Schedule—

  1. (a) "incremental period" means any period of six consecutive days, excluding Sunday (Monday therefore being treated as the next consecutive day following Saturday); and
  2. (b) "period of deferment", in relation to any person, means the period beginning with the day on which he attains pensionable age and ending with the day before that of his retirement.")
Page 57, line 18, leave out ("week") and insert ("incremental period"). Page 57, line 20, leave out ("that week") and insert ("the period"). Page 57, line 23, leave out ("week") and insert ("period"). Page 57, line 24, leave out ("week") and insert ("period"). Page 57, line 31, leave out from ("any") to end of line 33 and insert ("incremental period shall be determined under sub-paragraph (3) above as if the order or orders had come into force before the beginning of the period of deferment"). Page 57, line 33 leave out lines 36 to 42 and insert—
  1. ("(a) if any incremental period in that person's period of deferment consists wholly of days that fall to be so treated in relation to him or his pension, he shall not be entitled to any increment for that incremental period under sub-paragraph (1) of paragraph 2 above;
  2. (b) if any such incremental period contains one or more such days, the amount of the increment for the period under subparagraph (2) of that paragraph shall be proportionately reduced.")

The noble Lord said: With your Lordships' permission, I should like to move Amendments Nos. 37 to 43 en bloc. The effect of these Amendments is to remedy an unintended consequence of the Bill as drafted by replacing the term "complete week" in the Schedule by the term "incremental period", defined as any period of six consecutive days disregarding Sundays. The term "week" in the Bill as it stands is defined in the glossary in Schedule 20 of the principal Act as "a period of seven days beginning with midnight between Saturday and Sunday". As applied to the provision in the Bill that increments can be earned only for complete weeks of deferred retirement, this could make it possible for a person to have as many as twelve days of deferred retirement disregarded in determining the amount of increment he has earned. For example, if a man's 65th birthday falls on a Monday and he does a full week's work that week, it will nevertheless not be a complete week of deferment. If when he eventually retires he finished work, as most people will, on a Friday, that also will not be a complete week of deferment. This could mean that he would have to defer retirement effectively for 10 weeks before any increment were payable at all. The Amendments will ensure that this sort of situation does not arise. I beg to move.

On Question, Amendments agreed to.

Schedule 1, as amended, agreed to.

Schedules 2 and 3 agreed to.

Schedule 4 [Consequential amendments]:

Lord WELLS-PESTELL

I beg to move Amendment No. 43A. I spoke to this Amendment and also to Amendments Nos. 43B to 43G when I moved No. 33A. I beg to move.

Amendment moved— Page 65, line 8, leave out ("or") and insert ("and").—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Manuscript Amendment No. 43H.

Amendment moved— Page 65, line 16. leave out ("or") and insert ("and").—(Lord Melchett.)

On Question, Amendment agreed to.

The DEPUTY CHAIRMAN of COMMITTEES (Viscount Hood)

Now I think we can take all the Amendments down to 43G en bloc.

Lord MELCHETT

With your Lordships' permission, I will take all those Amendments together. In moving them, may I point out that in Amendment No. 43E the line reference should be 24 and not 23, and the second line reference should be to line 26 and not line 25. I beg to move Amendments 43B to 43G en bloc.

Earl ST. ALDWYN

I do not think this is quite right. I do not think we ought to move a block of Amendments where there is an alteration. I think they should be taken separately and dealt with in the proper way.

The DEPUTY CHAIRMAN of COMMITTEES

Then perhaps the noble Lord will put the three Amendments, Nos. 43B, 43C and 43D to your Lordships.

Lord MELCHETT

I beg to move Amendments Nos. 43B, 43C and 43D en bloc.

Amendments moved—

Page 65, line 22, leave out ("or") and insert ("and") Page 66, line 36, at end insert ("or under any provisions in force in Northern Ireland and corresponding to the last-mentioned Act.") Page 67, leave out lines 26 and 27 and insert ("for the words following "benefit under" there shall be substituted—

  1. "(i) the Social Security Act 1975,
  2. (ii) the Social Security Pensions Act 1975,
  3. (iii) the Social Security (Northern Ireland) Act 1975, or
  4. (iv) any provisions in force in Northern Ireland and corresponding to provisions of the Social Security Pensions Act 1975".").—(Lord Melchett.)

On Question, Amendments agreed to.

Lord MELCHETT

I beg to move Amendment No. 43E.

Amendment moved—

Page 68, line 24, leave out from ("references") to end of line 26 and insert—

  1. ("(a) to any provisions in force in Northern Ireland and corresponding to provisions of this Part of this Act or the Pensions Act; and
  2. (b) to contracting-out certificates within the meaning of any such provisions.")—(Lord Melchett).

On Question, Amendment agreed to.

Lord MELCHETT

I beg to move Amendments Nos. 43F and 43G.

Amendment moved—

Page 69, line 18, after ("Act") insert ("or under any corresponding provision in force in Norhern Ireland") Page 69, line 31, at end insert— ("32A. In Schedule 17 to that Act in paragraph 14, after the word "Act" there shall be inserted the words "or under any corresponding provision in force in Northern Ireland" ")—(Lord Melchett.)

On Question Amendments agreed to.

Lord WELLS-PESTELL

I beg to move Amendment No. 44A.

Amendment moved— Page 73, line 17, at end insert—

Forward to