§ 7.32 p.m.
§ The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
§ Moved, That the House do now again resolve itself into Committee.—(Lord Glenarthur.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD HAYTER in the Chair.]
§ Clause 16 [Constitution of panels for social security appeal tribunals]:
The Deputy Chairman of Committees
I am advised that if Amendment No. 59C is agreed to then I cannot call Amendment No. 59D.
Lord Dean of Beswick moved Amendment No. 59C:
Page 20, leave out lines 4 to 11 and insert—
("persons who appear to the President to represent employed earners; persons who appear to the President to represent employers and earners other than employed earners and persons who appear to the President to have knowledge or experience of conditions in the area concerned and of the problems of people living on low incomes.
(2A) Before appointing members of a panel the President shall take into consideration recommendations from such local committees representing employers or employed earners or both, from organisations concerned with the interests of employers or employer earners or from such other organisations as he considers appropriate.
(2B) There should be on each Tribunal, drawn from the appropriate panel, one person' nominated to that panel by an organisation or local committee concerned with the interests of employed earners.".").
§ The noble Lord said: On the last occasion that your Lordships' House sat in Committee on this particular Bill I rose and commenced to move this amendment. Because of the time factor, I have no desire to take too much time in rehashing the argument that I advanced on that particular evening. However, the facts are that the Bill as at present drafted amalgamates the two panels from which people have been drawn—the supplementary benefits appeal tribunal and the national insurance appeal tribunal. My case is that the Bill as at present drafted removes from the legislation the historical right that has been granted to the trade union movement to be part of those panels.215
In his reply the Minister may say that the Bill says:
The panel for an area shall be composed of persons appearing to the President to have knowledge or experience of conditions in the area and to be representative of persons living or working in the area".
The subsequent sub-paragraph says:
Before appointing members of a panel, the President shall take into consideration any recommendations from such organisations or persons as he considers appropriate".
It is my contention, and it is certainly the contention of those with whom I have discussed this matter, who have had this right in the past, that the Bill as at present drafted carries no such guarantee. If a president is appointed, or placed in position, by the Secretary of State and has anti-trade union leanings (which is not unknown in this day and age), it may well be that in a particular area the trade union input and the right to protect the working class at that particular level would be totally removed on the whim of the president of the area.
§ When I questioned the noble Lord, Lord Glenarthur, on this particular matter some time ago in this Chamber, he said that in the past difficulty had been experienced in certain areas receiving an adequate number of trade union nominations. I understand from the trade unions involved that there has been the odd local difficulty, but in the main those difficulties have been overcome, and can be overcome. On that basis, I look forward to the response of the noble Lord to the fact that this appeal is being made: that people at that particular level can have the protection that has historically been granted to them through the trade union movement in general or by people associated with it. I beg to move.
§ Lord Glenarthur
Perhaps I can respond to the noble Lord by taking the amendment in two parts. First, perhaps I can explain that the provisions in subparagraphs (2) and (2A) in this amendment are superfluous. It is a condition in Clause 16 that the panel as a whole should be representative of the area for which it sits. It is, therefore, implicit that the groups mentioned in the noble Lord's amendment should be included on the panels and should be able to put forward nominations for members. Therefore, we recognise the points that the noble Lord, Lord Dean of Beswick, makes, but we consider that those points have already been met.
Secondly, in effect, this amendment would restore the provision in existing legislation which makes it compulsory for one member of every tribunal to be a trade union nominee. Clause 16 abolishes this requirement, not because we want to reduce the number of trade union members sitting on tribunals but because we want to broaden the representation to include other groups, such as the disabled and single parents.
Members nominated by the trade unions have, of course, proved invaluable over the years in their knowledge of local working conditions; I do not think that anyone would deny that. I hope that in the future the president of social security appeal tribunals will be able to rely on trade unions for a substantial proportion of panel members. I know that the president is concerned to retain the co-operation of unions, and he has met TUC representatives on more 216 than one occasion. We do, however, attach importance to creating a single panel of members. Although the president wishes to draw members from as wide a background as possible, once they are sitting it is important for them to remember that they all have the same aim, which is to ensure that a correct decision is given, and that the two lay members are not intended to represent opposing groups in any way.
A single panel also allows greater flexibility in calling tribunal sessions without delays in the event of there being shortage of any particular category of member. I hope that I can assure the noble Lord that this is no attempt at all to step on the rights or privileges of trade union members, or in any way to inhibit the important role that trade unions play. I hope that I have been able to reassure the noble Lord on that point, that I have allayed some of his fears, and that he will see fit to withdraw the amendment.
§ Lord Dean of Beswick
I thank the noble Lord for his response. He said that he would deal with the amendment in two parts, and I am grateful to him for his response to the first part. However, when we debated this amendment a couple of weeks ago my main thrust was that inherent in the proposals was the fact that we could see the day coming very soon when a tribunal of three is drawn up with no trade union representative on it. That is the major reason for the amendment, and as far as I am cncerned that is the most damaging part of this clause. On that basis, I do not think that the Minister has gone far enough. Because the Government are altering what has become custom and practice, I am bound to say that I want to divide the Committee, and I so move.
§ Baroness Jeger
In support of my noble friend, we appreciate the Minister's explanation but it does not answer all the queries. The noble Minister said that it was not the Government's intention to reduce trade union representation but to increase representation for disabled people and single-parent families. I cannot understand why disabled people and single-parent families cannot be members of trade unions. This chopping up of people into separate divisions is not helpful.
One of the problems here is that Clause 16 states that such "persons as he considers appropriate" may be on the tribunal. I sat on tribunals many years ago and I am conscious of the fact that one feels on a different side of the table. There are two sides to these tables, and it would be a great mistake if the present Bill made it less easy for trade union members to have a seat as of right on these tribunals.
It is easy to be on a tribunal if you are fairly well off, if you are in the sort of job where you can get time off and life is fairly comfortable for you. It is much more difficult if you are working as a wage earner in some job to get put on to a tribunal unless you have some authority behind you so that you can say to your employer, "I have been asked by the Minister to be on this tribunal as a trade union representative".
§ Lords Glenarthur
The noble Baroness stresses the importance of being a member as of right. I hope she would also agree that it is important for the panels to be representative, too. If she feels that because they are 217 not going to be members by right the panels will become unrepresentative, I think she will realise that the clause specifically provides for the panels to be representative of the areas that they cover. The president is under a legal obligation to ensure that the panels do not become unbalanced by either having too few trade union members, or indeed too many.
§ Baroness Jeger
I thank the noble Lord for his courteous intervention but I have to ask him what is meant by "area"? What is meant by "persons living or working in the area"? With the amount of commuting that there is in present days—and we have been talking a lot about the GLC in your Lordships' House recently and there are 32 London boroughs—is where you live relevant or where you work?
Suppose you are on a tribunal because you are working in a certain area, wherever it is, and then you become unemployed? Unemployment is not just happening to the poorest manual workers; it is happening up and down the whole scale of our society. As the Bill stands at the moment it seems to suggest that if someone loses their job they would no longer be eligible to sit on a tribunal unless they also live in the area. Increasingly fewer people live and work in the same place.
If you are on a tribunal by virtue of working in a place, and then you become unemployed, it looks to me as though it might be possible for you to lose your place on that tribunal at a time when it is increasingly important that those who are unemployed—especially the long-term unemployed—should have a place on the other side of the table at these tribunals. We have too many unemployed and impoverished people coming before tribunals and feeling that they look only at the better off and more comfortable people, and that they do not have a friend on the other side of the table.
I do not think that that is the intention of the noble Lord, who has a great deal of sympathy for all these points, but it is a fear that is real to many people. The point of my noble friend Lord Dean's amendment is to try to bring these things together so that an unemployed man coming before this tribunal does not feel that he is just sitting opposite a collection of "fat cats" who are well employed, who are well off, and who have never lived on social security and have never been out of work. It is important that this consideration should be before your Lordships.
It might well be that because people are out of work, because they are retired—and there is no mention in the clause about retired people—they might have more time to give to this sort of work. I have to ask the noble Lord whether pensioners' organisations will be encouraged to put names forward? They are a relevant group in this situation.
The whole question seems to us to be bringing the tribunals within a very didactic appointment system. The idea of such persons as the "Minister considers appropriate" does not suggest the widest spectrum of people in the social life of our country. I support my noble friend Lord Dean in trying to put this amendment into the Bill. I cannot see why the Government should oppose it because it would reinforce everything that the noble Lord has said. I hope that the Committee will support my noble friend's amendment.
§ Lord Mottistone
Speaking from this side of the Committee, may I suggest to the noble Baroness that the key words are:representative of persons living or working in the area"?We are talking about a panel for an area. I cannot see that it could be any more explicit than that and give a wider basis for the very kind of people whom the noble Baroness wishes to get onto the panel.
I should have thought that Lord Dean's amendment is much narrower and much less likely to get people who are representative of persons living —and that includes those who are unemployed and those who are disabled and cannot work—or working—and that includes people represented by trade unions and those who are not—in the area. I should have thought that the existing provision is an ideal general way of putting it in order to get the best possible balance to achieve exactly what the noble Baroness wants. I would hope that your Lordships would agree that the Bill as it stands is the right way of putting that point.
§ Baroness Jeger
May I answer the noble Lord, because he put a question to me? I tried to make the point that "living or working" is the crux of this whole matter. One might be living in Westminister and working in Camden and be on a tribunal in Camden. Then one loses one's job. Then one is neither living nor working in Camden. I hope the noble Lord will make clear when he replies what an area is. Is it a county? Is it a borough? Where is it? In parts of the country it might be a very wide area.
Until we know what an area is in the context of this Bill it is difficult to go along with the noble Lord, whose points I very much appreciate. I hope that I have answered his question in that one can live somewhere and work somewhere else, and then lose one's place on the tribunal because one loses one's job.
§ 7.49 p.m.
§ Lord Collison
I shall be extremely brief. I want to support the amendment proposed by my noble friend Lord Dean of Beswick. I do this because, as I think your Lordships know, I have been a life-long trade unionist and a past member of the General Council of the TUC, and its chairman—too long ago now—in 1965. It is essential that we should have trade union representation on these panels. I know that the TUC feel this to be so.
I shall not go into all the arguments again. Trade union representatives represent the people who are working, or have been working, and they understand the interests of the working people. It is not a question of this side against that side, as the noble Lord the Minister has said; it is a question of having people there who can understand and make any points that need to be made on behalf of trade union people and those associated with trade unions, and indeed workers and others in any sphere.
§ Lord Dean of Beswick
I wish to be brief. My amendment was specifically designed to retain the historical right and role that the trade unions have had under the old system of the two sets of appeal panels from which the tribunals were drawn. My amendment is designed to convey that custom and practice into the 219 one panel that will be drawn up under this Bill. It is not about other groups. They have their own way and their own arguments. My amendment is specific, but I want to see the trade union movement given that facility and retaining that facility that successive governments have granted. It has worked well and I can see no possible justification in the Minister's answer either at this stage, in the earlier Committee stage or in the Committee stage of the Bill in another place. That is what my motive is and I move accordingly.
§ Lord Northfield
May I ask the noble Lord a question? I did not understand what he said properly. He said that the statutory right of a trade unionist appointee needs to be removed to make way for single parents, disabled people and so on. Why does one have to remove a right to bring other people on to the panel?
§ Lord Glenarthur
The point that I made is that we want to broaden representation. That is why I suggested that there were other groups such as the disabled, single parents and others who could equally well be part of the group. I do not for a moment imagine that I shall change the mind of the noble Lord, Lord Dean. I am sure that he will divide the Committee on this, but there are one or two points on this that I can usefully make.
The key point which answers the matter raised by the noble Baroness, Lady Jeger, is that the tribunal areas, of which there are 150 in all, will have members drawn from that area. They will be representative of that area and will not actually have to live or to work there, but will be representative of that area, as I understand it. I do not see how the question of losing a job comes into the matter. All groups will be taken into account.
As I said earlier, we appreciate the contribution which trade union members have made. I sincerely hope that they will be able to play their full part in the future, but I share the view of my noble friend Lord Mottistone that trade unions do not have a monopoly of experience with people living on low incomes or having any other way of life. We want others to be able to contribute their knowledge as well.
§ 7.52 p.m.
§ On Question, Whether the said Amendment (No. 59C) shall be agreed to?
§ Their Lordships divided: Contents, 58; Not-Contents, 108.220
|DIVISION NO. 1|
|Airedale, L.||David, B. [Teller.]|
|Avebury, L.||Dean of Beswick, L.|
|Aylestone, L.||Elystan-Morgan, L.|
|Banks, L.||Ennals, L.|
|Barnett, L.||Ezra, L.|
|Beaumont of Whitley, L.||Falkender, B.|
|Birk, B.||Fisher of Rednal, B.|
|Bottomley, L.||Gladwyn, L.|
|Buckmaster, V.||Glenamara, L.|
|Caradon, L.||Graham of Edmonton, L.|
|Chandos, V.||Grimond, L.|
|Cledwyn of Penrhos, L.||Hanworth, V.|
|Collison, L.||Harris of Greenwich, L.|
|Hooson, L.||Simon, V.|
|Irving of Dartford, L.||Stallard, L.|
|Jeger, B.||Stewart of Alvechurch, B.|
|John-Mackie, L.||Stewart of Fulham, L.|
|Kagan, L.||Stoddart of Swindon, L.|
|Kaldor, L.||Stone, L.|
|Kilbracken, L.||Taylor of Blackburn, L.|
|Kilmarnock, L.||Taylor of Mansfield, L.|
|Lloyd of Kilgerran, L.||Tordoff, L.|
|Nicol, B.||Underhill, L.|
|Northfield, L.||Wade, L.|
|Phillips, B.||Whaddon, L.|
|Ponsonby of Shulbrede, L. [Teller.]||White, B.|
|Wilson of Langside, L.|
|Raglan, L.||Wilson of Rievaulx, L.|
|Rhodes, L.||Winterbottom, L.|
|Alport, L.||Kaberry of Adel, L.|
|Auckland, L.||Kemsley, V.|
|Avon, E.||Kilmany, L.|
|Belhaven and Stenton, L.||Kinloss, Ly.|
|Bellwin, L.||Kinnaird, L.|
|Beloff, L.||Lane-Fox, B.|
|Belstead, L.||Lindsey and Abingdon, E.|
|Blake, L.||Long, V.|
|Brabazon of Tara, L.||Lucas of Chilworth, L.|
|Brougham and Vaux, L.||Lyell, L.|
|Broxbourne, L.||Macleod of Borve, B.|
|Burton, L.||Mancroft, L.|
|Buxton of Alsa, L.||Mar, C.|
|Caithness, E. [Teller.]||Margadale, L.|
|Cameron of Lochbroom, L.||Maude of Stratford-upon-Avon, L.|
|Chelwood, L.||Merrivale, L.|
|Colville of Culross, V.||Mersey, V.|
|Colwyn, L.||Middleton, L.|
|Cork and Orrery, E.||Monson, L.|
|Craigavon, V.||Morris, L.|
|Craigmyle, L.||Mottistone, L.|
|Crathorne, L.||Mountgarret, V.|
|Crawshaw, L.||Mowbray and Stourton, L.|
|Cullen of Ashbourne, L.||Murton of Lindisfarne, L.|
|Davidson, V.||Norfolk, D.|
|Denham, L.||Onslow, E.|
|Digby, L.||Orkney, E.|
|Dilhorne, V.||Peel, E.|
|Drumalbyn, L.||Penrhyn, L.|
|Eccles, V.||Plummer of St. Marylebone, L.|
|Eden of Winton, L.|
|Elibank, L.||Quinton, L.|
|Faithfull, B.||Rankeillour, L.|
|Ferrers, E.||Reigate, L.|
|Ferrier, L.||Renton, L.|
|Forester, L.||Rochdale, V.|
|Fortescue, E.||Rugby, L.|
|Gainford, L.||Savile, L.|
|Gardner of Parkes, B.||Skelmersdale, L. [Teller.]|
|Gibson-Watt, L.||Suffield, L.|
|Gisborough, L.||Swinfen, L.|
|Glanusk, L.||Swinton, E.|
|Glenarthur, L.||Teynham, L.|
|Gray of Contin, L.||Thomas of Swynnerton, L.|
|Hailsham of Saint Marylebone, L.||Tranmire, L.|
|Halsbury, E.||Trumpington, B.|
|Harmar-Nicholls, L.||Ullswater, V.|
|Hayter, L.||Waldegrave, E.|
|Henley, L.||Westbury, L.|
|Hylton-Foster, B.||Windlesham, L.|
|Ilchester, E.||Wise, L.|
|Inglewood, L.||Wynford, L.|
|Ingrow, L.||Young, B.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ [Amendment No. 59D not moved.]
§ Clause 16 agreed to.
§ Clauses 17 to 20 agreed to.221
§ 8 p.m.
§ Schedule 6 [Protection of pensions]:
Lord Morris moved Amendment No. 60:
Page 57, line 27, at end insert—
("(9) Sections 41A and 41B do not apply to pensions, relevant sums, guaranteed minimum pensions or additions which have accrued in respect of periods of an earner's employment which is or was contracted-out by reference to an occupational pension scheme prior to 31st December 1984.").
§ The noble Lord said: One of the reasons which attracted my support to the Conservative Party rather than to any other party was the certain knowledge that the Conservative Party was the party of principle and the party with principles. It comes as a sad surprise that Her Majesty's Government should support a device for curing the admitted harm of franking by means of a remedy which, in itself does harm. It is neither necessary, nor discriminate. In my submission there are no means of knowing the extent of the harm.
§ The purpose of the legislation is to prevent occupational pension schemes from franking; that is to say, counting pension in excess of the guaranteed minimum pension at the date of leaving towards the revaluation of the guaranteed minimum pension in line with inflation during the period after leaving until state pension age. This is not unreasonable, since the contracting-out terms allowed for such revaluation of the guaranteed minimum pension in the case of early leavers. It is therefore open to schemes to increase their future contributions, to reduce their future-service benefits, or to cease contracting-out in order to meet the cost involved for future-service benefits.
§ What is quite unreasonable and wrong in principle is to make the change retrospective to 1978. This must be wrong in principle since it undermines the whole partnership between the state and occupational pension schemes established as recently as 1978.
§ It is not necessarily possible for a pension scheme to take action to meet the cost of compulsorily-improved past-service benefits in the same way as for improved future-service benefits. In particular, in the case of a closed pension scheme, if additional pensions have to be provided for contributors who leave service prematurely, there will be less money in the fund to meet the cost of pensions already in payment of the contingent cost of the pension for those who stay. In other words, they will set the early leavers against the late stayers. At the margin this could tip a poorly-funded scheme into insolvency. With some 90,000 schemes, many of them insured, there are potentially numerous cases of this kind.
§ Even for an open pension scheme, the additional cost of retrospection may not be affordable. It would be wrong, as Her Majesty's Government might maintain, to suppose that the cost would be afforded out of the contracting-out rebate since 1978 since this money will almost certainly have been committed in other ways. Bearing this in mind, can Her Majesty's Government give me an assurance—and this is a simple question—that the legislative change proposed would not result in anyone's pension being reduced?
§ I believe that in practice, without statutory compulsion, most schemes would act retrospectively of their own volition, so that, in other words, it is not necessary, in my view, to make this compulsory. Certainly, those who could afford it, would do so and 222 would accept the administrative convenience of so doing. It is Parliament's responsibility, however, to act in the best interests of all threatened pension funds. The important point is that there should be a choice and the opportunity of a decision in the light of the circumstances of the fund.
§ The Government have recently accepted as right that pension funds should operate under trust law. The imposition of retrospective burdens is bound to make it difficult to assert that justice is being done.
I know that I am speaking to willing listeners, but noble Lords will recall that during consideration of the Telecommunications Bill Her Majesty's Government very strongly argued against the retrospective nature of an amendment which I moved, and which happened to be successful. It was a point which was taken up with great eloquence by noble Lords of Her Majesty's loyal Opposition. They fought this point very strongly and it was met in the other place. I absolutely accept that point. So I feel sure that Her Majesty's Government will be concerned about this particular matter. Indeed, I know that my noble friend Lord Glenarthur and all my noble friends on the Front Bench go to bed with the ringing words of Lord Coke, in his second Institutes, at page 292, when he said that it is,
a rule and law of Parliament that regularly, nova constitutio futuris formam imponere debet, non præteritis",
which, as we all know, means that a new law ought to be prospective, not retrospective, in its operation.
§ The common law defines retrospective legislation as such an anathema that it has been, even back to the statutes of Gloucester, a rule of construction that new laws should be looked at in this light; or, to put it another way, retrospective laws are, as a rule, of questionable policy and contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought to deal with future acts and ought not to change the character of past transactions carried upon the face of the then existing law. Accordingly, it has been said that every statute which takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already passed, must he deemed retrospective in its operation and opposed to the sound principles of legislation. This rule, which is in effect that enactments in a statute are generally to be construed to be prospective and intended to regulate the future conduct of persons is deeply founded in good sense and strict justice and has been acted upon in many cases.
§ It is for these reasons that I believe it to be of crucial importance that Her Majesty's Government—and, indeed, I beseech them to do so—have another look at this particular issue. I believe most sincerely that no harm will come from the absolutely correct principle to abolish franking. But the means by which they have gone about it could cause some considerable harm. I beg to move.
§ Lord Banks
I should like to say a short word of support for this amendment. I agree with the noble Lord, Lord Morris, that franking should be abolished. I think it is wrong that when the guaranteed minimum pension in a paid-up pension under a contracted-out 223 occupational scheme is increased, as it has to be by statute to take account of inflation, the remaining pension benefit should be correspondingly reduced. I am glad that that will no longer be possible. Higher pensions will be paid to some early leavers as a consequence, and in so far as this refers to future years, it can be funded over those years.
But, as the noble Lord says, the Bill makes it retrospective to 1978 and this will put an immediate burden on some occupational schemes to fund these accrued rights. This, as the noble Lord said, could prove very hard for some schemes and might push some of them into insolvency. I think he is right to suggest that if there is once a statutory obligation for the future, most occupational schemes will make it retrospective, if they can afford it. As it is, there is a danger, as the noble Lord said, that higher pensions for some may mean lower pensions for others. I hope that the noble Lord will be able to give that assurance for which the noble Lord, Lord Moms asked and that he will also agree that retrospective legislation is always bad.
§ 8.12 p.m.
§ Lord Glenarthur
No one is more aware than I am of the view that your Lordships have expressed on numerous occasions—let us hope not too numerous—when retrospective legislation was discussed. I am afraid that I cannot match my noble friend Lord Morris with his mastery of Latin; but the noble Lord has explained in moving the amendment that it is concerned with that part of the Bill that would abolish the practice of franking as adopted by some occupational pension schemes.
Perhaps I can begin by reminding the Committee of the general impression of franking. I am not in the habit of quoting what I said at Second Reading; but on that occasion I said that franking is a term used to describe the practice whereby the statutory revaluation of a guaranteed minimum pension is achieved by eroding other scheme benefits payable. It is an abuse, and as such it has been widely criticised.
May I also remind your Lordships that the Occupational Pensions Board in their 1981 report on early leavers recommended the abolition of franking. The noble Lord, Lord Brimelow, the chairman of the Occupational Pensions Board at that time, when he addressed the national conference of the National Association of Pension Funds in May 1981, said that the board's propsals on early leavers should be applied in such a way that early leavers would receive the full benefit of the board's recommendations in addition to the contracting out requirements.
I am sure we can all agree that franking as such should cease. It is a practice which cannot be defended; once its effect is appreciated it can be seen to have a damaging effect on the eventual rate of pension which would otherwise be paid. The amendment proposed by my noble friend is concerned with the restricting of the effect of the abolition, so it would only apply to future guaranteed minimium pension rights. This drastically reduces the benefits of the abolition for future early leavers.
As the Bill stands, any member leaving or retiring 224 after a future date—which has yet to be specified —would find that that scheme would be prevented from eroding his pension in excess of the guaranteed minimum pension, to meet the future revaluation of his whole guaranteed minimum earned since April 1978. The amendment would permit such erosion to cover revaluation of previous guaranteed minimium pension rights. Its justification has been expressed also by my noble friend Lord Morris. But he primarily objects to the retrospective nature of the Government's proposals.
I suggest that retrospection here is not only fully justified but it is absolutely necessary. Among other things, contracted-out occupational pension schemes have to guarantee that the eventual pension paid to a member at state pension age would not be less than the so-called guaranteed minimum pension. That guaranteed minimum pension is broadly the equivalent of the state scheme additional component. The employer and employee pay reduced national insurance contributions because of the scheme undertaking to pay part of the additional earnings-related pension.
That reduction in national insurance contributions is designed to match the liability undertaken by the scheme to provide a guaranteed minimum pension revalued to state pension age. The scheme therefore which practices franking is reducing other benefits to cover the cost of providing the revalued minimum pension, yet that is already allowed for in the reduction in national insurance contributions.
I suggest to the Committee that as that reduction has been given since April 1978 to members and employers in contracted-out schemes, there is every justification for the legislation having effect from the same date.
My noble friend asked me for an insurance that this legislation—
§ Lord Glenarthur
I apologise to my noble friend. He asked for an assurance that the legislative change would not result in anyone's pension being reduced. I say to him that if the scheme is properly funded then no one will suffer. If the scheme is not properly funded, then all will suffer.
My noble friend has described the difficulties and feelings that retrospection is alleged to be likely to cause, and indeed the feelings that your Lordships have. I have to say that I remain unsympathetic to his remarks. I understand them, but I hope your Lordships will agree that all members of occupational pension schemes need the full protection against franking that the Bill in its current form provides. This amendment, I have to say, is not desirable and in the interests of ensuring a fair deal for future early leavers, I hope my noble friend will withdraw it.
I am most grateful to my noble friend for reading his brief so beautifully and clearly. However, he suggested that my major argument against the Bill as it stands and in favour of the amendment was on the retrospective element. If he had listened with care, he would have realised that the 225 major argument was on the grounds of necessity and of natural justice, because his rebuttal to my argument also really ran to the root of the drafting or the effect of my amendment as it stands. I take no credit for that at all, and I would accept that the amendment as drafted might be unsatisfactory. But all I ask my noble friend is if he would consider the principle not only of retrospection but of the harm this will cause.
He really let the cat out of the bag when he used the phrase "If the funds were properly funded then there would be no problem", which I accept, "But if the fund is not properly funded …" It is here the danger lies, because I made particular play with regard to the closed fund when no more funds would be coming in. There lies the danger. The only way in which the fund can provide for the proper benefit for the early leavers is to take funds away from those who leave at the late time. Now who is going to provide the funds? I do not think Her Majesty's Government will. Yet they pass legislation without giving the provision. I am certainly not suggesting in any way whatsoever that the Government should do that but this is the injustice that they are in danger of perpetrating. The awful thing is that nobody, least of all Her Majesty's Government—and not even for instance the National Association of Pension Funds which covers the whole of the United Kingdom—had any idea of the extent of the harm, and the harm is not necessary, I am absolutely certain of that. Again, I beseech my noble friend, since this is such an important matter of principle, that he reconsider it so that discussions can go on before we reach the next stage.
§ Lord Glenarthur
I hope that my noble friend has understood one point about it. I appreciate, as he does, that it is an extremely complex area and I must confess that I do not even know whether my noble friend is total master of it; I am not sure that I am myself. But I think the point is that the legislation we are talking about affects future early leavers only. It is retrospective only for their benefits which were understood to be provided as part of the contracting-out arrangements, and it does not put a burden on schemes for past leavers. I hope that is some reassurance for my noble friend.
§ Lord Banks
Would the noble Lord answer the point about the closed fund, raised by the noble Lord, Lord Morris?
§ Lord Glenarthur
Would my noble friend remind me precisely what that point was? Would that be the reduction in pension that I referred to? Does he want me to elaborate on that?
The closed fund is one where there is no likelihood whatsoever of any new funds coming into the fund. For instance, it may be the pension fund of a company which has gone into voluntary liquidation and the fund is still existing because there are beneficiaries still alive and well. But there are no new funds coming in, and although the persons may not have reached their pensionsble age they decide to withdraw their interests in the fund early and, as such their rights would be affected. I beg your Lordships' pardon—those who stay in the fund to their full 226 pensionable age will lose out because the early leavers will have to be benefited in accordance with the legislation, and the only way that funds can be found for this is at the cost of those who stay in the fund to the full termination.
§ Lord Glenarthur
I think I follow the noble Lord, but I do not think I can usefully add to what I have already said on this matter. I think it would be best if I studied my noble friend's remarks and wrote to him about this. I am afraid that I stand by what I said earlier, and I hope that, with the assurance that I will write to explain matters, my noble friend will see fit to withdraw his amendment.
My noble friend is absolutely right in deducing with remarkable sagacity that I know very little about the subject I am talking about. I am comforted by the fact that I know he is extremely concerned about the subject as well. I would have thought it more gracious to allow me what I ask: namely, to reconsider this point. But as he has said that he will write to me on this point, I am most happy to beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 6 agreed to.
§ Clause 21 agreed to.
§ 8.20 p.m.
§ Schedule 7 [Miscellaneous social security amendments]:
Lord Banks moved Amendment No. 61:
Page 58, line 14, at end insert—
(" . In subsection (1) of section 125 (Duty to increase rate of certain benefits) of the Social Security Act 1975, after the final "of", there shall be inserted the words "earnings or".")
§ The noble Lord said: The object of this amendment is to restore the link with earnings so far as long-term benefits are concerned so that benefits are raised in line with whichever is the higher of the increase in earnings and prices, which was the original formula under the 1975 Act. At the moment, every time there is a greater increase in earnings than in prices the pensioners fall further behind. The breaking of the link with earnings has cost single pensioners over £2 per week and married couples over £3 per week.
§ There are two questions I should like to put to the noble Lord the Minister. First, how can pensioners share at all in increased prosperity unless, when earnings rise faster than prices, they receive an increase larger than the increase in prices itself would dictate? That was the first question. The second question is: how can they share equally unless they receive an increase equal to that which a total link with earnings would dictate?
§ The link with prices takes care of the subsistence level by ensuring that the real value of the pension cannot fall, and the link with earnings would prevent the pensioners dropping behind those in work. So what I am really asking is: what is the Government's attitude towards the relationship which ought to exist between the pension and average national earnings? The document, Population, Pension Costs and Pensioners' Incomes, which was published last week by the Department of Health and Social Security, includes a paper on future pension costs by the 227 Government Actuary's Department. That assumes an annual increase in earnings in excess of the increase in prices by 1½ per cent. In other words, the assumption is that earnings will always increase faster than prices.
§ I want to ask whether the Government accept that assumption and whether their planning for the future is based on that assumption, because, if that happens, the pension will steadily decline as a percentage of national average earnings, even if its purchasing power is maintained. Are the Government happy about that? In other words, the value of the basic pension will gradually be eroded until, as the paper says, the total pension will be largely composed of the earnings-related portion, that is to say, the comparable value of the basic pension as opposed to average earnings. Are the Government happy about that?
§ It would of course cost more to provide earnings-related basic pensions on the assumption made by the Government Actuary's Department, if that should prove correct; and it would cost a bit more still under the dual formula suggested in this amendment if, although earnings overall increased more than prices, nevertheless in some years the reverse were true. This is due to the so-called "ratchet effect". But if the future cost burden is too high, would it not be sensible to do what I have already suggested to the Minister; namely, abolish the earnings-related pension put everyone on contracted-in contributions, increase the basic pension by, say, 20 to 25 per cent. and link it to prices or earnings, as proposed in this amendment? Obviously, I do not expect the noble Lord to reply to that last question tonight, with the Fowler Inquiry still going on; but I should like to hear what the Government's view is on the relationship which ought to exist between the basic retirement pension and earnings. I beg to move.
§ Baroness Jeger
To save your Lordships' time, I would say only that we strongly support the amendment which has been moved by the noble Lord, Lord Banks. My economical use of time this evening might not be repeated on another occasion; but I want to make it clear that we support the noble Lord's amendment.
The Earl of Caithness
As the noble Lord, Lord Banks, said, the amendment would restore the link with prices or earnings and would mean that over time pensions and other benefits would rise faster than both prices and earnings. That would mean a growing burden on the economy that could only be met through higher contributions and higher taxes. Each 1 per cent. increase in pensions and other long-term benefits costs about £320 million in public expenditure. Over time, therefore, the extra costs that would result from this amendment would be very substantial indeed. In the Government's view, it would be irresponsible to legislate for automatic increases in expenditure in this way, irrespective of the country's ability to afford them.
The Government are pledged to maintain the value of retirement pensions and associated long-term benefits. This has been more than achieved: the retirement pension will have been increased by 83.6 per cent. between November 1978 and November 228 1984, while prices rose by only 76.4 per cent. over the same period. It is open to the Government to go beyond the statutory requirement of a prices uprating where they consider that affordable—and I should remind your Lordships that the Prime Minister has said that we intend to do the best we can to ensure that pensioners will share in the prosperity that will be brought with the country's economic recovery.
It is also relevant to mention that many of those newly retiring are already benefiting from the provisions of the new pensions scheme. By September 1983 nearly 1 million pensioners were receiving an earnings-related additional pension of some £2.60 a week on average, while those who have retired more recently have received about £4.65 on average. When the new pensions scheme matures in 1998 it will provide the average earner who has a full contribution record with a pension of about 40 per cent. of average male earnings for a single person and over 50 per cent. for a married couple—equivalent to nearly twice the present basic rate in real terms. Therefore, to answer the noble Lord, Lord Banks, pensioners will of course share in the rise in prosperity, because the Government have promised an increase by more than prices when resources permit. I hope that with that reply the noble Lord will be able to withdraw his amendment.
§ Lord Mottistone
May I say briefly that I hope the Government will hurry up and reduce inflation below 3 per cent., so that one of my occupational pensions does not start to erode?
§ Lord Banks
I am grateful to the noble Earl for presenting an answer to my various questions, but he did not in fact deal with any of the questions that I put to him. He did not deal with the question about how it was possible to share without having an increase in the pension which exceeded prices, on the assumption that earnings will always be higher than prices. He did not say what the relationship should be and what he felt about the possibility that the assumption in the paper published by the Department of Health and Social Security was right. He did not say whether that assumption was accepted by the Government, or whether the Government are happy about the implications of having a basic pension which is related only to prices when earnings are increasing every year faster than prices, with the result that the basic pension will ultimately become so small in relation to the earnings related pension that the whole scheme as now cast will be thrown entirely lopsided. It would be interesting to have an answer to these various points, but in order to allow the noble Earl to think about them a little further I will at this stage beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 61A not moved.]
§ Schedule 7 agreed to.
§ Clauses 22 to 24 agreed to.
§ Schedule 8 agreed to.
§ Clauses 25 to 27 agreed to.229
§ Clause 28 [Transitional]:
§ 8.33 p.m.
Lord Cullen of Ashbourne moved Amendment No. 62:
Page 28, line 28, leave out subsections (2) and (3).
§ The noble Lord said: This amendment brings us back to the optical front. These subsections were introduced by the Government during the passage of the Bill in another place. The objective of these provisions appears to be to enable unqualified and unregistered persons to enter into contract with family practitioner committees to dispense NHS spectacles, even although they are not qualified dispensing opticians. These provisions are extremely retrograde, and it is difficult to think of any precedent for permitting family practitioner committees to contract with people who are not professionally qualified to provide professional services.
§ These provisions are going back further than the Opticians Act 1958, since from the inception of the NHS in 1948, under what were known as the supplementary ophthalmic services, only opticians holding recognised academic qualifications could be admitted to the ophthalmic list of family practitioner committees. In effect, these provisions are deeming unqualified persons to be qualified dispensing opticians capable of undertaking NHS dispensing.
§ The Government may like to say that they do not regard ophthalmic dispensing, whether done privately or under the NHS, as involving any health matter; but the fact is that it has been so regarded and accepted by Governments of every colour since 1948. The Government certainly so regarded it when I was a spokesman for the DHSS, before the report from the OFT. It is, I am sure, a slavish following by Her Majesty's Government of that report to such a large degree that has caused such a profound change in view. I beg to move.
The Earl of Caithness
Clause 1 contains general proposals to liberalise the present restrictions on who can supply glasses. That clause liberalises the private market. These subsections of the transitional clause take parallel action in respect of the general ophthalmic service. We are being totally consistent in this matter. If alternative suppliers are to be allowed to sell to the public, there is no reason why they should not be GOS contractors. We propose that they contract on the same terms and under the same obligations as dispensing opticians, but they will of course be limited to serving adults by the terms of Clause 1. If contractors come forward who are prepared to operate on this basis, we see no reason at all why they should be excluded.
We have an inconsistency of argument to counter. Many existing opticians claim that GOS work is unremunerative. They claim that it is subsidised by their private work. Why, therefore, can there by any objection to bona fide suppliers being allowed to contract for this allegedly unremunerative chore which the amendment seeks to prevent? Could it be that it is not so unattractive after all?
We have sought this power for three principal reasons: first, because it is consistent with our approach to a future private optical market under 230 Clause 1; secondly, because we wish to secure an alternative source of supplies, should insufficient opticians be interested in continuing to do the residual GOS work; and, finally, because we expect such contractors to be more efficient and less costly, and their lower level of costs will become reflected in the factual inquiry about costs which underpins fee negotiations. We believe that these are good and sufficient reasons for this part of the clause and its deletion would be injurious to the public as both GOS users and, ultimately, GOS paymasters. I hope that my noble friend, having noted that the Committee has agreed to Clause 1, will be able to withdraw his amendment.
§ Lord Mottistone
I should like to support this amendment. I do not know what my noble friend will do. I think that may noble friend the Minister has been speaking a little aggressively in the circumstances. I hope very much that my noble friend Lord Cullen and the other noble Lords who support him will come back on this general subject at the next stage of the Bill, when I shall be delighted to support them. The whole principle of the unqualified dispenser is one on which I have not been satisfied with the Government's arguments. I think that they are barking up the wrong tree, and I hope that they will have another thought when we come back at the next stage.
§ Lord Northfield
I do not want to start a debate on this amendment but it should be recognised that what the noble Lord, Lord Cullen, is doing is going back to Clause 1 and Second Reading. He is really saying that it is wrong to allow unqualified people to provide spectacles: not to do testing, not to do the professional work, but to do the commercial job of selling spectacles. We have had this out time and again on Second Reading and in the debates on Clause 1. I suggest that that argument is now past and that this is a very late stage at which to introduce this great principle all over again as an argument.
§ Lord Cullen of Ashbourne
The noble Lord, Lord Northfield, and I do not agree on these matters, as we well know. This has been going on for quite a long time. I would not have come back to this matter had it not been for the fact that this debate was not finished on the occasion when we had put down a whole lot of amendments. This is one of a series that went together. I was not going to withdraw it this evening because I still feel very strongly that it is not right that unqualified people should be given the same facilities as qualified people to deal with the public. Nothing will change my view, although I know that the noble Lord has held very different views over many years.
My noble friend suggested that what he said was quite consistent. He is indeed entirely consistent. What I do not agree with is the Government's philosophy. It will be no surprise to me if, in a few years' time, the legislation which is now going through your Lordships' House has to be changed. I may well come back to this matter on Report. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 28 agreed to.231
§ Clause 29 [Citation]:
Lord Ferrier moved Amendment No. 62A:
Page 29, line 1, after ("Health") insert (", Optical Appliances").
§ The noble Lord said: I beg to move Amendment No. 62A. Your Lordships will recall that by Amendment No. 1, which was moved by my noble friend Lord Cullen of Ashbourne on 12th June, which has already been referred to this evening, we sought to leave out subsection (1) of Clause 1 of the Bill. During that debate I contended that if the Committee decided to retain the said subsection, the Short Title might require to be amended. Your Lordships rejected my noble friend's amendment. Consequently, I suggest that, as the matter stands, the Short Title requires suitable amendment.
Your Lordships will see that the opening words of the Long Title are:
An Act to amend the Opticians Act 1958".
The existing Clause 1 seeks to do just that. My contention, therefore, is that it would be prudent for the Short Title to be amended accordingly. Indeed, more than prudent, I feel that it is essential that the Short Title should be so worded that Hansard carries, if only for the purpose of its index, an indication that this enactment will in fact amount to an amendment of the Opticians Act and its consequent association with the provisions of the National Health Act.
§ It is not necessary to go over again the contention which the Committee rejected: that this Bill now varies the provisions of that Act. Be that as it may, I move that the Short Title should be amended to read:
§ In some respects, this is a rag-bag of a Bill. It is as well to remember that when the other place divided on its Third Reading, which they carried by a majority of 96, The Times pointed out that out of the Opposition's 207 available Members, 192 were missing. This fact is an indication of the way that the Bill has been pushed through. I am inclined to agree with what my noble friend Lord Cullen of Ashbourne has said: that the Bill may have to be revised again in future years. My heart goes out to my noble friends who have had to undertake the work.
§ If what I have said makes sense, I should be the last to contend that the wording that I have set out in the amendment is the best way of putting it and that it may be possible to word it in some other way. I beg to move.
§ Baroness Jeger
I support the amendment. In discussing the Bill with many people, I have found that the fact that the Title of the Bill is "Health and Social Security" has not conveyed to the members of the public the information that it has anything to do with optical appliances or optical services. As the Long Title of the Bill states that it is an Act to amend the Opticians Act 1958, I can see no possible objection to the noble Lord's amendment. I hope that the Government will accept it.
§ Lord Mottistone
I, too, support the amendment. I would suggest to my noble friend the Minister that one of the main arguments that the Government advanced for supporting the first four clauses of the Bill was that 232 they do not affect health. The argument is that you do not harm people's eyes if they have the wrong specs. Health is therefore not affected. That is the whole argument of all those who say that they want cheap, off-the-shelf specs to be made available. Therefore, it is bogus to put this under the general heading of health. Even if the Government cannot immediately accept the amendment, the least they could do would be to take the point away and say that they will think about it. It makes much more logical sense to have my noble friend Lord Ferrier's amendment in the Bill.
§ Lord Monson
As somebody who has made several unsuccessful attempts recently to make the Short Titles of various Bills more self-explanatory so as to assist the legal profession and the general public, I warmly welcome the amendment. I hope that the noble Lord, Lord Ferrier, will have more success than I did.
§ Lord Glenarthur
I fully accept the strong views of my noble friend Lord Ferrier and, indeed, my noble friend Lord Mottistone and the noble Lord, Lord Monson, to say nothing of the Opposition Front Bench, so far as this particular amendment is concerned, but the fact is that it would be a mistake to adopt this course, innocuous as it does in fact seem, because the words which form the Short Title of any Bill do not have any particularly special significance. The Short Title is not intended to detail all the contents of a Bill. As the noble Lord described when he moved the amendment, the Long Title covers a great many other aspects of a Bill.
My noble friend says that the Bill is a rag-bag of a Bill. I am afraid that unfortunately it is a fact of life that we have, in the very complex field of both health and social security, rather a lot of Bills which involve the alteration or improvement of a great many conditions. The Short Title is merely a convenient label for the purpose of identification. That being the case, there is quite a lot of merit in keeping that Short Title as short as possible. If we were to accept the principle of expanding the Short Title it would be difficult to stop at the amendment which we are now considering, because it has not been universally accepted in all quarters of your Lordships' House that the clauses dealing with the supply of optical appliances form the most important part of the Bill. There are many of your Lordships who would argue that the bits for which they have spoken are as important, if not more important. Those noble Lords who have regarded other clauses as being of greater or equal significance might legitimately argue that these, too, should be reflected in the Short Title. And where would we stop?
The fact is, as my noble friend described, that this part of the Bill amends primarily the Opticians Act 1958. It also amends to a lesser extent other Acts. What I am sure my noble friend will understand is that statutes in force will in due course reflect the changes which are being made to the Opticians Act 1958 by this Bill. They are available in the Library. People who want to see what changes have been made, particularly to the Opticians Act, will look at statutes in force rather more than at the Health and Social Security Act 1984 as it may become.
233 The reference to health in the Short Title, as at present drafted, neatly encapsulates the fact that the Bill makes a number of reforms in diverse areas connected with health and the provision of health services. I do not think that the proposed amendment would result in greater clarity or would more accurately reflect the position. I hope that what I have said about the statutes in force clarifies the position for my noble friend and that he will not press the amendment.
§ Lord Ferrier
It would be foolish of me to press the amendment at this juncture. However, I have had such support from all sides of the Committee and, indeed, from my noble friend who has just sat down, who pointed out that the Short Title as it stands is misleading, that I must ask him to reconsider the matter and raise it at a later stage.
§ Lord Glenarthur
I shall most certainly examine the matter again, although I am afraid I shall probably find, as my noble friend will expect, that a great many other Bills have passed through your Lordships' House over the years which do not in their Short Title encapsulate every part of the Bill which is encapsulated in the Long Title. The fact is that the Long Title is the fully descriptive title of the Bill. I will certainly examine what my noble friend has said, but the title "Health and Social Security Bill" is for reference purposes, and it is not designed to include every item which the Bill proposes.
Opticians are just one aspect, and FPCs are another. There are dozens of other matters dealt with in the Bill, including franking, so one might call it the Health and Social Security, Opticians and Franking Bill. One could go on for ever. I am well aware of the strength of feeling which my noble friends and others express on this particular issue, but I should like to stress that it is for reference purposes that the Bill has a Short Title such as this.
The subject of health is included in the Bill, and so is that of opticians. My noble friend Lord Mottistone argued about the fact that we said earlier that wearing the wrong glasses cannot damage one's health. I think that is a bit of a red herring, but the fact is that the Long Title describes the purposes of the Bill quite fully.
§ Lord Ferrier
It would be wrong for me to press this matter but I am not at all satisfied with my noble friend's reply. I hope he will return to this matter again. Under protest, in view of the late hour and the important business which will shortly be before us, I will ask the permission of Committee to withdraw the amendment—despite the support I have received from all sides.
§ Amendment, by leave, withdrawn.
§ Clause 29 agreed to.
§ In the Title:
§ [Amendment No. 63 not moved.]
§ House resumed: Bill reported without amendment.