SOCIAL SECURITY BILL

HL Deb 22 February 1979 vol 398 cc1922-78

11.33 a.m.

The PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT of HEALTH and SOCIAL SECURITY (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.]

Clause 1 agreed to.

Clause 2 [Attendance allowance]:

The CHAIRMAN of COMMITTEES (Lord Aberdare)

I understand there is a mistake on the Marshalled List in that Amendment No. 1 should be shown as standing in the names of the noble Lords, Lord Sandys and Lord Cullen of Ashbourne.

Lord SANDYS moved Amendment No. 1:

Page 1, line 18, at end insert— (" ( ) In subsection (2)(b) after the words 'one or both of those conditions' the following words are added 'except if a person is already in receipt of the attendance allowance at the lower rate in which case the Secretary of State may empower the Attendance Allowance Board to issue a certificate under which he may receive the attendance allowance at the higher rate so long as the normal conditions are satisfied for a period of not less than 3 months'.")

The noble Lord said: I was particularly pleased when I saw the Marshalled List this morning because it gave currency to the suggestion that the Government had appropriated this Amendment, the name of the noble Lord, Lord Wells-Pestell, appearing to it. It would give us great pleasure if that proves to be the case and the Government accept it.

The Amendment arises out of a very similar Amendment moved in another place on 23rd January, and it might be for the convenience of the Committee if I read out the three factors which compose the situation here. We have the principal Act—the Social Security Act 1975—the Amendment, and the wording as it stands in the Bill, and I will read out how the clause would read as amended: … a period preceded immediately, or within such period as may be prescribed, by one of not less than six months throughout which he satisfied or was likely to satisfy one or both of those conditions, except if a person is already in receipt of the attendance allowance at the lower rate, in which case the Secretary of State may empower the Attendance Allowance Board to issue a certificate under which he may receive the attendance allowance at the higher rate so long as the normal conditions are satisfied for a period of not less than three months".

That is the critical issue and it revolves around a situation in which a person suffering from, say, a debilitating disease such as multiple sclerosis has already been in receipt of the attendance allowance at the lower rate. It was our contention that should a deterioration take place in the debilitating disease, a further waiting period of six months should not be necessary if he wishes to go on to the higher rate of attendance allowance.

The Amendment moved in another place proposed that if circumstances and the Attendance Allowance Board permitted, it would have effect immediately once the situation was granted. The Government resisted that Amendment in another place and claimed it would not be satisfactory and would have the opposite effect from that desired. We are now proposing an alternative in which a three months period is suggested. This was proposed in another place on Report and the Minister for Social Security, Mr. Deakins, said he would look into the matter and consider it further.

Lord WELLS-PESTELL

I am grateful to the noble Lord, Lord Sandys, for explaining the position as he sees it. The Government cannot accept the Amendment for the reasons I shall give. My colleague in another place said we would look carefully at this, and that has been done, and I know Lord Sandys will accept my word when I say that. As the noble Lord pointed out, under the Amendment those receiving the lower rate of attendance allowance would be able to receive the higher rate of allowance after satisfying the different requirements for that rate for only three months instead of the six months as everybody else must do, and it is important to bear in mind that everybody else must do it.

It is important to remember that it is the attendance needs with which we are concerned and not the medical disability. Lord Sandys made a point of deterioration; but deterioration does not necessarily mean that more attendance is necessary—the two do not necessarily go together—and so we must be concerned with attendance needs. The requirements which have to be established to qualify for the higher rate are different from those of the lower rate. Attendance needs can vary even between individuals suffering from precisely the same disability, depending on how they have managed to adapt, their age, their home circumstances and a whole variety of matters, and one cannot say that because two persons are suffering from the same disability, there is no difference in attendance needs. In fact there is. The needs can fluctuate for some time after the worsening of the medical disability. They may well lessen, as we know from medical evidence, as a person adapts to the worsening situation.

I accept that this is an area of very real difficulty where it is more difficult to establish settled attendance needs than it is to diagnose the medical disability. It is so easy to diagnose the medical disability. It is not easy to assess accurately the attendance needs. We rely upon medical advice and opinion for what I am about to say. It is generally accepted that the needs of the individual in the long term can be reasonably determined only over a period of six months, so with respect, I think that a period of three months is unreasonable.

I note that the Amendment tacitly accepts that it seeks to make the change for only one group. I hope I have shown that the establishment of the attendance needs for this group is no different from that of any other. The period of six months in order to show established attendance requirements is needed in general, and to reduce this category, and this category only, would be unfair on other claimants who have to continue with the six months rule. Indeed, this category already has some advantage, in that during the qualifying period the claimants are receiving the lower rate of the allowance and their relatives who are caring for them may well be receiving invalid care allowance.

I must remind the Committee of the question of cost. I dislike doing so because I seem to be doing nothing else from the Dispatch Box. We must consider the cost of concessions time and time again during consideration of the Amendments. The cost of the concession proposed here would be little more than half a million pounds, but the cost of reducing the qualifying period generally to three months would be about £15 million. We are in a period in which we must look at every penny—and I really mean every penny, not just every million, or every half million. If some of the Amendments before your Lordships today were carried, the consequent cost, added together, would be a considerable sum.

However, I am not really relying upon the cost argument, but rather on the medical advice and opinion that we have received that the attendance needs cannot be accurately judged in three months, and that six months is not only a much more realistic period, but the period in which medical opinion can make the best judgment. I ask the noble Lord, Lord Sandys, whether, following that explanation, he feels able to withdraw the Amendment. We have gone into the matter very carefully, not just superficially.

Baroness ELLIOT of HARWOOD

I should like to ask the noble Lord a question about this matter. Let us suppose that it is decided within three months that the allowance should go to the additional amount. Would the claimant still be limited to the lower amount for six months despite the fact that perhaps within a short time of a medical condition arising it was certified by doctors that the condition was permanent and merited the higher figure?

Lord WELLS-PESTELL

The limit would have to continue for the six months. I say this because I should be very surprised if, after a claimant had been receiving the attendance allowance for one or two months, a doctor would say that the condition was going to be permanent, that it would not get better, but worse. I am advised that it is the general practice that the doctor would say, "We must see what develops". Over a period of six months a much more adequate and accurate judgment can be made about what the future situation will be. In answer to the noble Baroness, I would say that it would not be possible to make the judgment after one or two months, but if a judgment were to be made in such a short period we would say that it ought to be delayed up to the six months.

Lord SANDYS

The Committee will be grateful to the noble Lord, Lord Wells-Pestell, for explaining in such detail the situation surrounding the Amendment. Of course I am reluctant to withdraw the Amendment, but before doing so, I wish to ask the noble Lord whether it would be possible for the allowance to be backdated to a period when the deterioration took place and the attendance necessity increased after the six months period had elapsed?

Lord WELLS-PESTELL

This would be a very dangerous door to open, because if such action was taken for one group, what might be the argument for other groups? I should like to take advice on this matter and I promise to do so and to write to the noble Lord before the Report stage, to let him know whether it is possible to meet him on this. My first reaction is that the suggestion would not be helpful other than to one or two individuals, and I think that it would put others at a disadvantage. However, I should gladly take back the matter.

Lord SANDYS

I am most grateful to the noble Lord for his assurance that he will examine this matter, and I look forward to hearing from him. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Lord WELLS-PESTELL: moved Amendment No. 2: Page 2, line 7, leave out ("and ' in") and insert ("and ' mentioned in").

The noble Lord said: As your Lordships will see, this is a simple drafting clarification. I beg to move.

On Question, Amendment agreed to.

11.47 a.m.

Lord SANDYS moved Amendment No. 3:

Page 2, line 19, at end insert— (" (7) For the purposes of determining the entitlement to attendance allowance of any person who

1. (a) has been refused payment of an allowance, or
2. (b) has had an allowance withdrawn,

section 35 of the principal Act shall be deemed always to have had effect as amended by this section, but payment shall be made at the appropriate rate out of the National Insurance Fund.").

The noble Lord said: We return to the matter of attendance allowance related to renal dialysis. On Second Reading I referred to this unhappy situation, which is only partially rectified by the Bill. I am well aware that we should deal with the Amendments as swiftly as possible, and so I shall go back only a short way into the history of this matter. The anomaly arose in that patients who were receiving kidney dialysis treatment in hospital, with all the facilities of the NHS, were receiving the attendance allowance in full, while patients who were dialysing at home for two periods a week, rather than three, were denied the attendance allowance by a ruling of the Attendance Allowance Board.

I wish to quote what the Minister for Social Security, Mr. Orme, said in the Standing Committee in another place, as reported at column 10 of the Official Report: The latest figure for people now receiving attendance allowance is 320,000, of whom there are 2,400 dialysing. It is estimated that 100 home dialysists have lost the allowance, or will lose it, before the change in the law becomes effective. We estimate that approximately 200 more who were patients at home will lose the allowance if the law is not changed. Approximately 350 people who dialyse as hospital outpatients will no longer qualify".

We have already been informed by the Minister for the Disabled that 40 people have received the back payments, and we are very glad to hear this good news. Can the noble Lord, Lord Wells-Pestell, assure the Committee that the remainder of those people mentioned in the Minister's statement will shortly be receiving their extra statutory payment?

Lord WELLS-PESTELL

There is no difference between the Government and the noble Lord, Lord Sandys, on this particular matter. We are all agreed that the people adversely affected by the Attendance Allowance Board's decision should have their benefits restored. I hope I shall be able to convince the noble Lord that there is no need for him to press his Amendment, for two reasons. The first is that arrangements have already been made under the extra-statutory powers, and I am happy to inform the noble Lord that so far about 200 cases—I might as well be precise; it is 202 cases—have already been paid. It is many more than 40, because we have taken these powers and have used them to pay. The remainder will be paid soon. We felt that this was the best way to proceed, rather than to make the legislation retrospective, since that could have meant delaying the payment for a considerable time; and we have all agreed—and I think we in your Lordships' Committee all agree—that this should be accomplished as soon as possible. I recognise the noble Lord's desire to put the matter on a statutory footing, but, as I have said, it is unnecessary because we have powers to do it immediately.

It would have, I think, two unfortunate effects if the noble Lord pursued his Amendment, and I am sure he would not want them. It would certainly mean that those who over the years have received the allowance while dialysing as hospital out-patients have been overpaid. Secondly, the statutory authorities who make the awards of the allowance could not take into account the extra-statutory payments already made; and I am sure your Lordships will recognise that if this could not be done there would be duplication of payment and we should therefore have immediately to stop making these extra-statutory payments, to the detriment of those presently receiving them. Furthermore, in some cases, I am advised, where payment has been made, we may have to make the payment again, so some might have to be paid twice. This, of course, would not be desirable; but I am sure the noble Lord will take the point that we have embarked on paying them and have made 202 payments. We have these extra-statutory powers, which we are using at this stage, and I hope the noble Lord will feel able to accept that.

Lord BOYD-CARPENTER

Might I ask the noble Lord a question arising out of what he has just said? If he continues to deal with these cases under extra-statutory powers, what happens if there is a disputed case, if there is a dispute as to the facts between a patient and the Department? As I understand it, where he is proceeding under the legislation, as he would be proceeding, of course, if this Amendment were accepted, then I assume the ordinary adjudicating system would operate; that is, the system approved by Parliament for dealing with these cases. But where the matter is being dealt with extra-statutorily, does the adjudicating procedure come in, or is the patient simply at the mercy of the Department?

Lord WELLS-PESTELL

I frankly do not know. I had not given thought to that arising, for the simple reason that we know the number of people who were stopped and who ought to be paid, and, because we have such a list and know the people who are involved, it had not occurred to us that they would not be automatically paid. It is possible that this may well arise, but, as I say, I would have to find out what procedures would be adopted in the event. It may be possible for me to find out during the course of this morning.

Lord BOYD-CARPENTER

I am very much obliged to the noble Lord.

Lord DRUMALBYN

May I ask the noble Lord a question following on what has just been said? While wholly agreeing that these payments should be made in one way or another, may I ask him whence the statutory powers to which he is referring derive? It seems rather curious that it should be possible to make the payments in this way, without statutory authority.

Lord WELLS-PESTELL

My understanding of the payments under the extra-statutory powers is that they are payments which the responsible Minister regards as being within the broad intention of the relevant statute but which fall outside a strict interpretation of the statute; and, with Treasury approval, they are charged to the relevant Vote but are noted in the Appropriation Account which is laid before Parliament for approval. Essentially, they are made when a technicality frustrates the intention of Parliament and individuals would otherwise suffer hardship as a result. Parliament retains the ultimate control through the approval of the Appropriation Account, but this is done with prior Treasury approval.

Lord SANDYS

I am very glad that 202 patients are to be reimbursed in this particular situation. I am very glad to hear that announcement, because it is considerably more than the 40 I mentioned previously. There appears to be a very interesting area here, and I was most pleased to hear the points raised by my noble friend Lord Boyd-Carpenter, because as I understand it the extra-statutory payment is permitted through powers contained in an Act of Parliament deriving from the 19th century. It is one which I have not given attention to, and it is an area which I think will require further examination; but there does appear to be a number of situations in which this particular problem may arise again, and I am most grateful to my noble friend Lord Drumalbyn for what he said in this regard. Of course, I am willing to withdraw the Amendment, with your Lordships' permission.

Amendment, by leave, withdrawn.

Clause 2, as amended, agreed to.

Clause 3 [Mobility allowance]:

11.57 a.m.

Lord SANDYS moved Amendment No. 4:

Page 3, line 26, at end insert— (6) If a person—

1. (a) is over the age of 75; and
2. (b) was, immediately prior to reaching the age of 75, in receipt of a mobility allowance under section 37A of the principal Act, as amended by this section; and
3. (c) ceased to receive a mobility allowance under section 37A of the principal Act, as amended by this section, only by reason of subsection (5)(a) of the said section, as amended by this section and otherwise fulfils the conditions laid down for the receipt of a mobility allowance;

that person shall be entitled to an allowance payable out of the National Insurance Fund at the same rate as may be laid down for the time being for a mobility allowance under section 37A of the principal Act."

The noble Lord said: We turn now to the mobility allowance. Your Lordships will be aware that in the Bill as presented to us the position was as follows. There were two categories of disabled who benefited from the disability allowance. The first category comprised those who became eligible prior to their 65th birthday and continued to be eligible to claim the allowance until the age of 75, now permitted in the Bill. However, after the age of 75 the allowance is going to be denied. The second category comprised approximately 32,000 patients (reference was made to that number in column 55 in Standing Committee) in the ex-vehicle scheme, who were beneficiaries under mobility allowance and who will continue to enjoy the lifetime mobility allowance.

How do we stand? What information have we on the estimates? I can only draw your Lordships' attention to a very interesting Written Answer given in your Lordships' House on 10th April 1978, at column 442 of the Official Report. This is what the Government informed us (I quote the words, and I shall be as speedy as I may): By the end of 1979, it is estimated that mobility allowance will be payable to 100,000 new beneficiaries and possibly 25,000 ex-vehicle scheme beneficiaries. By increasing the value of mobility allowance to £10 a week from July 1978 the Government are putting potentially some £65 million a year in the hands of disabled people …".

Perhaps I can go forward a little and quote the words of the Minister, Mr. Deakins, who said this in Standing Committee, at column 85: The Committee will appreciate that most mobility allowance awards are for life, although there are some one-year or two-year awards where the medical condition might improve". So there is, in a sense, a third category of beneficiaries, who might be only temporary beneficiaries under the scheme.

But there is an important point here which I should like to draw to your Lordships' attention, and it is this. Here, the Minister acknowledges that the award to eligibility is on a life basis, but, alas!, under the Bill the financial provision will stop at the age of 75. Our Amendment seeks to rectify the situation and to ensure that, in the unknown number of cases of those people who survive beyond their 75th birthday, the allowance should continue, and that the sum charged should be charged to the National Insurance Fund, which as we understand it has at the moment a surplus of over £200 million. I beg to move.

Lord WELLS-PESTELL

May I first comment on the National Insurance Fund issue? If this Amendment were to be carried, the money for the allowance would come out of the fund and would be a continuing commitment that would have to be taken account of when future contribution rates were decided. It might require increased contributions from the generality of people who pay National Insurance contributions and, in the Government's view, that is not desirable. If the noble Lord's Amendment were put into operation the additional cost would be in the region of about £50 million a year.

But there is probably another argument which is much more telling. I was perfectly frank with the House on Second Reading that the relevant provision in the Bill was simply to give a breathing space of about ten years during which we or another Government—and I am sure that whichever Government were in power they would want to do it—would be able to look in depth at the position of the elderly. A lot of what we have done is to meet emergencies. In some respects it has been piecemeal, but good and effective. But we must take a long-term view of the best way or ways of helping the disabled. As my honourable friend the Parliamentary Under-Secretary of State indicated in another place, we are considering with the Office of Population and Census and Surveys the updating of the Amelia Harris Survey, which was a survey on the handicapped and the impaired in Great Britain. It came out in 1969 and is now ten years old. I do not think that we can plan for the over-75s on the basis of the information we have at present. We need much more up-to-date information upon which to base our concept of what they need and what kind of services we ought to offer them. With respect, what we think in 1979 may be useless in ten years' time. I think this must be something which (while I dislike the word "on-going") has to be an on-going thing.

Little is known about the mobility requirements of disabled people over 75. They are sometimes much more difficult to provide and much more serious than those of people who are getting mobility allowances at a younger age. At some stage, services such as shelter accommodation or domiciliary care become more important perhaps than cash benefits. It may be that we shall have to introduce some entirely different concept of help to people who need mobility at that particular age. I would emphasise that we are not seeking logic here; it is merely a breathing space. I accept that the Amendment put down will not create any immediate expenditure but, equally, it is not going to achieve immediate legislative effect. The situation it envisages cannot happen for ten years, and by then the Amendment may be totally unnecessary because the whole structure of benefits for the disabled may have changed radically. If it has not done so, the review and the surveys which will be undertaken (and which I am sure will be carried out by any other Government) may suggest something entirely different.

The Parliamentary Under-Secretary of State said in another place: When we reach the late 1980s I am sure that my right honourable friends will have worked out further proposals for extending benefits to the disabled which I am sure will meet the situation at that time". But he went on: My right honourable friends deserve to be judged on their record, which is extremely good". I would go farther and say I am confident that when the time comes a Labour Government will not be found wanting; and, from the terms of this Amendment, I am perfectly certain that that could be said of a Conservative Government also. This is a matter that both sides of the House are very concerned with. I feel that rather than to clutter up (and I apologise for using the word) an Act with things which at this stage are unnecessary, we ought to leave it so that either side or both sides, working either independently or simultaneously, can be looking at the needs of the disabled with a view to planning something in ten years' time. I believe that this is the way to deal with it and I hope that I have convinced the noble Lord, Lord Sandys, that it is the better way.

Lord BANKS

The Minister said that it would be unnecessary to make this provision. One might as well say it is as unnecessary to make provision for somebody at the age of 74 as it is at 76. The person who comes into the category in the years immediately ahead will be affected by the knowledge of whether it was for a limited period or for life. It could be argued that it is necessary that he should know that this allowance is there for life. I do not think that one can put forward the argument that it is unnecessary. The noble Lord also said that a breathing space is required. There is a breathing space. If it should turn out that the current provisions are, as the noble Lord said, useless in ten years' time, or before then, no doubt they can be altered to suit the facts that have become available in the interim or the experience that has been obtained in the interim. I cannot see that there is any argument against extending this provision beyond the age of 75, except the argument of cost.

I wonder whether this is the real point: that the noble Lord feels that it is not safe enough to allow for the additional cost that would occur over the present system if people over 75 were to be included; that is to say, people who became qualified before the age of 65 in the way the Bill lays down. I wonder whether that is such an enormous cost that we have to be so careful at this stage.

Lord WELLS-PESTELL

I do not want to take up too much time. We are, of course, concerned with cost; but I should have thought that if a Government, regardless of the Party in power, wanted to do something for the over-75s or the 75s in ten years' time, the thing to do would be to start making adequate provision now in the terms of how they are going to give that help—help which may be something entirely different from a mobility allowance. It might be a provision in some other way, as I have tried to point out.

Lord BANKS

Would that not also apply to the 74-year-olds in nine years' time?

Lord WELLS-PESTELL

I think it would. That may be so; but I do not see that this Amendment can really serve any useful purpose when it is clearly understood that it cannot be effective for the next ten years. Governments are criticised time and time again for the amount of legislation, for the number of sections and provisions that go into every Act and which at some subsequent stage are found either not to be in use or not to be effective. Anybody who has sat on the Consolidation Committee, as I did for some years, will realise that. I cannot see that any useful purpose can be served by putting this in the Bill when it will not have any immediate effect and cannot possibly have any effect for 10 years. I would much sooner leave it out because I think it is wise to do so. Then we can consider what our long-term policy for the disabled is to be. That can be introduced at a later stage.

I think that the noble Lord, Lord Sandys, referred to award for life. If he does not mind, I ought to qualify that for him, by saying that it only applies in what I think are known as the switch cases, that is the vehicle scheme beneficiaries. To use it without that qualification might give a wrong impression.

Lord DRUMALBYN

I wonder whether I may try to clarify my own mind, if nobody else's, on this point. What I think the noble Lord is saying is that if it is passed this will cost £50 million 10 years later. He does not want to enter into a commitment of that kind. He also says that it may prove later on that this may not be the best way of dealing with the circumstances. But the fact remains that people will be looking forward to this particular allowance, and the longer time goes on the more difficult it will be to alter it and amend it. People will have become accustomed already to the payments up to 65 and thereafter. Anybody who is incapacitated and immobile will be wondering what is going to happen to them after that—and increasingly so as the years go on. This will not be a common rate of growing disability for all people, it will vary in many different cases. I cannot see any objection to making this commitment at the present time because if the commitment is there a Government will have to make a better provision later on in order to supersede the commitment. I do not see why they should not do that. If this matter is going to be studied now and a better answer is obtained for those over 75, that is fine, it will obviously supersede the existing arrangement. What I think is difficult to see is why there should be a cut-off date at 75 when quite obviously the immobility will be growing. There will be a greater need after 75 than there is before it.

Lord PARGITER

I wonder whether I may ask a point which is rather technical. Presumably it would not be possible merely to extend the mobility allowance, because I assume that there is a Money Resolution in the other House which would prevent that. So it is being dealt with in a round about way to throw the cost—quite apart from the merits of the case—on to the Insurance Fund. Is there any power to throw matters brought in under one Bill, a charge, on to another Act of Parliament?—I would have thought not without providing the appropriate resolution providing the money for it.

Lord WELLS-PESTELL

It has occurred to us whether the Committee can properly discuss this Amendment. My understanding of the situation is it can; I do not know whether the fact that the Amendment being switched over to the National Insurance Fund alters the situation; but there is certainly a doubt in our minds as to whether we are competent to pass an Amendment of this kind. I cannot give a more definite answer than that.

In reply to the noble Lord, Lord Banks, regarding when the mobility allowance came in, it came in by stages and, if my memory serves me correctly, it is only recently that we have extended it as distinct from—shall I say?—just phasing it in. We have only recently extended it to take in, as they say, women from 60 to 65. The mobility allowance has been adjusted as we have gone along. I can see no reason why later on, if it is felt that this is the right way to deal with the over-75s—and it may well be the right way—we could not do this by amendment at some later stage. I cannot see that there is any merit at all in putting this in this Bill when in point of fact it cannot be implemented for 10 years.

Baroness MACLEOD of BORVE

May I ask the Minister one short question? I understood him to say that the Department are not able to reckon the number of people this will encompass either now or in 10 years' time; yet he has given a figure of £50 million. He must have based that on some figures and I wonder which.

Lord WELLS-PESTELL

The £50 million being committed will only help those disabled before the age of 65. One would not be able to get a mobility allowance from 65 until they are 75 unless one qualified for it before the age of 65. It means that those who would receive it until 75 would be those who had qualified for it before 65. In 10 years' time noble Lords opposite may be in power and may wish to spend the £50 million to help all the elderly and disabled through services as I have tried to say. If the commitment is made now they could easily be very frustrated if this goes into the Bill at this stage.

Baroness ELLIOT of HARWOOD

I have listened with great interest. Do I understand that if a mobility allowance is being paid to someone up to the age of 75, then that allowance is cut off after 75 because there is nothing in the Bill to continue it? That seems to me extremely unfair.

Lord WELLS-PESTELL

It is not unfair when one is talking about something that is 10 years hence. If somebody said: "We are going to cut it off in a year's time or two years' time" then there would be very serious objections to it; but there cannot be serious objections to saying to people that it has to stop at the age of 75 unless we come up with something, either by way of extending it or by some other form of mobility allowance which will help them. It stops at the present moment when people reach the age of 75; that is quite true. What I am saying is, let us plan in the coming years. We are undertaking an extension of the survey through the Office of Population Censuses and Surveys to see what the real problems of that age group really are so that we can make some benefit provision for them. Whether it is the right way to do it in kind or financially or provide some other facility, only a scientific survey will tell us. It is far better to let us, or any other Government that may be in power in the next 10 years, do this so that we fit the garment to the needs.

12.20 p.m.

Lord BOYD-CARPENTER

May I put a point to the noble Lord which I think his own departmental experience will confirm? In 10 years' time, whoever may be in power will have to consider this, as he says: and he knows as well as any noble Lord who has been in Government knows, that any project, however admirable and socially attractive, has to compete inside the Government machine for funds or with other good causes which other Departments in their wisdom wish to put forward. I do not suppose the noble Lord will be, or will wish to be, in his present appointment 10 years from now but, taking as a hypothesis that he is, would he not feel himself to be in a much stronger position to look after the interests of this very deserving section of the community if he had already got this provision on the Statute Book and could say to his colleagues: "Look, if you want to prefer some other expenditure to this, you will have to repeal through Parliament what is now on the Statute Book"? He would find himself in a very much stronger position in the scramble for funds—I think that is the right word to use, because anyone who has been in Government knows that all departments under all Governments have to indulge in it. Why will he not think again and endow his successor in 10 years' time with that stronger position which my noble friend's Amendment offers to him?

Lord WELLS-PESTELL

I am most grateful to the noble Lord; his experience in Government is greater than mine will ever be, and I acknowledge that. I acknowledge his vast experience and his competence, if he will allow me to say so, in this particular field. But, speaking for the Government, I accept the Government's view for two reasons, because I know that a great deal of thought has gone into it. I accept it for another reason entirely; that is, that all my life has been concerned with professional and voluntary social work and I have seen the disaster—that is not too strong a word—when people have laid plans today for five or ten years hence, and those plans, when the time comes, have borne no relationship to the needs. The noble Baroness, Lady Elliot, for example, started a remarkable college in Birmingham for the disabled. She planned it and had the best possible advice available when they were able to start on the project, and yet the end result bore no relationship to the beginning and cost about five times as much, if I remember rightly.

I think it really is very unwise. I would urge that we should use all the experience in the community, both inside and outside Government, to see what we really ought to be doing, not in 10 years' time, but what we ought to be doing in six or seven years' time to plan for the period ahead. On that basis, I hope the noble Lord will be convinced by me.

Lord CLITHEROE

There is one point the noble Lord has not dealt with, and that is the question of giving a sense of security to the individual.

Lord WELLS-PESTELL

I do not want to make a Party political point about this, because the disabled are above that sort of thing; but with great respect I think that this Government—and I do not doubt that any other Government would do precisely the same—have shown immense concern about this problem. I should have thought that any disabled person could go to bed every night feeling fairly certain, in fact very certain, that his or her needs will be looked after to the fullest possible extent. I do not see that there is any reason for anyone feeling they are going to be let down.

Lord SANDYS

I wish that I could share the confidence of the noble Lord, Lord Wells-Pestell. I am sure there are many disabled people who will share the anxiety of my noble friend Lord Boyd-Carpenter. From a long and seasoned experience, it is of course this pressure of events and the struggle which takes place for funds available at a particular moment in time which so exercise our minds.

There are two matters I should like to mention to the noble Lord. I am well aware that time is creeping up on us, but I think it is worth mentioning because your Lordships have expressed such interest in this clause. The noble Lord, Lord Wells-Pestcll, mentioned that the Amelia Harris survey was to be updated. When we discussed the Snowdon Report two years ago, on a Motion introduced by the noble Baroness, Lady Phillips, we went into the whole question of the integration of the disabled at that time. It surprises me that in the interval of the two years that have passed since then material should not be available on the disabled mobility arrangements for those over 75. I have been re-reading that important debate, and I think the Amelia Harris survey was mentioned at some length on that occasion—and even in those days it was seven years old.

I think the Government are leaning on a very slender argument in this set of circumstances. I believe there are other factors here which weigh heavily on their minds. But let us not forget that in the Bill we have Clause 3(2): an important Amendment brought in by the Minister for the Disabled which states: any changes in taxation which directly affect the cost of motoring for persons in receipt of mobility allowance and such other matters as he thinks relevant; and he shall lay before Parliament a statement setting out his conclusion and the reasons therefore as soon as is reasonably practicable.". Here is a Minister saying that the allowance, as such, might be increased by special provision. He is allowing for that, and both major Parties have agreed on that. So there is some flexibility in the uprating of the allowance. Nevertheless the extension of the allowance to those over 75 is disallowed by the Government. I hope that we may come back to this on Report, and I advise the Government that we would welcome some consultations were it possible. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

12.27 p.m.

Lord WELLS-PESTELL moved Amendment No. 5: After Clause 3, insert the following new clause:

Amendment of provisions relating to earnings after retirement age

(" .—(1) In section 30 of the principal Act (supplementary provisions about retirement pensions) the following subsection is inserted at the end— (6) The Secretary of State may by order—

1. (a) substitute for the period of 5 years mentioned in section 27(5) of this Act and subsection (1) above a shorter period; and
2. (b) substitute for the ages of 65 and 70 mentioned in sections 26(1) and (3), 36(5), 37(6) and 79(2)(a) of this Act and subsection (3) above such lower ages as are appropriate in consequence of any provision made by virtue of paragraph (a) above.".

(2) In section 167 of the principal Act (Parliamentary control of orders and regulations)—

1. (a) in subsection (1) the following paragraph is inserted after paragraph (b)—
• "(c) no order shall be made under section 30(6),"; and
2. (b) in subsection (3) after the words "section 17(3)" there is inserted "30(6),".

(3) In Part II of Schedule 15 to the principal Act (regulations not requiring prior submission to National Insurance Advisory Committee) the following paragraph is inserted after paragraph 17— 17A. Regulations contained in a statutory instrument which states that it contains only provisions in consequence of an order under section 30(6) of this Act.".").

The noble Lord said: With the indulgence of your Lordships, I wonder whether I may preface what I want to say about this Amendment by a reply to the noble Lord, Lord Boyd-Carpenter. I have taken advice on the matter he raised concerning a dispute between the Department and a person receiving a payment under the present system of extra-statutory payments. I am informed that there is no sort of appeal procedure at all when payments are made by that method, but I can give the noble Lord an assurance that, should the situation arise that there was a dispute, then we should certainly do our level best to secure some sort of independent view. The answer to the noble Lord's question is that in fact there is no appeal procedure.

Lord BOYD-CARPENTER

I am much obliged.

Lord WELLS-PESTELL

In moving Amendment No. 5, which stands in my name, I think I ought to refer, if the noble Lords, Lord Sandys and Lord Cullen of Ashbourne, will allow me, to their Amendment No. 6 which follows immediately.

This new clause, which is concerned with the earnings rule for retirement pensioners, flows from an undertaking given by the Government in another place, to which I referred briefly during our debate on the Second Reading of this Bill, when I said that at the Committee stage we would come forward with an Amendment to honour a pledge given by my right honourable friend in another place. May I say that the Opposition in the other place tabled an Amendment to the Bill at Report stage to make provision for the earnings rules applicable to retirement pensioners, and to increases of retirement pension, invalidity pension and industrial injuries unemployability supplement in respect of wives living with their husbands, to be abolished by an order approved by resolution of each House of Parliament. At present such a change would require an amending Act.

But the Amendment had defects, to which I will refer later, which precluded its acceptance by the Government. The movers therefore withdrew the Amendment on the Government's undertaking to introduce a new clause in your Lordships' House, which would enable the Government, by the use of affirmative orders, to phase out the earnings rule for retirement pensioners by steadily reducing the period over which it applies, with the aim of abolishing it entirely in due course.

The earnings rule for retirement pensioners, which applies only in the first five years after pension age—that is, between 60 and 65 for women and between 65 and 70 for men—provides that where a pensioner's earnings exceed £45 a week, his pension is reduced on a sliding scale. This earnings limit is reviewed each year and increased in line with the movement in the general level of earnings.

The earnings limit is also relevant to the retirement condition which a person in these age bands has to satisfy before he can be awarded a retirement pension. A person can be treated as retired if his earnings are not expected to exceed the earnings rule limit. However, women over 65 and men over 70 are treated as retired whatever their earnings may be.

In fact, the only purpose of the retirement pensioners' earnings rule is to maintain this retirement condition. Since 1948, it has been a condition for the receipt of the pension that a person must have retired, or been treated as retired, from regular employment. But this is not a concept that has been readily accepted by contributors, and I admit that the earnings rule has been a constant source of complaint for many years. As a result, the Government are committed to abolishing the earnings rule for retirement pensioners when resources are available. But the cost would be very high.

It would depend on the number of people who continued to defer their retirement beyond pension age and, depending on what assumptions are made, the cost to central Government funds over the 12 months from November 1978 to November 1979 would be between £64 million and £124 million. The problem of abolition and details of how these costs are calculated are set out in the report on the earnings rule, which the Secretary of State for Social Services published last October under the provisions of Section 6 of the Act of 1977. Copies are available in the Library and I would refer your Lordships to them.

During the debate in another place the Opposition cast doubts on these estimates, and because they did so we have reexamined the figures with the help of the Government Actuary, who is independent of the Department of Health and Social Security, and the Department's Economic Advisers, and we are quite satisfied that these estimates are reliable.

These are very large sums of money, indeed, and the most likely way of bringing the earnings rule to an end is by phasing it out over a period and thus spreading the cost. One of the major objections to the Amendment introduced by the Opposition in another place was that it did not allow the rule to be phased out. Another objection was that abolition of the earnings rule in the way the Opposition proposed would have left the retirement condition in the air, as it were, and it was not at all clear what the effect on that condition would have been.

The Government's new clause now before your Lordships overcomes these problems. It provides that the Secretary of State may by affirmative order substitute a shorter period for the period of five years over pension age during which a person has to retire in order to qualify for a retirement pension and over which the earnings rule applies to pensioners. It also enables consequential Amendments to be made where necessary to the principal Act; for example, by inserting a lower age for the age of 65 at which a widow pensioner who has not retired automatically becomes entitled to full retirement pension.

The clause provides that any such order shall not be made until a draft has been laid before Parliament and approved by resolution of both Houses. The new clause therefore provides a simple and convenient way of phasing out the earnings rule for retirement pensioners, by reducing the age at which the retirement condition is deemed to be satisfied and at which the earnings rule ceases to apply. I beg to move.

12.37 p.m.

Lord CULLEN of ASHBOURNE

I hope that the noble Lord will not think it ungracious of us to put down our Amendment No. 6, in view of the fact that the Government have carried out their promise to introduce this new clause today. We are grateful to the noble Lord for having explained the new clause to us. The only difference between our Amendment and the noble Lord's, apart from the technicalities to which he has referred, is that his is really an enabling clause and ours provides for action over the next five years. Where we differ is as to the cost that would be involved in abolishing the earnings rule.

I think the noble Lord will remember that the Government's estimates of cost used to be considerably higher than they are today. In fact, it was under pressure from the Opposition that the Government brought out a report very much altering the estimated cost. Strangely enough, before that time no proper review had ever been carried out. This report of over 40 pages was published four months ago and it contains a great deal of information. It overturns many previous mistaken assumptions put forward by the Government, to which I shall refer later. There is no doubt that it was an extremely useful exercise.

When the earnings rule was discussed last month in another place, one of the objections to abolition put forward by the Government was that it would be incompatible with what is called the retirement condition. The Minister meant that the pension is for retirement only, and that if a person takes up work he is no longer retired and, therefore, should no longer receive a retirement pension. The earnings rule ensures that this is what happens.

I have only two observations to make and I should like the noble Lord, Lord Wells-Pestell, to refer to them if he intends to repeat this argument. Would he explain why the retirement condition applies to the younger pensioner, but not to the woman aged 65 or over or the man aged 70 or over? If the retirement pension is truly a retirement pension, then how can this distinction be justified? Secondly, would the noble Lord also explain why, if the retirement condition is of such vital importance, it does not apply to the new State second pension scheme?

I could go on. I could ask why many widows receiving a retirement pension are completely unaffected by the retirement condition, whatever their age, but it would be unnecessary. The so-called retirement condition is a convenient peg on which to defend the earnings rule which would have been abolished a long time ago if this had been its only justification. So we come to what is really the crux of the matter, which is the cost of abolishing the rule, and I must ask your Lordships to bear with me as I shall have to use various figures in order to make my point.

As I mentioned earlier, one of the reasons which prompted this House to defeat the Government in 1977 was the unreliability of previous Government estimates. In 1976, concern about Government errors was mounting so fast that Ministers published a special 15 page paper, entitled Note on Estimated Savings, in which they conceded that: Assumptions have been altered in a number of important respects from those used to provide earlier estimates". As my noble friend Lady Young pointed out in this House, these mistaken assumptions were not trivial. The Government had miscalculated the cost of abolishing the earnings rule by up to £75 million a year. In another place, the Government Minister described these mistakes as hilarious, though I think he could have chosen a more suitable adjective. The same Minister admitted that the new figures about the cost of abolishing the earnings rule might also be wrong. It is hardly surprising that in these circumstances your Lordships forced an Amendment upon the Government to ensure that a proper review of the earnings rule was carried out, and the report was made in Parliament in October 1978.

In 1977, the Government had put the net cost of abolishing the earnings rule at around £150 million. Imagine my surprise on reading the new report to discover that the net cost of abolishing the earnings rule for pensioners had been reduced to a possible £64 million, as the noble Lord told us a moment ago. How, I asked myself, had this come about? The answer is quite simple and relates to the number of people deferring retirement —that is, those who postpone drawing their pensions and who become entitled to a higher pension when they do eventually retire: the incremental benefit. As the State makes a big profit out of people who defer retirement, it follows that the fewer the number of people who defer retirement the less money the State will make.

In their 1976 document, Note on Estimated Savings, the Government assumed that if the earnings rule was abolished, 100 per cent. of those who deferred retirement would no longer do so. However, in their recent review, the Government discovered, to their evident surprise, that 40 per cent. of those who deferred retirement would in fact probably continue to do so if the earnings rule was abolished in order to get the incremental benefit. This, of course, makes a radical difference to the cost of abolishing the earnings rule. This correction to their previous figures reduces by some £80 million the Government's estimate as to the cost of abolishing the rule. To this figure must also be added the increase in income tax revenue resulting from so many people deferring retirement. They will be working and also getting their pension and will therefore have to pay extra tax. This has been calculated at £43 million.

The latest official cost of abolishing the earnings rule having thus been reduced to a possible £64 million, many noble Lords may think that we need go no further and that it is perfectly feasible to abolish the earnings rule in five stages over the next five years, with each stage costing less than £13 million. However, I should like to explain why this figure is still wrong and why the cost of abolishing the earnings rule is much less than even this estimate. Conservatives have long argued that the abolition of the earnings rule would remove a major work disincentive. Many pensioners work up to or near the earnings rule limit but not beyond it. If pensioners work longer hours and increase their pay, then there will be an increase in tax revenue. In their latest review, the Government have gone some way towards meeting this argument and have conceded that £28 million would be raised in tax revenue.

I have two comments to make on this. First, I strongly dispute the Government's strange assumption that if the earnings rule were abolished a number of pensioners would work fewer hours. The Government are assuming that all those who had previously deferred retirement would now be drawing a pension and would cut their earnings by 10 per cent., thus reducing tax revenue by £17 million. Why such a large number of people should make this decision in such inflationary times is a mystery to me. That some will do so—some disabled people or those contemplating ceasing work altogether—I have no doubt, but why do the Government think so many people will work less when a disincentive to work has been removed? On that reasoning, many people would reduce their hours of work whenever the standard rate of income tax came down. I cannot agree to £17 million. We could agree to £1 million or £2 million, perhaps, and we might stretch it to £3 million, which would knock £14 million from the £64 million and reduce it to £50 million.

My second point is a very simple one. We know that there are thousands of unemployed pensioners who would have liked to continue to work. A recent survey carried out by the Office of Population Censuses and Surveys showed that four out of 10 people would have liked to work beyond normal retirement age. There are some 2 million people within the earnings rule age bracket, most of whom are not working but some of whom would certainly like to do so. I believe that if we abolish the earnings rule, we can expect an increase in income tax revenue from many pensioners taking up work. How many we know not, but 35,000 pensioners taking up work on average earnings would mean extra tax revenue of £40 million to £50 million a year. It will not have escaped your Lordships' notice that if extra tax revenue of the higher of these two figures were achieved, the annual cost of abolishing the earnings rule would be nil.

I concede that we are talking about several grey areas, and it is impossible, either for us or for the Government, to be precise on these figures. But we are getting to an interesting situation where the cost, instead of being between £64 million and £120 million, could well be between £64 million and nil—possibly it could be nil.

We can also expect pensioners outside the earnings rule bracket to take up work. For example, I am aware of a pensioner aged 81 who saw his local Member of Parliament and said that he wanted to work and the only thing that deterred him was the earnings rule. His Member of Parliament was able to assure him that the earnings rule did not apply in his case. The moral of this anecdote is to show the psychological effect of the earnings rule.

It is not enough for the Government to say that only male pensioners aged 65 to 70 are affected by the earnings rule. The crucial point is not whether someone is affected by the earnings rule but whether he thinks he is affected. I suggest that the abolition of the earnings rule will come as a relief to people outside the earnings rule age bracket, as well as those within it, and that the extra tax revenue gained will match the cost of abolition. I do not know what allowance, if any, the Government have made, but I suspect that they have skated over this important issue altogether. I emphasise that some of the figures are on the cautious side and that if the number of people who take up work proves higher there will be a net gain to our economy.

Before I close I should like to ask the Minister whether, in view of the discrepancies between the original Government estimate of the cost of abolition and the figure given in the Official Report, it would not be valuable to dig deeper into some of the grey areas to which I have referred and to publish a further report in 1980.

Finally, I should like to summarise the position of the various Parties. The Conservative Party is committed to the abolition of the earnings rule and we have concluded that five years is a reasonable period. If it can be done sooner, so much the better. The Liberal Party—as I expect the noble Lord, Lord Banks, to confirm—is committed to the abolition of the earnings rule as soon as possible. Then there is the Labour Party, and in another place a Government Minister has said that there are sufficient references for future historians to see that at least in the last couple of months all Parties in the House have placed firmly on the record, by one means or another, their commitment to abolish the earnings rule.

The same Minister added that the Government did not need to carry out a broad review of the rule in 1978 to emphasise that abolition is, and remains, their long-term objective. That was said in 1977; this Amendment proposes abolition of the rule in 1984, and no doubt noble Lords will agree that this is what the Minister may have had in mind when he said that it was Labour's long-term objective. To my mind, seven years is indeed a long time. In supporting this Amendment, noble Lords in the Labour Party will be doing no more than giving effect to what their Government colleagues have said in another place, and there is no reason for withholding their votes.

Lord SOMERS

I wonder whether the noble Lord, Lord Wells-Pestell, would clear up one point which has always rather puzzled me. Can he tell us whether a pension from one's previous profession, from which one has now retired, counts as earnings under this particular rule?

Lord BOYD-CARPENTER

I should like to ask the noble Lord, Lord Wells-Pestell, when he replies, to deal with two questions. The first is this: when a Government put forward legislation giving themselves additional powers, it is normally the custom to give some indication of the Government's intention as to the likelihood and timing of any exercise of those powers? If the Committee and another place approve this Amendment in the Minister's name, the Government will have these powers. I am inclined to think that the noble Lord ought to give some indication, even in general terms, whether or not, if the Government have these powers, they intend to exercise them, and to give some indication of the time scale.

The second point is a slightly more complicated one. I note that the Amendment refers to 70 and 65 as being at present the age at which the earnings rule ceases to operate in the case of men and women respectively. Does the fact that those ages are incorporated in this Amendment mean that the Government have abandoned all ideas of altering the pensionable age under the National Insurance scheme? The noble Lord will be aware that there is a considerable body of opinion which feels that the discrimination against men under the scheme, with an age of retirement five years later than that of women—although the women have the longer expectation of life—is perhaps somewhat unfair, and I understood at one time that a review of the ages of retirement was being undertaken. Are we to assume that putting the ages of 70 and 65 quite firmly in this Amendment means that the Government have abandoned that concept?

I should like to say a word particularly to my noble friend on the Front Bench. I suppose that I have defended the earnings rule more frequently than any other noble Lord in your Lordships' House, even than my noble friend Lord Drumalbyn, because I was longer in the Department—then called the Ministry of Pensions and National Insurance—than he was, although I recall his defending it most valiantly. I am bound to say that I have never had any great difficulty in defending it on one ground. The ground was that we could argue, as my noble friend Lord Cullen of Ashbourne has argued most persuasively, as to the quantum of expenditure that would flow from the abandonment of the rule, but, so far at any rate, we have proceeded on the basis that it would cost something.

I am bound to say to my noble friend that I have great confidence, based on experience, in the Government Actuary's view which has been given to your Lordships. As the Minister said, the Government Actuary is wholly independent. Indeed—if I may mention it in parenthesis—once when I was Minister in another place one of the noble Lord's honourable friends accused me, admittedly in the middle of the night, of "fixing" the Government Actuary and I was always very pleased with my reply: that I should be only too grateful if the honourable Member would tell me how one could do that, as no doubt on occasions it would be highly convenient but I had always regarded it as impossible.

I give a good deal of weight to the Government Actuary, and on my noble friend's calculations, as I tried to follow them, I wonder whether there is not one rather questionable item. He referred, by way of compensation, to the increased yield of the income tax arising from more employment being undertaken by people of pensionable age. But in an age where we have the best part of a million and a half unemployed, I wonder whether that would be a net increase to the revenue or whether the employment taken up by those people, admirable in social terms, would not be employment which otherwise would be available to, and taken up by, those under pensionable age and at present unemployed. If that be so, then, with very great respect to my noble friend, his calculations of the savings to the State are not very convincing, because, first, there would not appear to be any increase in the gross yield to the revenue, and secondly, one would have to offset the increased unemployment benefit which would have to be paid over and above what is payable under the present system.

For my own part, I believe that there will be some substantial sum, and I am inclined to accept the Government Actuary's lower figure because previous estimates have proved to be on the high side; there will be some additional expenditure. As my noble friend Lord Drumalbyn will remember, the problem which always arose when he and I defended the earnings rule was this: given that there is always a limit to the amount of money available for social benefits, is it a good priority for the expenditure of that money to give it to those people over pensionable age who are fortunate enough to have good health and a good employer to enable them to continue to earn? These are admirable people and should be encouraged, but in terms of social welfare it never seemed to me that they were the highest priority. I was inclined to feel—I do not know how the Committee feels—that such funds as were available would better go to those elderly people whose health had broken down and who required, either through the retirement pension or through some of the allowances, support which their unhappy condition perhaps made even more urgent than it was in the case of their more fortunate brethren who were still healthy, happy and at work. Therefore, I have felt that we should be a little hesitant in abolishing the earnings rule.

My noble friend is, of course, absolutely right in saying that it has never been understood, and it has sometimes, I think, been deliberately misunderstood. It has never been popular; I accept that. But it has been a feature of the scheme since it was introduced in the 1940s. As a claimant for priority in the funds available I myself have never ranked it very high, and, indeed, even today would not rank it very high. Therefore, I am bound to say, as between the two alternatives offered to us, I am inclined to prefer the Minister's proposal, which leaves the matter open to the Government of the day in judging the priorities of expenditure, rather than to accept my noble friend's apparently rather Orwellian choice of 1984.

1.2 p.m.

Lord BANKS

Perhaps I might be allowed to say, very briefly, that we on these Benches have always been opposed to the earnings rule and have never accepted the retirement condition. We have never been able to see why it was perfectly in order to have the largest possible unearned income with no effect on the pension and the very opposite if you actually earned what you received. But I need not go into that because, as has been made clear, the Opposition and the Government together have both now come round to our point of view, and we certainly welcome that.

Amendment No. 5 gives the Government the ability to phase out the earnings rule, whereas Amendment No. 6 would place an obligation on them to do it. I should like to support the point made by the noble Lord, Lord Boyd-Carpenter, when he was asking what kind of time-scale the Government had in mind. One wonders whether it would ever be done if we had to rely on Amendment No. 5. It is for that reason that of the two, as I understand the position at the moment, I prefer Amendment No. 6.

Lord PARGITER

Quite briefly, it seems to me that the Opposition have very cleverly dealt with this purely on a financial basis. I happened to be a Member of another place following Beveridge when the Insurance Acts were introduced. They were introduced for specific purposes, and one of the purposes was to enable people to retire and to have some reasonable pension on retirement from industry or whatever they were doing. This had the effect of opening up the avenues of promotion; that was one of the arguments used at that time. It also had the effect of bringing young people, school-leavers and so on, into the general stream of employment. That was one of the principal objectives that was provided for under the Acts.

At this time an increasing number of school-leavers are finding it very difficult to get work, and, in my view, that number will continue to increase, as people continue working and as we reach the stage of increasing efficiency, which we are supposed to be doing, and consequently we are required to work fewer and not more hours. It seems to me that if this matter is to be reconsidered we ought to reconsider the whole basis upon which the Insurance Acts were constructed, the financial aspects which were given by the Government Actuary at that time, the sort of things that could be done by the fund and the sort of conditions that would have to apply. These conditions have been gradually whittled away and, in whittling away those conditions, we have considerably increased the amount of contributions having to be paid into the fund.

It seems to me that if we are going to deal with this aspect we ought not to deal with it from the point of view of the earnings rule; it ought to be dealt with fundamentally from the point of view of whether we still mean the same sort of things now as we meant when the Insurance Acts were introduced, when the figures were decided on what pensions were available. It seems to me that if we are going to have an age at which a pension is payable, irrespective of retirement—that is what we are arriving at—we really ought to look at the whole situation properly, and not try to deal with it, even in the way the Government are trying to deal with it, on the basis of the abolition of the earnings rule.

It seems to me also that if people do continue working we shall have increasing charges on the insurance fund or some other fund for young people who are unable to get work. If people choose to continue to work and we do not have a retirement age at all, perhaps we should consider whether they should cease to pay insurance contributions, or whether they should not pay a social fund contribution in order that we can deal with those young people who cannot get work. I am not arguing against people continuing to work if they want to, but I am saying that we ought to look at all the social consequences and not just at the earnings rule and the likely effect of abolition purely on the financial aspects.

Lord SANDYS

I have listened with very great interest to what all the noble Lords have said. The noble Lord, Lord Pargiter, has raised the very widest issues, which go even beyond the terms of Amendment No. 5 and cover a very broad field of social policy. I think one point which I detect in common between Lord Pargiter and Lord Boyd-Carpenter is an assumption that by permitting elderly people of pensionable age to go on working you are denying younger people the opportunity of filling those jobs. I think it can be argued, and it has been argued in official documents—the Office of Population Studies have records of this—that this is not always the case. I was very interested in what my noble friend Lord Cullen of Ashbourne asserted, that four out of 10 of those of pensionable age would like to work beyond retirement. There is a whole area here for further investigation, and of course we do once again need that vital element, the Amelia Harris survey, updated in regard to those disabled persons in this category. I feel that if we remove this major work disincentive it would be of major benefit. Nevertheless I listened most closely to my noble friend Lord Boyd-Carpenter, who speaks from long experience in this field, both in Government and out of Government, and I believe we should be wise to follow his advice in this matter.

1.8 p.m.

Lord WELLS-PESTELL

I do not want to take up your Lordships' time. I am very grateful for the contribution made by the noble Lord, Lord Boyd-Carpenter, who put the matter much more succinctly than I could. Also I think we ought to bear in mind what my noble friend Lord Pargiter has said. When I listened to the noble Lord, Lord Cullen, I thought the first thing I ought to do when I went back to the Department was to try to persuade my right honourable friend the Secretary of State to sack the Government Actuary and the Government's economic advisers because they were so totally at variance with the noble Lord.

I do not think noble Lords on the opposite Front Bench can have it both ways. The defeat inflicted on the Government in this House in 1977 forced us—I admit that—to review the whole basis of our costing of ending the earnings rule, and gave the Government Actuary over a year to fulfil that task. The resulting report might, one would have thought, have been accepted as a basis for further informed debate, but apparently it is not. Because the report does not reach exactly the conclusion which I think the noble Lord, Lord Cullen of Ashbourne, wants, he argues that the underlying assumptions therefore must be vitiated. I do not think this will do. The Government Actuary is an independent person. One may not trust the Department's economic advisers —I do not say that seriously, of course—but when one has an independent Government Actuary I think one really must. It is a pity if we are to have our discussions on the basis that the only answers which will be accepted in one's debating points are those that one puts forward oneself. The ones that I put forward are from the Government Actuary who is an entirely independent person.

Lord CULLEN of ASHBOURNE

Perhaps I can clear this matter up. I am not suggesting that there is anything wrong with the figures which the Government Actuary has provided. I am saying that he left out of account the effect that there would be if various people, who are now pensioners, decided to take up work. I believe that there could be a considerable number of such people. I leave out the factor that my noble friend Lord Boyd-Carpenter mentioned; that is, that if one of those took up a job somebody else might lose it. I think that a large number of those jobs would be part-time. There are many jobs about today, even though there are many people who are unemployed. Anyone who walks in a London street will find that practically every shop is looking for assistants. Many old age pensioners would be delighted to help out in jobs of that sort. Therefore, I am not suggesting that the Actuary's figures are wrong, but simply that he left out of account quite a major element.

Lord WELLS-PESTELL

I may be at fault, but I told your Lordships' House that the cost of all this would be between £64 million and £124 million. I understood the noble Lord, Lord Cullen of Ashbourne, to say that the figures are between £16 million and £64 million. I must read Hansard tomorrow, because it may be that I misunderstood him. I thought that he was seriously challenging the Government Actuary's report.

I do not want to say anything more other than to reply to the noble Lord, Lord Boyd-Carpenter, who raised two points. The exercise of the power to phase out the rule is a matter which the Government feel can be decided only in the light of the economic circumstances prevailing. At present—let me be quite frank about it—we cannot afford to exercise that power. Noble Lords will not want me to go on reminding the House of the restraint on public expenditure, but that is a very real matter so far as the Government are concerned.

The noble Lord, Lord Boyd-Carpenter, asked whether the provision of this new clause was without prejudice to any further fundamental change which the Government might introduce in relation to the pensionable age. No; we have not abandoned the idea or the possibility of being able to reduce pension age. But, as we all know the cost of reducing it for men from 65 years to 64 and for women by one year, is almost astronomic—it is extraordinarily high. Any such change would require main legislation. What we are concerned about is not that we have abandoned the idea of reducing the retirement age but rather the financial implications involved. I beg to move.

Lord SANDYS

Before the noble Lord sits down I wonder whether he would help us, as we may be in some procedural difficulty as regards this matter. We believe that there is a case here. Very wide issues have been raised on both sides of the House. We believe that one way out of these procedural difficulties, owing to the flexibility of procedures in your Lordships' House, might be as follows: To recommit this one clause of the Bill. It is so important. Major issues have been raised, and we believe that there is such a wealth of experience in your Lordships' House in this particular area that there would be justification for re-examining this one clause in Committee. I wonder whether the noble Lord would be willing to respond to that affirmatively?

Lord WELLS-PESTELL

We have had a long discussion on this matter this morning. We have taken a tremendous amount of time and I really do not think that there is anything fresh that could be said about it. We have had, if I may say so, the contribution of one noble Lord who is very experienced in these matters, as is the noble Lord, Lord Drumalbyn. I should not have thought that any useful purpose could be served and I am very loath to agree because, I think that it would be taking up further time of you Lordships' House quite unnecessarily having regard to the length of time that we have discussed this matter.

On Question, Amendment agreed to.

Lord SANDYS had given Notice of his intention to move Amendment No. 6: After Clause 3, insert the following new clause:

Abolition of earnings rule

(" . Section 30 of the Social Security Act 1975 shall cease to have effect on 5th April 1984 and all references to those subsections in that Act or in any other enactment shall then likewise cease to have effect.").

The noble Lord said: I think that we are in the procedural difficulty which I identified. It appears that it would probably be better if this Amendment were not spoken to, but were withdrawn at this stage and we return to the situation once again on Report when we have a new print of the Bill. Therefore, with the leave of the House, and most reluctantly—because the noble Lord was given the opportunity to recommit this clause—I shall not move it.

[Amendment No. 6 not moved.]

Clauses 4 to 9 agreed to.

Clause 10 [Increase of official pensions]:

Lord WELLS-PESTELL moved Amendment No. 7:

Page 8, leave out line 4 and insert— (" (3) A direction under this section may provide that where it has applied ").

The noble Lord said: I beg to move Amendment No. 7. With the permission of your Lordships I should like to speak to Amendments Nos. 7, 8 and 9. Amendments Nos. 7 and 8 enable a direction made under Section 59A to provide for an official pension to be recalculated in circumstances to be specified, as if the direction had never applied. The third Amendment enables a direction to provide for the re-calculation of an official pension as if the direction had applied to that pension during the whole of the specified period.

These Amendments are minor technical changes. New Section 59A of the Bill is directed towards certain unusual circumstances where full inflation-proofing of official pensions would, for technical reasons, not take place under the new arrangements. The intention of Section 59, as originally drafted, was to continue present levels of price protection but to link the arrangements to those for up-rating the additional componnents of the State pension scheme. Therefore new Section 59A allows the Minister for the Civil Service to make directions allowing full pension protection to be paid by public service schemes where this cannot be done by the Department of Health and Social Security. None of the categories of former public servants affected is likely to be large, but their pension circumstances are likely to be rather complicated.

These particular Amendments are required to ensure that the direction to be made by the Minister makes proper provision for the groups concerned. These groups will include certain widows of former public servants and could also include former public servants who have worked simultaneously in two contracted-out employments. In some cases this will require re-calculation of an official pension affected by a direction to ensure that the pensioner is neither over-compensated, nor under-compensated and these Amendments ensure that that can be done correctly. I hope that your Lordships will accept that these are not major changes although they are important in ensuring fair treatment for the groups affected. I beg to move Amendment No. 7.

Lord SANDYS

We are grateful to the noble Lord for explaining these Amendments, which are technical rather than drafting Amendments. We shall look at them with care. We believe that they are beneficial to the Bill as a whole.

Lord DRUMALBYN

I should like to ask the noble Lord a question about one word that he used. He referred to public servants who had been earning a pension "simultaneously" in two, or presumably more, separate capacities. Did the noble Lord mean that, or did he mean "successively"? If he meant "simultaneously", can he give us an example?

Lord WELLS-PESTELL

I used the phrase "worked simultaneously in two contracted-out employments". I cannot give the noble Lord an example. I think that he has raised an important matter, and I shall certainly make it my business to find out about it and let him know. I do not know whether I can do so while we are sitting in Committee this afternoon.

Lord LEATHERLAND

Might not this cover those people who we describe as being members of QUANGOs, about which from time to time we have discussions in this House? There are members of QUANGOs who are members of several QUANGOS, and who hold two or three posts. They might very well be caught by this clause.

Lord DRUMALBYN

If that were so, are the members of QUANGOs public servants? I should have thought not. They are generally persons appointed to non-official bodies.

Lord WELLS-PESTELL

I can give one example, and I think that we should try to deal with it while it is fresh in everybody's mind. It would apply to a consultant who works for two health authorities. Does that satisfy the noble Lord?

Lord DRUMABLYN

I do not mean this offensively, but it seems plausible.

On Question, Amendment agreed to.

1.24 p.m.

Lord WELLS-PESTELL: moved Amendment No. 8: Page 8, line 7, at end insert (", in such circumstances as may be specified in the direction,").

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 9: Page 8, leave out lines 10 and 11 and insert ("that the rate of an official").

On Question, Amendment agreed to.

On Question, Whether Clause 10, as amended, shall stand part of the Bill?

Lord LEATHERLAND

I shall be very brief indeed. I find few defects in this very beneficial Bill, but I think that there is a weakness in Clause 10. It adversely affects those people who had increases, say, on 1st December 1978. On 12th November 1979 they will receive eleven-twelfths of the cost-of-living increase that has occurred between November 1978 and November 1979. This is to keep up with the actual increase in the cost of living for the full period of 11 months and 11 days which will have elapsed by 12th November 1979. Therefore, it looks to me as though those people will be deprived of 11 days' worth of cost-of-living increase which might have affected their salaries. Therefore, I suggest that instead of using complete months, as we do in the clause, we should express the period in terms of actual days. I do not, of course, want an answer today, but the point is now on record and perhaps at the next stage the Minister will be able to give me a reply.

Lord WELLS-PESTELL

I am aware of this. In fact, this matter was discussed rather extensively in another place, and as my honourable friend the Under-Secretary of State for Health and Social Security explained, apart from the major administrative difficulty in introducing a fundamental change of this kind at such a late stage, there are other reasons for resisting any suggestion that we should do something about it. First, 11 days of inflation-proofing represents only about 5p a week on the average pension at current rates of inflation. Secondly, although these pensioners will receive only 11 months' worth of increase, they will get it three weeks earlier than the usual increase date. Thirdly, 11 days' worth of inflation is well within the margin of error of any statistical index or retail prices. Although on the face of it there seems to be a point here, in practice there is nothing of any consequence at all.

Clause 10, as amended, agreed to.

Clause 11 agreed to.

Clause 12 [Maternity grant and death grant]:

1.26 p.m.

Lord BANKS moved Amendment No. 10:

Page 9, line 34, at end insert— ("If the Secretary of State concludes that during any year those sums have not retained their value he shall prepare and lay before Parliament the draft of an Order increasing those sums by at least the amount necessary to restore their value. If the draft Order is approved by resolution of each House of Parliament the Secretary of State shall make an Order in the form of the draft.")

The noble Lord said: Clause 12 obliges the Secretary of State to review the maternity grant and the death grant each year to see whether they have lost value during the course of the year. This obligation was inserted into the Bill during the Committee stage in another place. The Government made clear that although, of course, they would carry out that review, they did not intend to act upon it; they did not intend to rectify any shortfall which the review might reveal.

This Amendment would oblige the Secretary of State to take action to restore the value. If we look at past experience we can see, for example, what has happened to the death grant, which was introduced at £20 in 1949. It has been increased twice and is now £30, but it would have to be at £123 in order to retain its original value. It has been allowed to decline in value over the years. The Amendment would not remedy that position. It would not take account of any past erosion, but it would prevent further deterioration. When I asked an Unstarred Question about the death grant, the noble Lord, Lord Wells-Pestell, indicated that the Government were going to allow the death grant to fall further in value. This Amendment would prevent that from happening.

In my view, if Parliament decides that benefits at a certain level are necessary, they should be maintained at that level in real terms until a new decision is made. That has not happened in the past. I hope that Parliament will rectify that situation on some other occasion. This Amendment is designed to prevent it from happening in the future; to make sure that these grants retain their present value, and to prevent further erosion. I beg to move.

Lord LEATHERLAND

I do not suppose that at this stage my noble friend will say that he will accept this Amendment. However, I warmly ask him to persuade the Government to keep it very closely in mind. The maternity grant and the death grant are both very much appreciated, in the one case by the mother, and in the other case by the relatives. There is no doubt whatever that the amount of these grants has not kept pace with the increase in the cost of living.

I suppose that at the age of 80 there is a prospect that I might not be concerned with the maternity grant; there is probably a prospect that I shall be concerned with the other one. But I believe that these grants have been of inestimable benefit to large sections of the community, and if the cost of living has increased, and if it is likely to continue to increase—as it will —it is only fair that these two grants, which are so very valuable to millions of people, should also be increased in keeping with the cost of living.

1.29 p.m.

Lord WELLS-PESTELL

As the noble Lord, Lord Banks, said, we had a very full debate—notwithstanding that it was on an Unstarred Question—in your Lordships' House fairly recently, and I do not think I can add anything to what I said then. I would simply remind your Lordships that Clause 12 as set out in the Bill is the clause which was accepted by the other place. Albeit it was put in as an Amendment, nevertheless the wording, as set out in Clause 12, was accepted by the majority in another place. It resulted, as your Lordships know, from an Opposition Amendment at Committee stage. It does not require the Secretary of State to be committed to increasing these grants following any kind of review.

Lord Banks' Amendment makes the position of the Amendment very different from when it left the House. As I understand the situation, my right honourable friend the Secretary of State can increase the grants, if he wants to, under the wording of the present clause. I do not want to go over all the arguments we had on 30th January. I raised the question of cost then. I pointed out that there had been a considerable piece of research done not so long ago into the effect on people of the death grant, and there was no evidence at all from the group, which was a real cross-section of the community, that any hardship was experienced at all in general terms. There were one or two cases, but of the number seen they were very small.

We are concerned with the financial implications of the matter, because if we are thinking in terms of from November 1978 to 1979, and uprate them each November thereafter, it would cost about £1 million for 1979–80, rising to about £3.5 million for 1980–81. Having regard to all the things that we have got to do for the aged, and across a very wide front of benefits which are being given to a large section of the community, we have to use every penny we can to meet and keep the particular benefits that we are paying abreast of any rise in prices and, as some of them rise, in earnings.

I do not want to take up your Lordships' time by going over all the ground that we covered on 30th January, but the increases in child benefit taking place last November and the coming April require an extra £500 million; the Christmas bonus over £100 million. We are doing so much, and if a good many, as I said earlier on, of these Amendments before your Lordships today had been accepted, or had succeeded, they would have added quite appreciable sums of money, many millions of pounds, to an already overburdened Department when it comes to meeting resources from its allocation.

I hope that I can persuade the noble Lord, Lord Banks, who is by no means an unreasonable person, to leave the clause as it is, bearing in mind that the Secretary of State can increase the grants if he wants. Let him carry out his responsibility to both Houses of Parliament by exercising the responsibility put on him under Clause 12, and then let him see whether, having done that, anything can be done to meet the spirit of the Amendment before your Lordships.

1.33 p.m.

Viscount SIMON

I wonder whether the noble Lord can help the Committee. He quoted two figures which rather puzzled me. The cost in the coming year would be about £1 million, and in the following year £3.5 million. Does this imply that the Government think that inflation is going to increase more in the following year than it has been hitherto?

Lord WELLS-PESTELL

No. I cannot give the age bands, but we know that, taking statistics year by year, there are more deaths in one group of people than in another. We know that another group tend to live a much longer period. The only way by which one can make judgments of this kind, which I admit are not absolutely foolproof but they are not very far off, is by working according to the trends of people who are going to live and how long they are going to live. We know that in the next 10 years there will be an increasing number of people not only living over the age of 75 but, believe it or not, over the age of 85. Therefore, there will be greater strains on our resources for providing for the elderly. In the same way, we can tell from trends the number of people who are likely to die in any one area.

The cost is smaller in 1979–80, because the Amendment would only become operative in November and that would only really cover half a year. I said for that half-year it will be about £1 million; in the full year £3.5 million. That is because to some extent we can gauge the amount of claim there would be on this benefit if it was uprated.

Viscount SIMON

We cannot examine the figures very easily across the Floor of the House, but I must say I was rather surprised at the noble Lord telling us that, because if it is expected that people are going to live longer there will be fewer deaths in the ensuing year will there not?

Lord WELLS-PESTELL

This is true, but we have to set that against what would be the possible uprating of the benefit if the benefit was uprated. If it is going to be done in line with prices, which I imagine it would be, then one would have to take into account the possible inflation figure in a year or 18 months' time.

1.38 p.m.

Lord DRUMALBYN

May I ask a question about Clause 12, which the Amendment seeks to alter or add to? The clause itself is a curiosity. I do not blame the Government for this because it was not their clause. It merely provides for the examination of the present levels and, as a result, requires the Government to state what would be required to bring them up in real terms to what they were in the previous year. This is something which I imagine the Government still do; certainly we used to do it when I was associated with the Pensions and National Insurance Department. But this particular clause does not require him to do anything else. The noble Lord says that a Minister can, if he wishes, raise these amounts, either by the disparity between the previous value and the new value, or else presumably by another amount. I am not clear under what powers he can do that.

I take it that what he means is that at an ordinary uprating of National Insurance benefits provision could be made at the same time for uprating these two benefits. Of course, again he can do that anyway. I am not clear what the whole exercise involves. The great difference between Lord Banks' Amendment and what the noble Lord has been saying is that whereas Clause 12, as it now stands, provides only for a year to year increase, Lord Banks' Amendment would involve going right back to the original. Is this not so?

Viscount SIMON

I do not think so.

Lord DRUMALBYN

Going back a further distance, at any rate, because it says: during any year those sums have not retained their value he shall prepare and lay before Parliament the draft of an Order". He is simply requiring that these two grants should be raised from their present levels to whatever is required from year to year to make up the loss in their value and their real purchasing power.

This is a curious procedure because the real value has already fallen behind so far that it seems almost miniscule to provide for increases from year to year based on the present state of affairs. At a certain stage one would have to decide what the value of this benefit was. Lord Wells-Pestell seemed almost to be saying that these two grants were not of much value anyway nowadays and that the money could be better spent elsewhere—he did not say exactly that, but that was the deduction one would make from his remarks. Yet that is at variance with what is at present in Clause 12, which seems to say that, whatever else happens, we must at least keep this benefit under review to see that its value is retained.

If Lord Wells-Pestell can demonstrate that the Amendment is unnecessary—because the Government have power, if they so wish, to increase the amount in accordance with their re-examination—then I should not have thought there was much point in pressing the Amendment. But if he is saying that the Government will simply tell Parliament what the amount is and leave it to Parliament to clamour for an uprating, he will probably find that from year to year an Amendment will be moved, and the Government would then have to resist it because that would be the effect in the annual uprating. Perhaps the noble Lord would elucidate the point and explain what he meant by saying that the Government would have power to increase the grants. And may we be told how they would do it?

Lord WELLS-PESTELL

I am pleased to have this opportunity to clarify perhaps my own thinking on the matter. As I understand the situation, the Secretary of State is bound by various provisions in other Acts to consider certain benefits and, if they have not kept pace—some of them with prices; some with earnings—to uprate them accordingly. That does not apply to some benefits, and it does not and has never applied to the maternity and death benefits.

I think we are all agreed that the amounts paid out by way of death and maternity grants are very low; they were fixed a good many years ago and, trusting to memory, I do not believe the death grant has been raised since 1967 or 1968. To bring it up to its present level would be very costly; that is, if it were brought up to its present level from the time it was originally given. However, I understand the noble Lord, Lord Banks, is not asking for that. In his Amendment he is saying that the Secretary of State, when he looks at the death grant and maternity benefit eash year, must uprate them according to what their value was the previous year. I understand, therefore, that the noble Lord, Lord Banks, is asking for this to be uprated in line with prices as from November 1978.

The clause as drafted puts a responsibility on the Secretary of State to review maternity and death grants at the next review, but it does not put him under an obligation, according to the clause as drafted, to use the power he has to uprate it; he is required to review it. I am saying that, although he is under no obligation, according to the clause, actually to uprate it, if he wants to do so he has the power to do so under Section 124 of the Social Security Act, and therefore he does not need authority here to do it. The authority in this Bill is merely to review, although he could come forward and say he has decided to uprate it in line with prices because of the power he has under Section 124 of that Act. I must not make suggestions as to what may be in Lord Banks' mind. He may feel there should be an obligation on the Secretary of State to uprate. However, as things are, all he must do is review and he is under no obligation to uprate. I am merely saying that if he felt he wanted to do so he has the powers so to do.

Lord BANKS

When we discussed the Unstarred Question I was then asking for the whole of the back erosion, as it were—from the time when the grants were first established—to be made up, but, as has been made clear in discussing the Amendment, that is not what I am asking for today. I am simply asking that any future erosion should be made up, and I have chosen wording already contained in the Bill in respect of other matters. Noble Lords will see on page 8, at line 40, that exactly the same phraseology is used in regard to the uprating of income and guaranteed pensions; I have taken that wording and applied it to the death and maternity grants.

The noble Lord, Lord Wells-Pestell, said the wording of the clause had been accepted in another place. I have not interfered with the wording of that clause in any way; I have merely added this obligation on the Secretary of State to the wording approved in another place. The noble Lord said the Secretary of State could improve the maternity or death grant if he wished to do so. The complaint is that he has not wished to do so. Indeed, he has not wished to do so, as Lord Wells-Pestell pointed out, since 1967.

Taking the death grant back to the time when it was introduced, it then met 60 per cent. of the cost of an average funeral, whereas it now meets less than 15 per cent. The question is whether it is to go down further. In my view, if the Government wish to abolish these grants they should come before Parliament with a proposition to that effect, rather than allow them to be eroded gradually and steadily over the years, as is happening now.

The Amendment would prevent any further erosion. It would maintain the present level, inadequate though that is in relation to the past value which the grants originally had, and I cannot see that Lord Wells-Pestell has adduced a substantial argument against doing that. The cost of £1 million out of the £10,000 million or so paid out of the National Insurance Fund would be minimal, but it would at least do a minimum of justice for those involved with these two grants. Because of that, I feel I should test the opinion of the Committee on this matter.

1.50 p.m.

On Question, Whether the said Amendment (No. 10) shall be agreed to?
CONTENTS
Airedale, L.	Foot, L.	McNair, L.
Amherst, E.	Gainford, L.	Meston, L.
Amulree, L.	Grey, E.	Rea, L.
Avebury, L.	Hampton, L.	Robson of Kiddington, B.
Banks, L. [Teller.]	Hanworth, V.	Rochester, L.
Barrington, V.	Hayter, L.	Seear, B. [Teller.]
Clancarty, E.	Ilchester, E.	Simon, V.
Feversham, L.	Kimberley, E.	Swaythling, L.

NOT-CONTENTS
Ailesbury, M.	Leatherland, L.	Ritchie-Calder, L.
Boston of Faversham, L.	Llewelyn-Davies of Hastoe, B.	Rugby, L.
Brock, L.	Lovell-Davis, L.	St. Davids, V.
Brockway, L.	McGregor of Durris, L.	Shackleton, L.
Cooper of Stockton Heath, L.	Melchett, L.	Somers, L.
Craigavon, V.	Merrivale, L.	Stedman, B.
David, B.	Milford, L,	Stewart of Alvechurch, B.
Davies of Leek, L.	Murray of Gravesend, L.	Stone, L.
De Ramsey, L.	Oram, L.	Strabolgi, L. [Teller.]
Donaldson of Kingsbridge, L.	Pargiter, L.	Taylor of Blackburn, L.
Gore-Booth, L.	Peart, L. (L.Privy Seal.)	Wall, L.
Goronwy-Roberts, L.	Phillips, B.	Wallace of Coslany, L. [Teller.]
Hale, L.	Ponsonby of Shulbrede, L.	Wells-Pestell, L.
Henderson, L.	Rathcreedan, L.	Wigg, L.
Jacques, L.
Their Lordships divided: Contents, 24: Not-Contents, 43.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 12 agreed to.

Clause 13 [Adjustment of secondary Class 1 contributions for exceptions to redundancy provisions]:

2 p.m.

Lord WELLS-PESTELL moved Amendment No. 11: Page 10, line 5, leave out subsection (3).

The noble Lord said: With your Lordships' permission, I shall speak to Amendments Nos. 11 and 12 together. The first Amendment is a paving Amendment, and the substance of the matter is contained in Amendment No. 12. The purpose of the new clause proposed in Amendment No. 12 is to enable certain regulations, consequent upon the passing of the Bill, which are made within six months of the Royal Assent, to be exempt from the general requirement to be referred to the National Insurance Advisory Committee. The new clause includes the provision previously in Clause 13(3), but extends the power so as to include regulations made under Section 119 of the principal Act (effect of adjudication on payment and recovery) in consequence of the amendments to that section contained in Clause 7 and paragraph 8 of Schedule 3 to the Bill. I am sure your Lordships will agree that reference to the Advisory Committee is unnecessary within such a short period following the passing of this Bill through Parliament. That is the ground on which we are moving Amendment No. 12: so as to exempt the general requirement to refer to the National Insurance Committee matters which have been discussed just prior to the passing of the Bill. I beg to move.

Lord BOYD-CARPENTER

May I ask the Minister whether the National Insurance Advisory Committee have themselves been consulted; and, if so, whether they acquiesce in or object to their exclusion from a consideration of regulations made under these provisions.

Lord WELLS-PESTELL

I think I am right in saying that they have not been so asked.

On Question, Amendment agreed to.

Clause 13, as amended, agreed to.

Lord WELLS-PESTELL moved Amendment No. 12: After Clause 13, insert the following new clause:

Reference of regulations to National Insurance Advisory Committee

(" . Section 139(1) of the principal Act (reference of proposed regulations to the National Insurance Advisory Committee) shall not apply in relation to regulations—

1. (a) made under section 119 of the principal Act (effect of adjudication on payment and recovery) by virtue of paragraph 8 of Schedule 3 to this Act;
2. (b) made by virtue of section 13 of this Act; or
3. (c) made under paragraph 4(a) of Schedule 1 to the principal Act (calculation and adjustment of amounts) in relation to contributions reduced under section 4(7) of thet Act;

and made within 6 months of the passing of this Act.")—(Lord Wells-Pestell.)

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 13: After Clause 13, insert the following new clause:

Overlap with benefits under legislation of other member States

(" .—(1) The following subsections are inserted at the end of section 85 of the principal Act (overlapping benefits)—

"(4) Regulations may provide for adjusting benefit payable to or in respect of any person whether there is payable in his case any such benefit as is described in subsection (5) below.

(5) Subsection (4) above applies to any benefit payable under the legislation of any member State other than the United Kingdom which is payable to or in respect of—

1. (a) the person referred to in that subsection;
2. (b) that person's wife or husband;
3. (c) any child or adult dependant of that person; or
4. (d) the wife or husband of any adult dependant of that person.".

(2) In Part II of Schedule 15 to the principal Act (regulations not requiring prior submission to National Insurance Advisory Committee) the following paragraph is inserted after paragraph 12—

"12A. Regulations under section 85(4) of this Act (overlap with benefits under legislation of other member States).".

(3) The following section is inserted in the Child Benefit Act 1975 after section 4—

"Overlap with benefits under legislation of other member States. 4A. Regulations may provide for adjusting child benefit payable in respect of any child in respect of whom any benefit is payable under the legislation of any member State other than the United Kingdom.".")

The noble Lord said: The purpose of the new clause is to give the Secretary of State power to restore the effects of certain overlapping benefit provisions of the EEC regulations on social security which, in the context of the Treaty of Rome, may be declared to be invalid by the European Court of Justice. It enables regulations to be made for adjusting benefit payable under the principal Act or the Child Benefit Act in cases where benefit is payable also under the legislation of another member State of the Community.

The origins of this Amendment are somewhat complex to explain, but I do not think I need dwell on them at great length. The object of the Amendment is quite simple. It is designed to give the Secretary of State power to make regulations which would restore the intended effects of certain overlapping benefit provisions in the EEC regulations on social security which, as I said a moment or two ago, may be declared by the European Court of Justice to be improperly included. The EEC regulations in question form part of the free movement provisions of the Treaty. They provide advantages in the social security field to persons who move from one part of the Community to another, such as enabling their insurance or residence in the various member States to be aggregated for benefit purposes and transferring their right to receive benefit from one State to another. But, as one would expect, the regulations also contain provisions which are designed to prevent excessive duplication of benefit where the person acquires title concurrently under the schemes of two or more States.

The European Court has given a succession of judgments which have shown some aspects of those overlapping benefit provisions to be invalid. The court has said, in effect, that although, in the interests of free movement, the EEC regulations may co-ordinate social security provisions to the advantage of persons who move within the Community, they are incompatible with the Treaty in so far as they purport to reduce rights which a person may acquire under the legislation of a member State without the aid of the EEC regulations. So far, the court's ruling affects only a very limited range of cases. But we are advised that the principle is likely to be extended in due course to other provisions of a similar nature in the regulations, and if this happens the consequences would be more substantial.

The result of these developments could be that a person who changed residence from one member State to another, or who pursued employment successively in them, could in certain circumstances receive two full benefits for the same contingency, or at any rate considerably more than the maximum that he would normally receive from either country. May I give an example?—and I hope it is right. To take child benefit, a husband who is working abroad would be eligible, perhaps, for child benefit in that particular country of the EEC, while the wife would also be entitled to it at home here if she was in this country.

The court has made it clear that, although the provisions in the EEC regulations which were intended to regulate this situation are invalid, there is nothing in the Treaty to preclude the application of similar provisions in member States' national legislation. Some member States already have such provisions, and these may in appropriate circumstances enable them to offset against their own liability in the case the benefit which is being paid from our funds. The power which we are seeking is therefore needed, not only to restore the intended effects of the EEC provisions so far as British benefits are concerned, but also to save us from being placed at a disadvantage in relation to some of our Community partners. The intention is that regulations should be made under the new power as and when developments, or anticipated developments, in judgments of the European Court make it desirable to do so. In the light of these facts, I hope that the Committee will feel that this is an appropriate Amendment, and one to be accepted. I beg to move.

Lord SANDYS

This field of overlapping benefits is an extremely complicated one. Your Lordships will be aware that we had a debate on this subject on Friday, 19th May, 1978, in which the noble Lord, Lord Wells-Pestell, replying to an Unstarred Question by the noble Lord, Lord Banks, said at col. 692: Your Lordships may be interested to know that it has been estimated, although I admit that it is not easy to calculate this precisely, that it would cost something like £2,000 million a year or more to remove all the provisions preventing duplication". I think that at this hour it would not be for the benefit of the Committee if I were to expand on this matter very much further, but as we read it at the moment we think that the Government's clause would be beneficial, and I have no further comments to make.

On Question, Amendment agreed to.

2.10 p.m.

Lord WELLS-PESTELL moved Amendment No. 14: After Clause 13, insert the following new clause:

Criminal proceedings. 1965 c. 20. 1970 c. 55. 1975 c. 16. 1975 c. 61.

(" . For the purposes of the Criminal Evidence Act 1965 as it applies in relation to proceedings for any offence which is connected with—

1. (a) the obtaining or receipt of any benefit under the Family Income Supplements Act 1970, the Industrial Injuries and Diseases (Old Cases) Act 1975, the Child Benefit Act 1975, the principal Act or the Act of 1976; or
2. (b) the failure to pay any Class 1 or Class 2 contribution (within the meaning of Part I of the principal Act),

"business" shall include the activities of the Secretary of State.").

The noble Lord said: This new clause extends the scope of the Criminal Evidence Act 1965 to cover the records of the Department of Health and Social Security and the Department of Employment relating to claims for the payment of various social security benefits for which the two Departments are responsible. It is intended to allow the more effective prosecution of those engaged in the substantial defrauding of the social security system.

Your Lordships will wish to know that until recently it has been the practice of my Department to prosecute those who defrauded the social security system under our domestic social security legislation, but because the offence lies in making a false statement to obtain benefit the evidence which needs to be adduced is relatively simple and straightforward. But lately for a variety of reasons the Department has been under pressure to prosecute those who commit the more substantial frauds under the Theft Act.

However, prosecution under the Theft Act requires the Department to present full evidence of a chain of events leading from a fraudulent claim to the actual receipt of benefit. This requires, as your Lordships will understand, evidence from a large number of officials who deal with the claim in all its stages. Because of the vast scale of the Department's operations and the turnover of staff, it is often impossible to identify, when a fraud comes to light perhaps many months after the claim, the officials who dealt with the case. Furthermore, even if they can be identified, it is, in general, unreasonable to expect them to recall the events on which they would have to appear and give evidence.

The new clause, therefore, extends those provisions of the Criminal Evidence Act which enable documentary evidence to be presented in such circumstances to include the benefit operations of my Department and also the Department of Employment, and the records relating to benefit claims and the payments of the various benefits for which the two Departments are responsible. This is obviously done with the knowledge and consent of the Department of Employment and I also understand of the Home Office who in the normal way would be responsible for the Criminal Evidence Act 1965. I beg to move.

On Question, Amendment agreed to.

Clauses 14 and 15 agreed to.

Clause 16 [Financial provisions]:

Lord WELLS-PESTELL moved Amendment No. 15:

Page 10, line 39, at end insert— (" ( ) Section 60(1) of the Scotland Act 1978 (modification of enactments authorising payments out of money provided by Parliament etc.) shall have effect as if subsection (1) above were contained in an Act passed before that Act.").

The noble Lord said: This is a technical Amendment connected with the Devolution Acts. I was a little puzzled but I am told that the Devolution Acts are on the Statute Book and they must be taken into account whatever happens. By virtue of Section 6 of the Pension (Increase) Act 1971 the Secretary of State is the pension authority (and hence responsible for paying increases under that Act) for teachers and National Health Services Staff and one or two other categories of people. Although the matter of making orders increasing official pensions under Section 59 of the Pensions Act is reserved by the entry in Part III of Schedule 10 to the Scotland Act 1978, the responsibility for paying increases will, in a case where the Secretary of State is the pension authority, pass to the Scottish Executive. This being so, the Scotland Act should provide for the increases concerned to be borne by the Scotland Consolidated Fund, and that is the purpose of this Amendment which I commend to your Lordships. I am advised that no Amendment on account of Welsh devolution is necessary. I beg to move.

Lord BOYD-CARPENTER

I should like to ask the Minister something about this Amendment. It puzzles me. What happens if, as is perfectly possible, in the referendum the target of 40 per cent. is not obtained and the Scotland Act is, therefore, under the procedure contained in it, subject to annulment under the Resolution procedure? If we put this subsection into the Bill and that happens, will this not be an extraordinary anomaly in the Bill? Will it not be necessary to take it out?

Lord WELLS-PESTELL

I asked the same question because it seemed strange to me that before the referendum (and before we knew the result of it) we should be concerned with a matter of this kind. I am advised that this is necessary. The Devolution Acts are on the Statute Book. We shall know whether devolution takes place presumably within the next few weeks. If it does not then, again presumably, there will have to be some amendments.

Lord BOYD-CARPENTER

With respect, should this not have been framed —and I take the noble Lord's point—in some form of words such as, "subject to the continuation of operation of the Scotland Act 1978" or "providing the Scotland Act 1978 is still in effect" or something like that? This provision would stand out like a sore thumb if that Act were annulled.

Lord WELLS-PESTELL

I take the noble Lord's point. I found it rather surprising, but I am advised this is the way to do it; and I take the advice I am given.

Lord BOYD-CARPENTER

It is very odd.

On Question, Amendment agreed to.

Clause 16, as amended, agreed to.

Clause 17 [Short title, etc.]:

Lord WELLS-PESTELL moved Amendment No. 16: Page 11, line 11, leave out ("(1) to (3)") and insert ("(3) and (4)").

The noble Lord said: With the permission of the Committee, I should like to speak to Amendments Nos. 16 and 17. They are minor drafting Amendments dealing with commencement. The first Amendment is consequential on the insertion in the Bill at an earlier stage of subsection (2) of Clause 3. The second Amendment will ensure that Clause 10 of the Bill, which deals with the increase in official pensions will come into force on 6th April, 1979 which is the same date as that on which Section 59 of the Pensions Act (which also relates to increases in official pensions) is due to come into operation. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 17: Page 11, line 19, leave out ("Section") and insert ("Sections 10 and").

On Question, Amendment agreed to.

Remaining clause, as amended, agreed to.

Schedules 1 and 2 agreed to.

Schedule 3 [Minor and consequential amendments]:

Lord WELLS-PESTELL moved Amendment No. 18:

Page 18, line 46, at end insert— ("SOCIAL SECURITY ACT 1973 (c. 38) 2A. In section 68(1) of the Social Security Act 1973 (reference of proposed regulations to the Occupational Pensions Board) for the words from" (other than "to" passing of this Act) "there are substituted the words" (other than regulations made for the purpose only of consolidating other regulations revoked thereby) ".").

The noble Lord said: With permission, I should like to speak to Amendments 18 and 19. These Amendments remove from the Social Security Act 1973 and the Pensions Act those provisions which exempted draft regulations—affecting occupational pension schemes and made within six months of Royal Assent—from the necessity of being referred to the Occupational Pensions Board. Obviously those provisions have now served their purpose. The Amendments also provide that future draft regulations made only for the purpose of consolidation shall be exempt from the Board's formal scrutiny. The Occupational Pensions Board have been consulted and are content with what is proposed. I beg to move.

On Question, Amendment agreed to.

Lord WELLS-PESTELL moved Amendment No. 19:

Page 20, line 43, at end insert— ("19A. In section 61(2) of the Pensions Act (reference of proposed regulations to the Occupational Pensions Board) for the words from "to be made" to "passing of this Act "there are substituted the words" made for the purpose only of consolidating other regulations revoked thereby ".").

On Question, Amendment agreed to.

Remaining schedule, as amended, agreed to.

House resumed; Bill reported with Amendments.