§ Consideration of amendments on Report resumed.
§ Clause 7 [Professional remuneration in National Health Service]:
Lord Ennals moved Amendment No. 21:
Page 12, line 26, leave out from beginning to ("likely") in line 27 and insert ("incurred in the past and the amount or estimated amount of expenses (taking into account any discounts) ").
The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Marshalled List, with which I believe the noble Lord, Lord Renton, has agreed that we should take Amendment No. 22, since both amendments very much overlap.
Amendment No. 22: page 13, line 1, leave out subsection (4).
Yesterday I took up an amendment, which was marginally too late, but discovered, happily, that the noble Lord, Lord Renton, had already tabled it. Perhaps, therefore, we may take the two amendments together.
§ Clause 7 deals with professional remuneration in the National Health Service, in particular that of pharmacists and opticians. The noble Baroness, Lady Jeger, and I have tabled one amendment to the clause. The noble Lord, Lord Renton, has tabled a second, to which I should have added my name. The first amendment deals with discounts and the second with the general, retrospective effect of the clause.
§ We went over the ground in Committee. Throughout all the consultations since then, I have found neither the pharmacists nor the opticians are happy with Clause 7. That may not be sufficient a reason to have a significant debate upon it but, as the noble Lord, Lord Renton, drew to our attention in Committee, the effect of this long and complicated clause will depend upon regulations. That being so, it is important that we should get the picture right. The regulations will in turn depend upon the provisions of the Bill and, equally, upon the present law. But I have to say that we do not know what is the present law. The Pharmaceutical Services Negotiating Committee, representing the retail pharmacists, has sought clarification of the law. Although the High Court has decided in favour of the Government's interpretation of the law, this decision is subject to appeal and the appeal has not yet been heard.
The law in question concerns the Government's right, or otherwise, to recover or claw back from
pharmacists amounts said to have been overpaid to them as discounts on medicines in past years. As I have said, the appeal has not been heard, despite a second application by the pharmacists to have the matter expedited before today's Report stage. Your Lordships will be interested to hear the statement of Mr. Justice Parker when he considered the application for expedition some 10 days ago—subsequent, therefore, to the debate which we had in Committee. He said:
The House [of Lords] was led to believe that the High Court had upheld not merely the 'within year' point but also the 'year upon year' point. It is accepted by Mr. Brown, [counsel] for the respondents [the Government] that that was totally wrong".
We are faced with a difficult situation. The case that the Pharmaceutical Services Negotiating Committee brought against the discount clawback was heard and rejected by the High Court on 9th February. The Minister said at col. 455:
The fact is that we still accept—and it has been upheld by the High Court—that we have an entitlement to recover these costs".
The fact is that Mr. Justice Mann, far from upholding the year on year practice, though that was the very thing which was before him for decision, declined to express any views upon it, but limited himself to the provisions of the Drug Traffic Act 1983 which were said not to have any element of clawback. In so far as he referred to clawback, or anything related to it or the year on year practice, it was to "doubt but not decide" whether the practice was lawful.
§ I think it is equally extraordinary (this has been commented upon) that the Minister seemed to be quite unaware, first, that the PSNC had appealed, secondly, that they had applied for expedition of the hearing, and, thirdly, that the application was vigorously opposed on behalf of the Government. Thus, the present law concerning the clawing back of discounts is far from clear.
§ The lack of clarity, frankly, makes a nonsense of Clause 7 as it stands. The pharmacists' application to expedite the court of appeal hearing was vigorously opposed by counsel representing the Government. I find the Government's attitude very baffling. If the Government win the appeal, Clause 7 of the Bill is quite unnecessary. If the Government lose the appeal, Clause 7, in its present state, is manifestly an attempt to legalise dubious actions of the past. It could be said even to legalise dubious actions which were carried out by a previous Government. But we are now talking about a clawback which goes back over several years, and so there is no doubt that Clause 7 amounts to retrospective legislation, which is never popular. In fact, it is usually anathema to Parliament. It is for these reasons that I support the deletion of subsection (4) on page 13 of the Bill. The Government are saying, in effect: "This is how we wish to pay contractors. We are not clear whether we are allowed to do so under the law as it stands. So in case we are not allowed to do so, we are changing the law to make sure that it covers us for anything that we might have done in the past". Surely that is quite unacceptable.
May I illustrate that point with a figure which I used in Committee. At the moment, pharmacists are required to pay back some £37 million which they have already received. This clawback has been backdated all the way to October 1980. It is supposed
to reflect the discounts on medicines which some pharmacists, but by no means all, were given by wholesalers during that period. I should like the Government to tell us whether the phrase in subsection (4),
any … determination … in relation to remuneration",
refers to discounts or only to the reimbursement of pharmacists' overheads and labour costs. And in the case of the opticians, can we have an assurance that the £6 million withheld from their arrears of fees for the period 1978 to 1983 will be paid to them as soon as possible and not be held back by the effect of this clause?
§ I turn to the amendment to Clause 7. The objection of the opticians to Clause 7 is that, far from clarifying the present arrangements as they have been understood by the professions and the Government, this clause introduces for opticians two completely new elements: first, the inclusion in the National Health Service remuneration of any discounts on material costs and, secondly, the provision for retrospective adjustment of their remuneration to take account of such discounts.
Looking back at the Public Accounts Committee in another place, on 14th November 1983 we have Sir Kenneth Stowe, the Permanent Secretary in the Department of Health and Social Security, pointing out that the payments received by the opticians from the National Health Service were not,
in any way unlawful or had anything improper about them".
The fact is that the family practitioner committees have always made payments to opticians strictly in accordance with the law, as detailed in the General Ophthalmic Service Regulations. Charges for NHS lenses and frames have always been set by the DHSS and the optical manufacturers. Opticians have never been parties to those negotiations. Further, when the profession has raised the matter of charging levels not adequately reimbursing their costs, they have been told that the statement of fees and charges operates on a swings and roundabouts basis. The DHSS and the profession have always recognised that certain special lenses cost the optician more than he could reclaim from the NHS. On the other hand, certain manufacturers have been able to supply certain opticians with discounted supplies. These are the swings and roundabouts to which I have referred.
§ Opticians agree that there is a need for changes in the arrangements; changes which the opticians' representatives and DHSS officials have been discussing over recent months. But their objection—and I understand that it is their only objection—is to the retrospective element of these arrangements. That is one of the main reasons why I have moved this amendment.
§ We had a considerable debate in Committee about the wisdom or otherwise of retrospection and about the morality or otherwise of retrospection. I remember that the noble Lord, Lord Harmar-Nicholls, made an outspoken speech against retrospection of any kind, which I did not go along with. I argued then that retrospection should be for no more than one year. For the Government to sustain a position and try now to make legal what has certainly not been legal up to now, and to seek to claim rebates over a four year period, is 831 a very questionable activity. The Government must wait until the appeal has been heard before the Third Reading of this Bill, or they must withdraw this clause, or they must accept the amendments which have been tabled.
§ I cannot see that we could proceed with the clause in its present form without the two amendments which are being proposed unless the Appeal Court has already ruled. It would be outrageous for this House, in the middle of an appeal on an issue directly related to the subject with which this House is dealing, to seek to legislate. I beg to move.
§ Lord Renton
I agree that it would be right to discuss my amendment with that which has just been moved by the noble Lord, Lord Ennals. Frankly, I must say that I am not in a position to challenge anything that the noble Lord, Lord Ennals has said, although my understanding of some of the things he has said—hearsay understanding—does vary slightly from what he has told your Lordships.
As the noble Lord has pointed out, and he was fully justified in doing so, Clause 7 is partly retrospective. The effect of Amendment No. 21 would be to cast out of Clause 7 the mainly retrospective provision. That would have various implications which would no doubt he unwelcome to the Government. I referred at Committee stage, as the noble Lord has referred this evening, to the position created by the pending case—the merits of which we are not entitled to discuss; but I think it is only right that I should make one or two comments about it.
It is a case in which, intrinsically, there have been unfortunate misunderstandings. The fact that the trial judge failed to deal with a most relevant issue which was argued before him (and there is no doubt that it was) was in itself the first unfortunate misunderstanding. Then there seemed to have been other misunderstandings in relation to the case—misunderstandings in which counsel were quite genuinely involved—which have had the effect of the case not being decided, and not being capable of being decided before this Bill receives Royal Assent. That is the position with which we are faced.
We are in a difficult situation of not only legislating with retrospective effect but also of perpetuating some provisions of the present law without knowing what it is. The reason why we are unable to know is because there is a dispute about it which will not be resolved by the courts until after this Bill has received Royal Assent. To the very limited extent that that is so, Amendment No. 21 would overcome the problem because then, in a determination by the arbitrator, or whoever, making a decision under the regulations which are to be made, it would not then be within his power to refer to past matters. To that extent, the element of "retrospectivity"—if that horrible word could be acceptable to your Lordships—would be removed.
My amendment has a rather different purpose from that of the noble Lord, Lord Ennals. Perhaps I can explain it in this way. As your Lordships will see, if you are prepared to strain your minds to read it, Clause 7 is strangely drafted as well as being retrospective. I 832 must confess that I read it several times, and my head is reeling with its convolved phraseology. It is such an important matter to get the drafting right and to avoid this kind of convolution that, for the sake of the record, I will read out the phraseology used in this clause. It states:(4) Any determination in relation to remuneration in respect of services under Part II"—and then it mentions the 1977 Act and the Scottish Act of 1978—which was made before the passing of this Act or after it but at a time before the coming into force of a provision inserted by this section shall be deemed to be validly made if regulations authorising such a determination could have been made had that provision been in force at that time".In other words, it concludes with two uncertain hypotheses.
The matter is more obscure than appears even on the face of that wording. If your Lordships will turn to the commencement clause of the Act, which is Clause 27, you will find in subsection (2) the words,The following provisions of this Act shall come into force on the day this Act is passed".The provision which I have sought to leave out is just one of those.
If I may trouble your Lordships to refer back again to Clause 7. we find that that subsection (4) is to come into force on the date of Royal Assent and yet .we have the expression, which somehow has to be reconciled with what follows, in respect of a determination,which was made before the passing of this Act or after it".I find this a terrible mind-twister. I hope I am not being tiresome, ignorant or stupid, nor that I am oversimplifying the matter. However, the main reason why I have tabled this amendment is to give an opportunity to my noble friend to explain what the subsection means, and what its effect in law will be. I hope that I have said enough to my noble friend to alert him as to my reasons.
§ 8.30 p.m.
§ Lord Glenarthur
My Lords, perhaps I may, in approaching these two amendments together, deal particularly first with the question of opticians, which was one of the points which the noble Lord, Lord Ennals, raised. I shall then come on to the main theme of the arguments of the noble Lords, Lord Renton and Lord Ennals. I know that the opticians are apprehensive about this clause so far as it affects them specifically and its possible application to the question of the discounts they have received on the prices paid for spectacle frames and lenses. The rates at which they are reimbursed for these items are intended to cover only the cost of the opticians but we believe that the opticians may have profited from discounts from their suppliers. The sum of £6 million is currently being withheld from arrears of fees until we can establish how much may have been overpaid. An inquiry into the actual amounts paid by opticians for their supplies has recently been completed and we shall now be discussing with the opticians; representatives the scale of the problem. We shall await the outcome of these negotiations before deciding the extent, if any, to which remuneration should be adjusted to cover any amounts overpaid. But I must make it clear that the Government has a duty to 833 safeguard taxpayers' money and cannot give up the right to consider past overpayments and underpayments when determining opticians' remuneration any more than we can consider doing so for the other contracted professions.
That apart, and notwithstanding the general objection to retrospective legislation, in this particular case, perhaps I may try to do what my noble friend Lord Renton asked. I do not want to take up too much time discussing in detail the proceedings to which reference was made in Committee on 21st June. Following that discussion, as the noble Lord, Lord Ennals, described, an application was made to Lord Justice Parker in the Court of Appeal to expedite the hearing of the appeal pending in that court.
The court decided that expedition at the expense of other cases awaiting hearing would not be justified and that all the information Parliament would need to,consider what action it will take and whether it will proceed with legislation on the basis that it should or should not be retrospective,could be provided in the ordinary course of debate. I think that, when your Lordships have heard what I have to say on the amendment now, the justice of that view will become apparent.
Although I hope that the House will not accept my noble friend's amendment, or indeed that of the noble Lord, Lord Ennals, if they pursue them—when they have heard what I have to say perhaps they will be persuaded to withdraw it—I think I ought to begin by saying frankly that I do agree with much of what both of them have said. I do not have their long experience in Parliament, and certainly I do not have the experience of the law of my noble friend Lord Renton or the advantage of the profound study which led to the notable report on the Preparation of Legislation produced by the committee under my noble friend's chairmanship some nine years ago. I share his dislike of complex and elaborate legislation too, I may add. I also share, as I know many of your Lordships do, an extreme suspicion of retrospective legislation. I tried to make this clear when we last dealt with the matter. I too regard it as an evil that is, whenever possible, best avoided. Why, then, do I commend this elaborate clause with its retrospective operation to your Lordships?
To understand that I must glance briefly back at the history of the matter. When the National Health Service Act of 1946 set up what we now call the Family Practitioner Services—the general services provided by doctors, dentists, opticians and pharmacists—it made no specific provision for their remuneration. It provided merely, and on consolidation in 1977 this was repeated, that arrangements were to be made with them "in accordance with regulations". That formula was not new: it was a time-honoured one, taken from Lloyd George's National Insurance Act of 1911, which began the system of national health insurance which was the forerunner of our present National Health Service. It gave little if any clue to the extent of the powers conferred.
Over the years, an enormous superstructure has been based on that slender foundation. Under successive administrations, it seems almost to have been accepted that any arrangements acceptable to the professions and the authorities could be validly 834 entered into on that basis. Those arrangements have in the course of time become steadily more elaborate, with a great variety of arrangements for reimbursement of expenses of various kinds, for fees and allowances and for special incentive payments. The determination of the amounts to be paid and the conditions for payment has in some cases rested with the Secretary of State, in some with other authorities like the Family Practitioner Committees in England and the Health Boards in Scotland or the Dental Estimates Board, and in some has been divided between authorities. In the case of doctors alone the statement of fees and allowances which sets out the arrangements runs to some 200 closely-printed pages. None of this until recently came under legal scrutiny.
In 1982 one aspect of these arrangements, the application of a discount to the prices paid to chemists to reflect the discounts obtainable by them from their suppliers, was the subject of legal challenge. It came before the High Court and its validity was upheld. Last year a group of chemists took proceedings challenging the validity of arrangements made, also in respect of discount, by agreement with the Pharmaceutical Services Negotiating Committee (the PSNC). On that occasion, the department accepted that the manner in which the agreement had been implemented, but not its substance, could not be supported in law. By consent the arrangements were discontinued and the proceedings were withdrawn.
In the light of these experiences, Ministers concluded that it was necessary to put the arrangements on a more certain basis. It was clearly no longer satisfactory, if it ever had been satisfactory, to rely on the very vague and general formula "in accordance with regulations" which I described just now. No one could really know how far the powers that gave might extend. In particular, doubts had been expressed about the long-standing practice, in relation to all the professions, of adjusting the current year's remuneration to remedy an excess over or shortfall in the amount which it had been intended to deliver in a previous year, so as to maintain a proper year-on-year balance.
The working of this practice may be shown by looking at the very recent history of the discount arrangements. An inquiry, begun in 1975 and completed in 1977, found that over that period chemists had suffered excessive discount deductions amounting to some £4½m. To return that to them, the noble Lord, Lord Ennals, when he was Secretary of State, temporarily suspended discount deductions for a period in 1978–79. A second inquiry, agreed in 1980, began work in 1981 and reported in 1983. Because it found that chemists had been receiving from their suppliers much larger discounts than before, the deductions of discount from their remuneration had been insufficient by some £.521/2m. It was agreed that the balance should again be redressed by adjustment of the current discount scale. It was this adjustment that has had to be suspended because of the proceedings to which I referred.
It was therefore announced when this Bill was in another place that it was intended to add a clause to the Bill to avoid the need for prolonged litigation to resolve the legal position. The announced intention was no more and no less than to remove doubt, for 835 both the past and the future, by declaring the law to be what successive governments and the professions had (rightly or wrongly) assumed it to be over the years, and so to ensure that the agreements they had reached on that basis could stand and could be continued. The clause was introduced and is the clause your Lordships are now considering.
The wisdom of the Government's decision, if I may put it like that, was amply demonstrated when, shortly after that announcement, the PSNC decided to institute legal proceedings to challenge the validity of the agreed arrangements. In those proceedings the High Court has again upheld the validity of the discount system but has not given any decision about the validity of the process of year-on-year adjustment.
As your Lordships have heard, an appeal to the Court of Appeal is pending. However that may be decided, there may, if the litigation is persisted with, be a further appeal to your Lordships' House in its judicial capacity. And however that might be decided, there could be no assurance that further challenges to other aspects of the present system might not be raised at any time in the future. Whatever the result of the litigation the Government would be obliged to bring before Parliament a clause to give certainty to their powers.
Against this background your Lordships may perceive why the clause has had to be so complex and detailed as my noble friend described it. Had we started with a clean sheet we could no doubt have produced a clause which would have been much simpler because it could have been more generally expressed. We were however concerned to reassure the professions that we were seeking merely to confirm the powers on which existing agreed arrangements must depend and were taking no new powers that might affect them.
We have had full consultations with them and have I think convinced them that the clause sets out, step by step, only the justification for existing arrangements applicable, in each case, to some or all of them. The complexity of the clause comes from the need to do this: to ensure that it represents, so to speak, a standstill and not a new departure. In only one respect does the clause do more than confirm what has always been taken to be the existing position: in paragraph (b), which comes at the bottom of page 10, we have given the professions the new protection of requiring that any general determination of their remuneration must be preceded by consultation either with an advisory body (like the doctors' and dentists' review board) or with their representative organisations, or with both.
Precisely because of the nature of this clause I suggest that the usual objections to retrospective legislation, which have been raised on these matters before, do not apply in this case. Those objections, save in the most exceptional cases, have great validity when it is sought retrospectively to alter to their detriment the legal position of those affected. In this instance our purpose, and the effect of the clause, is the exact opposite of that. What it does—and, with the exception I have mentioned, all it does—is to ensure that the law is what those affected by it have always supposed it to be until recent doubts have crept in, to 836 confirm the validity of the arrangements to which they have agreed on that understanding and to enable them to continue on the same basis.
I share my noble friend's concern about the tortuous method of writing it into the Bill. I have given a long and detailed explanation on why it has been necessary to take this step. It is an explanation which I hope both my noble friend and the noble Lord, Lord Ennals, will accept. On that basis, I hope that neither the noble Lord, Lord Ennals nor my noble friend will feel it necessary to pursue their amendments.
§ Lord Renton
My Lords, I think it would be right for me to intervene again rather than leaving it to the noble Lord, Lord Ennals, who will have to make the final decision on his amendment.
May I say that I am grateful to my noble friend Lord Glenarthur and I weep for him. I weep for him having been placed by others in the position in which he finds himself. It is a basic principle of our legislation dealing with fiscal matters especially that retrospection in favour of the subject is legitimate when Parliament is legislating, but that retrospective legislation against the financial interests of the subject should be avoided whenever possible. I have a feeling that this retrospection might have been avoided, even on this occasion, but for the enormous sums of public money which are involved.
My noble friend has given some reasons which are understandable for making an exception to the general rule that I have mentioned, and I hope fairly described. All that I can say is, speaking for myself, that I think the Government have created a position which is now unavoidable and which we have to accept. However, I earnestly hope that Government departments will study the misfortunes which have arisen in this case, study the situation with which Parliament has been presented and try to avoid any such situation in the future so that we shall never again be presented with it in our time. I hope that I am not expressing too great a hope or that I have overstated it, but I feel this rather strongly.
As to the drafting of subsection (4), I am grateful to my noble friend for agreeing that it is very tortuous and I feel I must make a plea to him. He did not offer to ask the draftsmen to look at this again; but I think that he should ask the draftsmen to do so. It would be the last chance, on Third Reading, to produce something that the users of the statutes can more easily understand. There is no need to alter the legal effect of what is intended in this convoluted subsection; I am only referring to subsection (4). I hope that Ministers will not be fobbed off with the draftsmen's excuse "Oh, but this achieves certainty in law". Nothing that is uncertain in meaning can achieve certainty in law. I wish the draftsmen would understand that and get it sunk right into their heads. This is uncertain in meaning, I think, even to somebody with the most remarkable brain. In any event, it is such a piece of drafting that they should wish to look at it again. I hope that they will, and that my noble friend will agree to ask them to do so.
§ Lord Glenarthur
My Lords, with the leave of the House, I offered my noble friend an explanation about the drafting. I will certainly ask the draftsmen to look 837 at it again. I cannot honestly promise what they will come up with because, as my noble friend knows, there are all sorts of difficulties in actually putting this sort of material into a Bill, for the very difficult reasons I have given. I shall certainly find out whether there is any simpler way of expressing it, but beyond that I cannot be committed. I hope that that will satisfy my noble friend.
§ Lord Ennals
My Lords, I wish that I could say that I was as satisfied with the Minister's reply as the noble Lord, Lord Renton, is—although he was not totally satisfied. My dissatisfaction extends further. First, I shall need to read with great care the speech made by the noble Lord explaining what Clause 7(4) actually means. The noble Lord, Lord Renton, read it out in such a way that we realised that it was almost, if not totally, incomprehensible. The noble Lord did his best—I am not criticising him—to try to make sense out of a nonsensical statement; a difficult task even for an able Minister. Therefore, I must be glad that he is to ask the draftsmen to see whether they can come up with something better.
Secondly, I was disappointed that the Minister made no comment about the legal situation. The matter is before the court. The appeal is pending. He referred to the fact that the learned judge said how right it was for the Government to decide whether to proceed, or not to proceed, to legislate. He certainly had not ruled on the case that was put before him. I find it a very unsatisfactory situation in which this House is asked to pass legislation on issues on which a court is sitting.
§ 8.50 p.m.
§ Lord Glenarthur
My Lords, with the leave of the House, there is a difficulty in my following the course which the noble Lord asks me to follow. That is for the reasons which I explained when we debated the matter earlier and which I think my noble friend Lord Renton accepts. I do understand the position that in this case the court did not allow the expedition, but the noble Lord will be aware that it is very difficult for me to talk, as my noble friend Lord Renton says, about the merits of the legislation because it is still to some extent in train and the case does not come up until December. So I would be stepping out of line if I were to go further than I have gone in discussing the legal position. I hope that the noble Lord will accept that.
§ Lord Ennals
My Lords, I understand the difficulty and I. like the noble Lord, not being a lawyer myself, would equally find it difficult to determine how a Government should act when a case is before a court on precisely the issue that the Government are trying to incorporate within legislation. For the moment, be that as it may, although I find it very unsatisfactory. I am not suggesting for one moment that the noble Lord, Lord Glenarthur, intentionally misled your Lordships but your Lordships were misled at the Committee stage, and Lord Justice Parker made it clear that the House had been misled. Of course, I am not suggesting that was in any way intentional but it adds to the problems that we are facing.
838 If that were the only problem, then perhaps we might be able to set that one aside and say that the purpose of this legislation is to clarify what is not clear. That is in fact what the noble Lord, Lord Glenarthur, said. He said that the intention is to remove doubt and to put on to the statute book what we have all believed to be the position. If that were the case, once again we would have no problems. If he were putting on to the statute book what the two principal professions concerned—the pharmacists and the opticians—have believed to be the situation up to now, then there would be less objection. But both professions are saying that this legislation changes the situation. They do not accept that this is a legal interpretation of the existing situation. I do not think either of them would go so far as the noble Lord, Lord Harmar-Nicholls, went when he said that all retrospection was wrong. All retrospection has to be looked at very carefully, but this is the method by which payment is made to pharmacists and opticians.
The objection that I raised at Committee stage was that we should be able to go back as far as four years. The noble Lord. Lord Renton, said that the real problem facing us at the moment could have been avoided if there were not such enormous sums involved; and of course those enormous sums are taxpayers' money. Therefore, any Government has to be careful in looking after the interests of the taxpayers and also in looking after the interests of the professions involved. I think it is right for the Minister to ask himself—maybe this is not the time to tell the House—how it is that we can reach a situation in which restrospection is being dealt with over a four-year period. I do not recall this having happened before and that is why I moved an amendment at the Committee stage that it should be limited to one year in order that one could legislate for each year, to get the balance right.
I will at this moment withdraw my amendment, but I must say that I feel the need to read very carefully what the noble Lord the Minister has said, because it may be that I would feel it necessary after consultation to take some action on Third Reading. Therefore, I will ask him a question which will help me to determine what may need to be done on Third Reading. I can see the difficulty that he has been put into; it is an extremely difficult position. But if the whole of Clause 7 had not been introduced and were now to be deleted, what difference would it make? The Minister is saying that all that Clause 7 does is to put on to the statute book something which has already been happening and which the professions accept as being part of the game, so to speak. I therefore ask him: what would be the consequence for Her Majesty's Government, for the taxpayer and for the professions if Clause 7 were not introduced into this Bill at all? Perhaps he could answer that before I make my final comment.
§ Lord Renton
My Lords, would the noble Lord bear in mind that Clause 7 is mainly an enabling clause?
§ Lord Glenarthur
My Lords, with the leave of the House, I am not sure really that there is much to be gained by hypothecating on what might be the case if this particular 'clause were not in the Bill. The fact is 839 that we are now debating it because it is in the Bill. I daresay there would be a number of effects if this clause were not introduced into the Bill now, but I do not think I can go through them all in great detail. If there is any specific point which I can bring out, I will certainly let the noble Lord know, but I do not think it is worth my while to stand at the Dispatch Box and hypothecate about what might happen if this clause had not been put into the Bill in the first place.
§ Lord Ennals
My Lords, I am grateful to the noble Lord for his reply. I am not in the game of playing "dirty tricks", even though it may have seemed that that is what I was doing. But because it is not clear and it is not easy for the Minister to state what would be the consequences of not having this clause, my own assumption is that the situation would remain exactly as it is now. The noble Lord, Lord Renton, is nodding assent, I think, so clearly there is a possible course of action that could be taken when we reach the Third Reading; namely, that that clause should not be included in the Bill.
However, I am not anticipating what action should be taken because I want to read very carefully what the Minister has said tonight, for which I am most grateful. But I do not want him to think for one moment that I am satisfied with the situation as it is now. I beg to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Before the next amendment, No. 22, is called, may I just ask my noble friend, when he speaks to the parliamentary draftsman, to ask him a simple question: namely, whether the parliamentary draftsman understands Clause 7(4)? If the answer is "No", then I think the Government would be in honour bound to redraft it. If, on the other hand, the draftsman says that he does understand it, then my noble friend Lord Glenarthur would be in a unique position because he would be speaking to the only man in England who does.
§ [Amendment No. 22 not moved.]
§ Clause 11 [Severe disablement allowance]:
§ The Deputy Speaker (Lord Hayter)
The next amendment is Amendment No. 23. I have to point out that if this is agreed to I cannot call Amendment No. 24.
Baroness Darcy (de Knayth)
My Lords, before I speak to Amendment No. 23, may I query that decision? Is it not possible to have Amendments Nos. 23 and 24? Could we not have the cut-off age at 23, but a little extra for those in schools and in youth training schemes?
§ Lord Glenarthur
My Lords, I am not sure whether I am in order or not, but, as I understand it, the Deputy Speaker has said that it would not be possible to accept Amendment No. 24. I am sure he is right so I do not think the noble Baroness is correct.
Baroness Darcy (de Knayth): My Lords, I defer to the noble Lord. I move Amendment No. 23:
Page 15, leave out lines 19 to 23 and insert ("; and
(c) beginning not later than the day on which he attained the age of 20 and ending immediately before the relevant day he has been, other than for a period not exceeding 28 weeks, on each day, either—
Perhaps it would be for the convenience of the House if I were to speak to Amendments Nos. 23 and 24 together. Would the noble Lord, Lord Stallard, agree to that? Amendment No. 24 is in his name.
§ Lord Stallard
My Lords, I really do not know the answer to that. I am not too sure whether that is in order.
§ Lord Henderson of Brompton
My Lords, I think it would be the case that if the noble Baroness spoke to Amendment No. 23 and then withdrew it, then it would be possible for the noble Lord, Lord Stallard, to move Amendment No. 24, but not otherwise.
Baroness Darcy (de Knayth)
My Lords, I am most grateful to the noble Lord, Lord Henderson of Brompton, for his advice. This amendment was originally moved in Committee by the noble Lord, Lord Henderson of Brompton, and I have put it down again as a probing amendment to enable the Minister to repeat to the House some of the very full and detailed explanations he gave about the severe disablement allowance during a very useful meeting that we had last week. A lot of what the Minister said will probably emerge when he replies to Amendment No. 25 in the name of the noble Lord. Lord Ennals. So I will confine myself to the question of the young disabled, who, if they claim severe disablement allowance before the age of 20, have only to prove their incapacity for work, whereas after the age of 20 they will have to prove that they are 80 per cent. disabled as well.
The sort of things I hope the Minister will spell out now are, first of all, the position about courses. For example, how much does the youth training scheme course equate with incapacity for work? What is the definition of full-time education for the purposes of the SDA? Would some or all further education courses be regarded as compatible with being incapable of work, and the same for higher education courses? Will there be flexibility when judging courses, whether or not they are compatible with incapacity for work? Would the position of the young severely disabled who are undergoing a course of education or training be the same under the SDA provisions as under the current NCIP provisions?
The other group of questions is about the age of claiming. Even if the young disabled person is in education that is regarded as equivalent of work, could he apply for SDA before the age of 20, just stake his claim, as it were, but not receive it? Then when he has completed his education and still finds sadly that he is incapable of work, could he receive the SDA without having to undergo the 80 per cent. disability test, having staked his claim earlier? Could he even receive the SDA without undergoing the 80 per cent. 841 disablement test without having staked his claim previously, if he could prove that his condition had been serious enough before the age of 20 to have rendered him incapable of work?
I feel very strongly that we must do all we can to encourage the young disabled to explore every avenue before admitting that they are incapable of work. The noble Baroness, Lady Lane-Fox, who I am afraid has had to go, says that she agrees with me on this point. However, she is in general happy with the SDA, as was explained by the Minister last week, whereas I am not totally satisfied. Noble Lords will see that I have actually put my name to Amendment No. 24 with the noble Lord, Lord Stallard, because I think this is the simplest way of getting round the problem of discouraging the young disabled from even trying to equip themselves for work.
As I have said, this was really only a probing amendment. I was rather encouraged by seeing that the noble Lord, Lord Henderson of Brompton, and the noble Lord, Lord Ennals, had put their names to it. I thought that maybe we could have got rather further than I had intended and perhaps have even raised the cut-off limit to 23, and then given a little extra time for those in education and on the YTS. However, it appears that that is not possible, so this is a probing amendment to enable the noble Lord the Minister to say what he said last week. I beg to move.
§ Lord Henderson of Brompton
My Lords, perhaps I might briefly support the noble Baroness. I am very grateful to her for moving this amendment on Report. As she said, I think it is the same as the amendment which I moved in Committee, which I then moved as a probing amendment. In Committee I did say that the range, diversity and number of amendments put down in Clause 11 in themselves showed the concern of all the disablement organisations at the new severe disablement allowance and that this might give the Government some cause for thought. The range, diversity and number of amendments has now been reduced to the three which are on the Order Paper so we have made some progress in the interval. As the noble Baroness has said, I think that is very largely due to the discussions with the noble Lord the Minister, the noble Earl, Lord Caithness, and the Minister for the disabled, which have taken place on the initiative of the noble Lord, Lord Ennals—and very useful they were too. I think there was a useful exchange.
I can perhaps do no more now than to say that the Minister would do a great service to the House and to all those who are concerned with the severe disablement allowance if he would give the Government's response to the representations which were made to him at that meeting and so have it on the record. Of course, this is without prejudice to the next ensuing amendment in the name of the noble Lord, Lord Stallard.
Without pre-empting anything that the Minister has to say, perhaps I may say at this stage that what seems to be the ideal solution is a combination of the noble Baroness's amendment, Amendment No. 23, and Lord Stallard's Amendment No. 24. If we had the age of 23 inserted into the noble Baroness's amendment, we would have all that we desire.
§ Lord Glenarthur
My Lords, the noble Baroness, Lady Darcy (de Knayth), and the noble Lord, Lord Henderson, and others have expressed an understandable concern over the way that the easier age 20 rule for SDA will operate in relation to those in further education or training. Perhaps the first point to emphasise, therefore, is that someone undergoing a course of education would not necessarily be unable to qualify for SDA on the easier rules. Having said that, I hope I shall answer all the points that the noble Baroness asked me to, not, I hasten to add, necessarily in the order in which she asked them, but I hope that what I have said will at the end of the day be at least clear.
Between the ages of 16 and 19 a young person will be prevented from drawing SDA only where he is undergoing normal full-time education. This rule currently applies to NCIP and "normal full-time education" is generally interpreted to mean education which would be suitable for a non-handicapped person of the same age and where the claimant attends for at least 80 per cent. of the normal hours of classroom instruction for the course. Under SDA we intend to take the opportunity to clarify the present regulations, in particular to concentrate on the type of education received rather than, as at present, on the type of school which the young person attends. But, in practice, we intend that the effect should be the same.
Each case will be decided on its merits. But as an example, a young mentally handicapped person being taught simply social or communicating skills would qualify for SDA; whereas someone who, though disabled, was nevertheless undergoing a full-time course of CSE, 0 or A levels might not. In these circumstances, education is regarded as very much akin to the working situation, if I may so describe it.
Beyond age 19, with NCIP, the question of a person's incapacity for work will be left as a matter for determination by the adjudication officer and, on appeal, the social security appeal tribunal and the social security commissioner. A person is regarded as incapable of work if, having regard to his age, experience, state of health and other personal factors, there is no work, or type of work, which he can reasonably be expected to do.
The fact that a person is capable of attending a full-time course of education outside his own home, for example, undertaking a normal degree course at university, might be taken by the adjudicating authorities as indicating that he is not incapable of work of a sedentary or clerical nature. But, on the other hand, incapacity for work has been accepted where a person was attending a college of further education but was not in the mainstream of the course—attending on an irregular basis and working at his own speed. Again, each case will be considered on its merits in the light of all the evidence available. A young person should claim SDA at any time from age 16 onwards if he thinks that he satisfies the primary condition; that is, incapacity for work.
As regards courses approved by the Manpower Services Commission, including courses under the youth training scheme, days of attendance will be treated as days of unemployment and not incapacity for work. This follows the provisions which currently apply to contributory sickness or invalidity benefits 843 and to NCIP and is not an unreasonable rule, since it is the policy not to give someone a place on a course unless it is considered that he has a reasonable chance of obtaining employment on the open market at the end of it. Attendance on such a course will, however, count for linking purposes. Consequently, where someone qualifies for SDA on the under-20 rule and then undertakes an MSC approved course, he will be able to requalify for SDA on the easier conditions if he is incapable of work when that course comes to an end.
I accept that the provisions that I have outlined will not necessarily help a person who first becomes incapable of work after age 20 while a student or following a period of training on an MSC approved course. The noble Baroness's amendment seeks to extend the easier qualifying rules for SDA to these specific groups. Although the Government have every sympathy for people in this position and have given a clear commitment to monitor the new scheme closely to see whether such changes may be justified in the light of experience—that is a point that I should like to stress—we are not presently convinced that it would be right to single out particular groups for special treatment in this way. Not only would this increase costs, but it would also lead to anomalies compared with others who may similarly first fall sick after age 20 and for one reason or another find themselves without an adequate contribution record.
I hope that the explanations that I have given will have allayed some of the concerns which the noble Baroness has expressed and which were expressed by other Members of your Lordships' House when we previously met, as the noble Baroness has described, to discuss this matter. It is a complex matter. I hope that the answers that I have given cover all the points that the noble Baroness has raised. On that basis, I hope that she will see fit to withdraw the amendment in due course.
§ 9.13 p.m.
§ Baroness Jeger
My Lords, I rise briefly only to thank the noble Lord for his sympathetic hearing of this case. However, there are one or two problems that worry us. The noble Lord has said that it is the Government's intention that cases shall be considered individually, according to personal circumstances. But, if the age of 20 is written into the Bill, that produces a rigidity which surely makes it impossible for personal circumstances to be considered.
I think particularly of young people who, because of disability, have missed years of school and who, at the age of 20, are, mentally and physically, where normal young people are perhaps at the age of 15 or 16. There are also young people who have a certain degree of mental retardation which means that they, at the age of 20, are not keeping pace with people of the same age. It seems to us that by writing this age into the Bill, the noble Lord the Minister is contradicting what he said about personal consideration being given to the young people who, I know, he is most anxious to help. We were always puzzled, and we made clear at earlier stages of the Bill that we could not understand why the age of 20 was chosen. It is not the age of majority. It does not seem to have any relevance to any other 844 accepted norm. The noble Earl, Lord Caithness, said at column 86, on 21st May:Between the ages of 16 and 19, a young person will be prevented from drawing SDA only where he is undergoing normal full-time education. Beyond that age, further education will only be a bar to entitlement if the type of course being followed is inconsistent with the finding that he is incapable of work".I find that very difficult to follow, because it is very disturbing, when we are trying to assist disabled young people to try to maximise their potential and find out something that they can do, to have these rather stringent rules laid down about,inconsistent with the finding that he is incapable of work".How can anybody say that about a disabled young man or woman aged 20? It might be that, given a further year or so, they could blossom and find something they could do and wanted to do, and which would be useful for them and for the community. Therefore, I hope that it will be possible for the Government to look again at this matter and see that there is in the Bill a rigidity which contradicts the kindness which the noble Lord has expressed tonight.
§ Lord Glenarthur
My Lords, with the leave of the House, I should like to say to the noble Baroness that, as she realises, I cannot go on at too great length at this stage. We discussed some of this before. Severe disablement allowance is intended to be an income maintenance benefit, primarily for people of working age who are congenitally handicapped and have never been capable of work. Given this priority, the logical cut-off point—I think we covered this ground before—for the easier qualifying condition is 16 rather than 20.
Therefore, the benefit in its present form represents a significant relaxation of what, in effect, is the harsh logical position. It will enable people who become incapable of work during their late teens to qualify for SDA on the incapacity-only rule, if they have not paid enough national insurance contributions to qualify for contributory benefit. It will also permit congenitally handicapped young people to make an attempt at work without losing their right to SDA if the attempt fails. Basically, it seems to introduce flexibility, and not quite the rigidity which the noble Baroness feels it introduces. I hope she will study that particular point in relation to age 20.
Baroness Darcy (de Knayth)
My Lords, I should like to thank the Minister for the very full answer that he has given. It has helped to clarify a lot of things, and in some cases it may have allayed people's fears. I am glad to hear that the NCIP provisions will broadly be followed by the SDA. I hope that they will err on the side of leniency when deciding which courses do equate with incapacity to work.
I am very glad that the Government have committed themselves to monitor the scheme; that will be very helpful. I wish to thank the Minister for his courtesy and patience, and his willingness to thrash things out at length. It is well worth doing, and I am very grateful to him. But I do not feel it really goes far enough. Probably Amendment No. 24 is the way to do things, because it is much simpler and it gets rid of all these bits and pieces. I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.845
Lord Stallard moved Amendment No. 24:
Page 15, line 20, leave out ("20") and insert ("23").
§ The noble Lord said: My Lords, before I put down this amendment I was under a wee bit of a misapprehension. The discussion at the beginning of your Lordships' consideration of the previous amendment made matters even worse. I understood that it was not proper, and would not be acceptable in this House, as it is not acceptable in some other places, to put down the same amendment as was put down on Committee stage. Since then I have looked at a number of amendments, and quite a number are the same as when they were put down on Committee stage. So I was wrong, and perhaps that has led to some confusion, certainly on my part. I did not think it was right to do that, and therefore I put down a different amendment. Had I known it was possible to put down the same amendment, it might have been possible for me to have a slightly different approach.
§ For obvious reasons, I listened very carefully to the discussion on the previous amendment. I agree almost entirely with what was said by the mover, the noble Baroness, and by the noble Lord, Lord Henderson. But, having listened at Committee stage, having discussed the matter and thought about it, and having read the Official Report of the other place, as well as the Minister's comments in this House, I felt that probably it was a little too complicated. It was introducing some further complications that might be unnecessary and might make it even more difficult to achieve what in the first instance we were trying to achieve for the kind of people I mentioned in my previous amendment on Committee stage.
The point was made that every case will be decided on its merits. That means a long process, with appeals procedures and tribunals. This is introducing a whole new field into the discussion about these youngsters, and certainly the youngsters I was thinking about would not have been able to cope with that kind of situation. Therefore, it seemed an unnecessary hardship to introduce when we consider that in the first instance the age of 20—which we all accepted as the cut-off age—was an arbitrary figure. It was not a fixed, rigid figure; it was fairly arbitrary. In fact, the Minister in the other place, when speaking about it, said that the cut-off at 20:
would leave a year's gap in which to establish whether they"—
that is, the youngsters—
might be able to do some work between the age of 19, at which they would qualify for benefit having finished full-time further education, and the age 20 cut-off".
In other words it was an arbitrary 12 months added to the period when he felt that they would have finished their education. He said:
That is, roughly speaking, how we arrived at the age of 20".
He said "roughly speaking". I wanted to have what could be termed a slightly more scientific approach that was not so "roughly speaking". I wanted to make it a more soundly based cut-off rather than just taking the arbitrary age of 20. Therefore, I thought that my original amendment to increase the age to 25 for the reasons which I gave in Committee, was perfectly reasonable. I had temporarily to withdraw my amendment on that occasion and I have come back with what I think is a reasonable compromise—
namely, the age of 23—which, in my view, is based on a kind of logic.
§ I said on that occasion that I could justify the age of 23 on the basis that the young disabled people about whom I was talking are now able to go on a youth training scheme up to the age of 21. They are able to remain on that scheme for 18 months. If they went on to the scheme on their birthday it would bring them to 221/2. I should have thought that there could be a few months' grace as regards that age—and this is not an arbitrary figure—and that 23 could be justifiably argued as a more reasonable cut-off date than the arbitrary figure of 20.
§ While that would not cover all the youngsters that I have in mind it would cover many of them. Moreover, it would take account of the fact that, as I said in Committee, the young people with whom I am concerned and about whom I feel strongly are the youngsters who take longer anyway to reach the same position as their able-bodied contemporaries. Because they start later or they have frequent intervals of illness or treatment that interrupts their educational process, it takes them longer to reach a certain point. Therefore, it is not unreasonable to allow them extra time and encouragement.
§ I know only too well the amount of encouragement that is given to these youngsters by the social services, by social workers, by voluntary workers and by voluntary organisations like the Spastics Society. They spend uncounted hours trying to encourage these youngsters to persevere and to go for further education and to try their hand in the employment field, as the noble Baroness so rightly said. We cannot hold back on that type of encouragement. We must ensure that we do not do anything that would act as a disincentive to youngsters to strive for that kind of attainment.
§ In my view the cut-off at 20 is a disincentive to youngsters to try to achieve those objectives. Twenty-three is not ideal, but 23 at least does not produce the same kind of disincentive; it leaves some kind of incentive for those youngsters to go on after their youth training scheme to try to get into the labour market.
§ Therefore, on the basis of what I have said, I hope that the Minister will reconsider the arbitrary age of 20, with all the complications that that entails, and will accept the much more logically-based age of 23 that I am suggesting in the amendment.
§ I am very grateful, as are, we all for the way in which the Minister has tackled the representations. He has mentioned them and has studied them, and I accept that he has done a great deal of work on this. He mentioned that the scheme would be monitored. At what intervals will the monitoring process be reported back to the House? What kind of report will we have on the monitoring, on the effect of the scheme, so that we can decide whether or not it is functioning?
§ In the absence of the monitoring process being written into the Bill, it is not unreasonable to ask the Minister for an assurance that regular reports will be made to the House on the progress of the scheme. With that, and in the hope that I can receive the undertaking that I seek, I beg to move.
§ Lord Ennals
My Lords, I want to take only two or three sentences to support the amendment tabled by 847 my noble friend. I want to refer to the two groups who will be particularly affected by this. The first is the mentally handicapped, who inevitably are late developers and who come into training and education at a later stage because of their retardation. I argued this case in Committee and I shall not argue it at length again.
The other group is the mentally ill, many of whom may have a mental illness perhaps at the age of going to university or when they may be at college, experiencing the stresses and strains of youngsters in their early 20s. I should have liked to have seen an age higher than 23, and so would my noble friend Lord Stallard, but as a substantial proportion of those who will be affected by the SDA will be mentally handicapped and be affected by mental illness, I believe that a strong case is made out for the amendment proposed by my noble friend.
§ Lord Renton
My Lords, for reasons which may be familiar to some of your Lordships, I naturally support anything that is a prop to the mentally handicapped. However, it may be that I have completely misread this clause. To substitute the age of 23 for the age of 20 would seem to be a disadvantage to those concerned. Therefore the purpose of the amendment seems to me to be somewhat unusual. If I have understood the position correctly—and perhaps I have not—and the age was 23, the severe disablement allowance could not be paid until three years later.
Baroness Darcy (de Knayth)
My Lords, I shall be extremely brief, but I should wholeheartedly like to support the noble Lord, Lord Stallard. I do so because the more I have wrestled with the questions on my previous amendment, No. 23, about staking claims and about which courses equate with work and which do not, etc., the more I have become convinced that the raising of the age limit across the board is the simplest and most satisfactory method of dealing with the situation: and I mean that quite sincerely. It has been a long, slow process, and I am convinced. Courses change, the status of courses change, and the noble Lord the Minister said of my Amendment No. 23, when it was in the name of the noble Lord, Lord Henderson of Brompton, at the Committee stage, at col. 484 of Hansard on 21st June:we do not consider it right to single out particular groups for such concessions in this way".He said it again of my amendment this evening. He said that it would create anomalies. I am convinced and absolutely agree. The National Bureau of Handicapped Students also think that to increase the age limit is the best solution. They in fact wanted to increase it to at least the age of 25. They see the 20 age limit as a disincentive to continue in education and they say that it penalises young people in their attempt to secure skills sufficient for employment or to acquire skills that will reduce their dependence on community services, and that as such it is shortsighted both socially and economically. I believe that that is true.
As I have said before, we must encourage the young disabled to achieve their full potential, to become taxpayers, and to support themselves and their families, and they should not have to register as being incapable of work before they have done all that they 848 can to prove otherwise. If at the end of the day they fail, they should only have to undergo the incapacity to work test along with those other young disabled people who may not have striven so long or so hard, and this is why I support the amendment.
§ Lord Ennals
My Lords, with the leave of the House, may I say that I always hate to find myself not in agreement with the noble Lord, Lord Renton. I believe that he has misunderstood the effect of this. It may be that the Minister is going to deal with this, and if he is I shall promptly sit down.
§ Lord Renton
My Lords, I am grateful to the noble Lord. As I feared when I intervened just now, I was wrong.
§ 9.31 p.m.
The Earl of Caithness
My Lords, this is an area on which we have already had quite a lengthy discussion in Committee and it was raised at the meeting with the noble Lord, Lord Stallard, and other noble Lords on 2nd July. I will not therefore detain the House by repeating in detail all of the arguments for the age 20 rule. I think it is sufficient to say that our first priority in seeking a replacement for NCIP and HNCIP was to preserve entitlement to benefit based simply on a test of incapacity for work for those disabled at birth or in childhood, who, because of their disability, have never had the chance to work and build up a contribution record.
I appreciate, that as the noble Lord. Lord Stallard, pointed out in Committee (and again today) some mentally or physically handicapped youngsters may be unable to pursue normal full-time education or may take rather longer than usual to go through the education process. But as I hope my noble friend Lord Glenarthur and I have made clear when speaking to previous amendments, these are precisely the sort of people whom we would expect to be able to qualify for SDA on the easier under-20 rule, provided of course that they can produce medical evidence of their incapacity for work.
Overall we estimate that the numbers who will qualify for SDA on the easier rule will broadly equate with the numbers who currently qualify for NCIP. This includes those suffering from mental disorders, of whom the large majority are likely to have been handicapped from birth or in early childhood.
This amendment is aimed at raising the qualifying age for entitlement to SDA simply on a test of incapacity for work from age 20 to 23. As I pointed out in the debate on a similar amendment moved by the noble Lord, Lord Stallard, in Committee, those who would mainly benefit from such a concession are not the congenitally handicapped but those who first become incapable of work between age 20 and 23 and who for one reason or another find themselves without an adequate contribution record. Most of those involved would be married women bringing up a family. We have given this considerable thought and age 20 is not, as has been suggested, a random selection. It has been carefully worked out to give those who are congenitally ill the best chance of receiving this benefit.
849 We have previously estimated that, based on the proportion of married women contributors who receive invalidity pension, the extra costs of moving the age limit to 25 might amount to around £10 million a year. And on this basis the extra costs of moving to age 23 could amount to something in excess of £5 million a year, even taking account of possible savings in supplementary benefit.
The noble Lord, Lord Stallard, has raised the question of the disincentive effect of the age 20 rule. This of course is an argument which would apply wherever the age limit were to be set. The only way to solve this problem is not to have an age limit but, as noble Lords know, this is not possible at the moment. In practice I think that the problem may have been somewhat exaggerated since the normal linking rules which will apply to the new benefit will allow a disabled youngster to have a reasonable attempt at work without fear of losing benefit title. In particular, there should be no disincentive for someone who has qualified for SDA under age 20 to go on a youth training scheme after that age since he will be able to requalify for SDA on the same rules if he is still incapable of work when the course ends. Similarly, I do not accept that there will be any disincentive on employers to offer employment to disabled youngsters. My noble friend Lord Renton thought that moving the age to 23 was a disadvantage. I think he now realises that it is not.
The Earl of Caithness
My Lords, it is not what my noble friend thought. The noble Lord, Lord Stallard, mentioned the question of monitoring. We have discussed this before. We will monitor continuously and reports will be received on a regular basis. As the noble Lord is well aware, one of the best places for monitoring is this House and he can put down a Question on progress at any time. As I have said, we will monitor continuously and if we see something not working to our satisfaction we will take immediate steps to rectify it. Finally, as I have made clear on a number of occasions, we shall be prepared to reexamine the rules if our monitoring shows that this is necessary.
§ Lord Henderson of Brompton
My Lords, may I take up a phrase which was used by the noble Earl in reply to the noble Lord, Lord Stallard? If I took his words down correctly, I think he said that the only possible alternative to having an age limit is not to have an age limit. Is that correct?
The Earl of Caithness
My Lords, with the leave of the House, perhaps I may just correct that. In essence, that is what I said. What I was saying was in relation to the disincentive effect of age 20 was that there will be a disincentive wherever we put the age limit and the only way one can get round that problem is not to have an age limit.
§ Lord Henderson of Brompton
My Lords, further to that, may I suggest that there is an alternative? That is to include a provision in Clause 11 for the Minister by order to vary the age limit in the light of the 850 monitoring and the regular reporting that he has suggested. It might be that a variation in the age limit would be seen to be desirable. If the admittedly arbitrary figure of 23 or 20—any figure is arbitrary—is written into the Bill, the Minister will box himself in if it is not possible to vary this by order. I wonder whether that might not be a way out between the figure of 23 suggested by the noble Lord, Lord Stallard, the previously unacceptable 25 and the age of 20 which is put into the Bill. That kind of flexibility would be welcomed by all the organisations interested. I wonder whether the Government might not consider that suggestion sympthetically.
§ Lord Renton
My Lords, I should like to support the suggestion made by the noble Lord, Lord Henderson, and point out that under subsection (7) there are to be regulations anyway. That being so, it seems absurd that, when making those regulations, the power for which the noble Lord has asked should not be included.
§ Lord Mottistone
My Lords, with the greatest possible respect to my noble friend, this is a Report stage. I think he has spoken to this amendment already.
§ Lord Denham
My Lords, under our rules of order, my noble friend can only have the leave of the House to put right something that may have been taken amiss, but he cannot make another speech at Report stage.
§ Baroness Masham of Ilton
My Lords, as I have not spoken, perhaps I could just add something to take up the point made by the noble Lord, Lord Henderson of Brompton. I feel that, as the problems of disabled people are so complicated, a bit of flexibility would be a very good thing. Therefore I should like to add my support to his suggestion.
The Earl of Caithness
My Lords, with the leave of the House, I think that the right solution is to leave the age of 20 and let us see how the monitoring works. If it does require a fundamental change thereafter, we can reconsider it.
§ Lord Stallard
My Lords, I had hoped from the excellent and constructive suggestions that have been forthcoming in the course of this short debate, that the Minister would have felt able to move in the direction of either one of them, either the 23 or the excellent suggestion put forward by the noble Lord, Lord Henderson. There was an absence of that kind of commitment from the Minister. In fact, he almost wrapped up all of his reasons in the same old phrase that we get all the time—"the cost". I was waiting for this, the inevitable reason for the rejection of all the amendments—that the cost is too high. This is one 851 reason why I felt that reducing it to 23 might make it a bit more attractive because it would be slightly cheaper. That seems to be the sole criterion for some of the objections to these amendments.
Even if I accepted the basis of the cost, which I do not—because I have never yet been given a breakdown of the costs, and of the saving which would be made in supplementary benefits and other kinds of benefit if the amendments were made—I feel that, in view of the unsatisfactory reply and the strength of feeling that I have and which I know exists in other quarters, I am reluctantly forced to divide the House on the issue.
§ 9.44 p.m.
§ On Question, Whether the said amendment (No. 24) shall be agreed to?
§ Their Lordships divided: Contents, 41; Not-Contents, 54.852
|DIVISION NO. 5|
|Airedale, L.||Ingleby, V.|
|Attlee, E. [Teller.]||Jeger, B.|
|Banks, L.||Kagan, L.|
|Barnett, L.||Lloyd of Kilgerran, L.|
|Bathurst, E.||Mackie of Benshie, L.|
|Darcy (de Knayth), B.||Masham of Ilton, B.|
|Dean of Beswick, L.||Mayhew, L.|
|Elwyn-Jones, L.||Molloy, L.|
|Ennals, L.||Mulley, L.|
|Gallacher, L.||Nicol, B.|
|Hanworth, V.||Pitt of Hampstead, L.|
|Hatch of Lusby, L.||Ponsonby of Shulbrede, L|
|Henderson of Brompton, L.||Renton, L.|
|Houghton of Sowerby, L.||Robson of Kiddington, B.|
|Rochester, L.||Tordoff, L.|
|Seear, B.||Underhill, L.|
|Simon, V.||Walston, L.|
|Stallard, L. [Teller.]||White, B.|
|Stedman, B.||Wilson of Rievaulx, L.|
|Stoddart of Swindon, L.||Winchilsea and Nottingham, E.|
|Taylor of Blackburn, L.|
|Airey of Abingdon, B.||Hailsham of Saint Marylebone, L.|
|Alexander of Tunis, E.|
|Avon, E.||Henley, L.|
|Belstead, L.||Hornsby-Smith, B.|
|Boston, L.||Kinnaird, L.|
|Brabazon of Tara, L.||Lindsey and Abingdon, E.|
|Brougham and Vaux, L.||Long, V.|
|Buckinghamshire, E.||Lucas of Chilworth, L.|
|Caithness, E.||McAlpine of West Green, L|
|Campbell of Alloway, L.||McFadzean, L.|
|Carnegy of Lour, B.||Margadale, L.|
|Cathcart, E.||Melville, V.|
|Chelwood, L.||Morris, L.|
|Cork and Orrery, E.||Mottistone, L.|
|Craigmyle, L.||Murton of Lindisfarne, L.|
|Crathorne, L.||Norfolk, D.|
|Cullen of Ashbourne, L.||Rochdale, V.|
|Davidson, V.||Saltoun, Ly.|
|Denham, L. [Teller.]||Skelmersdale, L.|
|Drumalbyn, L.||Swansea, L.|
|Elliot of Harwood, B.||Swinton, E. [Teller.]|
|Elton, L.||Thorneycroft, L.|
|Ferrier, L.||Trumpington, B.|
|Gainford, L.||Vaux of Harrowden, L.|
|Gardner of Parkes, B.||Vickers, B.|
|Glanusk, L.||Whitelaw, V.|
|Glenarthur, L.||Wise, L.|
|Gray of Contin, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.853
§ 9.50 p.m.
Lord Ennals moved Amendment No. 25:
Page 17, line 6, at end insert—
() will incorporate an Assessment Code to be approved by both Houses of Parliament bringing together the conditions set out in paragraphs (a), (b), (c) and (d)(i) and (ii) of subsection (7), taking into consideration the special problems of—
§ The noble Lord said: My Lords, I should like to start by thanking the noble Lord, Lord Glenarthur, for an extremely helpful hour or hour-and-a-half that a number of noble Lords and Baronesses had with him following the Committee stage. It is following from that discussion that this amendment has been tabled, in not only my name but also the names of others.
§ The purpose of this amendment is clear. We want to see an assessment code which will bring together all the circumstances which will he taken into consideration, some of which have been listed under earlier paragraphs of subsection (7). We draw particular attention to the mentally disordered, to persons suffering from disabling conditions which lead to intermittent or fluctuating conditions, and to those undertaking further education courses—a subject which we have already discussed.
§ Before coming to the nub of the amendment, I cannot refrain from repeating how much I believe that, if the Government had taken the opportunity of widespread consultation with the organisations representing disabled people, much of what I now regard as misunderstandings would not have occurred. The fact that after the departmental study was published the Bill was out within a day, meant that it was almost certain that without consultation there would he real uncertainties among those organisations representing disabled people.
§ I say straight away that we on these Benches—and I think the whole House—welcome the severe disablement allowance as a step in the right direction. I think that all our political parties are committed to the concept of an allowance that will eventually help all significantly disabled people. Many of us see this as the first step and we believe that, gradually, as resources become available, the terms and conditions w ill be eased and the percentage of disability will be lowered. so that we shall have a new form of disability allowance. Therefore, it is important, first, that at this stage we get it right, if it is to be the beginning of something new; and, secondly, that it is fully understood. The purpose of this amendment is not to seek to change the mind of the Government. The Government's mind has been made clear partly by very helpful assurances given by the noble Lord, Lord Glenarthur, in Committee on 16th June, and also at a further separate meeting to which reference has already been made.
§ The real argument for setting out a separate assessment code is that it appears to the organisations concerned—and, perhaps, it is a worry that may still 854 stick with some noble Lords—that, at the moment, the rules are too inflexible and too closely linked with industrial injuries and war injuries, which one must accept, and which the noble Lord the Minister accepts, are quite different from congenital conditions, mental handicap and mental illness, few cases of which result from industrial injuries or war injuries. The feeling that many of us had before, during and after the meeting with the noble Lord was that many of our worries had been met, but that it would be much easier for the new disability benefit, the SDA, to be understood if it was set out in a separate assessment code.
§ I have to say—the noble Lord will, I am sure, tick me off for saying it, but it will not be for the first time—that I do not know whether the scheme had been worked out in advance and kept a close secret or whether the scheme has taken shape as we have put questions to the Minister and as answers have been given, which are not included, of course, in legislation. Many of us have sought in Committee to include some of these factors in the legislation, but clearly we cannot do so.
§ Perhaps I may give a number of cases where assurances have been given, most of which were not included in the Bill but which, if included in a separate assessment code, would make them much more easy for disabled people, and the organisations that represent them, to understand. We also feel that, if codified, understood and generously administered, they could form the first stage of the kind of disability allowance that would be accepted by all political parties.
§ The examples of assurances that I want to give are, first, that those registered as blind or partially sighted will he considered to be 80 per cent. disabled—a very important statement affecting a very large number of people. Second, that intermediate or fluctuating conditions, such as epilepsy or multiple sclerosis, will be assessed on the basis of the average degree of disability over a given period, a situation very different from that which is normally confronted by those who have to determine the percentage of disability in industrial injuries or in the war pension field. Third, that the percentage degree of disablement will reflect the way that the disability affects the individual's ability to live and enjoy life. compared with a normal person of the same age and sex. Again that is a very important concession for the congenitally disabled. Fourth. that there will he a system of automatic reassessment. Fifth. that the principles of assessment will he redefined and codified. Sixth, that the scheme will he monitored, particularly throughout the firs two years of operation.
§ The noble Earl, Lord Caithness, said that the scheme will be monitored virtually every day. I can visualise him going into his office first thing in the morning and monitoring it. However, the noble Earl said in the discussion which we had both with him, the noble Lord, Lord Glenarthur, and with Mr. Tony Newton, that throughout the first two years of operation the scheme will he monitored. Seventh, and finally, there has been an assurance that special provision will be made for those on courses or youth 855 training schemes. This is something which we discussed during our debate on an earlier amendment. Helpful explanations were given tonight, although we were not satisfied.
§ Therefore the argument is quite simple: that all that has now been explained to the House and which has relieved some, though not all, of the worries of Peers on both sides of the House should be set out in an assessment code which should then be brought before and approved by both Houses of Parliament. It is in that sense that I beg to move the amendment.
§ Lord Banks
I should like, very briefly, to support the amendment. At the meeting with the Minister, to which reference has already been made, there was general agreement that the inclusion of an assessment code was essential. It became apparent that there would be a document of that kind in existence and it seemed right that there should be a reference to it in the Bill. I very much hope that the Government will find it possible to accept the amendment.
§ Lord Glenarthur
My Lords, first may I say that I share the desire which underlies this amendment to increase the understanding of the general public and of those organisations representing disabled people about SDA, and in particular about the way in which the disablement test will apply. In this connection, I hope that the explanations which I have already given at earlier stages to your Lordships and which have also been made in another place, and in meetings and correspondence with the various voluntary organisations, will have gone a long way towards easing the concerns which have been expressed.
Although I appreciate what lies behind the moving of this amendment by the noble Lord, I am not exactly clear about what, as drafted, it is intended to achieve. It would provide for regulations to incorporate an assessment code which would not only deal with the assessment of disablement but which would also apparently include much of the general detail relating to the determination of claims for SDA. If this is what the noble Lord, Lord Ennals, has in mind, this would seem to be the equivalent, for example, of making the S Manual part of the supplementary benefit regulations. I am sure that your Lordships would accept that this is not something which Parliament could or should consider.
If, on the other hand, the noble Lord is mainly keen on ensuring that there should be a published code which incorporates matters relating to the assessment of disablement, then I think that I am in a position to give the reassurances he is seeking. An assessment code does in fact already exist in the form of the handbook for industrial injuries medical boards. This is a published document available through HMSO bookshops. There is a comparable document for war pensions, which is not published.
The industrial injuries handbook reproduces in a more convenient form the various legislative 856 provisions relating to the award of industrial injuries benefit, the adjudication arrangements and the way in which disablement is to be assessed. It also covers the procedural arrangements. It will clearly be necessary to modify the existing handbook to take account of SDA, and we shall be considering especially whether the guidance to our doctors should be expanded to cover the assessment of particular illnesses or diseases which have not hitherto figured very frequently in cases arising in the industrial injuries scheme.
Indeed, as much of the present handbook is concerned with the relevance of disablement to particular causation, and this will not be at issue for SDA, we intend to prepare and publish a separate handbook or assessment code dealing specifically with the new benefit. Such a document will not only be of benefit to the department's doctors but it will also serve to increase the understanding of those representing disabled people. With this in mind, it is our intention to consult with the various voluntary organisations as part of the drafting process.
I do not think that I need go again into the principles of assessment for industrial injuries disablement benefit. I hope that what I have said will be enough to reassure the noble Lord on that point. I believe he will accept that this is, in a way, a further advance on what we discussed a few days ago. I hope that on this occasion he will not press his amendment.
§ Lord Ennals
My Lords, I have no doubt that this is a very great advance on the situation and I am extremely grateful to the noble Lord for what he has said. As I understand it, there is already a handbook for industrial injuries and there is a comparable handbook, although in a different form, for war benefits. I was saying that there should be a separate, third, handbook or whatever one might call it, to deal with the new benefit.
As I understand it, the noble Lord has said that that is the Government's intention now. It may be that there was some additional benefit, which I had not yet realised, in the discussions we had, which led the noble Lord to make the announcement he has made this evening. The handbook will presumably be published and there will be consultations with relevant organisations. That is extremely important. With those assurances, I certainly do not wish to press this matter any further because the noble Lord has said that he is going to do what I sought to ask him to do in the amendment.
§ Lord Ennals
My Lords, unless there is disagreement among any of my supporters, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.857
§ 10.4 p.m.
Baroness Gardner of Parkes moved Amendment No. 26:
After Clause 11, insert the following new clause:
§ ("Extension of invalid care allowance to married and cohabiting women.
. The following words shall be deleted from subsection (3) of section 37 of the Social Security Act 1975:
and a Woman shall not be entitled to any such allowance, if—
§ The noble Baroness said: My Lords, this is essentially a probing amendment on a topic which I brought before this House at an earlier date in the form of a Unstarred Question on invalid care allowance and housewife's non-contributory invalidity benefit. These two benefits as they were then structured were, I considered, discriminatory. The Government have now removed the element of discrimination in the invalidity benefit by replacing it with the severe disablement allowance. This means that the only remaining benefit that discriminates is the invalid care allowance. Married women only are not eligible for this benefit—no matter who or how many invalids they are caring for.
§ In 1981 the Conservative Government widened the scope of the invalid care allowance which, until that time, had required a very close relationship for someone to be able to claim it. But this was widened in 1981 to cover anyone caring for a disabled person except a married woman or a cohabiting woman who, in this instance, is classified in the same way as a married woman for the purposes of this benefit. If your Lordships look at the wording that the amendment sets out, you will see that that is why I am bringing in the cohabiting woman. One or two of the noble Members of this House have asked me why I am particularly dealing with that point: it is because the classification is identical.
§ The present benefit is £20.45 per week and is payable to someone who does not have full employment but instead cares for a disabled person who is in receipt of an attendance allowance. It would seem appropriate to me that the party that has done much to make this benefit available to so many who are caring for an invalid should remove this present discrimination against married women. The present eligibility presumes that a woman does not work nor add to the family income and is freely available to take on the burden of caring.
§ As I have mentioned earlier, it does not matter for whom she is caring—child, parent or husband—she is treated as being supported by her husband and dependent on him. The truth is that many women have given up well paid jobs to shoulder burdens which would certainly otherwise fall on the state; and indeed they also lose their right to have national insurance contributions credited for them and in this way the value of any retirement pension that they might have been accumulating in their working time is not safeguarded. That in itself is quite a loss.
§ Seventy-five per cent. of the carers in society are married women. Women have always been willing to 858 care for those they love and those who need help. But this distinction of ineligibility for this benefit is discriminatory and possibly an infringement of the EEC directive. In January 1985 invalid care allowance will be the only benefit in Europe that specifically excludes the entitlement for women of working age because of their marital status. Indeed, warnings have been given that test cases against the United Kingdom may be brought to the European Court of Justice in January 1985.
§ When this matter was raised in this House on the occasion of my Unstarred Question the Government indicated that money was the main reason for not changing the benefit to include married women. May I ask the Minister, is this still the case? What is the current assessment of the extra cost, bearing in mind that in many cases the payment of invalid care allowance would not represent an extra payment as the household is very often in receipt of supplementary benefit already and this would simply be a matter of who would be getting the money, rather than the amount of money coming into the household?
§ If, however, the Minister tells me that costs would not permit this change to come into operation retrospectively—that is to cover all the present carers, and I know there are large numbers; and it may be that this amendment is not correctly worded to cover this point—could it not be implemented to benefit those married women who would be giving up work from now on to become carers, or those women who are already carers in receipt of invalid care allowance who plan, or would like, to marry but are not willing to do so because of the loss of this benefit? That, I think, deals with a point that many people do not realise: you can actually he a single woman receiving this benefit and, because you marry, you lose the benefit. That I think is a very hard thing for the single person caring for perhaps an elderly relative.
§ I think the Government would really wish to be able to help these women and I hope that they will look at the point of a possible gradual phased introduction of the benefit for married women.
§ It should not be overlooked that this might help married women who are considering whether or not they can afford to give up work. It might just tip the balance and enable them to decide to become full-time carers, which is certainly financially very much in the Government's interests. Where a woman says, "No, I will not take on this caring burden, but will continue in my job because it is in my interests to do so and I want to build up my retirement pension", the state carries a very much greater financial burden than where the woman chooses to give up.
§ Each carer in the community is making a great personal contribution. They should not, because they are married women, have the indignity of finding that they are treated as only dependent on their husbands and as a readily available source of free labour. The fact that were the positions to be reversed and a husband who gave up work to care for an invalid wife would he eligible surely confirms that this is a discriminatory situation. I beg to move.
The Earl of Caithness
My Lords, I think at this point it is worth stating that the invalid care allowance 859 is not a payment for services; it is a maintenance benefit intended to compensate, to some extent, for loss of earnings.
The Earl of Caithness
My Lords, I know it is; it is exactly the point. I know that my noble friend Lady Gardner of Parkes has generated considerable sympathy for the principle of what she proposed in introducing the new clause. However, there are a number of factors which prevent me from giving her the answer she would like to hear.
I hope that your Lordships will forgive me if I remind you that when invalid care allowance was introduced in 1976 as an income replacement benefit, the then Labour Government thought it right to confine eligibility to men and single women for whom giving up work to look after an invalid meant losing their sole source of income, probably their career prospects, and much of their social life. As my noble friend has pointed out, we have, in fact, extended that.
§ Lord Ennals
My Lords, to save my making a speech in the course of this debate, may I say now that if the Labour Government had not introduced the allowance, it would not exist at all.
The Earl of Caithness
My Lords, the problems of loss of social life would be true in regard to some married women, too, I have no doubt, but I hope that noble Lords will acknowledge that the position of married women in general is much more variable and less clear-cut. Despite social changes, there is still a large number who would not in fact have been earning, especially where there are young children. In other cases, even where the wife has some earnings, the husband will also be providing for her to some extent out of his earnings, and where he is sick or unemployed (including, of course, those cases where it is the husband who is the disabled person to be cared for) he will normally be receiving a social security benefit and probably a "dependency increase" for his wife. That group of people would, therefore, gain little or nothing from this proposal.
Apart from any social considerations, I have to emphasise to your Lordships that there is a substantial cost factor. Implementation of this new clause would, we estimate, add over £60 million a year to the benefit cost of invalid care allowance which at present accounts for only £10 million. This increased cost takes account of offsetting savings on other benefits. I was fortunate, and privileged, to speak recently to the National Council for Carers and Elderly Dependants. In talking to them I found that they appreciated that this is a substantial extra sum and that in the present financial circumstances it is not a viable proposition.
Even if an additional £60 million a year were available, I am not convinced that an extension of the invalid care allowance to married and cohabiting women would be our first priority for spending it. There is a wide range of other equally deserving possibilities for consideration in terms of what is available for social security spending as a whole. There is also the question of whether, if additional funds were 860 available, we might do more for carers by means of services rather than by extending invalid care allowance. The simple fact is, however, that we do not have £60 million available so that any thoughts on how we might spend it are somewhat fanciful.
My noble friend Lady Gardner of Parkes referred to the EEC. There was an interim report on the Equal Treatment Directive issued earlier this year by the European Commission. That confirmed our advice that invalid care allowance is not within the scope of that directive. The Commission expressed a desire in the interim report to see invalid care allowance extended to married women but does so by analogy to benefits available in other countries which are similar to attendance allowance, not invalid care allowance. Attendance allowance is of course available equally to men and women. So far as we are aware, there is no allowance comparable to invalid care allowance in any other member state. I appreciate the concern that my noble friend has on this matter. Having talked to many of the carers last week, I share their concern; but at the moment I think that our arguments are quite strong on this matter.
§ Baroness Jeger
My Lords, I rise only briefly to express our support for this amendment. As my noble friend Lord Ennals has reminded us, this benefit was first introduced by a Labour Government and many of us were looking forward to its extension. I should just like to ask the noble Lord one question. When he gives the estimated cost, has he taken into account the offsetting expense involved if all these caring married women send their senile old mothers-in-law into institutions and long-stay hospitals? Surely there is a great financial benefit, and not only a social benefit, for many of these old and invalid people when they are cared for at home. That ought to be offset against the sums which the noble Earl has mentioned. I see that the noble Earl is nodding. Perhaps he has tried to cost—it must be difficult indeed—the savings to the state of all the voluntary caring work that is done in thousands of homes up and down the country by women who, as the noble Baroness has reminded us, often give up their own prospects of marriage and find that by the time they have cared for their elderly parents they themselves are about ready to qualify for their old age pension without having built up proper contribution records.
This is a very serious social problem, and if the noble Earl cannot give us any hope tonight I hope he will at least let us know that the Government understand the repercussions throughout society on both sides of the balance-sheet regarding this problem and that we may look forward to further consideration being given to it.
§ Lord Mottistone
My Lords, I should like very much to support this amendment of my noble friend. I was extremely disappointed at the negative approach of my noble friend on the Front Bench—
§ Lord Mottistone
It is very negative, my Lords. I think it is very important that it should be realised by Government as a whole—this is not a party matter because, as governments come and go, this situation 861 will not go away and the sooner they adjust their attitudes in the recesses of Whitehall to the fact that one day this is one of the things that has to be done—and the sooner the better—the better.
§ 10.20 p.m.
§ Lord Banks
My Lords, I should like to join with others who have spoken in support of this amendment. It seems to me, as the noble Lord, Lord Mottistone, has said, that this discrimination (which is what it is) will go in time. I wonder whether it would be possible for the Government to consider removing it in part. A government say that they do not have £60 million: but when governments say that they do not have money, what they mean is that they have different priorities. They are spending their money on something else, and one is not quite sure whether they are justified. One is certainly not justified in saying that out of the large amount of money they spend every year this discrimination is so unimportant that £60 million cannot be found to put it right. But if that is so, then surely a start could be made and it could begin to be removed perhaps by taking certain age bands so that within a short time it could be completely eliminated but the cost would be spread over. It would not be so heavy a cost immediately on the Government. Perhaps they would consider tackling it in that way. However, I should like to repeat again what the noble Lord, Lord Mottistone, said, that I am quite sure the time will come when this discrimination is eliminated.
§ Baroness Masham of Ilton
My Lords, is it not a good reason now to rectify the omission which my noble kinsman said there was? These people may be too proud to ask for social security. From a health service point of view, the noble Earl knows very well the tremendous pressure on the provision of beds in the National Health Service.Would it not be of benefit to give as much encouragement as possible to keep the home together? There is a breaking point and the noble Baroness, Lady Gardner of Parkes, has said that the scales tip very easily. I strongly support this amendment.
Baroness Darcy (de Knayth)
My Lords, I shall be brief but firm in my support. The noble Baroness, Lady Gardner of Parkes, made a very good case for her amendment. It seems discriminatory and very unfair when you think of the cost in financial and human terms to the carer. One must consider the great saving to the state by keeping disabled people looked after by carers at home. It must cost far more keeping them in hospital or in homes.
The noble Earl, Lord Caithness, demonstrated some extraordinary ideas about the difference between the working lives and social lives of married women and of the rest of society. The noble Baroness, Lady Garner of Parkes, said that 75 per cent. of carers are married women. This means that the big majority of people doing this vital, sometimes thankless and I think always emotionally and physically draining job, do not receive the ICA. I do hope the Government will think again and may be able to offer a glimmer of hope of progress even if they cannot commit themselves all the way now.
§ Baroness Gardner of Parkes
My Lords, I thank those noble Lords who have supported me in this amendment which, as I have said from the beginning, was a probing amendment. However I was not very happy with the answer, which I thought was rather woolly. I think the points made by the noble Baroness, Lady Darcy (de Knayth), about the statement made on the lives that women lead were exactly right. Whoever prepared that part of the statement was very out of touch with what is going on in the world. That really stunned me. I do not think the Government appreciate the reaction of women to this sort of issue. Everyone accepts that there is not £60 million available. We would he prepared to sit back and wait for a very gradual, even the most minimal, move to see this situation gradually changing. That is where I am rather disappointed. I am also particularly disappointed that because the advice at the moment is there is no problem with the EEC directive this Government would sit back and wait until the court cases come in 1985 and then perhaps be forced to make a much more dramatic change than we could see now by a gradual introduction.
I again appeal for something to be done about the protection of pension rights for these women who give up their earning opportunity in order to care for a loved one. I will not press this amendment tonight but I will ask the Minister to read very carefully the content of what has been said. I hope that he will look at this matter again and come back in due course. With that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 6 [Protection of pensions]:
Lord Morris moved Amendments No. 27:
Page 53, line 33, after ("above") insert ("but excluding any part of such excess which represents increases in the guaranteed minimum occurring after the termination of employment date insofar as such increases relate to any part of the guaranteed minimum which accrued prior to the 31st December 1984;").
[Amendment No. 28:]
Page 56, line 4, after ("above") insert ("but excluding any part of such excess which represents increases in the earner's guaranteed minimum occurring after the termination of employment date insofar as such increases relate to any part of the earner's guaranteed minimum which accrued prior to the 31st December 1984.").
§ The noble Lord said: Before I speak to the amendment itself, I think it would be helpful to the Committee if we remind ourselves of the second report of our Procedure Committee of 1976–77. That laid down clearly that the minimal intervals to be observed between the stages of public Bills, and in respect of all Bills of considerable length and complexity—of which I submit this is one—should be 14 days between the end of the Committee stage and the start of the Report stage. As your Lordships are aware, there was less than seven days' interval between these two stages. I think that it would be most helpful if my noble friends on the Front Bench would at least explain why the House has been treated in this way. Furthermore, it is the duty, by virtue of this recommendation, of the noble Lord who is in charge of the Bill to give notice that the minimum intervals have been departed from. This was not done by the Government, and it should be explained.
§ In speaking to the amendment, I want to make clear at the outset that I am totally in favour of the principle of the object of this part of the legislation—namely, to 863 abolish franking. The amendments that I have tabled do not frustrate this principle in any way. What is wrong is that the changes are retrospective to cover pension rights earned since 1978. The provisions of this schedule affect future early leavers. Instead of making it apply only to pension rights they earn in future ears, the Government want it to apply to pension rights that they have earned in the past as well. I believe that my noble friend, the Chief Whip, wishes to interrupt—
My Lords, I am sorry. This is entirely wrong in principle. It places additional costs on occupational pension schemes which some of them will be unable to meet. Some pension schemes will have to be reduced, as my noble friend Lord Glenarthur blandly admitted at Committee stage. He said at col. 224:If the scheme is not properly funded, then all will suffer".Suppose we have a pension scheme where assets held are estimated to be just sufficient to meet the pension rights which members have earned in the past. We would all agree, I think, that such a scheme could be deemed to be properly funded. When this proposed legislation takes effect, everyone who leaves in the future before pension age will have to be provided with an additional pension. Clearly, the assets will no longer be sufficient to meet the liabilities. There are only two alternatives left for the scheme. Either more money must be paid into the scheme or pensions must be reduced. It is easy to say that more money must he found but it is not always available.
My noble friend Lord Glenarthur was kind enough to say at the end of the Committee stage that he would write to me on these matters, which he did. I am grateful to him for arranging that the letter be delivered on Friday afternoon. It was considered with great care over the weekend. My noble friend mentioned that many pension schemes at present have surpluses arising from investment conditions of recent years and that these surpluses could be used to meet extra costs. But there are many schemes, perhaps the majority, that do not have surpluses. The insurance companies which insure most of the schemes may have surpluses. But in how many cases will they have passed them on to the schemes? It surely depends on the policy terms and there will often be cases where the scheme will not have benefited at all. If the Government are relying on scheme surpluses, I beseech them to think again.
To test this point, may I ask my noble friend Lord Glenarthur whether he can tell me how many of the country's 20,000 contracted-out pension schemes are at present in surplus? What we are talking about is that for some schemes, it is a not insignificant cost burden. At a time when companies are still struggling to survive, is it sensible to require them to pay more money into their pension schemes? What about pension schemes that become closed because the employer goes out of business after the passing of this Act? My noble friend Lord Glenarthur pointed out in his letter: 864In such schemes, contracted out employment for the members must be terminated before the legislation comes into operation. There is, therefore, complete exemption from the anti-franking legislation by reason of Section 41C (6) which is included in Schedule 6 to the Bill. In other words, where contracted out employment has ceased before the anti-franking legislation becomes effective, no extra burdens are imposed".If the company goes out of business soon after the legislation comes into effect, before it has been able to pay for the additional pensions, who will meet the extra cost? The reality is that the pensions will have to be reduced: and yet we were talking about a pension scheme which at present is properly funded. How, then, does my noble friend Lord Glenarthur reconcile that with the statement he made at Committee stage—that if the scheme is properly funded, no one will suffer?
My noble friend said earlier that, as members and employees have had reductions in national insurance contributions since April 1978—which reductions allowed for the cost of revaluing the minimum pension—there was every justification for the legislation to take effect from the same date. Is he saying that a mistake was made in 1978? Is he saying that members and employees ought to have realised this, even though the Government did not, and should have been saving up a little money to meet this liability which the Government were going to impose one day in the future? Manifestly, that would be absurd.
The truth is that all contracted-out schemes have to provide guaranteed minimum pensions which in total are at least as great as the state pension, including the revaluation element. No one has had the benefit of a reduction in national insurance contributions without having to provide a pension, at least equivalent in value, in the occupational scheme. What we are discussing here is the extra pension, over and above the guaranteed minimum pension. The Government are now coming along and saying that the extra pension has to be larger than was laid down in 1978, and not just from a current date, but in respect of each year's pension rights since 1978.
In his letter my noble friend said there was a further safeguard if the scheme found that it was unable to meet its liabilities. I quote:If it then winds up, the anti-franking legislation ceases to apply and the scheme's normal winding-up rule is allowed to produce benefits according to its stated priorities. The anti-franking legislation does not override scheme rules where the scheme is winding up".What I am suggesting is that the current position will drive a considerable number of schemes into winding up. I am certain that that is a position this House should not like to see.
Even if the position is as my noble friend has stated, it does not remove the fundamental objection to the retrospective element inherent in the proposed legislation. Clearly, the net result of retrospection could be that, in order to escape the unfair burden of cost thus imposed, a number of properly funded schemes will be wound up. I cannot believe that this is likely to be in the best interests of the members and pensioners concerned.
I am cutting my speech short because of the very late hour. This matter is of such importance that I should be very grateful if my noble friend would reconsider it. I am sure that I have the support of many of your Lordships.
§ Lord Glenarthur
My noble friend Lord Morris started by asking why the stages of the Bill had been compressed. It is quite true that the interval which has elapsed since the end of the Committee stage is only seven days, whereas the recommended minimum interval is 14 days. I regret very much any inconvenience that, as a result, might have been caused to your Lordships, but I think I should point out that it was necessary at the Committee stage to arrange for more time to be set aside than had originally been contemplated. In particular, the very last part of the Committee stage was deferred until a week ago; but all the rest of the Bill had been considered by 21st June, since when some two weeks and five days have elapsed.
Moreover, the Bill was not amended in Committee, and therefore there was no need for your Lordships to await the publication of a reprinted Bill before preparing amendments for the Report stage. I ought to say also that this procedure is one which will have been agreed by the usual channels. I could go on to tell your Lordships that the situation several years ago could have been much worse than that which now exists.
Returning to the amendment, let me first explain so that we are quite clear on the matter exactly what we are talking about. The anti-franking legislation is not retrospective in so far as previous early leavers are concerned. It will affect only future leavers or those retiring before state pension age. Where the legislation is retroactive is for the future early leaver in relation to his total guaranteed minimum pension which has accrued since 6th April 1978. It will ensure that the statutory revaluation of that guaranteed minimum pension is not achieved by means of eroding or reducing other benefits which the member was entitled to expect to receive over and above that guaranteed minimum pension. An occupational pension scheme which practises franking could be said to be practising a form of robbery—robbing Peter to pay Peter. Many early leavers when they found out what would happen to their benefits used much stronger language in condemning the practice of franking.
Now I turn to the retrospection. I have explained more than once today that I respect the views held by the noble Lord and others about retrospective legislation and I know that there are many in this House who quite rightly object to retrospective legislation in principle. In this instance, however, I really do suggest that it would be wrong if the legislation were not retrospective.
The guaranteed minimum pension and its revaluation to a state pension age are calculated by the Government Actuary to be financed from the reduction in national insurance contributions enjoyed by contracted-out employers and employees. That reduction has obtained since 6th April 1978. If a scheme has chosen to adopt franking and recover the cost of the guaranteed minimum pension by that means as well, then what was the purpose of the rebate on national insurance contributions? The scheme which practises franking is taking money from the National Insurance Fund to finance the guaranteed minimum pension and reducing the member's benefits as well. We are not seeking to provide early leavers with an extra benefit; we are intending solely to ensure that they get what they may reasonably expect to get.
866 Franking is a complex subject. I am sure that both my noble friend Lord Morris and I can agree about that. Its mere complexity has ensured that most scheme members did not even realise it happened. Our proposals on disclosure of information will I hope prevent such a situation happening in future. I have even heard of some employers who, when the abolition of franking was mooted, asked the insurance company responsible for their scheme whether it actually involved franking!
The Government Actuary has estimated that the total cost of improvements for early leavers—and by that as well as anti-franking I mean the early leaver legislation announced by my right honourable friend the Secretary of State on 11th June—will add between 1 and 2 percentage points to the overall payroll cost of a pension scheme. In that figure it is suggested that the anti-franking element might amount to perhaps half of 1 per cent. When we published our early leaver proposals we made it quite clear that we realised that extra costs could be involved. The Government did not chose to prescribe how they should he met. Given the flexibility of schemes, we wish to leave it to employers, employees and their advisers how best to meet the new situation.
The abolition of franking does not involve a scheme in paying out additional money in benefits now. In due course, it will increase a scheme's liabilities depending on the age of the early leaver and the amount of his guaranteed minimum pension at the time of leaving. The scheme, though, has ample time to consider how best to adjust not only to the anti-franking legislation but also to the other early leaver improvements which will feature in further legislation as soon as possible. It is also, I suggest, true that pensions schemes and insurance companies have been enjoying very favourable investment conditions over the past few years.
If there is a scheme which for future early leavers considers that it cannot meet the new burdens either from increased contributions from employers or employees or by revising its benefit package, then of course it is open to that scheme to close as my noble friend suggested. If in extreme cases it winds up, then the anti-franking legislation does not apply. The normal scheme priority rules on a winding up would be left to have their own system of priorities. That. I suggest, is the ultimate protection.
My noble friend's amendment, tabled, I understand, to protect a hypothetical scheme in a funding difficulty, is not only misplaced, but. I venture to suggest, ill-conceived as well. It would have the effect of disadvantaging thousands of future early leavers. Instead of being protected from their benefits being reduced to meet the statutory revaluation of their whole guaranteed minimum pension, schemes will be allowed to continue franking to cover revaluation of that portion of the GM P which accrued before the 31st December 1984. That means that the effect of the anti-franking legislation would take years to build up, during which time people would be leaving with little or no protection against this practice, and I honestly cannot believe that that is what my noble friend wants. We will be faced with thousands and thousands of early leavers receiving pensions from their schemes of no more than the guaranteed minimum pension. Yet 867 they would have paid in contributions rightly expecting to receive benefits on a much larger scale. They would have been better off to stay in the state scheme and not be members of an occupational scheme at all.
We are offered voluntary action which would, wherever possible, match the Government's wishes; but what if it did not? How much voluntary action have we had so far to improve the benefits of the early leaver or to abolish franking? The Occupational Pensions Board completed its excellent report in June 1981, yet I am not aware of any significant moves towards implementation on a voluntary basis so far.
I suggest that this is another instance where the occupational pension schemes are not acting in the best interests of all their members. The assets of such schemes exceed £100 billion. The Government are committed to a partnership with the pensions industry but that partnership must be based on a wish to treat all members fairly. The partnership also must be one where the Government will not necessarily give way and if they believe that they are right, as they do in this case, then they must proceed with their legislation to protect the interests of the individual.
My noble friend asked how many of the 20,000 contracted-out schemes are in surplus. All, if they are contracted-out, must be able to meet the contracting-out liabilities. They may or may not be in surplus but they certainly cannot be in deficit.
Franking is quite indefensible, and I hope that I have convinced your Lordships in this instance that the strictly limited retrospection is not only justified but essential. I could go on to say that one of my regrets is that we have not been able to take this action earlier, and I hope that my noble friend will withdraw his amendment.
§ 10.43 p.m.
§ Baroness Jeger
My Lords, in our view what is wrong with the matters before us is that they should not be in the Bill at all. Late at night we have tacked onto a very complex Bill matters concerning these pension rights which are of great public interest and concern to every working person in this country. We are inserting five new sections after Section 41 of the Social Security Pensions Act 1975 without full and proper discussion. As I said on an earlier occasion, this habit of legislating by producing a mix-up of Bills of unrelated subjects is not the best way in which to serve Parliament and to serve this House in particular.
I agree with what the noble Lord, Lord Morris, said about the problems of retrospection. I appreciate that the Minister has had a very difficult job in dealing with a complicated matter which, as I said, in any sane assessment has no place in this Bill at all. Can he give an assurance that the changes will not result in anyone's pension being reduced? Is it possible that some people's pensions will be reduced?—because this will cause great anxiety. I do not think that this important matter has had the discussion that it deserves.
§ Lord Banks
My Lords, I have made it clear that we on these Benches are opposed to the practice known as 868 franking, but I think that we ought to be clear exactly what franking is. Very simply it is this. If you have a contracted-out scheme where the employer and the employee pay lower contributions because they are contracted-out, an obligation is placed on that scheme to provide a guaranteed minimum pension. That is the obligation which the scheme and the employer running the scheme have to the Government. The obligation that they have to the member is to provide benefits for that member according to the terms of the pension scheme, and the member was aware of those terms when he joined.
Most occupational pension schemes provide considerably more than the guaranteed minimum pension. They are not obliged to, and indeed there is no obligation on anyone to run an occupational scheme at all, but they run occupational schemes which provide considerably more than the guaranteed minimum pension. If somebody leaves then the guaranteed minimum pension which they have earned up to the time of leaving has to be uprated every year according to a given formula in order to offset inflation.
Obviously, as that guaranteed minimum pension increases, so it can erode the balance of pension. If that balance of pension is not increased, or is not left entirely the same, it erodes it gradually so that in the long run you would just have the guaranteed minimum pension there because it had been increased every year, whereas the benefits under the scheme are not being increased every year because no obligation to do so was ever entered into by the employer. Some schemes are run on the basis of making sure that the balance at the beginning of the occupational scheme over the guaranteed minimum pension is maintained. In that case there is no franking. But in other cases the guaranteed minimum pension increases, so that it erodes that.
It is not really fair to call that robbery. After all, the two obligations are being fulfilled: the obligation to the Government to provide a guaranteed minimum pension, and the obligation to the employee to provide a pension according to the terms of the scheme. If the scheme says that so many sixtieths, or so many eightieths, of salary will be paid out, and if it so happens that applying that formula for this early leaver means that the scheme would provide him with what happens to be the same amount as the guaranteed minimum pension, then the obligations the employer has both to the Government and to the individual member have been fulfilled. But nevertheless there is a case for saying—and I support the case—that this ought not to be allowed by law; that the additional occupation pension should sit on top of the guaranteed minimum pension. That is what will happen when franking stops.
Now how is franking to be paid for? If you are saying that this will only apply to the future, then you increase the contributions, and you pay the contributions over those future years. But if you say it is going to apply to some years which have already passed, if you are going to take it back to 1978, then there is a sudden obligation on that fund. There must be more money in that fund immediately if that fund is going to be solvent, and is going to be such that it can be said to be in a position to meet all its liabilities. It 869 is that sudden burden which could put a pension scheme into difficulties. The Government Front Bench have not viewed that sympathetically enough.
I support them in their intention to do away with franking, but they have not considered properly the impact on some schemes of this sudden extra increase in funds which they have to put in because they have acted in a way which at the time that they did so act, whether we think it desirable or not, was perfectly legal, and they have met their commitments. I hope that the Government will think again about this and listen to the noble Lord, Lord Morris, who has a real point here that deserves much more sympathetic consideration.
§ Lord Glenarthur
My Lords, with the leave of the House, may I answer one point that the noble Baroness, Lady Jeger, raised? She asked whether anyone's pension would be reduced as a result of these proposals. Pensions can only be reduced if the scheme rules permit them to he reduced. It depends on the scheme. Most scheme rules refuse amendments which will cause a beneficiary to be worse off as a result of a change in the rules. To that extent future pension increases will be reduced without the proposals which we have included in this Bill. I hope that that answers the point that she raised.
My Lords, I am grateful to my noble friend for answering this very difficult subject so fully. I draw enormous consolation from the fact that he knows only marginally more than I do about it, and that is saying very little indeed.
My Lords, I am not referring to the noble Lord, Lord Banks. On the contrary, as noble Lords will be well aware, he is a great expert on this subject.
I will just deal with the last point that my noble friend Lord Glenarthur raised in answering the noble Baroness, Lady Jeger. He has quietly forgotten, in his answer to Lady Jeger's question, the point about force majeur. I will illustrate this by an example which is very important to our understanding of this matter. I do not want to prolong this discussion, but it is critically important. I am using exactly the same figures as my noble friend Lord Glenarthur used in his rebuttal to my argument.
Suppose, for example, we have a company with 200 employees, and a payroll of £2 million per annum. The company has had a fairly modest but properly funded pension scheme for the past 10 years. I am advised that the future liability, which would have accrued during the past 10 years in respect of the members and pensioners now belonging to the fund, could have a capital value of £1 million. Since the scheme is properly funded its assets also total £ 1million. It is in balance.
Now we have this legislation. If the change be restricted to pension rights accruing in future years there will be no problem. For example, if cost was of crucial importance, members could rely on both parts of the state scheme for their pension rights in respect 870 of future service and no further contributions need then be paid to the occupational scheme. But since the legislation is retrospective, an extra cost will arise for future—I repeat future—early leavers in respect of their occupational pension rights which have accrued in the past since 1978. I understand that the cost would be as much—and this is my noble friend's figure—as one-half of one per cent. of the company's payroll; but what he failed to mention was that that was for each of the six years since 1978 plus interest. This would amount in total to about 3 per cent. of the current payroll; in other words, a sudden immediate extra cost of £60,000. Suddenly the scheme has liabilities of £1,060,000 and its assets still total only £1 million. It immediately has become insolvent.
What my noble friend has not been able to answer is that the Government have no idea of the extent of the harm that this will cause. I am not suggesting that I know. I am certainly not suggesting that the National Association of Pension Funds—which has been so able in advising me on this horrendously complex subject—knows, either. However, there is no doubt in my mind, and there is no doubt in the Association's mind, that harm will be done. I am not suggesting in any way, as I said right at the very beginning, that I am against the absolutely correct philosophy of abolishing franking.
Now I come to the major point that my noble friend made in his rebuttal of my original argument, which is a very serious point indeed. By implication he was suggesting that as there was no voluntary move by pension fund managers or by the insurance companies voluntarily to abolish franking—or very little move indeed—then they are deliberately trying to avoid this responsibility and thus indirectly harm a proportion of the beneficiaries under the scheme; namely, the early leavers. Her Majesty's Government are deliberately accusing them of not looking after the best interests of those people.
If that is the case, then that is a very serious charge indeed; and I entirely agree with the Government's position with regard to this amendment. But it is so important that I had better take this amendment away and look at it and, if necessary, come back at Third Reading.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 28 not moved.]
§ Schedule 7 [Miscellaneous social security amendments.]
§ Lord Banks moved Amendment No. 29:
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: My Lords, the object of this amendment is to restore the link between long-term benefits and earnings. I moved this amendment at the Committee stage when it was Amendment No. 61 on the Marshalled List, but I withdrew it to consider what the Government had said, and also to allow the Government to consider what I had said.
§ The noble Earl, Lord Caithness, said that the ratchet effect—he did not actually use that phrase, but it is implicit in what he said—would lead to a very substantial 871 increase in cost. The ratchet effect is simply this. If you have the dual system that this amendment would reintroduce—the method which was introduced in the 1975 Act and later abandoned; the dual system where you increase long-term benefit in line with the increase in prices or in earnings, whichever is greater—then there is what is called the ratchet effect. That is simply that, when prices rise faster than earnings, the percentage of average earnings which the pension represents will increase, and, when earnings rise faster than prices, the percentage of average earnings will stay the same so that gradually the percentage of average earnings which the pension represents increases.
§ What I want to ask the Government is this. How serious is that ratchet effect in practice? If earnings rose faster than prices in every year or if prices rose faster than earnings in every year, there would be no ratchet effect at all, would there? I should like to ask the noble Lord if he would agree with me there. What then are the Government expecting to happen? In the document Population, Pension Costs and Pensioners' Incomes, which was published by the Department of Health and Social Security within the last fortnight, there is a note by the Government Actuary's department on the future cost of the state pension scheme.
§ That is based on the assumption that earnings will rise faster than prices by 1½ per cent. per annum. I asked at the Committee stage if the Government accept that. Do they accept the assumption? Do they base their decisions on it? I did not get an answer to that on that occasion. Now, if earnings rose every year by 11/2 per cent. more than prices, then there would be no ratchet effect; but, of course, there would be a higher cost than now on that basis. The noble Earl may say that the Government cannot afford that cost now, but he ought to consider this: if earnings rose every year by 1½ per cent. more than prices and pensions were linked only to prices, then the pension would steadily decrease as a percentage of national average earnings even though its purchasing power was maintained. I asked at Committee stage whether the Government were happy about that. I did not get an answer to that question.
§ Eventually, the total pension would be largely composed of the earnings-related portion. I asked at the Committee stage whether the Government would be happy about that. I did not get an answer to that. Would the Government not agree that, unless over the years pensions keep fully in step with earnings, pensioners will not get an equal share of any prosperity? Is that not so?
§ Would the noble Earl like to comment on the statement in the note from the Government Actuary's department to which I have referred that if, over the past 35 years, the pension had increased only in line with prices, its value in relation to earnings would have halved? Does that not indicate a problem which there is for the future on the present basis? Is it the hope of the Government that, although they cannot afford it now, at some time in the future they will be able to catch up with earnings completely? If that does not happen, pensioners will not have shared equally in increased prosperity. I beg to move.872
§ Lord Ennals
My Lords, as would be expected, I naturally totally support the amendment proposed by the noble Lord. Lord Banks. I think that one of the saddest things that was done when this Government came to power was the taking away of the right of pensioners to keep pace with rising earnings or rising prices, whichever was to their best advantage. Since wages are negotiated and usually marginally keep ahead—although, naturally, the Government wish it to be only marginally ahead, but inevitably they keep ahead or otherwise we would not have any inflation at all—it is inevitable, as the noble Lord said, that, if the Government stand by their policy of inflation-proofing only while earners are able to get something above the inflation rate, bit by bit, year by year, pensioners will fall behind.
It seems to me totally unfair to the retired population that they should see themselves not sharing in what is even a modest rise in living standards. I should like to hear the Government's long-term thinking on this, because there is no question that if this policy, which has survived for five years, were to continue for another 10 years, the gap between the standard of living of earners and the standard of living of pensioners would inevitably have decreased.
The Earl of Caithness
My Lords, this amendment, like the one discussed in Committee, 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. This is what the noble Lord. Lord Banks, referred to as the ratchet effect.
The amendment pays no regard to the ability of the country to meet the massive increase in costs which would arise. Expenditure on retirement pensions alone represents almost half of all social security expenditure, or about one-eighth of public expenditure. Each 1 per cent. increase in pensions and other long-term benefits costs about £320 million. There would thus be a very heavy additional burden placed on the economy by way of increased national insurance contributions and higher taxes. We believe that it would he irresponsible to provide for statutory earnings linking without regard to the effect on the economy.
We have, however, made it clear that we shall do our best to ensure that pensioners will share in the prosperity which will come with economic recovery. This means that, on occasions when the economy permits, up-ratings ahead of the movement in prices will he possible, and the present legislation does not prevent this.
In the meantime, I remind noble Lords that we have more than honoured our pledge to maintain the value of retirement pensions and associated long-term benefits. By November 1984 the retirement pension will have risen by 83.6 per cent. since November 1978, compared with a forecast inflation rate of 76.4 per cent. over the same period. This represents an increase of 4 per cent. in real terms and has been achieved at a time when the number of retirement pensioners has increased by 700,000 and during the worst world recession since the second world war.
I think that that does to a very large extent answer the points raised by the noble Lord, Lord Banks. I know that I did not answer all of his questions 873 individually—and I shall not be able to do so today—but he was unfair when he implied that we had not answered him at all at Committee stage. I think that we have given him very good answers, not specifically on all his detailed points but within the overall concept of his argument. I admit that I did not give an answer, for which I apologise, when he raised the question of the recent report on Population, Pension Costs and Pensioners' Incomes, where the Government Actuary assumes that earnings will rise by one and a half per cent. more than prices. These are purely illustrative assumptions; they are not predictions or goals.
As the noble Lord will know, an inquiry into provision for retirement, chaired by my right honourable friend the Secretary of State, is looking into the role and levels of state, occupational and private provision for retirement. The inquiry will no doubt be looking with care at the implications of the Government Actuary's projections. In the meantime I think it would be premature to amend any existing legislation in advance of the inquiry's findings.
The noble Lord, Lord Banks, also said that if earnings continued forever to outstrip prices, there would be no ratchet effect, and that is probably a very fair conclusion. We take this seriously. As I have said, we have increased the value of pensions by 4 per cent. in real terms since 1978, and whenever the economy permits, we shall seek to ensure that pensioners get more benefit than they would on a pure linking based on either prices or earnings.
§ Lord Banks
My Lords, I am grateful to the noble Earl for his reply, but it still seems to me that the Government have not got to grips—at least, not in this House—with the problems which I outlined both at the Committee stage and this evening. For example, the noble Earl said that if we were to link to prices or earnings, whichever increase was the higher, this would mean a higher burden. He then went on to say that there would be no ratchet effect in certain circumstances and, if prices happened to rise higher than earnings every year from now until some date in the future, there would be no extra burden either. So if the noble Earl is saying that there is an extra burden, he must be making some assumptions. However, when I asked him whether he was making certain assumptions, he said that he was not making those assumptions, but he did not tell me what assumptions he was making in arriving at his conclusion that there will be a higher burden.
He said that the burden at the moment will be too high and therefore no attempt can he made now. I do not know whether that means that they will never catch up, or whether at some time they will catch up. He said that the Government will do their best and their best will mean that, from time to time, they will be able to afford to give a share, though they do not think they can do that at the moment, because earnings are increasing faster than prices. So why at some later stage should they be able to give a share in it? The Government are just hoping that perhaps they might be able to do that. Then there are the other long-term problems of what will happen if they continue on the present basis, which I raised, but which I do not think have been replied to.
874 But I shall not pursue this any more tonight. The object of putting down this amendment at both stages was to get some discussion going and to bring these problems out into the open. In doing that, to some extent, the exercise has been of some value. My Lords, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 8 [Repeals]:
§ 11.8 p.m.
Lord Glenarthur moved Amendment No. 30:
Page 63, line 38, leave out ("paragraphs 1(a) and") and insert ("paragraphs 1(a) and (c) and in paragraph").
§ The noble Lord said: My Lords, this is a Government amendment to correct the extent of repeal of part of Schedule 4. Part IV of the Social Security Act 1975. The amendment repeals an entry in paragraph 1(c) relating to the child dependency addition to sickness benefit, in order to be consistent with the entry for unemployment benefit, in both cases for beneficiaries under pensionable age. The provisions of Clause 13 and Schedule 5, paragraphs 2 and 3, of the Bill have the effect of confining child dependency additions of sickness and unemployment benefit to beneficiaries who are over pensionable age. Dependency increases to unemployment and sickness benefit were, until recently, listed together in Schedule 4 to the Social Security Act, but benefit changes made last autumn caused them to be separated. It is this separation which leads to the need for two repeals of entries relating to child additions of these benefits, instead of one.
§ Perhaps I should apologise to the House for tabling this amendment at so late a stage. Although technical, it is still important and it seemed to me better to table it late at this stage rather than to bring it in even later, at Third Reading. I commend the amendment to your Lordships. My Lords, I beg to move.
§ On Question, amendment agreed to.
§ Clause 28 [Transitional]:
Lord Mottistone moved Amendment No. 31:
Page 28, line 29, after ("may") insert ("not").
§ The noble Lord said: My Lords, the amendment seeks to negate the terms of subsections (2) and (3) of Clause 28. Your Lordships will remember that when this matter was raised during the Committee stage, my noble friend Lord Cullen of Ashbourne said that subsections (2) and (3) of Clause 28 were extremely retrograde in permitting family practitioner committees to contract with people who are not professionally qualified to provide professional services. I would go further than that and say that it is unknown throughout the history of the National Health Service for family practitioner services to be provided in this way by commercial salesmen, with the sole exception of the suppliers of surgical trusses.
§ At col. 229 on 3rd July my noble friend Lord Caithness made several points, two of which I should like to take up. First, my noble friend said that there is no reason why these unqualified persons should not be GOS contractors, on the same contractual terms and under the same obligations as registered opticians. It 875 would be quite impossible for the unqualified salesman to be subject to identical constraints by the family practitioner committees. The registered optician can be penalised for breaches of terms of service by having part of his remuneration withheld by the FPC. As long as he is dispensing for children under 16 years of age, he will have a credit balance as it were, with the FPC. The unregistered and unqualified seller will quite properly not be allowed to dispense for children.
§ As adults will be paying the full cost of their glasses, there will be no way by which the FPC can recover moneys from these unregistered and unqualified sellers. They will therefore have all the apparent respectability of being contractors to the FPC and the knowledge that the contract puts them under no real threat of penalty. The registered optician will, as I have said, be subject to having moneys withheld from payments due to him by the FPC and the further very real obligation of complying with what his professional body sees as his public duty. Needless to say, the unregistered and unqualified sellers will not be constrained in that way, either, in that they will not have the discipline of a professional body to make sure that they do their job properly.
§ Therefore, I put a direct question to my noble friend who is to reply: what different arrangements are the Government going to institute to ensure that the public have access to the NHS complaints procedures against these unqualified dispensers? Or is it the Government's intention that only qualified dispensers shall continue to be subject to the NHS complaints procedures and that the unregistered, unqualified people shall dispense in any manner, without having any regard for the consequences?
§ The second point that I should like to take up is that my noble friend Lord Caithness implied that registered opticians seek to retain NHS dispensing exclusively for the financial gain while saying publicly that it is an unremunerative chore. May I say that the Association of Optical Practitioners who represent individual ophthalmic opticians have always had a strong professional commitment to the NHS in optics.
§ This is not an issue related to price competition, since, while NHS dispensing remains all price control will also remain, whoever does the dispensing. The rationale that the Government have applied to allowing non-NHS dispensing to be attempted by unqualified persons in order to increase price competition and freedom of choice cannot and does not apply to the NHS while it exists in its present form.
§ Accordingly, I urge the Government to accept this amendment or possibly, as an alternative, to give an absolute undertaking not to implement those provisions of the Bill which would allow unregistered, unqualified persons to attempt NHS optical dispensing. I beg to move.
§ Lord Cullen of Ashbourne
My Lords, in the briefest possible way I should like to support my noble friend. He has made his arguments extremely clearly and rather better than I did in Committee.
§ Lord Glenarthur
My Lords, our amendments to the Opticians Act 1958 remove the total ban on the sale or 876 supply of glasses by persons other than registered opticians or doctors. We have discussed the merits of these changes at length during the previous two stages of this Bill and I have no intention of following my noble friend Lord Mottistone in going over this ground again. The point at issue on this particular amendment is whether those changes should be reflected in the arrangements for supplying glasses under the General Ophthalmic Service. We believe that this is both logical and sensible.
The unregistered will of course not be able to contract to supply children. In other respects, it is the Government's intention to provide in regulations that any unregistered contractors shall perform the same functions and operate under the same terms of service as other contractors. We see no insuperable problems in operating in this way. We do not intend that there shall be any dilution of standards.
Only individuals or firms who can meet the full obligation of contractor status will be allowed onto FPC lists. The normal terms of service will then apply. They cover such matters as premises and equipment. keeping of patients' records, use of deputies and employees, and the type and quality of appliances to be provided.
The public who use the GOS dispensing service will in future comprise the poorer and perhaps more vulnerable sections of the community, and so, with regard to remuneration, perhaps I may make the point to my noble friend that most GOS adults will in future be those on low incomes and they will get their glasses free. We shall ensure that they can get redress through the FPC if the service provided by contractors falls short. just as they can when registered opticians fail to meet the required standard—as sometimes happens. The system of service committee hearings and other disciplinary procedures will apply to them.
We shall be giving careful thought to how contractors will apply for inclusion on the list. It is unlikely that we could allow just anyone to have this right. We shall need to consider what requirements would-be contractors should meet, perhaps in terms of character references, financial probity, and the ability to perform the full range of GOS dispensing.
We shall be giving serious consideration to all these matters before bringing the necessary regulations before Parliament. However, we are confident that the use of unregistered suppliers will provide a useful auxiliary source of contractors and wider patient choice and will help to ensure an economic service.
In conclusion, perhaps I may remind your Lordships that there will be no compulsion on patients to use such contractors; they will have a choice. Such contractors will not of course be able to offer price advantages or a different choice of appliance. I hope that I have been able to answer some of my noble friend's queries. I have a feeling that I did not answer one of his specific questions; if so, perhaps I may let him have an answer later. I hope that I have been able to give him some reassurances and that he will not press his amendment.
§ Lord Mottistone
Yes, my Lords, in certain respects my noble friend has answered some of my questions. 877 But he did not really apologise for the insulting terms of his noble friend's remarks during Committee stage; nor did he really make the point—
§ Lord Glenarthur
My Lords, with the leave of the House, I must get this absolutely right. I was not aware that anyone had insulted anybody at Committee stage. I hope that, my noble friend Lord Mottistone is not suggesting that my noble friend Lord Caithness insulted him.
§ Lord Mottistone
My Lords, my noble friend Lord Caithness implied that registered opticians seek to retain NHS dispensing exclusively for financial gain, while saying publicly that it is an unremunerative chore. That hurt rather deeply.
In making his points my noble friend agreed that there is no price competition within this set-up, and so it seems to me that there is not all that much point in extending—perhaps I should stop speaking, my Lords, while my noble friends talk to each other. In view of the fact that there is really no price competition, it seems to me that there is no point in widening this scale, hearing in mind all the disadvantages of not having the qualified professional background and the discipline which that implies. I thought that the way my noble friend Lord Glenarthur put the Government's case indicated that it was being done willy-nilly because it is all part of the system, without the implications being thought out. It would therefore be helpful if he could read carefully what I have said at this stage and what my noble friend Lord Cullen said at Committee stage and see whether this is necessary. If it is not, perhaps he would not implement these particular subsections that I would seek to have reversed. However, this is neither the time nor the place to pursue this matter further, and I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.