Administration of Estates (Small Payments) (Increase of Limit) Order 1984 (Hansard, 10 April 1984)

§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)
My Lords, I beg to move that the draft Administration of Estates (Small Payments) (Increase of Limit) Order 1984, laid before the House on 12th March, be agreed to. This order seeks to extend the limit up to which sums can be paid from a deceased person's estate without probate or letters of adminis-tration. The Administration of Estates (Small Payments) Act 1965 sets a limit of £500, but there are powers in the Act to increase this limit with the approval of Parliament. The limit was last raised to £1,500 in 1975. The Government have reviewed the limit again, and now seek to increase it to £5,000.
For more than a century prior to 1965 the limit for exemption was £ 100. The limit was revised to £500 in 1965 and, as I have said, to £1,500 in 1975. It is obviously right to keep the limit under review, and desirable for Her Majesty's Government to raise it from time to time as past inflation erodes the nominal value of such limits. The 1965 Act allows a wide range of deposit-taking bodies a discretionary power to make payments of a deceased depositor's money although subject to a limit set by the Treasury. Among the bodies concerned are the Department for National Savings, Trustee Savings Banks, friendly societies, trade unions and building societies. I should add that the new limit does not take effect at once for all bodies, but it is a necessary step to pave the way for some amending regulations. The department will be introducing these in due course. This order will apply to deaths occurring from one month after the date it comes into operation.
The proposal to raise the limit is, of course, common sense. People have saved more since the limit was last fixed in 1975, and more estates are being caught by the £ 1,500 limit, which at the same time has become more restrictive in real terms. To restore the limit to its 1975 level would require an immediate increase to about £4,000. So to provide a bit of headroom and avoid the need to return to the matter again too quickly, Her Majesty's Government have decided to propose a higher limit. This will save the administrative effort involved, requiring as it does consultation with a large number of departments and organisations. I commend the new limit of £5,000 and the order to your Lordships. My Lords, I beg to move.

§ Lord Barnett
My Lords, I appreciate the need to increase the limit, as the noble Lord the Minister has indicated, but I wonder whether he can tell us, given the fact that inflation is scheduled to be at 3 per cent. by 1989, why he has chosen to increase the limit to £5,000 rather than to, say, £4,000, £10,000, £20,000 or whatever.

§ Lord Glenarthur
My Lords, as I hoped I indicated when I moved the Motion, £4,000 would be a realistic figure but £5,000 gives us adequate headroom, in view of the fact that it is an administrative burden to re-set it. There is no question of suggesting that the rate of inflation will rise, as perhaps lies behind the noble Lord's question. We are simply setting that limit because reviews involving 20 or so departments are a fairly large administrative burden to bear.