HL Deb 14 March 1977 vol 380 cc1267-352

2.53 p.m.

Lord WELLS-PESTELL

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Wells-Pestell.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord ABERDARE in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3 [Other amendments relating to retirement pensions]:

Baroness YOUNG moved Amendment No. 1:

Page 6, line 4, at end insert— ("( ) Regulation 7 of the Social Security (Widow's Benefit and Retirement Pensions) Regulations 1974 shall be amended by adding in paragraph (a) after the word "80" the following words" or was so resident for at least 10 years in the previous 20 years not-withstanding the age, being beyond 80, attained by him when that period expires".")

The noble Baroness said: Pensions for the over-80s, to which my Amendment refers, were introduced by the last Conservative Government to help a quite specific group of people who were, by their age, excluded from joining the national pensions and insurance scheme in 1948. There were, therefore, a small number of people who were not eligible for any kind of retirement pension, and it is a group of people which is diminishing in number each year, simply because of old age and death.

In another place, my honourable friend Mr. Newton moved an Amendment in terms somewhat similar to this, to cover certain people over the age of 80 who have been unable to fulfil the residence qualification of living in this country for 10 years until they were 80 years of age. The Amendment has now been redrafted in order to meet the criticisms made by a Minister in another place, and I hope very much that the Government will consider this matter favourably. When the Amendment was originally debated in Committee, it received a tied vote. The chairman's casting vote meant that it fell, and it was raised again on Report. But, as I say, my Amendment is designed to meet the criticisms which the Government Minister made at the time.

When I talk about pensions for the over-80s, I am of course using what is known as the conventional shorthand on this matter for those who are eligible for these pensions. As I have already indicated, they are people who were not eligible to join the scheme when it was originally introduced, because they were too old, and there is a diminishing number of them. But the fact is that you cannot qualify for a pension unless you have been continuously in this country for 10 years, and if you reach the age of 80 before you have had 10 years' continuous residence qualification you are not eligible for the over-80s' pension.

I understand that when this Amendment was introduced in another place the Government Minister replying to the debate on Report raised two objections to it. The first was that the Amendment as drafted would have conflicted with our obligations under the Treaty of Rome, because it referred to various residence qualifications. Therefore, in order to get over this difficulty, I have taken out what I gather were words which would have offended against the Treaty obligations. I hope very much that, having taken them out, the Government will not now say that the whole matter is so wide that it will apply to almost anybody in the world. But I thought I must explain why I have taken them out, and have deliberately not drawn the Amendment narrowly. It is in order to get over this point.

The second reason given for not accepting this Amendment was on the grounds of cost. Of course, in this case—and I appreciate the Government's difficulty very much—it is very difficult to know precisely how many will be eligible. What we do know, however, is that if those people who are here have no other source of income at all, they will of course be eligible for supplementary benefit, because they would clearly not be allowed simply to languish completely poverty-striken somewhere or other. So if they received the pension for the over-80s, a certain amount less would need to be spent on supplementary benefit, and there would be a saving.

The difficulty is in getting the exact figures. On re-reading the report of the debate in another place, I see that the number of people concerned is estimated to be about 3,000, and we calculate that the cost would be about £500,000. I hesitate to rest too much of the case on the figures, because in a later Amendment which I shall be moving I shall be asking the Government to come forward at a given date with much more precise figures about the total number of pensions and the cost of removing the earnings qualification. One of the difficulties we have found is that so many of the figures that we have been given have proved to be completely inaccurate. I am not trying in any way to blame somebody for this, but it means that to rest a case entirely on the figures given is very unfortunate.

I feel certain that, were we not in the present economic circumstances in which we find ourselves, this is the kind of Amendment which the noble Lord, Lord Wells-Pestell, would wish to see incorporated in a Social Security (Miscellaneous Provisions) Bill. Such a Bill should cover groups of people whose needs are not met in any other way, and this I believe to be a particularly unfortunate group of people. They are very elderly; they are not eligible for qualification in the first place; they are excluded from the pensions for the over-80s; and they are almost certainly dependent upon supplementary benefit.

This Amendment would represent a diminishing cost for the Government because the number of people in this category is bound to grow less each year. The Government would not be committing themselves to a cost which would increase extensively in the future. I hope very much, therefore, that the Government will favourably consider the Amendment. I beg to move.

3.2 p.m.

Lord WELLS-PESTELL

I do not propose to indicate to your Lordships what the Amendment does, because the noble Baroness has set it out very clearly. As the noble Baroness quite rightly pointed out, a similar Amendment was introduced by the Opposition in the Commons. The noble Baroness claimed that a problem arises only in the case of people who were too old to enter the National Insurance scheme in 1948 and whose numbers diminish each year. The cost of the Amendment would also diminish year by year.

I should make it clear, however, that the Amendment of the noble Baroness relates to Category D pensions. These, as she rightly points out, are payable from the age of 80, even when the person concerned has been able to contribute to the scheme, provided that his personal contributory pension does not exceed the level of the standard rate of the D pension scheme. It is the Category C pensions which are payable to persons who were over pensionable age in 1948 and, therefore, ineligible to contribute. However, that particular group of people must be, in the case of men, in the region of 93 years of age and, in the case of women, in the region of 88 years of age. Therefore few claims now arise. However, Category D pensions will continue to be awarded for the foreseeable future as the people concerned reach the age of 80.

To award these pensions, as the Amendment requires, to people who do not satisfy the residential conditions on their eightieth birthday, but who do so there-after, would cost the Exchequer an estimated £500,000 a year. Although this will not be accepted by a large number of your Lordships, I am bound to say that one of the main purposes of the Bill is to save money. I shall probably also be saying that to the noble Lord, Lord Banks. We have to keep this point in the fore-front of our minds.

As a matter of principle, the Government have no objection to the main purpose behind the Amendment. We know that the matter has been ventilated to a considerable extent in another place. In 1975 the noble Baroness's right honourable friend there, Sir Geoffrey Howe, was in correspondence with the then Secretary of State at the Department of Health and Social Security and, as she pointed out at the time, she thought it right that we should consider the whole matter at a later opportunity. During the discussion in another place the estimated cost of £500,000 a year was challenged as being too high, but this is the most accurate estimate that can be made on the admittedly limited evidence available.

The noble Baroness has said that we are frequently suggesting costs to your Lordships' House which, if I understood her correctly, are not borne out; but I have yet to be given one example of the estimated cost of something turning out not to be correct. These estimates are made not by members of the Government but by independent people. Of the additional people who would qualify if they were paid on the more relaxed basis proposed in the Amendment moved by the noble Baroness, it is thought that there are approximately 1,000 who are not in receipt of supplementary benefit and who would qualify for the Category D pension. We have to take that situation into account.

Rather than effect a transfer between one State benefit and another, which is one matter, here are a thousand people whom we have reason to believe are not drawing supplementary benefit and who would be eligible. The extra cost cannot be accommodated within the Government's programme. As I said a moment or two ago, one of the main purposes of the Bill—it is unfortunate, and we acknowledge that it is unfortunate—is to enable us to save as much public expenditure as we can and ensure that the money which we save can be used, and is used, for other matters which, rightly or wrongly, the Government may well feel should have greater priority.

The noble Baroness will be interested to hear, because she will be very interested in Amendment No. 13, that the Government propose to accept that Amendment, which again will cost a considerable amount of money. If we have to make choices and pay some kind of regard to priorities, we would sooner the money went in that direction, which would provide a non-contributory attendance allowance for handicapped children who are with foster parents. We shall come to that Amendment in due course.

As I have said, the Government have no objection in principle to the proposed Amendment, but it is a matter to be implemented when resources are available. I am sorry that I cannot be more helpful. I trust, however, that noble Lords will not assume that the Government are being intransigent this afternoon with regard to all the demands made upon them. As I say, we intend to accept Amendment No. 13, which I think shows some evidence of the Government's good faith in matters where we consider that there is perhaps greater priority.

Lord JACQUES

I appeal to the Opposition to act a little more consistently regarding public expenditure. We have a debate on economic affairs every two months or so. The Opposition Front Bench and its Back-Bench condemn the Government for excessive public expenditure. One speaker after another condemns the Government. However, in the interval of two months before the next debate hardly a day passes without the Opposition proposing increases in this or that form of public expenditure. Seldom does the Opposition make any suggestion about where a reduction should be made. I believe that the Opposition should be more consistent than they are at present regarding the general principle which they lay down in economic debates. If not, the public should be told where the inconsistency lies.

Baroness YOUNG

The noble Lord, Lord Jacques, has tempted me to intervene in the debate once again and to speak on a matter which I had not really intended to raise this afternoon; but since he has raised it, I feel obliged to reply to him. I have not normally taken part in economic debates but, as he has asked me to list some of the things which the Government have done which I think are going to cost the country a lot of money for very little public good, I will tell him something in regard to the Department of Health and Social Services. Not so long ago, in the autumn, we debated here the Health Services Bill which, by the phasing out of pay-beds, on the lowest possible estimates will lose the National Health Service £20 million a year.

The noble Lord, Lord Wells-Pestell, has just said that this Amendment will not cost more than £500,000 a year. But suppose it costs £750,000 a year; one of the places that money could have come from would have been encouraging people to pay for a bed in hospital and then the money would have been obtained in another way; that is, from those who could afford to pay for a bed and those who wanted to. However, the Government have chosen not to do that and the result is that this particular group of elderly people, over 80 years of age, cannot help themselves and are not going to get the help. I hope the noble Lord, Lord Jacques, is not going to intervene in this debate again in regard to this matter, because I can assure him that there is plenty to be said on our side.

Lord JACQUES

In the case to which the noble Baroness has referred, this Government, being truly democratic, acted in accordance with what appeared to be public opinion.

Baroness YOUNG

On that point, I do not think there was a single public opinion poll which substantiated the Government.

Lord PLATT

I should like to ask one question. If, as I understood from the noble Lord, Lord Wells-Pestell, 1,000 of these people are not drawing supplementary benefit, they are presumably supporting themselves in some way. I suppose some of them are paid for by their families, others have private means; if they become eligible for a pension, like others of us who become eligible for a pension it will be added to their income and income tax will be charged upon it, so that the total expense to the Government will be considerably less than they estimate.

Lord SANDYS

In support of my noble friend Lady Young I think it should be said that the terms of eligibility as set out in the Amendment are extremely narrow. We believe, and we have every reason to think that it is accurate, that the numbers eligible will be between 2,000 and 3,000 people. We are quite ready to accept the figure which the noble Lord, Lord Wells-Pestell, gave us this afternoon; that is, that approximately 1,000 people over the age of 80, who are not receiving supplementary benefit at present, fail to satisfy the existing residents' conditions.

We believe that figure to be reasonably accurate, but we should like to say from this side of the Committee, very clearly indeed, that when we come to it Clause 4 is the main money clause in the Bill and under that clause the Government, in reducing the terms of the earnings rule of 1975, are seeking to save a great deal of money. If one turns to the debates in Standing Committee in the House of Commons, one notices at once the wide variation between the figures offered by the Government and those offered by the Opposition. Straightaway we query a substantial number of figures which were brought forward by the Government at that stage. It is quite clear that this concession, which seeks a very minimal sum of money in terms of the total public expenditure on pensions—namely, £500,000—is one which we shall consider very carefully in present economic circumstances. I am particularly glad to hear from the noble Lord, Lord Wells-Pestell, that our Amendment No. 13 is going to be acceptable at a later stage, but I believe that the Government should give greater thought to this category of eligibility.

Lord WELLS-PESTELL

I cannot help noble Lords on their Amendment which is before the Committee at present and there is nothing more I can usefully say which will in any way help the situation. In my enthusiasm to let the noble Baroness, Lady Young, know that the Government were minded to accept her Amendment No. 13 I ought to have said, and I did not do so, that we could not accept it with its present wording. What she is seeking to do the Government propose to accept, but I am advised that the present wording is not suitable drafting and we should be happy to table the appropriate Amendment with a view to doing what the noble Baroness has in mind. We can deal with that when we reach Amendment No. 13.

Baroness FAITHFULL

I should like to ask the noble Lord, Lord Wells-Pestell, a question on this Amendment. One wants to see old people independent and able to lead their own lives. With this help a number of them would be able to do this who at the moment have to be given help in other ways, such as subsidised meals-on-wheels, subsidised home help services and so on. Is it not as long as it is short? If they do not get this help they will have to have it in another way. Would it not be better for them to have help in this way as of right rather than having to apply for extra things such as meals-on-wheels paid for by the Social Services?

Lord WELLS-PESTELL

I am sure the noble Baroness is not suggesting that that piece of community service, albeit done by the local Social Services department, is not often reliant upon the tremendous support it receives from voluntary organisations; I doubt whether we should be able to have meals-on-wheels in this country to the extent that we do if there was not such wide support coming from the voluntary organisations. What I am trying to say, quite simply, is that there is nothing in principle between the Government and the noble Baroness who has moved this Amendment. I am saying that it cannot be done in the present financial atmosphere, knowing, as we do, that it will cost another £500,000. This is something for the future—one would hope the very near future, but it depends upon the financial atmosphere.

Baroness YOUNG

I am grateful for the support of my noble friends Lady Faithfull and Lord Platt on this Amendment and I am very grateful, of course, for the attitude that the Government are taking by saying that there is no disagreement in principle between us about this matter. My noble friend Lord Sandys explained that when I referred to the inaccuracy of the figures, I was speaking largely about the numbers that the Government have estimated for those who would be affected by the earnings rule; but I shall be returning to that matter in a later Amendment. The fact is—as I am sure the noble Lord will confirm—the figure of £500,000 is an estimate: it might of course be more; on the other hand, it might be less. We simply do not know about that. One of the difficulties of basing the entire argument on money is that it is just an estimate so that we do not know how much it will cost. I find it deplorable that we have reached the stage at which we cannot afford this relatively small sum of money—in the context of Government expenditure it is so very little—to help this group of elderly people.

However, in order that I may put myself right at least with the noble Lord, Lord Jacques, if not with other Members of the Committee, may I say that we on this side of the Committee have acted with great responsibility. I think the Government have reason to be grateful to us for the attitude we have taken in regard to this Bill, when we could so easily have made a great deal of Party political capital out of the taking away of rights which under this Bill Parliament has already given to people.

We have indicated in another place, and I indicated at Second Reading, that we are not opposing the principle of this Bill and that under the economic circumstances we have to accept what is to happen. For that reason I shall not press this Amendment today, but I hope very much that the Government will look at this matter again so that, when circumstances allow, precisely these groups of people, who are frequently in very pathetic circumstances, can be helped. As the noble Lord, Lord Platt, said, if their income was sufficiently great they would in any event be taxed on it. As the noble Baroness, Lady Faithfull, has indicated, they will in any event be eligible for other services of every kind which they might be able to pay for if they had this particular pension.

However, as I do not intend to press this matter to a Division today, I only hope that the Government will consider it as soon as economic circumstances allow. I might conclude by saying that I am very grateful indeed to hear that the Government are prepared to accept Amendment No. 13. I quite understand that it is not drafted correctly; Amendments never are, in my experience, drafted correctly. I shall be quite happy for the Government to bring forward an Amendment which meets the point, and return to it when we get to that stage of the Bill. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Alteration of earnings rule]:

3.20 p.m.

Lord BANKS moved Amendment No. 2:

Page 6, line 6, leave out subsection (1).

The noble Lord said: We are dealing here with the subsection which amends the Social Security Act 1975 so that the level of weekly earnings at which the earnings rule will start is not raised in April of this year from £35 to £50, as originally planned. This Amendment would permit that rise. As has already been said this afternoon, this is the main expenditure-reducing clause in the Bill, and we are told that it saves £45 million net or £60 million gross. It is clear that all Parties, including the Government, are committed to the phasing out of the earnings rule, so there is little argument in principle so far as this Amendment is concerned. We are told that we must have this clause as it stands in order to save that amount of money—in order to save £45 million. We must do so, but not because there is no money in the National Insurance Fund. There is an estimated surplus this year of £932 million, and the estimated surplus next year will be £888 million, after allowing for this particular rise to £50 per week in the earnings rule limit. So we are thinking in terms of the saving of £45 million net, £60 million gross, and there is a surplus of £888 million, to which the £60 million gross will be added if the clause remains as it is now.

Of course, the reason for doing this is that building up this reserve is a convenient means of reducing the public sector borrowing requirement I said on Second Reading that I thought it was a misuse of the National Insurance system to employ it for this purpose, but since then I think we have had grounds for believing that the saving may not be necessary at all. Since the Bill had a Second Reading in this House I have read in the Guardian of 8th March, in a report by the paper's economics correspondent, these words: Treasury officials yesterday admitted publicly for the first time that they have over-estimated the likely size of the public sector's borrowing needs this year in the Letter of Intent to the International Monetary Fund last December. The report goes on: As a result of the miscalculation the borrowing requirement is now likely to be smaller in this financial year than was officially expected when Mr. Healey made his public spending cuts in December. Then two days later, on 10th March, the same paper's business editor wrote: Fresh evidence that the central Government borrowing requirement —and the central Government borrowing requirement covers 90 per cent, of the public sector borrowing requirement— will fall dramatically below Budget forecasts is contained in figures published yesterday by the Treasury. The business editor went on to say: On present showing the public sector borrowing requirement could undershoot the Budget forecast by anything up to £2,000 million. We are here considering £45 million. The stage would certainly appear to be set for important reductions in direct taxation in the forthcoming Budget. I thought it right in view of the changed situation to put down this Amendment, which would allow the limit to rise to £50 as originally intended, so that the noble Lord could let us know whether he thinks this cut in expenditure of £45 million net is still required, and, if so, why? I beg to move.

Lord WELLS-PESTELL

As the noble Lord, Lord Banks, has said, the Amendment would delete subsection (1) of Clause 4 of the Bill, which has the effect of amending the provisions of the Social Security Act 1975, under which the earnings limit is due to rise to £50 a week on 4th April this year, and, instead, maintaining the limit at its present limit of £35. Clause 5, however, provides for the figure of £35 to be increased annually in line with the general movement of earnings, and it is intended that the first such increase will be in November of this year, when the £35 earnings limit will be increased; I cannot say by how much, but undoubtedly it will be increased by a few pounds. The financial effect of Clause 4(1), as modified by Clause 5, is to secure a public expenditure saving of £45 million in 1977–78, after allowing for a lower income tax yield, and in view of the urgent need to secure such savings we consider that it is absolutely essential to keep to this provision.

The noble Lord has referred to the necessity for his Amendment because, he says, in recent days or recent weeks the Government have discovered that there will be far greater savings than were envisaged at the time we were having discussions with the International Monetary Fund. But, in spite of that, the amount of money which we shall have to borrow is still very considerable, and there must be a moral obligation on any Government, so far as they possibly can without imposing and inflicting a hardship upon people to any marked degree, to save as much money as possible. I was tempted to say—although I hesitate to use the word when talking about the noble Lord, Lord Banks, but I cannot think of a different one—that there must be on his part some misconception of how the National Insurance Fund works in practice and how it relates to public expenditure and Government revenue as a whole. I apologise for the use of the word "misconception" but I just cannot think of a better word. One knows that Lord Banks's knowledge and expertise in this field is probably unrivalled in your Lordships' House.

The annual reviews ensure, broadly, that income from National Insurance contributions and Treasury supplement is sufficient to meet the anticipated benefits and administration costs of the Fund and to provide a small margin to allow for short-term fluctuations in income or expenditure. But variations in the principal factors affecting the Fund, such as earnings, prices, unemployment and benefit loads, will alter the balance of costs either in the direction of extra surplus, as in recent years, or towards a deficit, which I think the noble Lord will recognise we had in the 1960s. It would be folly to suggest that a surplus in one year could be used to finance a permanent improvement in National Insurance provision. Were surpluses used in this way it would inevitably increase the future burdens of the working population.

Although National Insurance is, as the noble Lord, Lord Banks, has stressed, a self-contained system, it cannot be considered in complete isolation from the requirements of the economy as a whole and, in particular, the impact of National Insurance Fund receipts on the public sector borrowing requirement. The reserves and surpluses on current account of the National Insurance Fund are invested by the National Debt Office in Government securities. This means, in effect, that the surplus money is lent to the Government and it gains interest for the Fund. But what is much more important is that it reduces the amount which the Government need to borrow from other sources to finance their overall borrowing requirement. Because the National Insurance Fund is part of the public sector, transactions between it and the Government cancel out in calculating the public sector borrowing requirement.

With public sector borrowing at its present very high level—and I do not think that anyone will dispute this—the existence of a large surplus on the National Insurance Fund is of great economic assistance, though it is not intended to be a permanent feature of economic management. But when one is in the situation that we are in at present one must look at every source in order to save money.

I have said before to your Lordships that despite the financial situation in which we find ourselves, we are paying out about £10,000 million a year in benefits of one kind or another. It is an enormous sum. Any Government would be behaving irresponsibly if at every turn they did not save whatever money they could. It may well be that that is not acceptable to a number of people. One must bear in mind that when the Government came to power the earnings limit—and I speak entirely from memory—was about £13 a week. From 1974 to the present time it has increased to £35 a week. What does it mean? Whereas we had an enormous number of people retiring at the age of 60 in the case of women and 65 in the case of men because the earnings limit was fixed at £13, today, with the earnings limit fixed at £35, more and more people are deferring retirement because they can continue to earn a considerable sum of money. We do not quarrel with that.

We say that at present we believe £35 to be a realistic figure. Further, we say that in principle we are wedded to getting rid of this at the first available opportunity. However, the noble Lord, Lord Banks, and the Government disagree on when the first available opportunity should be. The noble Lord naturally believes that it should be done next month. We say that it should not be so soon, but we have undertaken what to me seems to be a very acceptable compromise—that the £35 should be increased in line with the general movement of earnings, and that the first such increase will take place in November. As I say, I cannot tell what the general movement in earnings will be by next November, but obviously the figure will be such that it will mean an increase in the £35. I ask your Lordships to accept that as being necessary at this stage. After all, it is a very good compromise between the £35 and the £50. In principle there is nothing between the noble Lord, Lord Banks, and the Government. Because of that, and because the Government are going some way towards meeting this situation, I hope that the noble Lord, Lord Banks, will feel able to accept the position as it is at present and will not press his Amendment.

3.38 p.m.

Baroness YOUNG

The Committee should be very grateful to the noble Lord, Lord Banks, for raising this issue, because it goes to the heart of the Bill. Clause 4(1), which removed what Parliament put into the 1975 Act—namely, the right to earn £50 a week before the pension was reduced—is now to be removed on the ground of public expenditure. The noble Lord, of course, is an authority on the whole question of the National Insurance Fund, so I shall not follow him in that argument.

However I hope that the noble Lord, Lord Wells-Pestell, will answer this question before we complete the Committee stage of the Bill. If the reason for removing the £50 is exclusively the need to save money, what will he do if—and, as I understand it, under Clause 5 the Government have agreed to dynamise the earnings rule—the Government are unable to control inflation next year? Does that mean that once again those in retirement will be the worst hit, or does it mean, on reading the 1975 Act, that the Government will simply be able to look at the earnings rule and, to quote Section 125(2): The Secretary of State shall estimate the general level of earnings and prices in such a manner as he thinks fit and shall have regard…"? Under Clause 4 shall we be giving up what Parliament had agreed and really buying a bit of a pig in a poke?

Lord BRUCE of DONINGTON

I am grateful to my noble friend for emphasising so clearly the requirements for economy in the public sector and in particular in the realm of public expenditure. It does not lie in the mouth of anyone who has pursued, as a matter of public policy, the necessity for making urgent and even more stringent cuts in public expenditure, to make any plea on behalf of an exception. The pressure generated upon the Labour Government, in particular by the Conservative Party, for even more drastic cuts has been so considerable that it would be a little incongruous if we now had pleas for exceptions to be made in individual cases.

I must say that I thought my noble friend glossed over, as being a matter of not overmuch importance, the colossal error that was made by the Treasury in computing the public sector borrowing requirement during the present year. If I am not mistaken, the error is rather nearer £2,600 million than the £2,000 million that has so far been admitted and to which eloquent attestation was made by the Treasury official attending a Select Committee the other day. My noble friend should not imply—and I do not say that he has implied this—that errors of this magnitude are of no account, and that they are of no material significance to the position. After all, if the Press is to be believed on this—and the Press has given this subject copious coverage—there has been a terrific argument as to whether the public expenditure cuts should be £1,000 million or £1,500 million, all based on the incorrect assumption that the public sector borrowing requirement was about £2,600 million more than it in fact was.

I do not expect my noble friend to give me an answer this afternoon, because this must obviously lie close to the heart of the Chancellor of the Exchequer, who must be complaining bitterly that he is being misled by the Treasury on this whole question. When this matter comes to be reconsidered either by the Chancellor of the Exchequer, or indeed by the Cabinet as a whole, as it must be when the Budget formulation is taking place, some account ought to be taken of the position of people affected by this clause of the Bill. If a person has been an insured contributor all his life and reaches a retirement pay pension age when he is entitled to the normal pension for which he has been subscribing, it is of material significance to be told one day that you can earn up to £50 a week extra without reducing your pension, and then thereafter to say suddenly: "I am afraid you can no longer do that in the light of the current economic circumstances. Your position is now going to be worse."

Therefore, while appreciating the significance of what my noble friend said—and he has put the Government case adequately and fairly based on a public sector borrowing requirement that is now in fact much less—I sincerely hope that he will convey to his right honourable friend the widespread feeling that if there is to be a reassessment of priorities following the discovery of these colossal errors, this is one of the items that should be reconsidered, and that is all I ask. It bites particularly so far as self-employed people are concerned. Self-employed people, although they pay significantly less premiums per week than the remainder of the population, also have a very restricted benefit under the national social security scheme.

When they get to the age of 65, or whatever age the self-employed may select, the prospect of being able to continue in some other gainful employment is a very tempting one indeed. This House, and the other place, ought to encourage them to continue in gainful occupations that are of service to society and bring some benefit to themselves. Therefore, I hope that my noble friend will convey to his colleagues the concept that although perhaps it would be unwise to amend the Bill at this stage, at least some consideration ought to be given by his colleagues when the inevitable, or at least we hope inevitable, reassessment of priorities takes place in the light of changed circumstances.

Lord WELLS-PESTELL

I obviously did not make myself clear, but I thought it was implied in what I said that the Government would do precisely what my noble friend has just said. When there is a reappraisal of the situation the Government are committed to getting rid of the earnings rule limit. I thought I made this clear. I do not want to go over the ground again. It may well be true that the public sector borrowing requirement in the immediate future will not be nearly as large as perhaps the Treasury and other Members of the Government thought it was going to be, but do not let us take too much comfort in that fact. The fact is that it is still going to be rather considerable, as noble Lords opposite know. They are frequently reminding us of the size of it. I come back to what I said, therefore; that is, that we have to save money wherever we can.

The noble Baroness raised the question of what the Government would do under Clause 5. Clause 5 is quite unambiguous. It requires a compulsory review of the earnings rule each year in accordance with the movement of earnings, and taking into account the movement of earnings so the amount of the earnings rule will be increased year by year. I do not think I can go beyond that. The noble Baroness raised the whole question of inflation. Whatever the inflation rate may be, the fact is that earnings have increased fairly substantially year by year and have tended to increase faster than prices. The limit is going to be increased in line with earnings. In the circumstances, I think this is a reasonable compromise between the present £35 and the intention of everybody eventually to get rid of the earnings limit.

Lord BANKS

The noble Lord in his reply said that he thought I was under a misconception with regard to the nature of the National Insurance Fund and the way in which it works. If tomorrow he carefully reads what I said earlier this afternoon I think he will not find any misconception about the way the National Insurance Fund works. I did not, for example, suggest that we should use the whole surplus, the whole £888 million that is estimated for next year, or the whole £3,000 million to £4,000 million which has accumulated in the National Insurance Fund at the present time. I suggested that we should use £45 million out of the £888 million, and I do not think that that is being imprudent or is a sum which, in the absence of any other considerations, people would think it was rash to spend out of a surplus of that amount. The noble Lord says that the Government must save whatever money they can save, but of course you can carry that principle on and on. In this subsection of the Bill they are withdrawing a benefit they have already given. They could of course withdraw other benefits, and save money in that way. That argument is not a satisfactory one, and they must present a case for this particular cut on its merits.

The noble Lord said that there was an urgent need to save, but I pointed out—and it was forcefully emphasised by the noble Lord, Lord Bruce of Donington—that the Treasury have over-estimated the public sector borrowing requirement. I mentioned a figure of £2,000 million; the noble Lord, Lord Bruce of Donington, mentioned a figure of £2,600 million, and that makes a considerable difference. It is true that the borrowing requirement still remains large, but are we to have no tax reliefs? Is the rumour that we read continually in the papers that there are likely to be taxation reductions of anything from £1,000 million to £1,500 million entirely wrong? If there are to be cuts of that kind in taxation, ought not something which is already on the Statute Book and agreed by Parliament to have priority over those cuts? That is the point I am making this afternoon.

This short debate which we have had on this Amendment has served a useful purpose in so far as it has made it quite clear that the economy argument has to be used with a certain care, and cannot just be plugged without any real consideration of what is actually involved and of the changes which have taken place in the situation. I hope that there will be a reappraisal, as the noble Lord, Lord Bruce of Donington, suggested, and perhaps not so far in the future as the noble Lord, Lord Wells-Pestell, seemed to say when he responded to what Lord Bruce of Donington said. I realise that involved here are wider considerations of economic policy which will inevitably affect this matter, and that it might be too much to expect that the noble Lord should be able to answer this afternoon. I hope we may return to it; and because it has these wider considerations and because it needs on the part of the Government a rethink which they may not yet have carried out, I would in the meantime beg, leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

3.50 p.m.

Baroness YOUNG moved Amendment No. 3:

After Clause 4, insert the following new clause:

Review of earnings rule operation

. The Secretary of State shall review the operation of the earnings rule for retirement pensioners and the wives of retirement and invalidity pensioners and the cost of its abolition, including the extent to which it acts as a disincentive to work, and shall lay a report of his review before Parliament by 31st October 1978.

The noble Baroness said: An Amendment in these terms was moved in another place by my right honourable friend Mr. Jenkin. I have slightly rewarded it, but I make no apology for tabling it again because, having listened to what the noble Lord, Lord Banks, said about discrepancies in the Government's estimates of the public sector borrowing requirement, it is clearly valuable to turn our attention to some of the estimates on which the whole of the Bill is based. There is no doubt that there is great public interest in the whole question of the earnings rule. Indeed, the debate which I initiated a few weeks ago on the subject of retirement has brought me an enormous number of letters, a great many of which are directly concerned with the earnings rule. My Party has pressed very hard for an alteration of the earnings rule and we can claim considerable credit for the fact that it now stands at £35 a week. But the country cannot afford to have people, who could be working, not working because of the earnings rule, particularly as the proportion of the elderly in the population will increase.

As I indicated on Second Reading, we on this side of the Committee will not oppose the principle of Clause 4; indeed, we have accepted the alternative that has been put in Clause 5. However, we cannot just let the whole of the argument rest on the different figures of cost that have been given at different times. The whole reason for having Clause 4 at all is, as the noble Lord, Lord Wells-Pestell, said, to save money, and the money that Parliament voted in 1975 by allowing retirement pensioners to earn up to £50 a week before the pension is affected is to be taken away and something else put in its place which must, if it is to be a saving of public expenditure, be less advantageous to the pensioner than what would have been provided in 1975.

We on this side believe that we are taking a very responsible attitude in this matter because we recognise the seriousness of the present economic situation. Thus, what we are now asking in this Amendment is that the Government shall review the operation of the earnings rule and bring forward a report of the review by 31st October 1978 so that by that time we shall have had at least a year of the operation of the Bill to see how it is working, how it affects the numbers of pensioners who are working and what is its cost.

I do not want to take the Committee through all the detailed arguments which were well set out in another place, but in support of my argument I wish to comment on two groups of figures of Government estimates which have been shown in the past to be completely inaccurate. Largely as a result of Opposition pressure, the Government produced in January of this year a document specifically relating to the earnings rule and in it the document makes clear: That deferred retirement statistics for 1973 and 1974 were wrongly interpreted previously to suggest a fall in number which we now think unlikely to have occurred". And: Assumptions have been altered in a number of important respects from that used to provide the estimates. For example, the Government now say that 180,000 people deferred retirement in March 1976 as against the previous figure given to Parliament of 120,000, which is an error equivalent to £70 million or £75 million a year, rather more than the present Bill is alleged to save by preventing the earnings limit from going up in April. I do not wish to comment further on that; it is always difficult to get accurate estimates, but when the whole of the basis of the argument is a question of financial estimates it is vital that the estimates should be accurate.

The other reason for amending the earnings rule has been the major cost which is attributable to wives of invalidity and retirement pensioners. Since a Parliamentary Question was put down on this subject on 23rd February 1977, the Government have referred specifically to a survey carried out by the Office of Population Census Surveys into prolonged sickness. This survey covered illness for periods of one month, three months, six months and 12 months, and concluded that in all four samples between 65 per cent, and 71 per cent, of the informants were married men. However, in the paper submitted by the Department of Health and Social Security for this Bill it was stated: If the proportion of invalidity pensioners at each age were married, as in the population as a whole, then about 85 per cent, of the 373,000 male invalidity pensioners in May 1975 would have been married. However, as the invalidity pensioners include some who have been sick for many years, it is thought likely that a rather lower proportion would be married men than in the population generally. It has been assumed that the proportion married is 10 per cent, less than the population as a whole. There is clearly a disparity between the two statements. If the OPCS survey is correct, then the number of validity pensioners not claiming allowances for their wives is 22,000 as against 52,000 given in the DHSS paper. I quote these two examples only to show that there is some discrepancy in the figures that have been given; and, after all, those figures are the basis for the Bill.

When my right honourable friend put down a similar Amendment in another place the Government were not prepared to accept it, and they gave three reasons for not doing so. The first was that everybody was agreed, the Government and the Opposition, that the earnings rule must go, and so there was no need to review its operation. I do not believe this is an argument at all because, although we are all agreed that the earnings rule must go, if the basis for not keeping to the £50 is the economic situation, we could wait for a very long time before the economic circumstances are such as to justify the total abolition of the earnings rule. I suggest that to say that simply because we all want the earnings rule abolished there is no need to call for a report on the figures is rather like asking everyone to wait for Godot, and I think we shall wait a very long time before we get a result.

The second reason given was that it would create extra work for the Department. I recognise that this may be so, but if the Government will have to review the working and will have to review it each year in the light of the movement of prices so as to keep the earnings rule dynamised, they will already have to do quite a lot of work; they will have to review the numbers of pensioners. They already have a great deal of the information before them and I believe that this is such an important matter that it is an issue to which the Department should give priority. It is very relevant to the third reason for not accepting that the Minister gave in another place which was that members of the Opposition could put down Parliamentary Questions. Of course, that is perfectly true. Anybody can put down a Parliamentary Question and, indeed, can put down a great many Parliamentary Questions, but I should have thought it much more sensible for the Government to produce a report which was fully thought through than for the Opposition to be required to put down a whole series of Parliamentary Questions, all of which will require a great deal of time for their reply. I do not see how one can argue, on one side, that something is going to take up more time and, on the other, encourage the Opposition to put down Questions which will automatically require a great deal of time for their reply.

This is not an Amendment that requires the expenditure of more money, but it is a serious Amendment and is designed to make quite sure that the Government are monitoring the operation of the earnings rule and are bringing a report to Parliament by a given date. I believe that this is in the interest, above all, of the retirement pensioners themselves and of the wives of retirement pensioners who are affected by this, but I also genuinely believe that it is in the best interests of this or any Government to have accurate information before we consider this matter again, as we must inevitably do,[...] at some date in the not too distant future. I beg to move.

Lord WELLS-PESTELL

I cannot think that any useful purpose would be served by dealing with a whole mass of figures to which the noble Baroness referred. There is obviously a difference between the noble Baroness and the Government on the question of figures and all I can say is that we have provided a great deal of explanation as to how the figures have been arrived at. My recollection is that a copy was sent to the noble Baroness and to other noble Lords. I must repeat that the estimates are the best that the Department of Health and Social Security and the Government Actuary's Department have been able to arrive at, based on known facts and the most up-to-date information available as regards the many factors involved. The Government actuaries have no[...] vested interest in this: they are an independent group of people whose arm is not twisted by the Government or by any Department of Government. Their responsibility is to examine the situation in the light of the facts known to them and the facts that emerge from their own inquiries, and to inform the Government accordingly. That is precisely what the actuaries do and it does not matter which Party is in power: one must accept the facts that are given.

Lord PLATT

May I ask for clarification? Why must we accept the facts just because the actuaries are independent of Party? If they have made a mistake, they have made a mistake. We do not have to accept the facts just because the actuaries are free of Party influence.

Lord WELLS-PESTELL

I do not quite follow what the noble Lord is saying. If he is saying that I might consult a top ranking medical consultant and not accept the advice he gives me, there must be something wrong with me. I go to an expert in order to get best possible opinion and the Government Actuary stands in that relation to the Government.

Lord PLATT

I cannot accept that kind of thing. Were they wrong or were they right? Top consultants can be wrong. We all know that.

Lord WELLS-PESTELL

It is nice to hear that from one so expert in the field and so close to it. However, it is all very well people getting up and throwing out things like that, but I wonder what evidence the noble Lord has that the Government actuaries have been wrong in this matter. Or is this just conjecture on the part of the noble Lord? We are saying that we have no reason to believe that the Government actuaries are wrong. What I want to do is to deal with the matter which is before your Lordships. As I understand the situation, the noble Baroness, Lady Young, and the noble Lord, Lord Sandys, are asking for the Secretary of State to review the operation of the earnings rule and lay a report before Parliament. I imagine that the expectation in putting down the new clause is to assess the cost of bringing the earnings rule to an end. If the Secretary of State undertook this kind of investigation, the hope would be that he would find that less public expenditure was required than he had so far supposed and, consequently, would be more willing to announce a timetable for the ending of the rule.

Let us look at the matter on the information that we have and on the information that the noble Baroness herself has. There is no reason whatever to suppose—and the noble Baroness knows it—that a review carried out by October next year would come to any different conclusions from those which Ministers laid before the Standing Committee on the Bill in another place. These showed that to end the earnings rule would involve a gross cost to the national fund of something like £200 million, with an offset by an income tax yield of £60 million. The Government do not, if I may say so with the greatest respect, need to carry out a formal review of the rule in 1978 in order to emphasise that abolition is, and remains, their long-term intention. The proposed review would therefore serve very little purpose but would add considerably to the work of the Department and of the Secretary of State. That is something that we should find very difficult to undertake, always assuming that it would serve some useful purpose, and we are by no means convinced that it would.

I also believe that a review would not make funds available for the abolition of the earnings rule. Nor do we think that it would bring forward the date at which the abolition could be afforded. The wording of the new clause does, however, mention the alleged disincentive to work presented by the earnings rule and supporters of the clause doubtless feel that too little weight has been given to this factor in the Government's thinking so far. In this connection, it is relevant that the first results of the full-scale survey which is being carried out by the Office of Population Censuses and Surveys will be available at the end of the year and more detailed analyses will follow in the first half of 1978. This should provide much of the information which noble Lords opposite are seeking about the considerations which most influence the work patterns of people over pension age, without, I submit, the need for the special review called for in the noble Baroness's new clause.

If we felt, quite sincerely, that a useful purpose would be served by undertaking a review of this kind, the fact that the Government want to see the end of the earnings rule would make them only too pleased to undertake it notwithstanding the amount of work involved. But we feel that we must know a great deal more in the future than we do at present, and that is why we feel that the review into the reasons for retirement which is being carried out by the Office of Population Censuses and Surveys will give us far more and more detailed information covering a much wider field than any review which my right honourable friend could undertake himself.

4.10 p.m.

Lord HARMAR-NICHOLLS

The noble Lord came to the point only in the last few sentences of his reply to my noble friend. My noble friend was saying that there seems to be evidence to show that the damage thru the disincentive will do in money terms could well be greater than the saving that would be brought about by this. She then went on to say that she would tolerate the risk of the damage being greater from the disincentive if she could see that there was a reasonable chance of the earnings rule being abolished in the reasonably near future. She recognised at once the extra work which would be put on the Department and on other people to get the review. She then went on to say that from her reading of the situation she cannot see any speedy ending of the earnings rule if the conditions which have brought about the change which we are now putting forward are the reasons for wanting to amend the actual terms.

If the noble Lord can say that within a reasonable period—and I should say two to three years—he could see that the earnings rule is likely to go, and that conditions would be such for that to happen, then I would have accepted the answer that he has just given to my noble friend. But what if this is likely to go on for three, four or five years? After all, the problem here is deep-seated and there does not seem to be any speedy way of getting out of it. If it is going on, then we ought to be told more authoritatively than the noble Lord has done so far whether the disincentive of maintaining the rule will be more damaging than the money saved. If the disincentive is more damaging than the money saved, and it is continued a minute longer than needed, then the chance of getting out of our economic doldrums will be made even more difficult because one is removing, because of the disincentive, one of the contributions that could get us into a position where we could afford to do away with the whole lot.

I should have thought that my noble friend's Amendment is a very reasonable one, if this general basis which we have been considering has any strength at all. There is no question at all of suggesting that the actuaries are not doing their job. There is no suggestion that the Government themselves are deliberately turning a blind eye to facts that are known. But we know that in this field it is very intricate and that general atmosphere as well as cash considerations comes into the whole situation. The noble Lord knows that if someone is given a date by which he has to put in a report, he is more likely to get on with it and keep up to date than if it is merely left to him to do his best in his own way. I have found in business—and the noble Lord must have had this experience, too—that with the best will in the world one is doing what one thinks is one's best in getting on in order to get certain information to hand. But if that information has to be produced by a specific date that has the effect of making certain that it is produced.

I should have thought that the noble Lord would not be showing any kind of weakness if he were to have second thoughts, and he said that he would be prepared to look at this question again. If the disincentive carries with it he damage that it may well do—and my noble friend has suggested that the damage from the disincentive will be quite considerable—then one is really removing from oneself one of the arms for fighting out of the general economic doldrums which we are in today. I should have thought that this proposal was reasonable and that it was not necessary to prove the case specifically in order to ask the noble Lord to accept it. If there is even a suggestion of a risk of the disincentive being as damaging as it might be, then the Government have a duty, without showing any kind of weakness, to make the situation absolutely certain and crystal clear; and the nearest that one can get to that is through having a review in order to see that we are doing the right thing.

4.15 p.m.

Lord SANDYS

I should like to support the Amendment and all that has been said by my noble friends Lady Young, who introduced the Amendment, and Lord Harmar-Nicholls, who has just supported it. Both stressed the need for accurate information. This is what we are so short of at present. The noble Lord, Lord Wells-Pestell, said, "There is no reason to believe that the Government Actuary is wrong". We accept that in so far as the information supplied to the Government Actuary is the information on which he has based his calculations. But there is a quite basic problem here, and I should like to go into a little more detail about it because I believe that the Actuary has reached a conclusion which is not in line with what we believe to be the case.

I do not in any way impugn his motives or the integrity of the office, but I believe that the information has come through inaccurately. I say this because up to 1974 the task was not so difficult because it was reasonably easy to maintain a check on the number of those who were to defer their retirement. This was based on the weekly flat rate insurance contributions. However, after 1975 it was no longer possible to make this assessment with any accuracy whatsoever because all the contributions were earnings-related, and therefore it was not possible to select out of statistics anything which would bear any accurate relationship to a change in trend.

So what has been supplied to the Government Actuary? We believe, though we have no reason on which to be able to prove it, that they are projections; they are the best estimate that the Government can provide. The tool which the Government used to provide these estimates—that is to say, the fiat rate weekly contributions—and the statistics which come from that are no longer available to the Government. So they are compounding their problems by having no current source of information.

I believe that the problem is a deeply serious one because the Government have failed to detect an underlying trend; namely, the great desire of large numbers of those of pensionable age who wish to continue work. I believe that the inaccurate assumptions are very serious here. There is an assumption here that 85,000 wives of invalidity and retirement pensioners are in work. The Government from their own statistics would not at the moment be able to tell us about that, but we believe once again that the information which they have supplied to the Government Actuary has been based upon assumptions on which very serious doubt may be cast.

I should like to refer to what the late Mr. Brian O'Malley said in the House of Commons on 29th January 1975, as reported at column 469 of the Official Report. He said this: …if the earnings rule were abolished numbers of people who in present circumstances might well retire would not then retire. January 1975 is over two years ago, and the late Mr. O'Malley then recognised something which the Government at present are unwilling to recognise to such an extent; namely, this very substantial desire among people to continue in their work. I think that the inaccuracies of the situation demand a review of the position, as proposed in the Amendment, and I do not believe that the Office of Populations Statistics and other means of providing the material will be an adequate or sufficiently speedy a solution to the problem.

Lord BANKS

I feel that the Government should accept this Amendment. After all, the noble Baroness, Lady Young, and the noble Lord, Lord Sandys, have gone a great deal further towards the Government position with regard to the earnings rule than I was prepared to go, and they have accepted, at any rate for the time being, the economy argument, which I was not prepared to accept. I think it is quite understandable, in these circumstances, that they should want some kind of guarantee that the whole subject will be a matter for discussion in Parliament within the foreseeable future. I also think it is quite possible that the circumstances will be entirely different 18 months from now. We have suggested this afternoon good grounds for believing that the situation is very different from what it was thought to be when we had the Second Reading of this Bill in your Lordships' House only a fortnight ago, I think it was; and if mistakes can be made and situations can appear different in so short a time, it is not unreasonable to suppose that matters might be very different in 18 months' time and that it would therefore be worth while tying the Secretary of State down to a review of this kind at that time.

Lord WELLS-PESTELL

I do not think I can add a great deal to what I have already said. I will certainly, for my own information, take up the point that the noble Lord, Lord Sandys, has made about the Actuary's information being inaccurate, and I will read in Hansard tomorrow what he has had to say. But at Second Reading I said that the number of people over pension age who were deferring retirement had actually fallen considerably, from about 218,000 in November 1974—a level which had remained fairly static since 1971—to around 135,000 today; and I acknowledged that my figure of 135,000 was provisional. What it means is that people over pension age will be left as free as they are now to undertake either full-time or part-time employment if they wish to do so. It also means that persons at 60 or 65, depending on their sex, will, by and large, take their pensions when they can if they are not prevented from doing so by their earnings; and that a higher earnings rule limit in fact leads to more people drawing their pension and thus to greater public expenditure.

On the question of disincentives, the point is that we have no evidence whatever that the earnings rule at the level at which it now is—namely, £35 a week, dynamised from this November—acts as any disincentive. I would have thought that all the evidence was to the contrary. To those pensioners who have already retired but work part time, the people to whom the rule applies for five years after minimum pension age, one has to bear in mind that £35 a week is a great deal of money even now; and I do not see how the question of it being a disincentive can be made out.

I think the only other thing I want to do is to call your Lordships' attention to what I said a moment or two ago concerning the review which is being undertaken by the Office of Population Censuses and Surveys. The Amendment, as I understand it, wants a review undertaken by October 1978. I said to your Lordships that the Office of Population Censuses and Surveys will in fact be publishing an interim report to my right honourable friend at the end of this year, and the survey will probably be completed by the middle of next year. We shall therefore get, presumably much sooner than the date mentioned in the Amendment, a good deal of information which will help us to come to a conclusion on this particular matter.

Lord BYERS

I do not want to prolong this debate more than a couple of minutes, but I am just asking myself whether the Government attitude on this is a sensible one. It seems to me that if we are all committed to getting rid of the earnings rule at some time, then we ought to be having fairly regular reviews so that we know exactly what is the up-to-date position. What the noble Baroness, Lady Young, has asked for is something in about 18 months' time. In 18 months' time many factors will have changed: certainly the pay policy will be different, the inflation rate will be different, and we are led to believe that the taxation structure and rates will be different. All these are important factors which affect a decision on phasing out the earnings rule. The picture may be worse or it may be better, but at least the Government ought to know this; and, at the very best, this census that the noble Lord has referred to can be only half the picture. What we really want is a working document on which we can say, "Taking into account all the things which affect this decision, are we now in a position to say, 'Yes, we can abolish it' or do we have to wait for another two years?"

Baroness YOUNG

I am most grateful to all those noble Lords who have taken part in this debate, In putting this Amendment down I felt I was merely asking for something which would be of benefit to the Government and to everybody else who takes a serious interest in this very important subject—and I am very grateful for the most helpful remarks of the noble Lords, Lord Byers and Lord Banks. The fact is that, in the past, the estimates have not been very satisfactory. I am not in any way intending to pin the blame or suggest the blame should be pinned on any particular person at all, but the fact is that this is a very serious matter indeed; and if one looks no further than the provisional estimates that the Government gave in relation to those deferring retirement, in March 1976 they were said to number 180,000 and in the autumn of 1976 this figure had dropped to 135,000, which suggests that there is some difficulty in getting very accurate figures.

As my noble friend Lord Sandys has already drawn to your Lordships' attention, the fact is that the figure in relation to working wives has altered very considerably, and as the number of working wives very much affects the total amount which will be saved by not having the £50 limit, it is very important to get an accurate figure on that. But most of all, I think, we need to know in the future what the cost is going to be in relation to the economic circumstances of the country; and although I think the information coming from the Office of Population Censuses and Surveys will of course be valuable—it has been very useful in the past—it is by no means the whole of the story. After all, if it proved not to be as expensive as the Government now think, then, who knows, they might be able to consider the pensions for the over-80s; and if it is more expensive, then we shall know what the cost to the county is and we shall all be able to form much better judgments.

My Amendment does not commit the Government to any extra expense. It obliges the Government to have a look at this whole question and to look very carefully at what the costs are going to be; and, although the noble Lord has said that the Government Actuary does the work and is non-political—something which of course I accept entirely—the noble Lord, Lord Banks, will know that the estimated surplus for the National Insurance Fund in 1976/77 was first of all estimated to be £389 million and was then estimated to be £932 million, so it does

Clauses 5 to 10 agreed to.

show that a lot of estimates vary considerably. I think this is such an important matter of public interest that I will press my Amendment and test the feeling of the Committee on it.

4.26 p.m.

On Question, Whether the said Amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 87; Not-Contents, 56.

CONTENTS
Adeane, L. Ebbisham, L. Onslow, E.
Alport, L. Effingham, E. Platt, L.
Amory, V. Emmet of Amberley, B. Porritt, L.
Ampthill, L. Faithfull, B. Rankeillour, L.
Amulree, L. Fraser of Kilmorack, L. Reigate, L.
Arran, E. Gainford, L. Robbins, L.
Auckland, L. Glasgow, E. Ruthven of Freeland, Ly.
Avebury, L. Gowrie, E. Sackville, L.
Balfour of Inchrye, L. Greenway, L. St. Davids, V.
Banks, L. Grey, E. St. Just, L.
Barrington, V. Gridley, L. Saint Oswald, L.
Beaumont of Whitley, L. Halsbury, E. Sandford, L.
Berkeley, B. Hanworth, V. Sandys, L. [Teller.]
Birdwood, L. Harmar-Nicholls, L. Selkirk, E.
Brookeborough, V. Hatherton, L. Sempill, Ly.
Byers, L. Hawke, L. Sligo, M.
Campbell of Croy, L. Hylton-Foster, B. Somers, L.
Carrington, L. Kilmany, L. Stamp, L.
Cathcart, E. Kinnaird, L. Strathcarron, L.
Clancarty, E. Lloyd of Kilgerran, L. Strachclyde, L.
Clwyd, L. Long, V. Strathcona and Mount Royal, L.
Craigavon, V. Lyell, L. Strathspey, L.
Cullen of Ashbourne, L. Macleod of Borve, B. Tenby, V.
Daventry, V. Mills, V. Trefgarne, L.
de Clifford, L. Monck, V. Vickers, B.
De Freyne, L. Monson, L. Ward of North Tyneside, B.
Denham, L. [Teller.] Newall, L. Westbury, L.
Derwent, L. Northchurch, B. Wigoder, L.
Drumalbyn, L. Nugent of Guildford, L. Young, B.
NOT-CONTENTS
Aylestone, L. Goronwy-Roberts, L. Pannell, L.
Bacon, B. Greene of Harrow Weald, L. Peart, L. (L. Privy Seal)
Blyton, L. Hale, L. Phillips, B.
Brockway, L. Harris of Greenwich, L. Sainsbury, L.
Castle, L. Henderson, L. Segal, L.
Champion, L. Houghton of Sowerby, L. Slater, L.
Chorley, L. Jacques, L. Snow, L.
Collison, L. Janner, L. Soper, L.
Cooper of Stockton Heath, L. Kilbracken, L. Stewart of Alvechurch, B.
Davies of Penrhys, L. Kirkhill, L. Stone, L.
Donaldson of Kingsbridge, L. Leatherland, L. Strabolgi, L. [Teller.]
Douglas of Barloch, L. Lee of Newton, L. Taylor of Mansfield, L.
Douglass of Cleveland, L. Lloyd of Hampstead, L. Wallace of Coslany, L.
Elwyn-Jones, L. (L. Chancellor.) Lovell-Davis, L. Wells-Pestell, L.
Fletcher, L. Lyons of Brighton, L. Wigg, L.
Gaitskell, B. McCluskey, L. Winterbottom, L. [Teller.]
Gardiner, L. Northfield, L. Wootton of Abinger, B.
Gifford, L. Oram, L. Wynne-Jones, L.
Gordon-Walker, L. Paget of Northampton, L.
Resolved in the affirmative, and Amendment agreed to accordingly.

Clause 11 [Mobility allowances for certain persons eligible for invalid carriages]:

4.35 p.m.

Lord WELLS-PESTELL moved Amendment No. 4:

Page 11, line 42, at end insert ("; or (d) would have been, by virtue of any of the preceding paragraphs, a person to whom this section applies but for some error or delay for which in the opinion of the Secretary of State the person is not responsible and which is brought to the attention of the Secretary of State within the period of one year beginning with the date of the passing of this Act.").

The noble Lord said: I am hoping that this is a matter in which we shall all be in agreement. This Amendment has been put down to meet a commitment given in another place. Paragraphs (a), (b) and (c) of Clause 11(3) define those beneficiaries who have reserved rights under the health service vehicle scheme and who may be allowed under the clause to switch, if they choose, to the new mobility allowance. Noble Lords will know that the vehicle scheme is provided under Section 33 of the Health Services and Public Health Act 1968.

The Government believe that Clause 11 as at present drafted covers all those beneficiaries who have reserved rights and who consequently are entitled to exercise the option to change over to the mobility allowance. Nevertheless, concern was expressed during the earlier passage of the Bill and by the Joint Committee on Mobility for the Disabled that there may well be deserving cases who would have met the terms of paragraphs (a), (b) or (c) of subsection (3) but for some error or delay for which they were not responsible. It was thought those cases might well come to light once the legislation came to be implemented. The Government therefore agreed to put down an Amendment giving the Secretary of State a safety net to catch cases of this kind which are brought to his attention within a reasonable time limit. The Amendment as put down is wide enough to achieve this effect. It is purely beneficial and I ask your Lordships to accept it.

Lord SANDYS

The noble Lord, Lord Wells-Pestell, rightly foreshadowed agreement from this side of the Committee. Category 3 beneficiaries, with a tricycle or a private car allowance, in particular, might conceivably have fallen through the net. It so happens that this was being discussed in another place on Report on 14th February this year only two days before the debate in this House on the Snowdon Working Party Report on the Integration of the Disabled. I then mentioned to your Lordships there had that day in The Times appeared an article in regard to discussions which had taken place between Ministers in regard to new arrangements and the loan plan whereby the mobility allowance could be commuted. It is quite clear that this new arrangement which the Government have reached will have some benefit and we believe it goes some way towards meeting the point raised in Standing Committee.

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Clause 12 [Amendments of Supplementary Benefits Act 1976]:

Lord BANKS moved Amendment No. 5: Page 12, line 8, leave out ("notwithstanding that the contribution is not actually made").

The noble Lord said: Under subsection (1)(a) of this clause the parental contribution received by a student must be taken into account in assessing him for supplementary benefit. I do not object to that. However, subsection (1)(a) also states that such a contribution, if prescribed, must be taken into account whether or not it is actually made. The Amendment seeks to remove the qualifying clause, notwithstanding that the contribution is not actually made. The supplementary benefit is intended to deal with actual situations, not notional situations. It is a form of emergency first-aid and that cannot be refused to someone because notionally they should have received it from someone else. A Department of Education and Science survey indicated that 73 per cent. of students do not receive the full parental contribution.

I would ask the noble Lord, Lord Wells-Pestell, whether he agrees that this Amendment is right in principle. On Second Reading the noble Lord advanced administrative arguments in sup sort of the provision in the clause. But is it only on administrative grounds that he would object to the Amendment? Are the administrative difficulties insuperable? For example, would it not be possible to say that parents should pay their contributions to the local authority, as they do their rates, and that the local authority should pass on the contribution to the students? The parents who did not pay could be proceeded against by the local authority. The student who had not received his parental contribution could then apply to the local authority for a certificate which he could present to the Supplementary Benefits Commission.

I fully realise that that suggestion would be beyond the scope of this Bill. But perhaps if this Amendment were passed it would encourage the Government to introduce such an arrangement. In any event, in moving this Amendment, I draw attention to the absurdity of including what is not paid as if it were, and make the suggestion that the administrative problems are not as great as has been suggested. I beg to move.

Lord GIFFORD

I wish to give some support to the Amendment and the sentiments behind it. I speak as having taken some cases on the Supplementary Benefits Act on appeal as a practising lawyer. The law on this aspect of supplementary benefits for those students who are engaged in full-time education has been considered recently by the courts in the case of Atkinson. I am sure that we are going to have further references to that case. Mr. Atkinson was a student who succeeded in the Court of Appeal in obtaining benefit to the full amount of his requirements and, in doing so, caused some confusion to the Department. There are some Amendments to be taken later which deal precisely with the implications of this case. One of the arguments used by him on appeal was that his parents had the means to support him but he was saying that they were not supporting him.

The court in its judgment made quite a sensible answer to that. It said: the Department is entitled to take the view, prima facie, that if a student's father or mother has the means to support him, then the likelihood is that they will support him in the vacation. This case turned on the vacation grant. But, of course, the student can bring evidence before the Commission or Tribunal to show that he is not receiving that support. If he bring such evidence, he may be entitled to a full grant. It is much better, surely, for benefit to be received on the basis of someone's actual needs rather than on the basis of rules of thumb or notional contributions which can cause hardship in the particular case.

The whole scheme of the Act—and I will be returning to this in later Amendments—is to give to the Commission and, on appeal, to the Tribunal, the utmost discretion and flexibility in the way it is applied. Discretion and flexibility are not possible when there are regulations which lay down arbitrary provisions forbidding the Commission to grant benefit even when the claimant is not getting the notional contribution. It is unfair and I hope that my noble friend on the Front Bench can answer the points and criticism raised.

4.48 p.m.

Lord WELLS-PESTELL

My noble friend Lord Gifford is quite correct. We will return to this matter in much more detail later. I do not want to have a rehearsal for that at this stage. I can indicate what is in the mind of the Government to the noble Lord, Lord Banks, and to my noble friend Lord Gifford. As we see it, the effect of this Amendment would be to frustrate the proposal to give statutory backing to the Supplementary Benefits Commission's existing practice of taking into account the assessed parental contribution whether or not paid. I repeat the word "assessed".

In giving the background to the Government's Amendments to Clause 12, I believe I can make it clear that for the Supplementary Benefits Commission to make good any part of a contribution that a parent has been assessed as able to make—and I repeat, that a parent has been assessed as able to make—would, in the Government's view, be to undermine the whole concept embodied in the Education Acts and Regulations, that the cost of higher education, where appropriate, should be shared between the parent and the State. The Commission should not be asked to shoulder a burden which Parliament has deliberately placed elsewhere.

There is little doubt that replacement by supplementary benefit in the vacations of any alleged shortfall in the parental contribution would be an attractive proposition and would lead to a rapid growth in the numbers of claims from students. I believe the Amendment would frustrate the existing practices of the Supplementary Benefits Commission. Perhaps I am being unduly suspicious, but it is really an open invitation to students and parents to go into collusion and say that the parent does not pay.

As I have said, we believe it would lead to a considerable growth in the number of claims from students. It is estimated that additional expenditure in benefits could be as much as £6 million annually. There would also be additional administrative costs, and a burden would be imposed on the Commission's officers which would be intolerable and would mean that their ability to provide a proper service to the old, the sick and the unemployed would be seriously impaired. The Government's argument on this matter is not based entirely on administrative difficulties, but these would nevertheless be very real, because if a student came along and said: "My parent has not paid although he is supposed to pay", and if the Supplementary Benefits Commission had to carry out some kind of investigation to see whether the parent had or had not paid, that would be an intolerable burden upon them. It would be necessary for the Commission to check the position and to assess how much, either in cash or in kind, was being contributed by the parent. I shudder to think of the amount of work involved. The task of evaluating a contribution given in kind—for example, clothing or maintenance in some form other than money—would be virtually impossible.

If this Amendment is put down, as I am sure it is, out of concern for those students who, although their parents are assessed as being able to contribute, suddenly find themselves in difficulties because for some quite unforeseen reason the parents are not able to pay, then the Amendment is unnecessary because the Commission can help, pending a reassessment of the grant by the local education authority. That happens already. We realise that there are exceptional circumstances, and the Commission tries to meet them. Therefore, in cases of genuine hardship, provision already exists for the Commission to give help through the exercise of its discretionary powers in an exceptional situation. However, I would ask the noble Lord to look very closely—and I am sure he will do so—at what might happen if this Amendment were accepted by the Government or, if pressed, accepted by your Lordships. It would impose an almost impossible task on the Supplementary Benefits Commission when there are several thousands of such applications. Many students could no doubt say, with some degree of truth, that they are not getting the allocation that has been made for vacational purposes.

It is a problem. I rather like the method which has been suggested by the noble Lord and I wish somebody would look at it, because obviously something has to be done to clarify the situation in a way that would be both workable and acceptable. But as things are at the moment, I do not think any reasonable person would say otherwise than that the Supplementary Benefits Commission could not function in any way other than the way it functions at the moment. For those reasons, in a sense with some reluctance, I must say that we cannot accept the Amendment of the noble Lord and I would ask him whether he feels that he could withdraw it.

Baroness YOUNG

Before the noble Lord, Lord Banks, replies, in view of the fact that we shall be going over this ground on several occasions during our debate on Clause 12, as the noble Lord, Lord Wells-Pestell, has based his arguments for not accepting the Amendment on the fact that there could well be collusion between the student and his parents, and the parents do not pay their part of the grant in order that the student can claim supplementary benefit, could he tell us what evidence he has for that assumption? Secondly, and rather more importantly, may I ask what discussions there have been between his Department and the Department of Education and Science on this matter?

I understand the point about the administrative difficulties that will fall on the officers of the Supplementary Benefits Commission if they have to investigate fully each case. But the difficulty for the student, on the other hand, is that if he does not get money from his parents he is without money altogether. There is evidence to show that the level of grants has not in fact kept pace with the rate of inflation. Further, the students may not be able to get vacation work, so he is then in a very difficult position indeed—and of course it is the poorest students who are worst off. I suspect, in fact, that in many cases it will be the girls who will be even worse off than the men.

This is a serious matter, and I think the Government need to look at it very carefully. I have great sympathy with the noble Lord, who is left to argue a very difficult brief indeed, but I would ask him, before we conclude all our discussions on this part of the Bill, whether he could tell us how much consultation is going on between the two Departments and how he expects some students who will find themselves in an extremely difficult position are going to manage.

Lord WELLS-PESTELL

I cannot say off the cuff what discussions are going on at the present time or what is planned for the future, but I will certainly find out and at some stage during these proceedings will give the information to the noble Baroness and your Lordships. I hope I did not say that we had evidence of collusion. The noble Baroness asked what evidence of collusion there was. What I hope I said was that it could give rise to that kind of situation; and of course it could. But I hope I did not say that we had any evidence that such a thing happens.

We must face the fact that at the moment the parents, under the various Acts, have a responsibility—not only a moral responsibility, with great respect, but a financial responsibility, as the noble Baroness knows better than most people among us. There is a financial responsibility, and I think any Government Department has to think twice before having an arrangement, or accepting some kind of arrangement, whereby a person could be assisted twice for the same purpose. That is possible; and apart from other difficulties there is also the difficulty of establishing whether or not a student is receiving the allocation that should be received from the parent. It is because of those difficulties, and because there is a responsibility on the parents at the present moment, that I suggest we ought to think very carefully before taking some step that could release them from that responsibility.

5 p.m.

Lord ROBBINS

I must confess I feel very great sympathy with the noble Lord, Lord Wells-Pestell, over his reluctance to accept this Amendment. I think that prima facie it constitutes some incentive to collusion, and for that reason I believe that we have to think twice before urging it on the Government. On the other hand, I feel equally strongly that the ambiguity which exists in present practice can bear very hardly on students who, for some reason or other, not collusively, have repudiated dependence on their parents and find themselves in need. It seems to me that, whether or not the Amendment is considered, that side of the question deserves very serious consideration at some stage.

Lord SLATER

I have listened most attentively to the discussion on this issue. My noble friend Lord Gifford described himself as a lawyer, and talked about those who are responsible for giving further consideration to applications for increases in benefit, against the decision of the local authority. No one has said anything in support of those who are responsible for making a decision in the first place.

My experience in local government taught me that there must be confidence in those who are first responsible for giving consideration to an application for student grant, in order that someone may go on to college or university. But it seems to me that more or less everything that has been said has decried the usefulness and intelligence of those people in local government who are responsible for the administration of this sector. They have been decried for not having the ability, and it has been said that if a student wants to get assistance, without depending on his parents, he must apply to the Supplementary Benefits Commission. I want to support my noble friend Lord Wells-Pestell who has endeavoured, to the best of his ability, to put forward the case on behalf of the Government, and I take my stand in support of the local authorities who are responsible in the first place for dealing with student applications.

I am not speaking without knowledge of this subject, because my daughter had to apply for a student grant before she went to college. I was working at the coalface at the time, and I had to pay my contribution towards my daughter's grant. But from what has been said one would think that the students of this country are being treated so badly that there is no outlet whatever for them, and that some parents are not facing up to their responsibilities in the way they should. They say that they would like the best form of education, but they are not prepared to make any kind of contribution when they are called upon to do so.

Lord BANKS

I am grateful to the noble Lord, Lord Gifford, for drawing attention to the legal case, which is the basic reason why this part of the clause appears as it does in the Bill; and I am glad to have his support for the assertion that it is the actual situation which supplementary benefit should help, and not the notional situation. It seemed to me that the principal objection, if not the only objection, of the noble Lord, Lord Wells-Pestell, was one of administration, and I see that within the scope of the present arrangements there would be administrative difficulties for the Supplementary Benefits Commission. But I suggested a special arrangement, with the local authority collecting the parental contribution and passing it on to the student; the student being able to claim a certificate from the local authority if he did not receive the parental contribution, and the local authority being able to proceed, against the parent if they did not get the contribution, just as they would if they did not get the rates. That suggestion seemed to appeal to the noble Lord, and I hope that he will draw it to the attention of his right honourable friend the Secretary of State for Education. That is one solution.

Another solution is to abolish parental contributions altogether for adults; and that second one is the one which I prefer. Either of those two solutions would be acceptable to me, but I appreciate that both would involve legislation quite beyond the scope of this Bill. The Department of Education would clearly be involved and would have to take the initiative. For that reason—though I think it has been reasonable to stress this matter, and to point out what a paradoxical and absurd situation it is—I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.6 p.m.

Lord WELLS-PESTELL moved Amendment No. 6:

Page 12, line 21, at end insert— ("(2A) Subject to subsection (7A) below, regulations under the preceding provisions of this section may be so made as to take effect from the commencement of the Supplementary Benefits Act 1976.").

The noble Lord said: We have reached a stage in the proceedings which brings us to a very important clause, and I wonder whether I may ask your Lordships—in particular, the noble Baroness, Lady Young, and the noble Lord, Lord Banks—whether they feel that I can speak to Amendments Nos. 6, 9, 10 and 11 together. This is not because I want to save time, but because to some extent they intertwine and overlap. In introducing these Amendments, I think it would be helpful—it will take a little time, but I will not be unnecessarily long—if I gave the background to those subsections of Clause 12 which deal with students.

The Government agree in principle with the views expressed by the Supplementary Benefits Commission on their Annual Report for 1975, that supplementary benefit is not an appropriate form of income support for students. But to change the student support system so as to make recourse to supplementary benefit unnecessary in every case would not be possible without unacceptable implications for public expenditure. In these circumstances—and the Commission fully agrees with this—the principle cannot be realised. What the Government have done, under the new arrangements announced by the Secretary of State in February 1976, is to concentrate the vacation maintenance element in the student's grant into the two shore vacations at Easter and Christmas. During these vacations, students now have an income equivalent to the supplementary benefit entitlement for a single non-householder, and only a minority with special commitments should still need supplementary benefit. In the long summer vacation, when no provision will be made in the grant for maintenance, any student unable to support himself by working will be able to claim supplementary benefit.

Where this Bill comes in is in regard to the Commission's long-standing practice of taking full account of the contribution which parents are responsible for making under the education legislation towards the cost of their children's maintenance, and allowing no disregard on the student award. The Commission does this because to ignore any shortfall in the parental contribution would be to act contrary to the student grant scheme and assume a liability which Parliament, we feel, has properly placed elsewhere. To disregard any part of the student award would be to provide twice over for the same purpose and, in our view, would be an improper use of money—one might almost say a waste of money.

The Commission's use in this way of its discretionary powers to deal with exceptional circumstances has now been successfully challenged in the Court of Appeal. May I make it quite clear that the whole purpose of Clause 12(1) is to give statutory backing to the Commission's long-standing practice. As I said a moment or two ago, unless this is done the additional burden on public funds could amount to as much as £11 million per annum, apart from the serious staffing implications of having to deal with a greatly increased number of claims, and having to determine whether or not a parental contribution has been made either in cash or in kind and then for the Supplementary Benefits Commission to try to place a value on that cash or kind.

I should make it clear that the rules to be laid down under the Act and regulations will be the same as before. No change of policy will be involved. The object is solely to put the policy on a proper statutory basis. In particular, students who are disabled or lone parents will continue to get supplementary benefit on the same terms as before: that is, if the parental contribution is not being made it will not be taken into account, and students who are disabled or lone parents will get a disregard of £2 on the maintenance element of their grant.

Your Lordships will see that Amendments introducing a new subsection (2A) to Clause 12 contain a power to ensure that regulations made under Clause 12(1) and (2) may be made so as to cover past cases, I want to emphasise that point so that we know exactly what we are doing. This is essential if the Commission is to be protected against the impossible task of looking again at cases which have been settled since the supplementary benefits scheme came into being over 10 years ago, in 1966, which would bring its current work on meeting urgent need almost to a halt, if not to a halt.

I should make it clear that the purpose of the new subsection (7A) is to ensure that the legislation does not have the effect of nullifying the judgment of the Court of Appeal in relation to the particular case which was laid before it. The Bill also seeks to deal with a general issue which arose in the judgment of the Court of Appeal to which I have referred. The court ruled that the wording of the Supplementary Benefits Act was not such as to enable the Commission to use its discretionary powers in relation to classes of cases as distinct from individual cases. I think one could argue that the whole judgment revolves around this. This has left the Commission in the position of having an extremely shaky statutory basis for a wide range of its policies and for the payments that it makes in connection with them.

Paragraph 4(1) of Schedule 1 to the Supplementary Benefits Act 1976, which consolidates a similar paragraph in the 1966 Act, gives the Supplementary Benefits Commission power to increase or, in the case only of a supplementary allowance, reduce the benefit entitlement which would otherwise be arrived at in order to take into account any exceptional circumstances. The Commission uses this power not only in relation to the exceptional circumstances of an individual but—may I say this very carefully—also in relation to categories of cases. As I understand it, the decision of the Court of Appeal was concerned with categories. Therefore, when we are thinking of what the judgment of the Court of Appeal really is, it is in relation to the Supplementary Benefits Commission using its discretion in relation to categories.

All that we have heard about in the judgment of the Court of Appeal—and it is natural that it should be only in relation to the person who sought their judgment—is the question of the student category. Indeed, it is inevitable that discretion should be exercised in this way in a scheme such as supplementary benefits which deals with millions of claims a year. You must have categories; you cannot deal with millions and millions of claims on the basis of individuality. That is what this Government and every Government since 1966 have beein doing, thinking that it was right for them to do it and that they had the power to do it.

May I give two examples. The Commission awards substantial heating additions at standard rates and special diet additions of set amounts to fairly wide categories of claimants meeting specified criteria, such as illness or infirmity, or for accommodation that is difficult to heat. At present, over 1 million heating additions are in payment and there are about 300,000 additions for special diets. On the other hand, this power has also been used on a much smaller scale to reduce or to deny benefit to some categories of claimants whom it would be anomalous to support from public funds.

If noble Lords would like an example, I hope they will feel that a good one is overseas visitors who have been allowed into the country on condition that they will not be a charge on public funds. It seems perfectly reasonable that in such circumstances the Supplementary Benefits Commission should say, No; these overseas visitors have been allowed into the country on condition that they will not be a charge on public funds. However, I ask your Lordships to keep in mind the whole question of categories; if you cannot help one category you cannot help the others. It really is, as I see it—although I may be wrong, and if I am wrong my advisers will be very quick to tell me—all or nothing.

As I have indicated, the judgment of the Court of Appeal would lead to additional expenditure in some areas, possible hardship in others and a breakdown of confidence in the supplementary benefits scheme. This must be so. Urgent action has to be taken to retore the position—let me put it as simply as I can—to what the Commission had hitherto thought it was, and the purpose of our proposed subsection (6A) is to restore the position to what the Commission had hitherto thought it was. It has been found necessary, as with the previous Amendment relating to students, to ensure that this Amendment has effect in relation to past cases, otherwise there is a real possibility of old cases being reopened, so disrupting the work of local offices in trying to help people who are currently in need. This simply restores the situation to that which successive Governments have for so many years thought existed, and in my view right from 1966 every Government thought that the Supplementary Benefits Commission had that power.

I should make it clear that no claimant will suffer any detriment because what has happened in the past was concerned with a situation which existed then. It is not a continuing situation; it is a situation which was over and done with at that period. Consequential Amendments to Clause 21 of the Bill ensure that the provisions embodied in the Amendments now being made to the Bill shall come into force on the passing of the Act.

I have tried to set this out briefly. Probably I have been too brief because this is really a very important clause. All that the Government are asking—and I am sure that it must command the support of everybody in your Lordships' House—is to set out in this Bill in no uncertain manner what the Government have always thought the position to be since 1966 and to give clearance—for want of a better word—of the actions taken, regardless of the Government in power, since 1966. In the circumstance it seems to be reasonable.

I merely ask your Lordships also to keep in the forefront of your minds the consequences if the Amendments were rejected and if the Supplementary Benefits Commission in the future have to act in accordance with the decision of the Appeal Court—and we are not quarrelling with their judgment. What we are saying is that we want this Bill to set out clearly what we thought was the law since 1966; and that if we cannot deal with the student group, we cannot deal with a good many other groups in the community, who are probably the groups in the greatest possible need, in the way that we are dealing with them at present. I beg to move.

Baroness YOUNG

I am sure we have all listened with great attention to what the noble Lord, Lord Wells-Pestell, has said in connection with this series of Amendments to Clause 12. I was grateful to him for telling me in advance of his intended Amendments and of their general effect. I have now had the opportunity to study them much more closely than I had done when we had our original conversation, and I am bound to say that, although I appreciate that the intention behind the Amendments is to put the position vis-à-vis students and the Supplementary Benefits Commission into the relationship which the Government thought they had before the Atkinson case, the way it is being achieved seems to me, to say the least of it, to be doubtful legal practice.

I recognise that the immediate important matter is for students to know where they stand in relation to the Supplementary Benefits Commission because the effect of Clause 12 and the debates in another place has been to take away from students their right to supplementary benefit during the Christmas and Easter vacations, and now this is designed further to prevent anybody who might have raised their right to it, following upon the court case, from doing so. It has the merit at least of stating what the Government's position is, so that the student knows.

However, from the point of view of a student it is bound to be regarded as a very unsatisfactory position. The fact is that innumerable categories of people have been quoted to support the students' case. But the student is unlikely to read Hansard, I should think, and he is unlikely to go to the Supplementary Benefits Commission to find out what the relationship of his grant, the parental contribution and his rights to any assistance from the State may be. The most unsatisfactory situation of all is that when I asked the noble Lord, in connection with an earlier Amendment, what discussion there had been on this matter between the Department of Health and Social Security and the Department of Education and Science, at least to the noble Lord's knowledge there appeared to have been very little. He is going to write to me on this point and it really is necessary for students to know whether what has been assumed to be a practice up to now is going to be taken away from them in the middle of their course; and they should know how they are to be affected.

The Amendments smack very much to me of the same kind of retrospective legislation that we have had over the matter of students' fees, where the student embarks on a course and finds that the fees have gone up and if he is in the unfortunate position of supporting himself he is in very great trouble indeed. There is a great deal of evidence coming from the universities to indicate how great the trouble is in this regard.

If I understand these Amendments correctly, what the Government are saying is that this is retrospective legislation going back as far as 1966 as the regulations apply to the Supplementary Benefits Act 1966. I was not quite sure what that Act of Parliament is, because when I went to the Printed Paper Office to get a copy of the Act in order that I might try to under- stand what was going on, there was no Act so called. But there is one called the Ministry of Social Security Act 1966. I take that to be the one to which the Amendment in fact refers. I hope I am right about that. Of course there is a great deal in Schedule 2 on benefits for other people which no doubt are also affected by the Government's regulating powers.

It seems to me to be a doubtful practice to have retrospective legislation, and I should like to ask the noble Lord what precedents there are for introducing this type of legislation, and exactly how he sees it working for these different subsections. I hope he will consider favourably Amendment No. 12 standing in my name and that of my noble friend, Lord Sandys, that any regulations made under this section will be by way of Affirmative Resolution, so that at least both Houses of Parliament will have an opportunity to look at them and to comment upon them before they become law.

What I think is most unfortunate of all about these Amendments is that by having this kind of retrospective legislation we bring Government and, if I may say so, Government Departments, into disrepute. The constant shilly-shallying about the Department between students and the Supplementary Benefits Commission, the uncertainty of the position, the changes that the Government have undergone in these last weeks, make it very difficult for a lot of individuals. As the noble Lord knows, many of them are not supported by their parents when they should be, their grant has not kept up with the rate of inflation and they are unable to get vacation jobs, and they will find themselves in extremely difficult circumstances. I take it that if they are in a destitute state and their situation can be proved, the Supplementary Benefits Commission will help them out. I hope the noble Lord will tell us whether such is the case, because if it is not then I think we are in great difficulty.

From this side of the Committee we have already indicated that we do not wish in any way to go against the principle of the Bill, but I am bound to say to the noble Lord that this is an Amendment which, although we shall not divide the Committee against it, is not one about which we feel very happy and we believe it sets a very dangerous legal precedent.

5.30 p.m.

Lord GIFFORD

I accept whole-heartedly the arguments put forward by my noble friend Lord Wells-Pestell on the matter of categories. I did not understand or agree with the judgment of the court when they said that it was in some way improper to treat a category of people as being an exceptional case. I think my noble friend can also carry me with him on the rest of the Amendments if he can tell the Committee a little more about the regulations which are to be introduced. What I hope he can tell us is that the regulations will not preclude the Commission from acting in a case of exceptional need.

In other words, taking the case of students, they are regarded as a category of exceptional people, but within that exceptional category there will be exceptions. There will be people, as the noble Baroness pointed out, who will be in very severe and sometimes destitute circumstances. What we do not know from Clause 12 as it now stands is whether these regulations will provide for an absolute embargo on the payment of benefit to persons within the category or whether the regulations will themselves be subject to the existing paragraph in the first Schedule to the Bill, paragraph 4, where in exceptional circumstances what would be the normal calculation of resources and requirements can be overridden and amounts of extra benefit can be awarded. If the flexibility of the Commission and the discretionary power to deal with exceptional cases is to be preserved in the new regulations which are to be made, then it seems right that the Amendments should go through in the form that they are.

Lord COLLISON

May I say a brief word about this. I was chairman of the Commission, as your Lordships know. I simply want to assure the Committee that the Commission and its officers acted in absolutely good faith in taking the attitude that they took in the past to this matter. It has always been assumed that it was their right and indeed their duty to act in this way. Although I am not there now, I can clearly imagine the dismay which overtook them when the court found as it did. Indeed if this Amendment were not accepted, it could lead to innumerable other cases being brought forward. I can understand one's dislike of an Amendment which perhaps smacks of restrospective action, but in this case, in my view, it is absolutely necessary; we would be doing wrong if we were not to accept the Amendment.

I could talk about the Commission's power to take action in exceptional circumstances, but I will leave that to my noble friend Lord Wells-Pestell. I wanted to make it very clear, and to make the point, which I am sure your Lordships all accept, that the Commission believed that what they were doing was right and are dismayed now to find that the court took a different view. I would underline the necessity of putting this right, even if it does smack a little of retrospective action.

Lord WELLS-PESTELL

I am very surprised at the attitude which the noble Baroness, Lady Young, has taken in this matter; I really cannot see why she cannot give wholehearted support to what we are trying to do. I know that retrospective legislation is something which the vast majority of your Lordships dislike.

Several noble Lords: Hear, hear!

Lord WELLS-PESTELL

It is all very well to say, "Hear, hear", but there is retrospective legislation which is abhorrent and there is retrospective legislation which is not going to harm anybody or be detrimental to anybody. The whole point is that all that is involved here is restoring the law to what successive Governments have thought it was ever since 1966. I have said this several times this afternoon. The Supplementary Benefit Act 1966 was formerly the Ministry of Social Security Act 1966, as the noble Baroness pointed out. No one's rights are being threatened. The noble Baroness said she did not know what authority there was for it, whether this kind of thing had happened over a period of time.

The only example I can give is that it has been done in another place on a number of occasions where persons have been elected Members of Parliament—I think I am right about this—and it has been found that for some reason or other they were not qualified to sit. I am most grateful to the noble Lord, Lord Byers, who indicates that I am right. It has been found in some cases that persons were holding offices of profit under the Crown or something like that, and legislation has been passed to make it possible for them to continue to sit. There was nothing objectionable in that. There is nothing objectionable in this.

The regulations will not preclude the the Commission from dealing with truly exceptional cases. It retains powers—as I thought I had pointed out very clearly—to deal with urgent need. Clause 12 does not take away students' entitlement to supplementary benefit. The student now gets more of his maintenance grant in the short vacations, and, therefore, needs less supplementary benefit. In the long vacation there will be no maintenance element whatsoever in the grant, and if the student cannot find work he will be entitled to more supplementary benefit. So he is not going to be harmed by this at all. But we are concerned that we should be able to restore the law to what successive Governments thought it was. It seems to me to be a perfectly normal way of doing it. It is not reprehensible. In this case it really is not objectionable.

Lord BANKS

I wonder whether I could ask the noble Lord one question. I am not quite clear whether claims are going to be prevented from being made as a result of this Amendment which is proposed by the Government. I understood, from what the noble Lord, Lord Collison, said, that claims might ensue if this were not done. If that is so, it would seem to me that this legislation will in fact affect some people's rights, if it prevents them from making claims that they otherwise would have made.

Lord WELLS-PESTELL

I do not think there is any point in my hiding—I am not very good at that anyway—the possibility that if this legislation does not go through claims in relation to past applications may be made. If noble Lords are really worried about that, perhaps I may explain what the situation is. A number of people over the years have applied for supplementary benefit and on those occasions at that time did not get all the money that it could be held they might have been entitled to. But that is to deal with a situation long since past. Is it right to do anything about it now, when perhaps many of them would probably no longer be students? I think we have to face this fact.

We have to consider the position during the Easter vacation. Clause 12(1) will restore the position to what it was thought to be before the Court of Appeal judgment. However, until regulations can be made—and they cannot be made immediately—the Supplementary Benefits Commission will have to treat students' claims in accordance with the law as it has been declared by the judgment in the Court of Appeal. This means that for at least the first part of the Easter vacation students will be allowed a £4 disregard on income from the grant or from parental contributions. The Commission will also ignore any assessed parental contribution which is shown not to be paid.

The Court of Appeal held: It should, in our judgment, be open to a student claimant to satisfy the Commission or the Tribunal, if he can, that his parents, for some reason, either cannot or will not make up his local authority grant to the level of the full grant. There is a responsibility on him to do so. The judgment continues: We recognise that the onus of establishing such a claim would be a heavy one, and that the Commission or Tribunal would be fully justified in examining any such claim with suspicion. The Commission will therefore require positive proof that a parent has not made his contributions. Assuming the regulations under Clause 12(1) are made, student claims for the latter part of the Easter vacation will be assessed in the same way as that which applied before the judgment was given in the Court of Appeal. I can give your Lordships no more notice than that. However, I am a little concerned that there should be a doubt in your Lordships' minds that we should not proceed by clearly stating the law as we have always understood it to be since 1966. It seems to me that there is no valid reason why we should not do it as from that date.

Baroness WARD of NORTH TYNE-SIDE

Perhaps I may ask the noble Lord a question. If the decision which finally complicated all this came from the Court of Appeal, what advice was tendered to successive Governments on the 1966 Act? Shall we be allowed to see the advice? This is extremely important, if the matter arose only as a result of the judgment of the Court of Appeal. It is a rather extraordinary matter.

Lord WELLS-PESTELL

It is not a question of advice. In 1966 Parliament, in its wisdom or stupidity, passed the 1966 Act which sets out the powers given to the Supplementary Benefits Commission. Among those powers the Supplementary Benefits Commission had power to disregard certain matters, to ignore other matters and in exceptional circumstances to provide exceptional benefits—I listed a few this afternoon (I do not know whether the noble Baroness was present)—to the aged, the sick and so on.

Like every other Bill, that Bill went before both Houses. Parliament accepted that the Supplementary Benefits Commission should be able to act in this particular way in a whole variety of circumstances. Parliament was quite satisfied that the Supplementary Benefits Commission could act for a class, a group or a category—those are my words. There was no doubt in Parliament's mind that the Supplementary Benefits Commission could do that. Parliament accepted that there was no other way of dealing with millions of people other than by dealing with them on a class, a group or a category basis. That was never questioned by anyone. Parliamentary draftsmen and Government legal advisers quite clearly saw what was intended, and they believed that this was right. It was only when this ex-student appealed to the Tribunal—and incidentally the Tribunal upheld the decision of the Supplementary Benefits Commission—and his appeal was refused that he went to the Court of Appeal. The judges there said that in their view the Act did not entitle the Supplementary Benefits Commission to act for or deal with a specific group of people and that such people must be dealt with as individuals.

There was no question of advice being given. In 1966 Parliament saw quite clearly what it wanted to do and all successive Governments since have accepted that that was the law. The judgment of the Court of Appeal merely says that the Supplementary Benefits Commission cannot deal with a group as a whole but must deal with individuals. I imagine that a copy of the judgment of the Court of Appeal can be found in the libraries of both Houses of Parliament.

Lord SLATER

From listening to my noble friend it seems that one of the strongest arguments that he has presented to noble Lords has been on retrospective payments. I began to wonder low often I had heard that and how often I, along with others, had made application for retrospective payments and been turned down. On this occasion we find that the Government, through the Minister, are prepared to allow retrospective payments. It is something that should have been done before. Therefore, they seek to amend the mistake that they made on that particular occasion and they have instructed their Minister to press for this Amendment to the Bill. This House would be amiss if it does not accept the recommendation that has been made by my noble friend.

Baroness YOUNG

I do not want there to be any misunderstanding on this point of principle about retrospective legislation. I have already indicated to the noble Lord, Lord Wells-Pestell, that we on this side of the House will not oppose these Amendments and that, for the reason that he has given, we shall accept them. Apart from anything else, I understand that if they are now carried and the situation is not as the Government intend it to be under their present legislation the public expenditure cost would be about £11 million. That is the underlying reason for the Amendments.

One can appreciate the need to move these Amendments, because without them the Bill could not become law in the way in which the Government wish following the Atkinson case. We are concerned about the legislation because, from the point of view of the student, the Government are using the Bill to put right various complexities surrounding the whole question of student grants and maintenance. This in itself is a subject for a major debate and I do not intend to launch into it today.

However, I think I am right in saying that one of the items in the equation is that now students fees have all increased and it is the Government's intention that tuition fees will be covered by grant, even when the Government grant is only at the lowest possible scale, that in itself will cost about £3½ million of public expenditure. All sorts of sums of money are involved. Some of the things which the student had expected to receive have been removed by the Bill—some part of the way through his course. He was upheld in the judgment in the Atkinson case and this puts the situation back not to what the student thought it was but to what the Government believed to be the law of the land.

This is a serious matter. Although we shall accept these Amendments, it casts doubt in the minds of the public—in this case the students—as to what the circumstances are when they embark on various courses, the increase in fees and now the taking away of supplementary benefits at Christmas and Easter. Whatever may be the merits or otherwise of this legislation certain students will be adversely affected by it. It is retrospective legislation. I take the point that someone who was a student in 1966 should not claim. Nevertheless, it is not a desirable form of legislation. The Government, and in particular the two Departments concerned, should conduct a thorough-going examination of student grants to discover what proportion is supposed to cover the vacation, otherwise a sense of injustice will hang over this whole matter. As I have already indicated, we shall not vote against these Amendments, but they raise a doubtful principle. Although we accept it, we do so not because we like it but because we have to in the circumstances.

Lord ROBBINS

Might I just say to the noble Baroness that I am in complete agreement with her that students at the present time, whatever their disgraceful antics in various quarters, have a real grievance in the way in which prospective fees have been changed. But I think that there is a shade of difference between drastic action of that sort and this rectification of administrative difficulties which seems to be involved by the judgment of the Court of Appeal. I doubt whether many students making their plans in the past have taken into account the state of the law in this respect, its ambiguities and so on, whereas I have absolutely no doubt at all that some students contemplating their future in regard to fees—not all; I do not wish to identify myself with many of the absolutely unjustifiable complaints that have been made—have a genuine grievance over the way in which this momentous subject has been handled. However, I do not think that the analogy is completely correct as regards the matter immediately under consideration.

Lord WELLS-PESTELL

We are in danger of using this as a kind of umbrella to discuss all sorts of matters that, if the Committee will allow me to say so, are quite irrelevant. Many of us would express many views which the noble Baroness and perhaps the noble Lord have expressed about certain conditions generally affecting students, but we are here concerned only with the authority and the power of the Supplementary Benefits Commission. So far as I know, since 1966 there has never been any attempt by anyone to say that the Commission acted improperly or illegally in using their discretion in either one direction or the other. If I am wrong I shall come back and say so, but to my knowledge there has not been any official complaint from any student organisation about the misuse, if you like, of the powers of the Supplementary Benefits Commission. It only came to light as the result of one student bringing an action—which was undoubtedly to his credit. What we are trying to do is to state the law in the future as we understood it was in the past.

On Question, Amendment agreed to.

5.53 p.m.

Baroness YOUNG moved Amendment No. 7:

Page 12, line 21, at end insert— ("( ) Nothing in the above subsections or in any regulations made in pursuance of those subsections shall prejudice the position of handicapped students and, notwithstanding the above subsections, regulations shall authorise the payment of benefit in circumstances in which physical sensory or mental disability would be likely to preclude the obtaining of temporary employment during any vacation.").

The noble Baroness said: I beg to move Amendment No. 7. The purpose behind this ought to be perfectly clear. It is concerned with disabled students. I have had the opportunity, as I am sure other Members taking part in the Committee stage of this Bill have had, of re-reading the proceedings in another place. This matter of disabled students was raised on Report, and under the procedure there was no reply from the Minister. I think that the noble Lord, Lord Wells-Pestell, has made it absolutely clear that disabled and handicapped students will be eligible for supplementary benefits, but it would be helpful to have a full statement of this on the Record and I hope that the noble Lord will be able to give us one.

Lord WELLS-PESTELL

As I explained in moving the Government Amendments, the position of handicapped students will, even without this Amendment, be fully protected. Like other students they will still be able to claim supplementary benefit if they are unable to find temporary work in vacations, provided that their income falls short of their supplementary benefit requirements. The Supplementary Benefits Commission's normal practice up until now has been to treat disabled students in some respects particularly favourably, and the regulations made under Clause 12 of the Bill will continue that practice. In particular they will ensure that in the case of a disabled student no account is taken of an unpaid parental contribution, and the £2 disregard will continue to be given on the disabled student's pay. In view of what I have said—and I am sure that the Committee will accept what I have said—the Amendment is unnecessary. If the noble Baroness agrees with me, I hope that she will see fit to withdraw it.

Baroness YOUNG

I am grateful for what the noble Lord has said. When I spoke earlier I meant to ask him whether he would also confirm that, in the case of some local education authorities who pay an extra grant to cover students' particular disabilities, this will not be included in the calculation for supplementary benefit. This is a matter which is of great importance to the students. If the noble Lord cannot give me an answer right away perhaps he could write to me on this point. I must apologise. The Committee moved on slightly faster when I moved the Amendment, and the note I had on this point was not to hand.

Lord WELLS-PESTELL

I can give the noble Baroness that assurance.

Lord SANDYS

I should like to support my noble friend's Amendment. I believe that in drafting our legislation it is often necessary to emphasise the obvious. The noble Lord may well say that this is an unnecessary Amendment because it is taken care of in the Amendments he has just proposed. However, we would to well to recognise the wise words in the Finer Report on one-parent families; we should recognise—certainly your Lordships' House recognsised—the wisdom of the Snowdon Report on integration of the disabled; we should also recognise the problems of educational handicap which have been raised in a series of debates in your Lordships' House. I shall re-read with pleasure the speeches of my noble friends Lord Elton and Lord Alexander of Potterhill on this, subject because I believe there is a need for a declaratory clause of this nature. My noble friend Lady Young has put forward something which could very well assist those who are attempting to interpret the legislation, and to point out the value of the particular clauses and Amendments which the noble Lord has just moved.

Lord ROBBINS

I should like to urge the noble Lord, Lord Wells-Pestell, to accept this Amendment. I am convinced by the statement that he has made, as always in sincerity and in truth, but I think that it would be a reassurance to many people if such an Amendment were in the Bill. I cannot think that anything that he has said indicates a disadvantage in writing it into the Bill. I suggest that it would give the Bill more credit if it was there in black and white.

Lord WELLS-PESTELL

I said—at least I thought I said—that we had the powers to do this earlier on, and that we are going to do it. Many people, including many of your Lordships, complain of too much legislation, too many pages of legislation, too much going in, and too much going on the Statute Book. Is it really necessary, when a Government come along and say, "We already have the powers to do it. We are going to do it", that one should write such a provision in? It would mean that legislation would become almost impossible. Bills would increase in length when, in point of fact, in every Bill there is provision for regulations. Governments give assurances, and I think it would be difficult for any Member of your Lordships' House to say, where a Government had given such an assurance, they had not carried it out. I would think that this is sufficient.

Lord HARMAR-NICHOLLS

The noble Lord will recognise that new legislation in the sense he is describing it brings new powers with it; sometimes we think there is too much of that sort of legislation. In this instance we are talking about the need to explain legislation which exists so as to avoid the need for it having to be sorted out and explained later, perhaps even to having to go to court to get a Lords of Appeal decision. In other words, we are not talking about new legislation in the sense that the noble Lord was describing it.

In this case the powers already exist, and my noble friend has explained the need to make an Amendment of this kind to ensure that the Bill is more easily understood. The Minister has admitted that this is not new, that no new powers would be introduced and that the powers already exist. For that reason, why not break new ground here—I should like to see more new ground of this sort broken in the future—and make quite clear what we are doing?

Lord WELLS-PESTELL

It will be made perfectly clear in regulations. The noble Lord, Lord Harmar-Nicholls, has had a great deal of experience of Government and knows that what appears in a regulation is just a valid as it is in an Act of Parliament. We cannot put everything in legislation without substantially increasing the volume of legislation. Here the Government are giving an undertaking that they already have the power and therefore do not need new powers to take this step; in other words, the Amendment is not necessary. Why, then, pursue what is unnecessary?

Baroness YOUNG

I am pleased to have all this firmly on the record. I am grateful for the support I have had on the Amendment, which is not one I intended to press today, and I shall not do so now. It is important for us to see the regulations, and I shall return to the subject when we discuss my Amendment No. 12. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.2 p.m.

Lord GIFFORD moved Amendment No. 8:

Page 12, line 30, at end insert— ("( ) In section 3(2) of that Act (which relates to supplementary benefit to meet exceptional needs) there shall be inserted at the end the words ("and may take into account any requirements which would otherwise fall to be excluded under section 1(3) of this Act.")")

The noble Lord said: We move away from the question of students and come to another source of confusion in the Supplementary Benefits Act 1976. It arises out of Section 1(3) of that Act which says: The requirements of any person to be taken into account for the purposes of this Act do not include any medical, surgical, optical, aural or dental requirements. Section 3(1) of the Act says: Where it appears to the Commission reasonable in all the circumstances, they may determine that supplementary benefit shall be paid by way of a single payment to meet exceptional need. There are two ways in which one might interpret those two sections taken together. On the one hand, one might say they mean that normally the Commission cannot take into account medical requirements, but that exceptionally a single payment could be made to cover such a requirement; or, on the other, one might say there is general discretion to meet exceptional needs, but medical requirements are ruled out. A recent court decision, this time in the Divisional Court, held that the second interpretation, the more rigid one, was correct.

The purpose of my Amendment is to make it clear that the Commission's discretionary powers to meet exceptional need could be used in cases where medical requirements—medical and the other surgical, optical or dental requirements—are in issue. Normally, medical requirements are taken care of by the National Health Service without charge and there is no need to claim supplementary benefit for them. Sometimes that is not the case. The court case in question concerned osteopathic treatment recommended by his consultant doctor to a man suffering from severe pains in his back. Osteopathic treatment is not available under the Health Service and it was being paid for privately.

A tribunal held that it was a genuine case of need and that a payment should be made to cover the cost. It was perhaps a rare case, but it was a genuine one. Other cases, perhaps not so rare, of medical requirements which the Commission might wish to meet, include a special dietary need which cannot be met through chemists and which requires extra expense. That might well be a medical requirement, because there is no explanation in the Act of what a medical requirement is. There might be other cases, cases of extreme urgency; cases where forms of treatment not available on the NHS might be exceptionally justifiable.

The hallmark of the Supplementary Benefits Act is its flexibility. Even people in full-time work, at school or on strike may receive benefit in a case of urgent need. It is not right, I suggest, to rule out one arbitrary form of requirement—people with medical requirements—and therefore I commend the Amendment as being in accordance with the general flexible approach of this legislation.

Lord WELLS-PESTELL

I wish at the outset to express my gratitude to my noble friend Lord Gifford for writing to me giving details of this particular case and the background information together with a copy of the judgment, which I had not seen. My noble friend's Amendment to the Supplementary Benefits Act 1976 would enable the Supplementary Benefits Commission to make single payments, known as "exceptional needs payments", of benefit for requirement otherwise excluded by Section 1(3); namely, medical, surgical, optical, aural or dental requirements.

It arises, as my noble friend said, out of a recent hearing by the Divisional Court of a successful application by the Commission for an order of certiorari quashing a decision by a supplementary benefits appeal tribunal in Peterborough to award £200 to a claimant, Mr. Ernest Albert Dobson, for private osteopathic treatment in London and associated travelling expenses. I think my noble friend represented Mr. Dobson at the hearing.

The Government cannot accept the Amendment. The Divisional Court's judgment clearly confirms that the effect of the legislation is what was intended to be, and as it has always been interpreted by the Commission; namely, that any requirements which a claimant has for medical requirements are not to be met from the Supplementary Benefits Scheme. The reason for this exclusion is that the NHS provides a comprehensive system of diagnosis, treatment and care to meet people's health needs and has its own system for relieving those on low incomes from those charges that are made; for instance for prescriptions, dentistry and optical requirements.

My noble friend said that the treatment required was not available under the National Health Service. I confess that that surprises me because, again trusting to memory, my right honourable friend the Secretary of State for Health and Social Services recently set up a committee comprising a large number of medical experts to look into the cause and treatment of back pain, and I thought there were two doctors on that committee—my understanding is that there is at least one—who are osteopaths. But I may be wrong. I shall have to look into it. It car not be accepted as part of the function of the supplementary benefit scheme to make private treatment of whatever sort available to those on supplementary benefit. To do so would be, in effect—and I ask your Lordships to consider this very carefully—to create a special group who could get private treatment at the expense of the State. That would be the effect of the Amendment.

My noble friend's concern arises out of a case involving osteopathic treatment, but his Amendment would also enable payments to be made for all manner of treatment such as expensive private dental treatment, elective surgery or some of the services of less standing in fringe medicine. The staff of the Supplementary Benefits Commission would, if they were to keep any sort of control over these payments, be involved in all manner of questions about the desirability, utility and cost of particular forms of treatment—questions which they are simply not qualified to deal with. There would also be an overlap between the provision of the National Health Service for relieving people of charges and the meeting of those charges by the Commission.

I come back, however, to the point that I made first. I believe that it would be highly undesirable to create a special group which could get private treatment at the expense of the State whereas others who were not in receipt of supplementary benefit could not get treatment. In view of the little that I have said, I hope that my noble friend will feel disposed to withdraw his Amendment.

Baroness PHILLIPS

Before my noble friend speaks, I noted—I hope, correctly—that the Minister said that the special dental, optical and other treatment was not given through the Supplementary Benefits Commission but through the National Health Service. That may be true but there is an area of confusion here because, certainly among elderly people, it is commonly assumed that one gets dental assistance only if one is receiving supplementary benefit. So, though it may all come from one source, it is assumed to come through the Supplementary Benefits Commission. I have come across quite a number of these cases. I wonder whether my noble friend can clear this point up, because it seemed unfair that an elderly woman who is living on a pension should pay full price for spectacles whereas one who receives supplementary benefit got them very much cheaper, if not entirely free. The two things seem to be allied; certainly they are in the minds of the recipients.

Lord WELLS-PESTELL

I should need to look at this matter and perhaps get some further information from my noble friend.

Lord HARMAR-NICHOLLS

I believe that the argument of the noble Lord, Lord Wells-Pestell, against the Amendment is absolutely correct and ought to be accepted, but, while he is looking into the question raised by the noble Baroness, Lady Phillips, it might well be that he could use his influence to ensure that osteopathic treatment on the advice of a doctor is included in the National Health Service. I agree that this is not the vehicle to bring this about but it may well be that, since the matters are allied, the noble Lord's influence can be brought to bear to have this point considered.

Lord WELLS-PESTELL

What I was saying was that I should like to look into this question because my impression is that there are in the medical profession a large number of doctors who are qualified osteopaths. I should have thought that, if such treatment was necessary, it could be made available. But I should have to go into this.

Lord GIFFORD

On that last point, as I understand it, there are a few registered medical practitioners who are also osteopaths, but of course the majority of registered osteopaths—who are now quite a dignified profession of long standing—are not registered medical practitioners, so they do not qualify for the National Health Service. Having said that, whenever I hear a judgment in a court of law my instinct is to appeal it, but when I hear the answer of my noble friend on the Front Bench my instinct, at least this time, is to accept it and not to appeal any further.

Viscount COLVILLE of CULROSS

Before the noble Lord withdraws his Amendment, I wonder whether I may very gently mention a passage from Standing Orders. If I am right in thinking, as did his noble friend, that he actually took part professionally in this matter, it is normally considered undesirable that the matter should then be pursued by him—as, indeed, by accountants or by any other professional persons—in this House. I have often been gravely tempted to do this myself, but it is actually dealt with in Standing Orders and it is said to be undesirable. I do not wish to rebuke the noble Lord; it is only that I so often find myself in this position and have to restrain myself. Perhaps the noble Lord would have it in mind.

Lord GIFFORD

I was not aware of the Standing Order and I apologise to the Committee. I shall not do it again.

Lord WELLS-PESTELL

I think that I ought to assume some responsibility. I knew that my noble friend was going to raise this point. As I said, he wrote to me and I knew of his connection, but I took this—I cannot speak for him and would not dream of doing so—as illustrating a matter which he felt ought to be put right. It was on that basis that I made no comment.

Lord GIFFORD

I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord WELLS-PESTELL moved Amendment No. 9:

Page 13, line 10, at end insert— ("(6A) Paragraph 4(1) of Schedule 1 to that Act (adjustment for exceptional circumstances) shall have effect and, subject to subsection (7A) below, be deemed always to have had effect, as if at the end there were added the words " and for this purpose the circumstances of a case may be treated as exceptional if it falls within a class of case the circumstances of which are exceptional.").

The noble Lord said: I have spoken to this Amendment and, if your Lordships will permit me to do so, I should like to move it formally.

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 10:

Page 13, line 18, at end insert— ("(7A) Neither subsection (2A) nor subsection (6A) above shall affect any decision substituted or to be substituted for a decision quashed by an order of a court made before 4th March 1977.").

The noble Lord said: For the same reason, will your Lordships allow me to move this Amendment formally?

On Question, Amendment agreed to.

Clause 12, as amended, agreed to.

6.19 p.m.

Lord WELLS-PESTELL moved Amendment No. 11:

After Clause 12, insert the following new clause:

Retrospective amendment of Supplementary Benefit Act 1966 c. 20.

. So far as subsections (1) to (2A), (6A) and (7A) of section 12 of this Act apply with respect to periods before the passing of this Act they apply also with respect to periods before the commencement of the Supplementary Benefits Act 1976, but as if for this references to that Act and Schedule 1 to that Act there were substituted references to the Supplementary Benefit Act 1966 and Schedule 2 to that Act.

The noble Lord said: I have already spoken to Amendment No. 11, and, with your Lordships' leave, I beg to move formally.

Baroness YOUNG moved, as an Amendment to the Amendment, Amendment No. 12: At end insert— ("Provided that any regulations made pursuant to section 12(1) which relate to a period before the passing of this Act shall be made by statutory instrument which shall not come into force until approved by a resolution of each House of Parliament.").

The noble Baroness said: I should like to move Amendment No. 12, which amends Amendment No. 11. The intention of my Amendment is to provide that the regulations will be by Affirmative Resolution of both Houses of Parliament and not by Negative Resolution. We have had a very full discussion about Clause 12 which, as I believe the whole Committee will recognise, is a very complicated matter. As a result of our discussions, there seem to me to be two important matters that will arise on the regulations, One is the matter of disabled students. I did not press my Amendment to a Division for a number of reasons, not least of which was the Government's wish not to enlarge the Statute and the undertaking that the needs of disabled students would be covered by regulation. However, if the regulations are simply by Negative Resolution, there will be no opportunity to discuss this matter because it is only possible to vote against Negative Resolutions in their entirety. It is not possible to have a debate upon them as it would be under the Affirmative procedure.

That is one group of people who would be covered by these regulations and it indicates how important it is that these regulations should be dealt with by Affirmative Resolution. However, Clause 12(1)(a) refers to those students "attending a course of full-time education". Nowhere is this defined in the Bill and, as the noble Lord will know, this is not a very satisfactory definition. For example, it might be thought that a full-time course of education was one for which there was a mandatory award, but in fact there are at least 29 courses of full-time education for which there are no mandatory awards but only discretionary awards. Under the present circumstances, discretionary awards are, not surprisingly, being cut and it may be necessary for the students to have additional help through supplementary benefit. Even if they have a right to claim supplementary benefit, it is very important that they should know the circumstances, how it will affect them, and how these provisions will affect those who are in full-time education on discretionary grants.

The noble Lord has already indicated that while considering this Bill he does not wish us to stray into the whole area of education, yet in this particular clause the two are intimately connected and it is very difficult to separate them. I do not wish to take us right off the course of supplementary benefits and on to education, but I use this case merely to illustrate why I think the regulations are important and why I think that both Houses of Parliament ought to have an opportunity to debate them. It is for that reason that I have tabled the Amendment. I beg to move.

Lord HARMAR-NICHOLLS

I should like to say a few words in case the noble Lord may be committing himself a little against accepting the Amendment. He rebuked me—it was a charming rebuke, as is usual with the noble Lord—for suggesting in what I had to say that a regulation was not as good as part of an Act. He said that one is as good as the other, but this is not so unless the Resolution involved is affirmative. If it has been accepted after debate, then I would accept what the noble Lord said when he rebuked me a minute or two ago—that the regulation should stand as firm as, and be accepted almost in the same light as, part of the Act itself, but not in the case of a Negative Resolution. So I hope that the noble Lord will carry through in action what his words seemed to imply when he replied to me only a few minutes ago.

Lord WELLS-PESTELL

I note the noble Lord's comments and observations. We are in some difficulty here. The Amendment, if accepted, would in effect delay the implementation of regulations made under Clause 12(1), and in our view, rightly or wrongly, we must have some account as to the speed of the process and this could not be done if the Amendment is carried. I gave your Lordships some indication why we want to be able to deal with this matter very quickly. As I have explained, the purpose of the new clause is to restore the position relating to students and others to what it was thought to be before the judgment of the Court of Appeal in the Atkinson v. the Barnsley Supplementary Benefit Appeal Tribunal (I have not mentioned this before), to give it statutory backing. If regulations relating to students were delayed because of the Affirmative Resolution procedure, it would be necessary to continue to apply the law as laid down by the Court of Appeal, and one would have to apply it in that way probably throughout the whole of the Easter vacation, and again we are a little worried about the cost of it, which we think would be in the region of £2 million.

Furthermore, in these circumstances the work of local social security offices, we feel, would be seriously disrupted by continuing claims and by students seeking to have claims for earlier vacations reviewed to the prejudice of the generality of the Supplementary Benefits Commission's claimants. I suggest that the aim of your Lordships should be—I say this kindly and not in any sense as a kind of directive—to assist the Commission in its effort to restore its practices to what they were. This Government and previous Governments have always considered those actions to be the right ones; and it is for that reason that I say to the noble Baroness that the Government must resist her Amendment. I hope that that will convince her, and that she will feel that in this matter the Government are being reasonable. The only thing I can do is what I have done; namely, to put before your Lordships briefly and in clear and precise terms our reasons for saying why we cannot accept the Amendment.

Baroness YOUNG

Will the noble Lord tell us whether the reason for not accepting the Amendment is the delay that it would cause? In parentheses, I should like to remind him that the Easter vacation has begun at some universities this week, and so if we are waiting for the legislation to be passed before the start of the Easter vacation it is in fact too late for some universities. But will the noble Lord tell us what is the delay in having this procedure rather than the procedure that he has suggested?

Lord HARMAR-NICHOLLS

While the noble Lord is thinking about that, at the risk of advertising one's ignorance I would say that I should have thought that the Affirmative Resolution could be quicker than the Negative. The Negative Resolution has to lie on the Table for a certain number of days to make certain that on the last day it is generally acceptable, whereas if the affirmation was obtained on the first day the regulation is framed. By accepting this procedural way, it could be quicker.

Lord WELLS-PESTELL

At present I am not convinced that the noble Lord is correct, but if it is of any help I should be prepared, subject to the consent of the noble Baroness, to look at this matter and let her know within the next day or two our comments and observations. I know that there is a time factor here. I do not want to write too many letters. The noble Baroness said that I had earlier promised to write to her on a matter but in fact I did not do so. I said that at some time during the proceedings I hoped to be able to give her the answer. But if what I am now suggesting is acceptable to the noble Baroness I would certainly take into account what has been said. I will look at Hansard tomorrow to see whether what the noble Lord has also said is likely to help the Government rather than hinder them.

Baroness YOUNG

I am grateful for the offer to look at the matter. I think that the cause of the delay is very relevant, as are the facts of the situation, and I hope that on looking at this matter the noble Lord will be able to accept the Amendment. But, if he does not, it is a matter to which we can return at a later stage of the Bill. In the meantime, I beg leave to withdraw the Amendment.

Amendment to the Amendment, by leave, withdrawn.

On Question, Amendment agreed to.

Baroness YOUNG moved Amendment No. 13:

After Clause 12, insert the following new clause:

Amendment of Social Security Act 1975

.—(1) In section 35(6) of the Social Security Act 1975 after the words "for whom accommodation is provided" there shall be inserted the words "other than with a foster parent or with foster parents".

(2) Any regulations made pursuant to the said subsection of the said Act insofar as they prohibit payment of attendance allowance in respect of foster children are hereby annulled.

(3) For the purposes of this section "foster child" means a child in the care of a local authority under any enactment mentioned in section 11 of the Children Act 1548 who is boarded out with a person or persons to live in their dwelling as a member of their family under the powers conferred by section 13(1)(a) of that Act; and the terms "foster children", "foster parent" and "foster parents" shall be interpreted accordingly.

(4) In the application of this section to Scotland for the words "any enactment mentioned in section 11 of the Children Act 1948" and "section 13(1)(a)" there shall be substituted respectively "the Social Work (Scotland) Act 1968" and "section 21(1)(a)".

The noble Baroness said: During consideration of an earlier Amendment I was very glad to hear that the Government are willing to accept this Amendment. It has the support of the all-Party disablement group, and it is not in any way a Party political matter. As the noble Lord will know, it can be achieved at relatively little cost. It has now been estimated that it would cost about £200,000 per annum. But much more important than the cost of the Amendment is that it is right that severely handicapped children who cannot be brought up by their own parents should not languish in institutions if there are foster parents who are willing and able to lock after them. If we are talking about comparative costs it should be borne in mind that it is estimated that in a local authority community home it costs approximately £70 a week for a child to be looked after, whereas if the child is in the care of foster parents the cost can be as little as £9 to £12 a week. So in fact the public expenditure gain is very great indeed.

What I believe is an injustice at the moment is that whereas parents with a severely handicapped child are able to claim the attendance allowance—and because they are able to claim the attendance allowance it is tax free—foster parents who foster a child cannot claim the attendance allowance even if the child is severely disabled and they are dependent upon the local authority grant. As I understand the position, the amounts of money involved may be somewhat similar, but in certain areas tax officials have taxed the local authority grant whereas the attendance allowance is tax free.

My Amendment seeks to rectify this anomaly. I am very pleased indeed that the noble Lord has said that he will accept the Amendment. Perhaps I should say before he says it that I accept that the Amendment is not correctly drafted; Amendments drafted by anyone other than Government draftsmen never are correctly drafted. But I am very pleased to hear that he accepts the principle here and that he is prepared to bring back Amendments correctly drafted to meet the principle that I have outlined. I beg to move.

Lord WELLS-PESTELL

If I may be permitted to do so, I merely want to ask the noble Baroness what her reaction is to what I am about to say. We had a discussion on Amendment No. 7, which she moved, on the question as to whether this should go in the Bill or whether the Government should use existing regulation-making powers to achieve this result. The Government can do this—I am now talking about Amendment No. 13—by using existing regulation-making powers to achieve the result that the noble Baroness wants. I should like to have her comments and observations on this matter before we pass on to the next Amendment.

Baroness YOUNG

I am bound to say that this is a matter which I had not considered before, and it is one that I shall need to think about. Perhaps, just as the noble Lord will speak to me in the next day or so, I might speak to him. Clearly, if it can be done, and done quickly, by regulation, this is in general, for the reason that he has given, a sensible way to proceed. I think that one wants to know that the point is going to be covered and, once again, that we shall have an opportunity, if necessary, to debate the regulations. It is very difficult, just being asked a question like this, to consider all the features of the case. That is my first reaction to the noble Lord, but I shall give him a definitive view tomorrow or the next day. For the convenience of the Committee, on that understanding from the noble Lord, Lord Wells-Pestell, I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 13 to 17 agreed to.

6.33 p.m.

Lord WELLS-PESTELL moved Amendment No. 14:

After Clause 17, insert the following new clause:

Calculation of guaranteed minimum pensions preserved under approved arrangements

.—(1) Where an occupational pension scheme ceases to be contracted-out and guaranteed minimum pension rights or accrued rights to guaranteed minimum pensions under the scheme are subject to approved arrangements (as defined in section 44 of the Pensions Act for the purposes of subsection (2) of that section) for their preservation, then, except in such circumstances as may be prescribed, section 35(5) of that Act shall have effect, unless the prescribed person otherwise elects in the prescribed manner, as if the following words were added at the end thereof: " except such an order made in any of the tax years comprised in the period of five years ending with the tax year in which the scheme ceases to be contracted-out; and as increased by 12 per cent. for each of those five tax years except any in which an order under section 21 of this Act was made which did not relate to the factor and any in which such an order was not made and would not have related to the factor if it had been made ".

(2) Regulations may provide that subsection (1) above shall have effect with prescribed modifications in relation to a scheme which, immediately before it ceased to be contracted-out, contained provisions authorised by section 35(7) of the Pensions Act.

(3) In this section expressions used in Part III of the Pensions Act have the same meanings as in that Part.

The noble Lord said: This is where we begin to enter a field full of mines and trip-wires, so far as I personally am concerned, but I look in the direction of the noble Lord, Lord Byers, because I hope he will feel that in this Amendment the Government are acceding to a request made by the pensions interests. I have a very long note on this Amendment, and I do not know whether the noble Lord, Lord Byers, feels that I should use it except to say that the subject-matter is extremely complicated and it is difficult to explain it without setting out the background in some considerable detail. If your Lordships feel that I can move the Amendment shortly, bearing in mind that we are acceding to a request made on behalf of the pensions interests, I would be very happy to do so; but if your Lordships feel I ought to go into it deeply, again I will. I beg to move.

Lord BYERS

There is no doubt about the fact that this clause will be warmly welcomed by those who have to deal with pensions. I think the real point is that when the 12 per cent, limitation was first announced—and it is referred to in this new clause—there was a good deal of concern that it applied only for the purpose of calculating certain State scheme premiums, and there was a considerable body of feeling among the pensions experts that it should also apply for the purpose of calculating the guaranteed minimum pension. These proposals were put to the Government some time ago, and I am delighted and very grateful to them for having accepted the view that was put to them and for bringing forward this new clause.

On Question, Amendment agreed to.

Clause 18 [Other miscellaneous amendments]:

Lord WELLS-PESTELL moved Amendment No. 15: Page 18, line 30, after ("Act") insert ("(which relate to a person whose service in contracted-out employment ceases before he attains the relevant scheme's normal pension age) ").

The noble Lord said: Subject to your Lordships' consent, I should like to speak to Amendments Nos. 15, 18 and 19 together. These are purely consequential drafting Amendments necessitated by subsection (7) of Clause 18, which was incorporated in the Bill at the Commons Report stage. I think that is all I need say so far as these Amendments are concerned, and I beg to move Amendment No. 15.

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 16:

Page 18, line 32, at end insert— ("( ) In section 40(3) of the Pensions Act, after the words " the rule has taken effect" there shall be inserted the words " except that the rule may also accord priority, on a winding up occurring after an earner has attained normal pension age, to liabilities of the scheme in respect of pensions and other benefits to which he will be entitled on ceasing to be in employment or to which the earner's widow or widower or any dependant of the earner's will be entitled on the earner's death.").

The noble Lord said: Once again, as I understand the situation, the Government are acceding to a request made by the pensions organisations, and I am sure this Amendment will find favour on the other side of the Committee. I think it merely indicates that we have a Government who are open to reason and argument. It is the end result that really matters; and, that being the case, I beg to move.

Baroness PHILLIPS

Before the Question is put, may I raise one point? It is not on this Amendment at all, but I cannot see any other way of raising it, and I thought that if I mentioned the point now my noble friend might get the answer before the end of the proceedings. On page 17 we have some fascinating words. We are told that, in future, for the words 'she is cohabitating with a man as his wife' there shall be substituted the words 'she and a man to whom she is not married are living together as husband and wife'". I am very curious to know what the difference is, if any.

Lord WELLS-PESTELL

It may be one of semantics, but I will find out and let my noble friend know before the end of the proceedings.

On Question, Amendment agreed to.

6.39 p.m.

Lord LYELL moved Amendment No. 17:

Page 19, line 26, at end insert— ("( ) In section 28(1) of the Pensions Act there shall be inserted at the end the words ' so as to embody the best practicable estimate of the average of the cost referred to in paragraph (a) above'.").

The noble Lord said: The noble Lord, Lord Wells-Pestell, said we were entering a complicated area of minefields and trip-wires. Certainly I will attempt to pick my way fairly delicately through this area and through these obstacles, but the purpose of this brief Amendment is this. Section 28 of the Social Security Pensions Act 1975, I understand, is what we might call the master Act, and, as I understand it, Clause 18 of this Bill, for the main part, is amending various sections and subsections of the Pensions Act 1975. The object of this brief Amendment is to write into Section 28 of that Act, which I understand deals with the alterations in Class 1 contracting-out contributions, the same provisions as are contained in Section 46 of the Pensions Act. Perhaps Members of the Committee may not be aware, as I was not, that this particular section deals with actuarial tables. However, I believe that a connection between Section 28 and Section 46 exists thus: that Section 46(2) contains fairly close provisions detailing a standard actuarial table which embodies whatever appears to the Secretary of State to be the best practical estimate of the average cost of providing any one of three rather complicated premiums. First, there is something called the "accrued rights premium" or, the alternative, as a variation on this, the "pensioner's rights premium". Then there is the different form of the "limited revaluation premium". All of these, I understand, are a form of premium where a contracted-out earner requires to re-enter the Government scheme. The different nomenclatures for the premiums are apposite to differing circumstances.

I understand that all of these three premiums require very careful calculation and close scrutiny both by the Government Actuary and by the Secretary of State. I think we should also remember that these three premiums concern the return of the contracted-out pensioner to the Government scheme. We believe that it is right that great care should be taken; but I wonder whether the noble Lord could give us some indication why the Secretary of State should not exercise what we regard as equal care and precaution when altering the rates of contracted-out Class 1 contributions as set out in Section 27(2) of the Pensions Act 1975 when using the provisions of Section 28(1)(b). This is the subsection to which my particular Amendment applies. I apologise for the seeming complication of this particular Amendment. I understand that it is fairly simple and I hope that the Committee have found it so. I beg to move.

Lord WELLS-PESTELL

I hope the noble Lord, Lord Lyell, will not misunderstand me when I say that I have found it difficult to understand what he wishes to achieve by this particular Amendment. As the noble Lord will realise, I have taken advice on this but that has not helped me a great deal—and in saying this I am not being critical of the advice; for I am always in the happy position of being given the best possible advice, which is a good thing for me and, I hope, for your Lordships. It is a question of what the noble Lord had in mind when he put down this Amendment and what he thought it would achieve. This is my difficulty. I think I ought to be frank about it. That is not being critical of what he has put down.

Section 28 of the Pensions Act lays down the procedure for regular reviews of the contribution reduction for the contracted-out which will initially total 7 per cent. of earnings in the upper band. Subsection (1)(a) requires the Government Actuary to report on the contracted-out contribution percentages applying at the time and on any changes in the factors affecting the cost of occupational pension schemes of providing guaranteed minimum pensions, and the Secretary of State is then required, as I understand it, in subsection 1 (b), to report on whether he considers that, in view of the Government Actuary's report, there should be any change in these rates of contribution. This rather formal procedure, and particularly the specific reference to changes in the factors affecting the cost or occupational schemes of providing guaranteed minimum pensions, was provided for especially to allay the fears of the pensions interests that the terms for contracting-out might be worsened at some future date for reasons other than the need to revise the underlying acturial assumptions.

It may well be that the Amendment is intended to ensure that where the Government Actuary demonstrates in his report that the costs of providing guaranteed minimum pensions have gone up, a draft order in respect of a compensating adjustment in the contracting-out terms (that is, the size of the contribution abatement) will follow as in subsection (4). But the discretion given to the Secretary of State in subsection 1(b) as to whether there should be a contribution change and, if so, what change, I am advised, would be untouched by the Amendment. On the other hand, the reference to the "best practical estimate" in the noble Lord's Amendment might be an expression of doubt as to the efficacy of the Government Actuary's reporting. I am sure that noble Lords will go away thinking that I have "a thing" about Government actuaries and the treatment thereof.

Neither thought, could, of course, be entertained by the Government. There could be no question of the Secretary of State not exercising his discretion reasonably, while the accuracy of the Government Actuary's impartial uprating should not be doubted. Parliament laid down the Secretary of State's responsibility under the section and the intention was plainly that changes in the terms for contracting-out would be as a result of the specific advice of the Government Actuary within the terms of the section, and not otherwise.

I was going to quote the whole of Section 28(1)(a) and (b) but I shall not do so. But when one looks at Section 28(1)(b) and adds the words that the noble Lord has put down in his Amendment then I say, with respect, that I do not think it does anything that is of any value or of any help. I hope that the noble Lord will feel on reflection, or perhaps after looking at Hansard tomorrow, that that might be so.

Lord LYELL

I should like to thank the noble Lord for what he has said. I shall be happy to reflect on it. The noble Lord would agree with me that I would be very happy with the actuarial calculation. It was just this aspect of discretion on the part of the Secretary of State to which the noble Lord alluded. It seemed that there was a slight inconsistency in my mind and in the mind of one or two other people as to the difference of the words I had put in my Amendment including "best practical estimate of the average of the cost" which is expressed. We understand that this is some kind of criterion and guideline again allowing the Secretary of State to use his discretion but, we understood, within these parameters. We thought that these parameters might be and are apposite to Section 28. However, I think that the noble Lord has given us enough on which to reflect. I would not wish to pursue this at much greater length tonight and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord WELLS-PESTELL moved Amendment No. 18: Page 20, line 12, after ("which") insert (", as amended by subsection (7) of this section,").

The noble Lord said: I have already spoken to this Amendment and mentioned that it was consequential. I beg to move.

On Question, Amendment agreed to.

6.50 p.m.

Lord WELLS-PESTELL moved Amendment No. 19: Page 20, line 13, leave out ("the scheme's normal pension") and insert ("pensionable").

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 20:

Page 20, line 14, at end insert— ("( ) In section 47 of the Pensions Act, in subsections (1)(b) and (8)(b), for the words " state scheme premium" there shall be substituted the words " contributions equivalent premium.").

The noble Lord said: The Government have introduced this Amendment to express more clearly the intended scope of Section 47 of the Pensions Act. I think I can take it briefly. This section enables an employer to recover part of the cost of paying a contributions equivalent premium from any refund of occupational scheme contributions the employee may receive. Broadly, a contributions equivalent premium may be paid by an employer to the National insurance Fund when an employee leaves contracted-out employment before the scheme's normal retirement age and has completed less than five years' contracted-out service.

The effect of payment of the premium is to remove the scheme's liability for a guaranteed minimum pension for the employee concerned and to buy him back into the State scheme as though he had never been contracted out. A contributions equivalent premium is in fact a straight adjustment of National Insurance contributions. As is set out in Section 47(2) of the Pensions Act, its amount is arrived at by calculating the difference between the contributions that would have been payable for the employee if he had not been contracted out and those that were actually paid in the contracted-out employment. This difference covers both the employer's and the employee's share of the contributions. Section 47(2) therefore allows the employer to make a corresponding deduction from any refund due to the employee in respect of the employee's share of that difference.

It has been suggested that the employer could have a similar right of recovery under the terms of the section when he pays other types of premiums such as a limited revaluation premium or an accrued rights premium. This was never intended, and in fact would result in some very anomalous situations. A limited revaluation premium results in the State taking over responsibility for part of the revaluation of a guaranteed minimum pension which the scheme would otherwise have to provide. Accrued rights premiums transfer the responsibility for the guaranteed minimum pension to the State scheme. In these circumstances, there is no reason why scheme rates should provide for refunds of contributions in respect of alterations in the arrangements for guaranteed minimum pensions, and it would be inappropriate to provide for deduction from any refund relating to pension rights in excess of that minimum.

The intention of this Amendment is thus to make it clear—and I accept that it is very difficult for those of us who are children in this matter—that the employer's right of recovery under Section 47 of the Act relates solely to contribution equivalent premiums. I beg to move.

On Question, Amendment agreed to.

6.54 p.m.

Lord BYERS moved Amendment No. 21:

Page 20, line 14, at end insert— ("(12A) In clause 33 of the Pension Act (which provides for requisite benefit for an earner who wishes to contract out of an occupational pension scheme), after subsection (1)(b), there shall be inserted the following— Provided that the Board may at their discretion issue a contracting-out certificate notwithstanding that the scheme does not, at that time, contain rules or amendments to the rules complying with the detailed requirements of the Act, so long as the Board are satisfied that a formal commitment has been entered into, that rules or amendments to the rules which comply with the requirements of the Act will be adopted within such period as may be laid down by the Occupational Pensions Board.".")

The noble Lord said: I tabled this Amendment to deal with a problem which I raised on Second Reading, the problem which occurs from a strict interpretation of the 1975 Act in connection with the various detailed stipulations concerning the benefits necessary for contracting out. As I pointed out, in practice very few schemes will be able to produce full and final rules by the operating date, which is April 1978. Even if they could, I do not think that it is reasonable for the Occupational Pensions Board to be expected to deal with them in detail before then. What I think is needed, as I said on Second Reading, is an interim method of documentation.

The purpose of this Amendment is to give the Occupational Pensions Board the discretion which it needs. There is a precedent for this, I am told, in that the Superannuation Funds Office of the Inland Revenue have allowed interim procedures to be adopted for many years now. At present the only place where the kind of details that are required can be recorded would be the explanatory booklet, announcement or notice issued to employees. But these documents, quite rightly, have been written in a "chatty" style, and it would not be appropriate for them to contain the formal detail more appropriate to the rules booklet. Even if the detailed material were included, again I do not think that the Occupational Pensions Board would have time to examine it in detail.

The Government may take the view that those that have to deal with these matters in pensions are getting unduly nervous; but I can assure them that those people have a great deal of experience and they are worried. In their view, unless some interim method is adopted, there is going to be a much more serious log-jam towards the date of April 1978 than has hitherto been predicted. This Amendment would allow the requirements of the Act to be met by a short, generalised commitment in interim formal documentation followed by the final document within a time to be set by the Occupational Pensions Board.

I mentioned one other alternative, which may commend itself to the Government. If the Government would consider giving an assurance that Clause 63(2)(g) of the main Pensions Act 1975 would be used to include a regulation-making power to allow the addition of more streamlined systems of documentation, this would avoid the need for my Amendment. If the Government could give an assurance that Clause 63(2)(g) can be used, and that they will use it in order to get something done in the way of more streamlined procedures and interim documentation, I should be only too happy to withdraw my Amendment. I beg to move.

Lord WELLS-PESTELL

I have a very long note on this Amendment and I do not know to what extent I should use it. The noble Lord, Lord Byers, has, I believe, received a letter from the noble Lord, Lord Allen of Abbeydale, who is chairman of the Occupational Pensions Board. I do not know to what extent that letter has helped. Perhaps it has not helped as much as the noble Lord hoped. But I can say—and I hope that the noble Lord will say whether or not it is helpful; if it is not, one must approach it in some other way—that the Department, in conjunction with the Board, will keep a close watch on the situation as it develops during the coming months. If it appears that regulations under Section 63(2)(g) will be needed, these will be made. Any such easement, if it proved necessary, might well need to be subjected to restrictions, and the requirements of the Board here would be ascertained. For this reason, easement through regulations would be more appropriate than a general discretion, without any limitations, based on a "formal commitment" as in the Amendment. If that is helpful, I will stop there. The noble Lord, Lord Byers, knows he has access, as everyone has, to the chairman of the Occupational Pensions Board and I will certainly draw the chairman's attention to what the noble Lord has said tonight. Subject to anything the noble Lord says, I will leave it there.

Lord BYERS

I should like to say, first, that the letter from the noble Lord, Lord Allen of Abbeydale, was extremely helpful. I think the best thing I can do is to say that I will study in Hansard what the noble Lord has said and, if necessary, I will write to him. In fact, I think he goes as far as I can expect him to go at this stage. If he does not, I will come back to him personally, but in the meantime, in view of what the noble Lord has said, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 18, as amended, shall stand part of the Bill?

Lord HAILSHAM of SAINT MARY-LEBONE

It is seven o'clock!

Lord LYELL

Before we consider this Question, I wonder whether the noble Lord, Lord Wells-Pestell, whom I warned before the debate of two minor points that I wanted to raise with him, could give me some form of explanation. If so, I should be very grateful. I should like to refer the noble Lord and indeed the Committee to subsection (7) of Clause 18, where there is a change in two sections of the Pensions Act 1975. In both sections it seems that the words, "the Scheme's normal pension age" are to be replaced by the words, "pensionable age". Those two sections deal with an earner's guaranteed minimum pension and also the limited revaluation premium that we had explained to us in connection with an earlier Amendment by the noble Lord, Lord Wells-Pestell. Those two minor changes, as set out in subsection (7), may not be of the greatest importance, but I have my doubts and therefore I should be very grateful if the noble Lord, Lord Wells-Pestell, either now or at some later stage, could give some indication of the meaning of the changes and how those words affect the two sections in the Pensions Act.

The second point I wanted to raise concerns subsection (11) of the same clause, on page 19 of the Bill as we have it. There seem to be two fairly substantial amendments to Sections 44 and 45 of the Pensions Act. It seems that the Bill's amendment to those sections differs in one major respect from the regulations as they are set out in the Act. It is that Section 21 of the original Act shall be considered as a factor with the earnings factor whether a Section 21 order was in force before or after the scheme terminated. I am worried about what Section 21 purports to say. It appears that the first three subsections are the most important ones. They lay down what the Secretary of State shall consider and what action he shall take in relation to earnings and earnings factors, when comparing those items with long-term benefits. In the fifth and sixth lines of subsection (3) we find that the Secretary of State: …shall…lay before each House of Parliament…an order directing that those earnings factors shall,…be increased…". I could not find any provision in Section 21 where the Secretary of State would make an order which is not concerned with earnings factors. Would the noble Lord be able to let me know the meaning of paragraphs (a) and (b) as amended in the Bill, as they affect Sections 44 and 45 of the original Act?

Lord WELLS-PESTELL

I am rather embarrassed, because I have given an undertaking that these proceedings will finish at seven o'clock. I do not want to prolong them. If the noble Lord would not think me discourteous, I can answer him and indeed I have the answers to all the matters he raised but I wonder whether he would allow me to write to him. If so, that would save an appreciable amount of time. There are only three more Amendments remaining to be dealt with. I imagine that Amendments Nos. 23 and 24 will not be moved and if the noble and learned Lord will give me two minutes, I can move Amendment No. 22 very briefly and we can complete our proceedings on this Bill.

Clause 18, as amended, agreed to.

Clauses 19 and 20 agreed to.

Clause 21 [Citation, commencement and extent]:

Lord WELLS-PESTELL moved Amendment No. 22: Page 22, line 25, after ("7") insert ("12(1) to (2A), (6A) and (7A), 12A, 13").

The noble Lord said: The effect of this Amendment is to add subsections (1), (2), (2A), (6A) and (7A) to Clause 12 and also Clauses 12A and 13 to those provisions which come into force on the passing of the Act. The whole purpose of them is to bring Clause 13 into force on Royal Assent. The clause provides part of the powers under which regulations for the recoupment of benefit from Industrial Tribunal awards are to be made by the Secretary of State for Employment. Since it is intended that those regulations should operate from May 1977, it is desirable that Clause 13 should be brought into force on the passing of the Act, so that there would be adequate time for their making, laying and being brought into operation. I beg to move.

On Question, Amendment agreed to.

Baroness YOUNG had given Notice of her intention to move Amendment No. 24. Page 22, line 31, at end insert ("and section (Amendment of Social Security Act 1975") shall come into force on 1st September 1977.").

The noble Baroness said: Can the noble Lord give an assurance that if he considers the Amendment to meet my Amendment No. 13 it will come into force with the rest of the provisions of this Bill?

Lord WELLS-PESTELL

Will the noble Baroness let me communicate with her on this?

Baroness YOUNG

Yes. With that assurance, I shall not move the Amendment.

Clause 21, as amended, agreed to.

Schedules 1 and 2 agreed to.

House resumed: Bill reported with the Amendments.