Lords Sitting of 25 June 1985

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.

Namibia: Government Policy
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they propose to take over the attitude to United Nations Resolution 435 adopted by the South African Government in setting up an interim government in Namibia.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the new administrative arrangements in Namibia do not alter South Africa's responsibility to bring about internationally recognised independence in accordance with the terms of Security Council Resolution 435. We shall continue to take every opportunity to impress upon the South African Government the need for the early implementation of that resolution.
Lord Hatch of Lusby: My Lords, does the noble Baroness not realise, after the recent raids into Botswana and the raid on Cabinda, that the words of Her Majesty's Government have no effect whatever on South African policy? That is why I am asking what action the Government intend to take. Can she tell us why last week at the Security Council the British Government abstained from voting on the resolution which warned South Africa of the movement towards economic sanctions? Can she tell the House why only yesterday at the special Commonwealth Committee meeting the British Government stood alone against the whole of the rest of the Commonwealth in action, not words, being taken against these invasions by South Africa of international morality?
Baroness Young: The noble Lord, Lord Hatch, has managed to include about seven questions in his one supplementary question. I shall answer his point about the vote in the Security Council on Security Council Resolution 566, from which we abstained because of our reservation on certain elements of the resolution and because we regretted the failure of the Security Council to agree a consensus text. Her Majesty's Government continue to believe that economic sanctions are not the most effective way of securing a Namibian settlement.
Lord Cledwyn of Penrhos: My Lords, I hope the House will allow me, before I ask a supplementary question, to say how delighted we are to see my noble friend Lord Underhill back looking so well after his illness.
Noble Lords: Hear, hear£
Lord Cledwyn of Penrhos: My Lords, we appreciate that the Government rightly condemn the action of the South African Government, and also that the Government support Resolution 435. Can the noble Baroness say whether there have been any direct representations from Her Majesty's Government to the Government of South Africa on their action, which can do nothing but create a more difficult situation in Southern Africa and also create an invidious political situation for other members of the Commonwealth, such as Zambia and Zimbabwe, in that part of the world?
Baroness Young: My Lords, we, too, are very pleased to see the noble Lord, Lord Underhill, back in his place. On the particular point that the noble Lord, Lord Cledwyn, has raised on the South African raid into Gaberones, we acted swiftly. My right honourable and learned friend summoned the South African ambassador immediately on 14th June and made clear the very serious view we took on this indefensible attack. We strongly condemned this blatant violation of Botswana's sovereignty, and we joined our Community partners in the statement by the Ten on 17th June strongly condemning the South African action.
Lord Avebury: My Lords, is the noble Baroness not continuing to confuse action with words? Do not all her answers show that nothing is being done to combat the behaviour of the South Africans except mere remonstrations? Is it not time we moved on from that, as the United Nations Congress is thinking of doing? If the noble Baroness is not prepared to do anything positive whatsoever, will she not at least advise the leaders of business and industry in this country that, whatever the morality of the situation, they are taking tremendous risks with their shareholders' money in continuing to invest funds in the racist regime of South Africa and in Namibia?
Baroness Young: My Lords, I have made plain in your Lordships' House on many occasions what is Her Majesty's Government's view on the effectiveness of economic sanctions. We do not believe that they would be effective in this case, and we continue to think that we can best make our views known and best influence the South African Government by leaving open the channels of diplomatic communication and other lines of communication.
Lord Molloy: My Lords, will the noble Baroness briefly adumbrate the premise upon which the decision has been taken that economic sanctions are not worth bothering with?
Baroness Young: My Lords, we believe that economic sanctions would be counter-productive and would be likely to hurt the blacks in South Africa most and harm the economics of the neighbouring black African states.
Lord Brockway: My Lords, in the Government's view, how long is the present deadlock to go on? Is it not the case that the illegal Government of South

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Africa has now operated for over a decade? If Her Majesty's Government are not prepared to endorse the policy of sanctions, what do they propose to do to bring effective pressure upon the South African Government? Could they not at least limit investments into South Africa, which are maintaining the apartheid system?
Baroness Young: My Lords, I have made plain Her Majesty's Government's view over sanctions. Perhaps I may add that we do not believe that they would be effective in securing the implementation of Security Council Resolution 435, which is the subject of this Question. Indeed, it is much more likely to bring to an end the possibility of negotiating a peaceful and internationally accepted settlement in Namibia.
The Earl of Lauderdale: My Lords, would not my noble friend agree that it may not be altogether helpful if Members of this House dub particular Governments as illegal? Is it not the case that our own constitution goes back to the revolution of 1688?
Baroness Young: My Lords, I note the point that my noble friend makes on this matter. In fact, so far as the interim administration in Namibia is concerned, we do not recognise it and it has no standing under the United Nations plan.
Lord Hatch of Lusby: My Lords, is it not the case that the South African administration in Namibia before the new interim administration was formed was also illegal internationally and has been declared so? The noble Baroness, in answering my first supplementary question, said that the reason that the British Government had abstained at the United Nations was that they did not believe in economic sanctions. Is it not the case that the British Government are now placing themselves in isolation from the rest of the Commonwealth and in isolation from the rest of the Security Council apart from the United States of America? If the British Government do not believe in economic sanctions, what action do they believe in, bearing in mind the fact that words have been used for the past 70 years with results that we can all see today?
Baroness Young: My Lords, we are quite clear what it is that we wish to achieve in Namibia; that is, the implementation of Security Council Resolution 435. The question is, how to achieve it. We do not believe that imposing sanctions will achieve it.

Nuclear Weapons and US Servicemen
2.45 p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Quesions was as follows:
To ask Her Majesty's Government whether having regard to reports that alcoholism, drug abuse, and mental illness are rife among United States servicemen with access to nuclear weapons, any examination has been made of the incidence of
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such hazards among United States personnel manning nuclear weapons in the United Kingdom
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, our information does not support the allegations to which the noble Lord refers.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that a Congressional report reports it and that that is more important than the opinion of the noble Lord, if I may say so? Is he also aware that the Congressional report was published by the United States of America, who are rather more open in these matters than we are? Will the noble Lord ask the Americans to publish the next report on this subject, as they have previous reports, and in future t break down the figures geographically so that the people of this country can assess the additional risk here?
Lord Trefgarne: No, my Lords, I shall do no such thing. The fact of the matter is that the incidence of abuse to which the noble Lord refers has significantly declined in recent years and there is, of course, no question of anyone in these circumstances having any access to nuclear weapons or any other weapons.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that common observation suggests that there is more alcoholism, drug addiction and mental illness in the ranks of the CND than there is in the armed forces of our loyal American allies?
Lord Trefgarne: My Lords, that is an interesting observation which I cannot verify or otherwise deal with.
Lord Renton: My Lords, is my noble friend aware that Mr. Gorbachev has expressed his deep concern about alcoholism among the Russian people and that there are reports which indicate that this extends, alas, also to members of the Russian forces?
Lord Trefgarne: So I have heard, my Lords.
Lord Grimond: My Lords, will the Minister assure us that, even if the allegations were true, the chances of setting off nuclear weapons by mistake, so to speak, are extremely remote?
Lord Trefgarne: My Lords, the noble Lord is entirely correct in that assumption. The safeguards are very stringent indeed.
Lord Molloy: My Lords, if there is a possibility and that possibility is remote, can the noble Lord tell the House when the remote possibility—which he agrees exists—of a nuclear weapon being fired could arise?
Lord Trefgarne: My Lords, the noble Lord is, of course, asking for information which he is not authorised to receive.
Lord Balfour of Inchyre: My Lords, is it not an abuse of the House that a Question should appear on the Order Paper based entirely on unsupported and substantially unjustified accusations? Is it not an insult

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to our allies upon whom we rely greatly that this kind of Question should appear?
Lord Trefgarne: My Lords, that is a very proper point of view, if I may say so, but I imagine that the questions of the noble Lord, Lord Jenkins of Putney, are well known to our brave allies.
Lord Cledwyn of Penrhos: My Lords, whatever may be one's views about the merits or otherwise of the CND, is it not also an abuse of the House to make the kind of charge that the noble Lord, Lord Boyd-Carpenter, made against a movement which includes members of all political parties and which is viewed with respect for the courage of the views of those people who are represented?
Lord Trefgarne: My Lords, your Lordships probably will not wish me to extend Question Time by responding to that supplementary question.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, if allegations of the grossest character are made by someone associated with an outside organisation against the gallant forces of our American allies, they must be prepared to take it as well as to give it?
Lord Jenkins of Putney: My Lords, is the Minister aware that the allegations are based on a United States Congressional report? Does he not agree that the indignation expressed by his noble friends is unworthy of them and that they would be better engaged in concerning themselves with the reality of this issue rather than pretending to a false indignation on facts which they do not care to know about?
Lord Trefgarne: My Lords, if the noble Lord will forgive me for saying so, he is quite good at quoting things out of context. The fact of the matter is, as I said earlier, that abuse of this kind has sharply declined in recent years, and I am sure that the noble Lord will be very glad to hear that.
A noble Lord: Next Question!
Lord Leatherland: My Lords, since this question deals with alcohol, will the Minister bear in mind that those of us who stood up to our waists in water on the Somme in 1915 were very thankful indeed when the rum ration came round at 6 a.m.?
Lord Jenkins of Putney: My Lords—
Noble Lords: No!
The Lord President of the Council (Viscount Whitelaw): My Lords, judging from the noises I hear I think it may be that the House will feel that enough has been given and taken on this particular Question to enable us to pass on to the next one.
Lord Jenkins of Putney: My Lords—
Noble Lords: Order, order!
Lord Jenkins of Putney: My Lords, will the Leader of the House be good enough to bear in mind that it would become him to call his noble friends to order?
Viscount Whitelaw: My Lords, I will of course bear everything in mind; it is my duty to do so. But the noises that I heard coming from around the House, and not all from one side, led me to the conclusion that on the whole the House would wish to pass to the next Question.

Lloyd's: Regulation of Activities
2.51 p.m.
Lord Bruce of Donington: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state their attitude towards the recent disclaimer by Lloyd's of any responsibility for the fraudulent trading practices already reported to the Director of Public Prosecutions and whether they will publish a detailed report on the effectiveness of Sections 83 to 86 of the Insurance Companies Act of 1982 in the years following its introduction.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, responsibility for the regulation of the Lloyd's market is primarily for the Council of Lloyd's by virtue of the Lloyd's Acts 1871–1982. It is thus not for the Government to comment on matters between Lloyd's members and their agents or the Council. The Government have, however, appointed inspectors under Section 165 of the Companies Act 1948 into activities of two groups. My department has also been in touch with the Director of Public Prosecutions in respect of the inspections, and police investigations are in progress. I do not consider that there is any need for a report on Sections 83 to 86 of the Insurance Companies Act.
Lord Bruce of Donington: My Lords, I thank the noble Lord for his most informative reply. Is he not aware that the unresolved scandals of 1932 have still to be attended to? Is it not also clear that the provisions of Sections 83 to 85, the breach of which occasions no offence which enables the noble Lord's department to proceed, are now due for very considerable revision? Also, in order to satisfy very wide sections of members of Lloyd's in London, will the noble Lord please see to it that the relevant documents, and in particular the Price Waterhouse report and the report by Sir Peter Green, are made public? Therefore, instead of being able to judge matters on leaked reports, people will know exactly what is happening in what appears to be a highly privileged institution.
Lord Lucas of Chilworth: My Lords, in response to the noble Lord's first supplementary question, I am afraid that I do not recall, nor do I have a note of, what the noble Lord described as a 1932 scandal.
Lord Bruce of Donington: My Lords, 1982.
Lord Lucas of Chilworth: My Lords, the noble Lord said 1932; but if it is a 1982 scandal then events which are now under investigation will prove whether or not that is in fact a scandal. To turn to the review of Sections 83 to 86, again, until the investigations by my department's inspectors and investigations by the police are completed and have been reviewed, it would be premature for me to suggest or even agree that those sections should be reviewed. In regard to the Price Waterhouse report, it is not yet available although I confirm that my department are in touch with Price Waterhouse and have knowledge of what they have been investigating. However, until all those investigations have been completed by the various agencies, I feel it would be premature of me to give any further judgment.
Lord Bruce of Donington: My Lords, is not the noble Lord aware that the underwriting syndicates concerned for a number of years have been in breach of Section 83 of the 1982 Act? Is he also aware that the auditors of the syndicate were drawn from a list specifically approved by Lloyd's as a precondition for their appointment? Will the noble Lord at least consider the appointment of auditors who are subject not to the authority of Lloyd's but to the authority of his own department?
Lord Lucas of Chilworth: My Lords, no, I could not agree with the latter suggestion of the noble Lord. These matters are for Lloyd's and Lloyd's members and their agents to resolve. It was for exactly that reason that Lloyd's came to Parliament in 1981, asking for additional powers. Parliament gave those powers to them and they became effective at the beginning of 1983. That of course is the consequence of self-regulation. It is for Lloyd's, and I know that Lloyd's are seized of both their responsibilities and their obligations under the powers which were given to them by Parliament in the 1982 Act.
Lord Mowbray and Stourton: My Lords, may I ask my noble friend—and I declare an interest here, as a name at Lloyd's—whether he is fully aware that the chairman, the chief executive and the committee of Lloyd's are going through the most agonising time at this particular juncture? Is he aware that they are doing absolutely everything possible to clear their names and Lloyd's name, because it is the most important underwriting position in this Kingdom? Can the noble Lord confirm that the Government agree that Lloyd's are doing absolutely everything they can, even if they have not gone so far as the noble Lord, Lord Bruce of Donington, would wish?
Lord Lucas of Chilworth: My Lords, I gladly confirm what my noble friend Lord Mowbray and Stourton has said. Lloyd's have implemented a great number of the powers for which they asked in a Private Member's Bill in 1983. They are pursuing even further those remaining powers. It is in the interests of Lloyd's, of the members and of others connected with them to ensure that the conduct of the market is satisfactory in all respects.

Building Society Legislation
2.57 p.m.
Lord Taylor of Blackburn: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they intend to introduce legislation following their Green Paper Building Societies: A New Framework (Cmnd. 9316.).
Lord Brabazon of Tara: My Lords, the economic Secretary to the Treasury announced detailed proposals for new building society legislation in a speech earlier this month to the annual conference of the Building Societies Association. He said he hoped that the legislation would be introduced in Parliament this autumn. Copies of his speech have been placed in the Library of your Lordships' House.
Lord Taylor of Blackburn: My Lords, I thank the noble Lord for his reply to my Question. I am not privileged to attend the annual conference of the Building Societies Association and I look forward to reading the report which is placed in the Library. Perhaps I may ask whether this includes conveyancing and whether the Government intend allowing building societies to introduce conveyancing for their members.
Lord Brabazon of Tara: My Lords, my noble and learned friend the Lord Chancellor has recently reaffirmed the Government's commitment to allow solicitors employed by banks, building societies and other organisations to offer a conveyancing service. The Government are still considering how best to give effect to this.
Lord Stoddart of Swindon: My Lords, I wonder whether the noble Lord can say that in the legislation to be brought forward there will be protection, especially in the matter of unsecured loans, for people who actually want to borrow money. Can the noble Lord also say whether there will be protection for small societies against takeover by large societies? Will he also say whether there will be provisions in the Bill to provide for better democracy within the building society movement?
Lord Brabazon of Tara: My Lords, on the point of the smaller societies, my honourable friend said that he believed that it would be a pity if the existing variety of building societies was lost, and he hoped that the present variety would continue and indeed develop because a diverse movement is a healthy one. On the question of democracy in the building societies, he has outlined more or less as in the Green Paper his proposals for election to the board, etc.
Lord Mishcon: My Lords, in answer to a question directed to him by my noble friend, the noble Lord the Minister talked in terms of Government policy in regard to solicitors and building societies. Would he say quite firmly that the Government will protect the public to see that there is no conflict of interest in that connection?
Lord Brabazon of Tara: My Lords, it is indeed the Government's intention to provide arrangements which avoid subjecting solicitors to a conflict between the interests of their clients and those of their employer.

Business
The Earl of Swinton: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Glenarthur will, with the leave of the House, repeat a Statement on terrorism which is to be made in another place. He will be followed by my noble friend Lady Trumpington who, again with the leave of the House, will repeat a Statement on Supplementary Benefits Board and Lodging Allowance.
It may also be convenient to the House if I announce that the Committee stage of the Social Security Bill will be adjourned at approximately 7.30 p.m. for a short period and during this adjournment the Third Reading of the Hill Farming Bill, the Report stage of the Local Government (Access to Information) Bill and the Third Reading of the Rating (Revaluation Rebates) (Scotland) Bill will be taken.

Wildlife and Countryside (Amendment) Bill
3.3 p.m.
Read a third time.
Lord Melchett: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass. (Lord Melchett.)
Baroness Nicol: My Lords, I know that the House will forgive me if I rise and keep your Lordships for a very short time simply to say how very glad we are to see this Bill finally on its way. If I may be forgiven for introducing a slightly sour note, I should like to say how much better it would have been if the clauses which were approved at Second Reading in the other place had been allowed to remain in the Bill, especially those on marine reserves, forestry and the duties of agricultural Ministers. The last one, in particular, received wide support from all sides of the House and from outside bodies which are concerned with farming interests. It is very difficult to understand why the Government insisted on removing this particular clause. Public opinion demands it and sooner or later it must come.
During the passage of the Bill there have been many weaknesses exposed in the 1981 Act, and we look to further amendments from the Government in the next Session as part of their programme, instead of having to rely on Private Members' Bills. Finally, perhaps I may congratulate my noble friend Lord Melchett, and my honourable friend Dr. David Clark in another place, on what is a very useful Bill.
Lord Hunt: My Lords, is it acceptable if I rise from these Benches to echo very briefly the words of the noble Baroness, Lady Nicol, in congratulating the author of this Bill, Dr. David Clark, in thanking the noble Lord, Lord Melchett, for introducing it in this
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House and in saying how glad we are that it may shortly reach the statute book. I cannot do better than reinforce what the noble Baroness, Lady Nicol, has said about other most important elements in the matter of protecting the landscape and wildlife which remain outside the Bill. There is an over-riding need of providing very early protection for badgers and of ensuring that the loophole which existed in the protracted process of designation of intended SSSIs should be closed and that they should be protected by law. I would only say that there are other important matters, such as the marine nature reserves. It may be of interest to your Lordships if I say very briefly that I have just come back from spending four days on Scoma. There is no doubting the deep concern of people directly informed about the damage being done on the seabed in that intended nature reserve through dredging for scallops.
It follows that any delay in further tightening the measures to protect the environment, whether it is submarine or on the land surface, can only mean further damage, and therefore there remains important unfinished business. We on these Benches hope very much that there will be support from all sides of your Lordships' House in this strictly nonpolitical area beneath the sea and in the landscape and habitats of wildlife, for pursuing and pressing for further amendments and improvements of the principal Act.
Lord Houghton of Sowerby: My Lords, I wish to detain the House for only a moment or two on this Motion. This is a Private Member's Bill which arrived here on a very choppy sea. I hope that anyone who is now making a study of the Private Member's Bill procedure will have a look at how this Bill came here and at the drawbacks and hazards that it overcame. It is fortuitous that Clause 1 is in this Bill. At an earlier stage I expressed an appreciation of this provision being here and I am grateful to all those who used their endeavours to insert it and keep it in the Bill. However, I want to underline the appeal that I made at that earlier stage of the Bill to the hunting fraternity and to the British Field Sports Society.
The badger is under very heavy pressure all over the country. Not only is there this tragic destruction of badgers which are found to be infected with bovine tuberculosis—and the area of trapping and killing is widening the whole time—but in addition there has been a growing menace to the badger from those who are unaware of the popularity of this animal and the desire of the people to cherish it after many centuries of persecution. People go badger digging and sometimes they take dogs with them to assist. Clause 1 is an attempt to strengthen the existing law against this and it is to be hoped that Clause 1 will bring about the conviction of persons accused of badger digging where, at the present time, the courts are unable to convict through lack of sufficient evidence.
Be that as it may, only experience will show how the clause will produce the results that we want. I want to make this appeal. We are all now trying to safeguard the badger, not only against the extreme danger of the disease of bovine tuberculosis, but also from badger diggers and others who harass the badger. It is the duty of those who go fox-hunting and those in charge of

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foxhounds and hunts to play their part, too. There is a practice in some hunts of stopping up badger setts before the hunt begins in order to prevent foxes taking refuge in them, which I am advised they frequently do. That is called stopping up. Another practice is that if a fox is seen to take refuge in a badger sett, the fox is dug out in order to set it again in the chase, and that is called digging out. If I am misrepresenting what fox-hunters do, I hope that noble Lords who are more familiar with this sport will correct me.
But since it is called a sport, why not be sporting enough to give the fox a reasonable and natural chance of escape? Certainly badgers have suffered through having their setts stopped up, and very often badgers have suffered through being the victims of the digging-out of a fox which has taken refuge there. I do not think it is unreasonable to ask fox-hunters to desist from both of these practices. If a fox can get away, let it get away. I thought this was the idea: that you hunt animals with the chance of escape, and if there is not the chance of escape it is not called hunting and it is not called sport.
In those circumstances I think, since others are being asked to refrain from activities which are harassing the badger in present circumstances, that those who are in the field probably more than anybody, those who claim to be sportsmen in the field more than anybody, should also play their part. I am not myself a fox-hunting man, although I come from fox-hunting country. I have witnessed some parts of foxhunting, but I have never ranted about foxhunting, and that is something about which to commend a Member of your Lordships' House on this subject, because emotions run very high on it. There it is, my Lords, in good temper, in the hope that there will be a response from those who have responsibilities for the conduct of foxhounds, and hunting men and women in the field. Give the badger a chance.
Lord Skelmersdale: My Lords, for the second time in 24 hours I have to say quite genuinely that six months ago I never thought that this day would ever come. That it has is due to the combined efforts of many people—too many for me to mention by name. Through the difficult medium of a Private Member's Bill we will have on the statute book an Act of Parliament that strengthens the Wildlife and Countryside Act. I would say to the noble Baroness, Lady Nicol, that, had it been a Government Bill, it is my own personal view that it would inevitably have ended up as a very different animal.
This strengthening is done in two very important ways. The first, and originally the only, gap that this Bill plugs is the so-called three months' loophole. As from Royal Assent, even though there will still be a three-months' period for objection after a site has been notified as a SSSI, the protection for the site will run from the date of notification and not the end of the three-months' period allowed for objections to be made and considered.
The second important thing that this Bill does is to shift the burden of proof on to a person accused of molesting badgers to show that he was not, as opposed to the situation in the Badgers Act where the onus of proof is on the prosecutor. The Bill does two other
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things which in their own way are equally important: namely it extends the range of topographical features which have to be mapped in national parks, and gives the Forestry Commission a duty to try to achieve a reasonable balance between the interests of forestry and conservation.
The House will know that this Bill could have covered more subjects by this last stage in its parliamentary timetable—perhaps even would have. Many of them were discussed in Committee and I shall not go into them now. Moreover, due to the traumas inherent in the Private Bill procedure in another place, your Lordships were asked to do something completely unheard of in countryside matters in recent years; namely, to have a self-denying ordinance and to appreciate that in this unusual case the best really was the enemy of the good.
Nonetheless, the Government are most grateful to the House for the very thorough way in which it has examined the whole Bill and the reasons underlying it. Getting this Bill on to the statute book brings great credit not only to the promoters of the Bill but also to all the interests in the countryside and their continuing diplomacy. It therefore only remains for me, on behalf of the Government, to wish this Bill all blessings and beatitudes.
Lord Melchett: My Lords, first may I thank those noble Lords who mentioned by honourable friend, Dr. David Clarke, who promoted the Bill in another place, and on whom almost the entire burden of work—and it has been an enormous amount of work—has fallen as a result of the Bill going through Parliament. He certainly deserves the thanks that have been given to him. I should also like to thank the interests which came together to provide the initial suggestions for the contents of the Bill and some of the drafting help, particularly the voluntary wildlife, animal welfare and landscape conservation bodies, the National Farmers' Union and the Country Landowners' Association, all of whom played a big part in helping my honourable friend to introduce the Bill and to get it now to this stage and on the statute book.
I should also like to thank the Government for the drafting help that they gave for the clauses that are still in the Bill, but to echo my noble friends comments of deep regret that two of the most important clauses were deleted by the Government as part of that redrafting exercise. I am sure, as other noble Lords have said, that those two clauses raise issues to which we shall inevitably return in the very near future, and quite rightly so.
Finally, perhaps I may issue my own plea to the Government—and I am delighted to see the noble Lord, Lord Belstead, sitting on the Front Bench listening, because I think it is to his department that this plea is mainly directed—that in two months' time when the Bill will come into force, assuming that it gets Royal Assent in the near future (as I hope it will), the Government will make every possible effort to give maximum publicity in particular to the new laws contained in Clauses 1 and 2, which will have a major impact on farmers and landowners. I think it is only right that they should be given as much information as possible about the change in the law. Having said that,

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I hope that the Bill can now proceed to be an Act as quickly as possible.
On Question, Bill passed.

Social Security Bill
3.18 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Trumpington.).
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Short service benefit for members whose employment is terminated before age of 26]:
On Question, Whether Clause 1 shall stand part of the Bill?
Baroness Jeger: I rise only briefly to point out some difficulties. I understand from the Explanatory and Financial Memorandum that Clause 1 amends Schedule 16 to the Social Security Act 1973 so as to remove the age limit of 26 under which an occupational pension scheme need not preserve a member's accrued rights. This is something that we welcome, but it seems to us to mean that any early leaver with five years' qualifying service will be entitled to preserved benefits, while any young person with less than five years' accrued benefits will not be entitled.
I want to ask the Minister why the age of 26 has been chosen. Why should persons under the age of 26 not have any option of preserved benefits? Should people with less than five years' qualifying service not be entitled to some sort of benefit? Why not make it three years? It is a truth of the present situation that people may, sadly, be made redundant after only a few years; certainly, after less than five years. There cannot be many young people in this country who have a continuous employment record of five years. We want to encourage job mobility, we want to encourage promotion and we want to see people moving from job to job and from area to area. I can see one Minister nodding, but I am wondering whether in changing jobs these people will endanger their rights under Clause 1 of this Bill.
This is particularly important, because the Government's objective is to move the maximum number of people into private schemes. Are they going to recommend to private pension funds that these young people should not sustain rights if they have been employed under one fund for less than five years? This could be a trap for people changing jobs and it could be a very important element in the decision of young people whether to change their jobs and try to improve themselves by getting more interesting and more useful work. They may be just finding their feet.
It applies particularly to young women who may contribute for a year or two and then be away, perhaps
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having a baby. I feel that the five-year rule might be a disadvantage for them. In fact, the contributions which workers make are really a part of deferred income. It is their money which goes into these funds. On Clause 1 I must ask the noble Baroness whether there is any chance of the five-year qualifying period being looked at again, because five years in the life of a young worker is quite a long time.
Baroness Trumpington: Following comments made in another place we consulted the main pensions interests about the effect of reducing the five-year qualifying period, but we decided that we should not make any change in the Bill. Any change would increase the administrative costs of schemes which would have to provide a greater number of comparatively small pensions. What it means is that when the provision comes into force schemes will have to preserve benefits for anyone with five years' service, irrespective of their age. This is a small but I believe a worthwhile change. If the qualifying period was reduced to three years the number of preserved pensions would increase by something like a quarter. Removing the qualifying period altogether could double the number of preserved pensions.
Clause 1 agreed to.
Clause 2 agreed to.
Clause 3 [Information about schemes]:
On Question, Whether Clause 3 shall stand part of the Bill?
Lord Mottistone: At Second Reading my noble friend the Minister declared both in her opening and in her closing speech that the Government were open-minded about the need for a register such as would be set up under Schedule 2, for which this is the paving clause. I am questioning whether, having heard what was said on Second Reading and any other points that may have been brought to their notice, the Government have considered whether there really is a need for this register and registrar. Having read the Social Security Pensions Act 1975, it seems to me that if there is a need for some sort of supervisory body of the nature of the registrar, the Occupational Pensions Board may have its activities slightly increased. But to go into the whole business of setting up what Schedule 2 proposes seems to me to be a rather cumbersome and unnecessary job. If the Government do not respond to this point I have tabled amendments which I hope we shall discuss separately later when we come to them, but not now. My real point is that we should get rid of this altogether and I hope that the Government, when they say they are open-minded, are open-minded enough to do just that.
Lord Kilmarnock: I recall the reference of the noble Lord, Lord Mottistone, to this clause on Second Reading—
Baroness Trumpington: Perhaps I may ask the noble Lord to speak up, because it is terribly hard to hear him.
Lord Kilmarnock: I am sorry. There are not many microphones around here in this gap.

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I recall the speech of the noble Lord, Lord Mottistone, at Second Reading in which he opposed this clause and said that he would raise the matter again in Committee. I disagreed with him at that time. He has now put forward the suggestion that responsibilities of this kind might be undertaken by the Occupational Pensions Board. Whoever is responsible, it seems to me that it is desirable to have a register of this kind. The reasons are quite simple. The Government's acknowledged aim is to shift the balance of provision of income in retirement towards the private sector. If this comes about a great deal of personal wealth will be tied up in these schemes.
In fact, in Chapter 1.47 of the Green Paper the Government say themselves:
"For many people this will become the biggest single asset that they own—worth more even than their own home".
It is therefore surely right that there should be some method of policing or overseeing these schemes, as indeed there is for the Stock Exchange, for banking, for insurance and for many other activities of this type. The Green Paper also says—we cannot debate this Bill without also looking at the Green Paper because they overlap at several points—at Chapter 1.45 that:
"Under the new arrangements, employers and employees will be required to contribute to an occupational or personal pension".
There is also to be an option to prefer the personal pension to the employers' scheme. It therefore seems likely that many new schemes will flourish.
My belief is that the register should be brought into existence, though I agree we could discuss under whose control it should be. If the scheme is brought into existence, will it also become responsible for the registering of the personal pension schemes which the Government are advocating in the Green Paper? Will they have to declare themselves also in the register which is proposed under the Bill? It is also worth pointing out that in the Green Paper the Government suggest that a wide range of institutions should be allowed to offer pension savings schemes and so we shall have all kinds of new schemes coming into the arena. In Chapter 1.58 of the Green Paper the Government refer to the necessity for safeguards. On all those grounds, in principle it seems to me that there should be a register. I should like to hear from the noble Baroness what schemes the Government think should appear in it.
Lord Boyd-Carpenter: I should like briefly to support my noble friend Lord Mottistone in his suggestion that the idea of a register of private pension schemes should be dropped. I do so for two reasons. First, as I said on Second Reading, there is a danger from this Bill generally that the increased intervention by the state in connection with the operation of the private schemes may well have the effect of discouraging either their introduction or their expansion. All the machinery of a register, though it may not weigh very heavily in the decisions that have to be made, may add a little to that discouragement. If your Lordships look at Schedule 2, you will see the length and complexity of the provisions required for this register. I think your Lordships will feel that if we can avoid it, we ought to, because a system as complex as
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this will need quite a substantial staff and will add to the expenses of my noble friend's department.
With my noble friend Lord Mottistone I hope that open-mindedness which my noble friend the Minister displayed on Second Reading will now blossom out into an acceptance of the idea of dropping this register altogether.
Lord Davies of Leek: Perhaps I may ask the noble Lord, whose opinions I respect because of a position he held previously in this department, where he was noted for the work he did, what protection there is in this "bucket shop approach", if I may use that loose phrase, if we do not have some kind of control of information.
Lord Boyd-Carpenter: Perhaps I may respond to the noble Lord's perfectly proper question. If he will study the clause and still more the schedule, he will see that there is no protection there against a "bucket shop" pension scheme. I share the noble Lord's apprehension about such schemes. They have been known to exist, and they do a lot of harm and cause much social misery. But I do not believe that there would he any protection in the registry such as would justify its coming into being to prevent such schemes.
3.30 p.m.
Lord Swann: Unlike the noble Lord, Lord Mottistone, I do not want to oppose the Question that Clause 3 stand part, but I have one reservation about the clause. First, I welcome very much indeed the proposal that scheme members and their dependants can now find out all about their company schemes. Regrettably, there are still some companies loath to provide such information. As chairman of the Company Pensions Information Centre, again I warmly welcome the raising of the level of awareness about how pension schemes work, the benefits they provide, and their cost.
Although I welcome the aim of the register, I have two worries about it. One is its cost, and the other is the likely demand for it. We have been told that the cost will be that of up to 100 staff; I suppose this must mean more than £1 million a year. By the time there is added the cost of premises and all the rest of it, I suppose the figure will be nearer £2 million a year. That is to be shared between search fees and the trustees and managers.
What is likely to be the demand? Do the Government know, or have they tried to find out? Individuals will of course now be able to find out all they want to know about their own scheme from their own employer. A few individuals may want to know about other schemes if they are thinking of changing jobs, or for other reasons, and no doubt a few professionals will want to browse through the data. Also, a few keen-nosed journalists may want to study the information from time to time. But I wonder how many inquiries the registry will receive.
I should have thought that the number is unlikely to reach 100 per day, which would be 25,000 inquiries a year. A fee of £ 10 a search would represent income of about 10 per cent. of the total cost. If the number of inquiries is more like 10 per day, which is the figure I guess it will be, one will be talking about meeting 1 per

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cent. of the cost. So the bulk of the financial burden will undoubtedly fall on the trustees and managers.
I may be wrong, but I have to say, as an ex-chairman of the BBC, that it does rather sound to me as though Jim Hacker and Sir Humphrey Appleby of "Yes, Minister" fame have been transferred to the DHSS and had a hand in drafting the schedule. So unless the Government have real reasons for supposing that the demand will be far greater than I expect, would they not be well advised to consider cheaper and simpler solutions, if they can be found? Let me say once again, however, that I am in full agreement with the aim of the registry.
Lord Banks: I should like to enter a plea that the registry should be a tracing registry and not a registry of documents, or that, if there is to be a registry of documents, it should be at the joint office of the Inland Revenue Superannuation Fund and the Occupational Pensions Board. I suggest that they should become the registrar, if a registry of documents is felt to be essential.
A pensions consultant of my acquaintance, in order to obtain approval of a United Kingdom scheme in the Republic of Ireland, had to send 24 copy documents to Dublin. The same consultant recently acquired a new client with an existing scheme established in 1971. When the consultant received the documents involved, he found that there were 32 of them. There are many schemes established in the 1950s and before the war which have even more documents. Even when the deed and the rules are completely replaced, all the earlier documents must be kept in order to ascertain whether the power was there to make the alterations contained in the replacement document.
Collating, copying and posting documents to the registrar, to establish the registry, would be an administrative burden, particularly on smaller employers. But the joint office of the Inland Revenue Superannuation Fund and the Occupational Pensions Board already has copies of all approved pension scheme trust documents. That is why I suggest that if a registry is considered necessary, the joint office can accommodate such a registry. That body is of course carrying out the supervisory work which my noble friend Lord Kilmarnock very rightly says is essential now and will be even more essential in the future.
A simple tracing registry would be very useful. It would help a person who left a company pension scheme 30 years ago, and who is now approaching retirement, to trace his scheme despite changes in company names, company takeovers and mergers, changes in scheme names, and amalgamations.
Baroness Trumpington: I believe that the noble Lord, Lord Swann, is just old enough to know what I mean when I say that I feel, in his "Yes, Minister" syndrome, just like Mrs. Mopp: can I do you now? As my noble friend Lord Mottistone said, Clause 3 introduces Schedule 2. It deals with disclosure of information and the pension scheme registry. Scheme members will be given basic rights to receive information about their scheme and the Secretary of State will have the power to set up a registry of occupational pension schemes. This is the second area covered by our occupational pension scheme reforms.
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I hope that there is no argument between us about the desirability of giving members access to information about their schemes. After all, a pension can be the biggest single asset they will ever have. We believe it is essential that people should have sufficient information available to be able to safeguard their assets.
To dispense with the clause would, if I may say so, be to throw out the baby with the bath water. The principles of greater disclosure of information to pension scheme members have, as the noble Lord, Lord Swann, indicated, received widespread support in both this House and another place. For some time there has existed broad agreement that members of pension schemes should have the right to basic information about the schemes to which they belong. Indeed, our proposals go no further than formalising what is already good practice in many well-run schemes. In general, any reservations expressed have been about the need for and purpose of a public registry of information. As I have already indicated the Government have undertaken to look further at this issue.
It would indeed be unfortunate if concern about a registry were to undermine the general principle of disclosure of information which has been so widely accepted. The provisions as set out would permit the Occupational Pensions Board to run any registry in whatever form, if the Secretary of State so decides.
Returning to the question of cost, and in answer to the noble Lord, Lord Swann, we are evaluating costs at this moment. The noble Lord, Lord Kilmarnock, will remember that the proposals in the Green Paper are for consultation only at this time. I hope that I have answered the fears expressed by my noble friends Lord Mottistone and Lord Boyd-Carpenter.
Lord Mottistone: I am not sure that my noble friend has fully satisfied me; I do not know about my noble friend Lord Boyd-Carpenter. I hope that when my noble friend considers this little debate she will pay particular care to what was said by my noble friend Lord Boyd-Carpenter when he warned the Government, particularly this Government, not to have yet another bureaucratic system which, basically, they are against having, not to set up an expensive new outfit which is not perhaps wholly necessary.
My noble friend the Minister made it clear, I believe, that there is no need for a separate registry and a separate registrar, and that this function could be given as a duty to, for example, the Occupational Pensions Board. If that were so, it may be that we do not need Schedule 2 with, as my noble friend Lord Boyd-Carpenter observed, all its highly complicated bureaucratic nonsense, but we could have instead some simple instructions to the Occupational Pensions Board to meet the need to ensure that the right people have access to the right pension funds. That is all that is necessary. Nobody would quarrel with the fact that the people who are subject to pensions should have full access to any pensions funds which are going to affect them; but Schedule 2 is not needed to make that happen.
Perhaps the Government could be more true to their last in their basic principles if they were to have a big movement towards sweeping away Schedule 2 and

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putting in a few phrases to give an extra job to the Occupational Pensions Board. However, I shall not pursue this matter any further now.
Clause 3 agreed to.
The Earl of Caithness: My Lords, I think this is an opportune moment to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Terrorism
3.41 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, with the leave of the House, I shall now repeat a Statement on terrorism which is now being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"As the House will know from the statement issued by the police yesterday, on 22nd June five people were arrested in Glasgow by the Strathclyde Police and detained under the Prevention of Terrorism Act. My right honourable friend the Secretary of State for Scotland has approved the extension of their detention for five days for further questioning. Since then the police have arrested and detained under the Act a further 16 people. Those detained are being questioned in connection with a number of offences, including the bombing of the Grand Hotel at Brighton.
"As a result of information obtained following the arrests made on 22nd June, the police were able to discover and disarm a bomb set for detonation on a long-term timer in a room at the Rubens Hotel, Buckingham Palace Road. The investigation, the discovery of the bomb and its disarming are outstandingly successful demonstrations of the professionalism, courage and determination of the police in the battle against terrorism which they are fighting on behalf of us all. I congratulate warmly all the forces concerned.
"The House will also be aware, however, that the bomb discovered at the Rubens Hotel was intended to form part of a wider operation involving the planting of bombs in a number of towns: Blackpool, Bournemouth, Brighton, Dover, Eastbourne, Folkestone, Great Yarmouth, Margate, Ramsgate, Southampton, Southend and Torquay. The bombs were to be timed to explode at intervals from mid-July, at the height of the holiday season, and the attacks would have been quite indiscriminate in their victims. But as last night's statement indicated, the police have reason to believe that the only device so far placed was the one discovered in the Rubens Hotel, and that the preparations of the IRA have been interrupted at an early stage.
"Nonetheless, the police must take account of what they regard as the slight possibility that it was not only in the Rubens Hotel that a bomb had been placed. Accordingly they are urgently pursuing co-
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ordinated inquiries and searches on a basis agreed between all the chief officers of police concerned. This will involve conducting searches in the places identified as intended targets just as vigorously as if there were positive reasons for believing that bombs had been put in place there.
"The police service therefore now faces one of the largest preventive operations it has ever mounted. I have decided to ask the Commissioner of Police of the Metropolis, Sir Kenneth Newman, to undertake personally the co-ordination of this operation. The commissioner's task is not to take over the local operational responsibilities of chief officers, but to provide a co-ordination centre and clearing house, in which individual forces may be represented, for the conduct of this operation. For this purpose, the forces principally involved will be invited to second appropriate officers temporarily to assist the commissioner in this task. He will in this way be able to ensure that information derived from related inquiries in any police force area is made available to others who may need to act upon it or refer to it. And these arrangements will enable the public and the press to be kept properly informed, particularly in relation to any ways in which they can help.
"But the local Members of Parliament may also have an important role to play. For this reason the commissioner, in consultations with the chief constables for the relevant areas, will be arranging a briefing tomorrow for Members of Parliament for the constituencies identified as possible targets. The purpose will be to explain the background and the police assessment as fully as practicable and to discuss ways in which the Members and the public can best help the police.
"The House will appreciate the limitations on what can be said at this stage in the inquiries about the considerable amount of information which has so far been discovered. This has already resulted in a major terrorist outrage being thwarted. Every possible effort is now being made to prevent any further risk to the public and to bring to justice those who have been planning the cold-blooded and indiscriminate murder and maiming of totally innocent people."
My Lords, that concludes the Statement.
Lord Mishcon: My Lords, I am sure that all parts of the House will be united upon three matters. The first is on the congratulations to the police forces who have been instrumental in making these discoveries and effecting certain arrests. About that there is no doubt and all of us will want to express our gratitude to them. The second point upon which I am sure all the House will be united is a further declaration which goes forth very clearly from these Benches and all Benches in Parliament that terrorism and hijacking are not going to be allowed to pay. The third matter is that, with a full sense of responsibility, one does not ask questions which go beyond reasonable probing and which in any way would interfere with the security of our people.
Having said that, there are some questions which I should like to put to the noble Lord, the Minister, whom I thank for having repeated the Statement in this House. I ask the first question with every respect and only in order to try to help if there are future

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Statements of this kind. Possibly the Minister can tell me, by an answer to my question, that I have no need to complain or express apprehensions. I ask the Minister why so much publicity has been given, including in this Statement, to the 12 resorts which it is discovered were subject to threat. It is the beginning of the holiday season for the people who keep hotels, boarding houses and apartments in these resorts and people have obviously made their arrangements to go there. I noted that in this morning's Daily Telegraph Commander Simon Crawshaw, who is head of the anti-terrorist branch, was asked if he would give these resorts the all-clear. His answer was:
"There is no question of giving the all-clear. I am certain the public need not have any fear in these resorts."
If they have no reason for fear and everybody is to be encouraged to go to the resorts, why have the resorts been named? It does not seem to be doing any good and it can conceivably do some harm.
My next question to the Minister is this. I also noticed in the press that there was an announcement—presumably somewhere, or at least a discovery somewhere—that there is a new liaison arrangement which was set up after that regrettable Brighton bombing, whereby there would be a Royal Ulster Constabulary presence at Scotland Yard to maintain a contact with the anti-terrorist squad. If after and out of that terrible tragedy that liaison has resulted, at least some of us would feel just one little bit of consolation. Is it true, and is there the liaison with the RUC that all of us would want to see?
My last question is this. Is there that association and co-operation with the hotels association and all other bodies, including those which may be associated with small establishments and not large ones, in order to ensure that there is that series of safeguards which all of us would want to see, especially at this time when presumably we are in the midst of these threats?
Lord Wigoder: My Lords, I would not want to ask any questions arising out of this Statement because the questions which I would seek to ask are those which I know perfectly well it would be quite inappropriate for the Government to attempt to answer at this stage. I shall therefore, if I may, make only three brief comments.
First, as to the disclosure of the names of the towns to which the noble Lord, Lord Mishcon, referred, it seems to me that the police were in a quite impossible dilemma. If they disclosed the names of the towns, they were liable to be criticised on the basis on which the noble Lord criticised them. If they did not and there was by any chance, however remote the possibility, an explosion in one of those towns, they would in due course be heavily criticised for not having alerted the public to that remote possibility.
Secondly, I note that the people who have been detained have had their detention extended for a period of five days for further questioning. I think it may be that few Members of your Lordships' House would query that decision by the Secretary of State. Perhaps it adds force to those of us who supported that power of extended detention when the Prevention of Terrorism Act was passed through your Lordships' House not very long ago.
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Finally, may I say this? The planting of bombs with time fuses of this type is an act of the most despicable cowardice. It requires no courage, no skill, no ability and no bravery; it requires nothing except a lust to kill. What has always astonished me over the past few years when such offences have been committed has been the extraordinary success of the police in bringing to justice such a high proportion of the people who commit the offences. It reflects very, very highly on the skill and determination of the police force, and that skill and determination are obviously being repeated at the moment. I know that the whole House will want to join in the congratulations being extended to the police on their actions.
Lord Glenarthur: My Lords, I am most grateful to both noble Lords for their remarks and their kind references to the police. I entirely share, as I know does the whole House, the views which they have expressed, and I shall ensure that they are passed to the police.
The noble Lord, Lord Mishcon, asked why the resorts should be named. The answer really was, I think, given by the noble Lord, Lord Wigoder. I can understand that there are those who would question the wisdom of stating that there was a slight possibility that those towns might have been targeted, but equally there are no doubt those who would accuse the police of irresponsibility if they did not share the information that they had. It is not always easy to judge in these cases. If there was an error, it was an error in favour of disclosure. But I think that the noble Lord, Lord Wigoder, gave the answer for which the noble Lord. Lord Mishcon, was searching.
So far as a RUC presence in New Scotland Yard is concerned, what I can assure the noble Lord about is that there is indeed the closest co-operation between the RUC and New Scotland Yard on these matters, which are of course of such importance.
The noble Lord asked about hoteliers. Like members of the public, they should be on the alert for suspicious objects, individuals and incidents, but they should not institute searches of their establishments without advice from the police. I think that the best way that that can be taken forward is in the light of what I repeated in the Statement about the commissioner's responsibility in now bringing together all these forces to provide the clearing point for all the information that comes forward.
The noble Lord, Lord Wigoder, did not ask me any questions, but I note the points that he made, particularly about the extension of the Prevention of Terrorism Act. I think that that Act is serving us well.
Lord O'Neill of the Maine: My Lords, I thank the noble Lord for the excellent Statement, and I should like to ask him a question. Might this not be a good moment to have a review of security arrangements in the Palace of Westminster? Perhaps because I come from an area where these things are most important I have sometimes noticed a certain lack. It is a very difficult question. I have discussed it with Black Rod. But perhaps the Minister or his right honourable friend could consider the possibility of having a review of security as it exists in the Palace of Westminster today?
Lord Glenarthur: My Lords, the matter of the security of the Palace of Westminster is under continuing review.
Lord Renton: My Lords, I join in the tributes paid to the police. In view of the increasing scale and sophistication of terrorist attacks, may I ask my noble friend whether he will confirm that they are considered to come within the all-hazards approach for dealing with emergencies in peace and war, about which the Government made such a welcome Statement last week?
Lord Glenarthur: My Lords, the matters with which we are concerned here are primarily for the police in their pursuit of terrorists. They are difficult and sensitive matters. I am well aware of my noble friend's interest in the all-hazards approach. Whether it is entirely appropriate in this instance I think is more a matter for the police to judge. I think that in this case it is best left to the police.
Viscount Hanworth: My Lords, does the noble Lord agree that perhaps a very important reason why the places should be named is that if there is to be an investigation into the hotels and boarding houses, as he said there will be, unless people know what is happening and know that other places are involved, and unless there is a free statement of the whole position, absolute panic will be created? To my mind the situation could have been absolutely disastrous had the Statement not been made.
Lord Glenarthur: My Lords, I am grateful to the noble Viscount for his comments.
Lord Fitt: My Lords, can the noble Lord say whether prior to the arrests any approach had been made to the Government or the security forces of the Irish Republic, and whether there had been cooperation from those forces?
Lord Glenarthur: My Lords, what I can tell the noble Lord is that the arrests followed receipt of information. I cannot tell him whether the Government of the republic were involved.

Social Security Bill
3.58 p.m.
House again in Committee.
Clauses 4, 5 and 6 agreed to.
Clause 7 [Calculation of contributions]:
Lord Banks Lord Banks moved Amendment No. 1:
Page 4, line 7, after ("week") insert ("less the first £10.00")
The noble Lord said: In moving Amendment No. 1, with the leave of the Committee, I should like to speak also to Amendments Nos. 2, 3 and 4.
Amendment No. 2: Page 4, line 7, leave out from ("question") to end of line 10.
Amendment No. 3: Page 4, leave out lines 11 to 23.
Amendment No. 4: Page 4, line 29, leave out from beginning to end of line 3 on page 5.
The Bill reduces the national insurance contributions from employer and employed for the lower paid. The reductions are to be paid for, at least in part, by abolishing the ceiling on employers' though not employees' contribututions. There are three steps in the new graded scale as it affects employees. For example, for contracted-in employees, for those earning between £33.50 and £55 the employee's contributions is 5 per cent. at £55 to £90 it is 7 per cent. and at £90 or more it is 9 per cent. The scale for employers is the same, except that for those earning over £130 the rate is 10.45 per cent.
The aim of this is to reduce the burden of the lowest paid and to reduce the cost of employing the lower paid. Both aims are unexceptionable. However, the new system substitutes a number of smaller poverty traps, at £35·50, £55 and £90, instead of the one big poverty trap. It is inevitably more complicated to operate and there is also the danger of employees being trapped in bands just below the limits, in order to avoid higher contributions having to be paid.
These amendments would be simpler. Instead of the graded scales which I have described, they would simply exclude the first £10 of earnings from national insurance contributions. I believe that it would cost about the same as the Government's proposed reforms. It would of course bring some relief to all employees. It would bring rather less to the lowest paid, although, even there, their reductions would be a higher proportion of their earnings than was the case for higher earners. The same would apply to the employers' contributions.
Amendment No. 2 would abolish the upper limit for employees' contributions. In the Bill this has already been abolished for employers' contributions. Now that it is proposed to phase out the earnings-related pension, the argument for retaining the upper limit for employees' contributions is greatly weakened. It seems absurd that national insurance contributions should form an increasingly smaller percentage of proportion of earnings as earnings rise above £265 per week. Removing the upper limits could well allow a reduction in the percentage rate and that would be accomplished at the same time as a fairer system was established so far as employees are concerned. I beg to move.
Baroness Jeger: I shall delay the Committee only long enough to say that we support the amendments which have been spoken to by the noble Lord, Lord Banks.
Lord Mottistone: This is not quite clear to me and perhaps the noble Lord, Lord Banks, can explain it. It seems to me that his Amendment No. 4 will sweep away the employer's contribution altogether. Alternatively, does that mean that it stays as it is now, with no change at all?
Lord Banks: It stays as it is in the Bill with no further change.
Lord Mottistone: But is the noble Lord not taking away from page 4, line 29, new subsections (6D), (6E) and 6F)? Does not that sweep away what the Bill is proposing, or am I being very dull?
Lord Banks: I do not think it does. However, I shall consider what the noble Lord has said and perhaps return to it.
The Minister Without Portfolio (Lord Young of Graffham): It is with a mixture of pleasure and trepidation that I rise to assist my noble friend: pleasure because this is my debut in this Chamber in matters concerning social security and trepidation because I find myself answering such an acknowledged expert in these matters as the noble Lord, Lord Banks. But I am glad to be able to do so because, even though a Minister Without Portfolio, as your Lordships well know, I have a very particular interest in the encouragement of employment. I believe that the changes in the national insurance contributions which my right honourable friend the Chancellor proposed in his Budget, and which this Bill seeks to put into effect, are a bold and imaginative step to encourage employment at the lower end of the wage scale, particularly among that vitally important group: young people looking for their first job. I am too old a hand to hazard predictions of my own, but I notice that among the experts in this field the London Business School has suggested that there will be some 150,000 extra jobs as a result of these changes, and some have made even higher predictions.
Although not an old hand when it comes to national insurance, except perhaps as a contributor, I have already learned that it is a technical and highly complex matter. In such matters bold steps may be amply justified by the helpful changes they introduce for a wide majority, and in this case the assistance given to the lower paid and to their employers has been widely welcomed. However, in a complex field there may be inescapable repercussions for others, and I understand that the noble Lord's amendments are in part addressed to these.
From the noble Lord's remarks at Second Reading, I understand that these amendments also reflect his interest in the integration of income tax and national insurance contributions. The Chancellor has already said that this will be one of those areas explored by the forthcoming Green Paper on personal taxation, and I shall not allow the noble Lord to tempt me into that particular thicket. Instead, I shall consider his amendments on their merits within the existing system. I shall argue that they are unacceptable drawbacks to the action he proposes and that in any case he has exaggerated the problems.
Let us first take the supposed problems. The third amendment in this group of four would remove the structure of graduated rates which we have proposed for employees' contributions, and the fourth amendment would do the same thing in respect of employers' contributions. The noble Lord argues that this is necessary because the transition from one graduated rate to the one above creates a series of earnings traps. It is true that the transition is not a smooth one. However, at each new cliff edge the increase in gross pay needed to overcome the increased contribution liability and thus produce an increase in net pay is far smaller than that which currently exists at the lower earnings limit.
These cliff edges are of course reflected in both the employee's and the employer's liability to pay
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contributions. Taking both together, the present cliff edge at the LEL is formidable. It costs an employer £8.58 to give an employee earning £34.50 a £1 increase in take-home pay. Under the proposed new system, and taking account of income tax, it will cost only £4.70 to give that same employee the £1 net increase. By comparison with the existing cliff edge at the LEL, the new steps at £55 per week and £90 per week are much smoother. It will cost an employer a total of £4.61 to give an employee earning £54 gross a week a £1 increase in take-home pay, and £6.75 a week to give the same increase to an employee on £89 gross a week. At that level a 5 per cent. pay increase is more than enough to leave the employee better off.
Nor should we lose sight of the fact that, whatever the transitional effects between the different earning brackets, all those employees within the scope of those reduced rates will take home more in absolute terms than they do at present, and their employers' costs are reduced. Eight-and-a-half million lower-paid earners will be better off.
What is it that the noble Lord proposes to put in place of these desirable changes? The first of his four amendments exempts £10 of weekly earnings from contributions. I shall not dwell on the drafting technicalities, but I assume that he intends that all employees whose earnings exceed the LEL, £35.50 per week, should pay contributions on £10 less of earnings than they do at present. Because of his third and fourth amendments, employees will, however, pay at the current standard rate of 9 per cent. and employers at the current standard rate of 10.45 per cent. Despite this exemption of £10, for employees only, there will still be a hefty cliff edge at £35.50. It would cost employers £7.49 to give an employee at £34.50 a week a net increase of £1 a week.
The noble Lord's proposals also mean that low-paid employees will be considerably worse off than under the Government's proposals. For example, someone earning £40 a week will pay just £2 under the Government's proposed graduated scales, but, under the noble Lord's proposals, £2.70, over one-third more. This amounts to an attack on the lowest paid of the working population. The reductions in employee liability are not concentrated on the low paid as in the present draft of Clause 7. The noble Lord's proposal provides increases throughout the wage scale and this gives assistance to some who do not need it quite so much.
The noble Lord's amendments also do little for employers. He proposes nothing to compensate them for the loss of the structure of reduced rates for their contributions. At a stroke he would add some £880 million to employers' costs in a full year, which will not help the creation of jobs one whit. The main aim of the Government's proposals for graduated rates of national insurance contributions is to improve the employment prospects of the low paid and particularly of young people seeking their first job.
I turn finally to the second of the noble Lord's amendments. I have to acknowledge that at the upper earnings limit there is a savage end to his largesse. He proposes that the upper earnings limit should be abolished for employees just as we have abolished it for employers' contributions. The effect on employees, however, is very different from that on an employer.

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Whereas many employers will recoup from the reduced liability for their lower-paid employees what they would incur in increased liability for the higher paid—that is, for those above the upper earnings limit—the individual employee has no such offset. Nor is it possible for the Government to mitigate this increase by adjusting the higher rates of income tax. There is a substantial body of employees, about 900,000, whose annual earnings exceed the upper earnings limit of £13,780 but who still fall within the standard rate band for income tax. The onset of higher-rate tax varies, of course, with individual circumstances. But assuming only the basic allowance, it is £18,405 for a single person and £19,665 for a married man.
For these people, above the upper earnings limit but still paying standard rate tax, there would be no way of preventing unacceptably high marginal rates of tax. It would mean an extra £8 a week for someone at the £18,405 level and over £10 a week at £19,665. Those employees who are also owner-directors of their company would be particularly hard hit, if their earnings were high, because they would have to pay both the employees' and the employers' shares of the contributions on all their earnings. My right honourable friend's Green Paper on the reform of social security makes clear that for these reasons we have rejected the abolition of the upper earnings limit for employees.
To sum up, it is true that the assistance we are giving to the lower paid will create small new steps in contribution liability where none exists today. But the steps are all small both in relation to earnings and to the current cliff edge at the lower earnings level. Everyone affected will be better off in absolute terms than at present and jobs will be created. By contrast, the noble Lord's alternative creates grave distributional problems. A more rational relation between tax and national insurance contributions requires very careful consideration. I would urge your Lordships to await the proposed Green Paper on personal taxation and meanwhile to reject all these amendments.
Lord Banks: I should like to thank the noble Lord very much for his comprehensive reply to these amendments. The amendments were designed to make the working more simple by removing the administrative problems created by having these three different tiers by the very simple procedure of excluding the first £10 and extending the payment by employees throughout the range of earnings.
I do not think that the noble Lord replied to the point about the reduction of the rate which could have been done for the employers' contributions as well as for employees if the top earnings limit were to be abolished. It is wrong to assume that the same percentage would be applied and to work out what that would cost. Indeed, somewhere around £800 million has been added to Government revenue by what has already been done with regard to employers. However, it would be wrong for me to try to reply to all the points that the noble Lord was good enough to set out. I would like to consider carefully all that he has said. In the meantime, I seek the leave of the House to withdraw the amendment.
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Amendment, by leave, withdrawn.
[Amendments Nos. 2, 3 and 4 not moved.]
4.15 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 5:
Page 5, line 3, at end insert—
("(6FF) The Secretary of State may by order make provision for the implementation of percentage rates, which are to he paid in the primary earnings brackets set out in subsection (6B) above, to be deferred until the weekly earnings reach a sum which equals the lower earnings limit of a particular bracket plus the percentage rate of that bracket applied to its lower earnings limit.").
The noble Lord said: This amendment springs from remarks that I made at col. 545 on Second Reading, when I pointed out that the cliff edges that my noble friend Lord Young has been talking about, or perhaps, as I might call them, the pay traps, as opposed to the poverty traps, are quite serious and cannot readily be swept away because of the implications that they could have for industrial relations and wage bargaining. I would not take exception to what my noble friend the Minister Without Portfolio was saying about all the benefits of the broad picture of the new scheme that is proposed in the clause. But he did not say, or did not take into account, that the fact that there are these cliff edges could have quite serious implications for wage negotiations.
It could well happen that someone having a 5 per cent. increase negotiated for him will be able to say that if this takes him over the edge from one bracket into another, he will have to pay—if he goes over the bottom one—5 per cent. on national insurance, not having paid anything at all before, and that this will sweep away the benefit of the pay increase. Therefore he, or his trade union for him, will seek to negotiate an even greater pay increase. But the company will neither wish nor need to do this for people who are not going over the cliff edge. I did say that it seemed to me that it would be very difficult to draft an amendment to meet this point. With the aid of a wise industrial relations expert of many years' standing, we have come up with Amendment No. 5.
The principle here is that it eases the movement from the lower bracket to the higher bracket. If, for instance, you take the current lower earnings limit of £35.50 for bracket No. 1, the imposition, if my amendment was accepted, of the 5 per cent. NHI deduction would not be effective unless the new weekly earnings were on or above £37.28—that is, £35.50, which is the current lower earnings limit, plus £1.78, which is 5 per cent. of £35.50 rounded up. This means that if there are increases that hover around the borderline, which is very likely—we know from other statements that these borderlines will move with inflation and are not therefore static—they will be spared having to pay this extra NHI deduction until they reach the new softened limit.
However, it is not really good enough. I take the example that I gave. Let us suppose that the new earnings, after a percentage increase, were £38. The person would suffer some of the pay trap shortcomings but not all of them. In pointing that out to my noble friend Lady Trumpington when trying to indicate the line that I was going to pursue, I invited her to instruct the cleverest of her advisers to get to work to see whether they could not improve these provisions even

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further. At this point I strongly say to my noble friend the Minister Without Portfolio that the industrial relations implications are of such a nature as potentially to cause all types of trouble which will then negate the advantages which, I fully admit, should accrue from the general policy which is within the Government's amendments.
Therefore, I hope that my noble friend will say that he understands the point that I am making and that he will give it consideration and see whether he can come back on Report with an even greater improvement than the suggestion which I am putting forward. I beg to move.
Lord Young of Graffham: Having just successfully climbed the cliff edge put up by the noble Lord, Lord Banks, I hope that I shall not fall promptly into the pay trap put up by my noble friend. I understand my noble friend's concern. However, the fact remains that in absolute terms all employees earning up to £90 a week are better off. There are, indeed, more cliff edges, but the steps will be smaller. To make a comparison, I would say that it is easier, perhaps, to climb a staircase than a cliff face.
I read with interest what my noble friend had to say about the effects where increases in earnings cross the threshold between one contribution rate and another. I read what he had to say in the Second Reading debate and I also listened with interest and care to what he has had to say just now. However, I am afraid that it only goes to underline what he said at Second Reading; namely:
"it will be very difficult to produce suitable amendments … without upsetting the whole principle of what the Government are clearly trying to achieve".—[Official Report, 3/6/85; col. 546.]
I can quite see the thrust of what my noble friend intends by this amendment. By deferring the onset of a higher rate of contribution he hopes to level out that small dip in the graph where, unless gross earnings increase by an amount sufficient to compensate for the higher contribution rate, there is a small decrease in net pay. However, I have to say that this is an inherent feature of a system of progressively higher rates which, once triggered, then apply to all earnings. What is to happen when a higher rate, despite having been deferred according to the formula in this amendment, eventually applies after all? Without some additional mechanism, a cliff edge occurs again, but at a different point.
My noble friend cannily left the details of his scheme to be settled by regulations, and did not specify what the additional mechanism might be. It is true that the abruptness of the cliff edge might be reduced if, within that relatively small band of earnings over which my noble friend proposes to defer the application of a higher rate, there was a more gradual change to that higher rate. Thus between £55 per week (the threshold between the 5 per cent. and 7 per cent. rate) and £58.85 (the point to which he defers the onset of the 7 per cent. rate) it would, I suppose, be possible to provide a succession of rates increasing from 5 per cent. to 7 per cent. by stages. But I have to say that the administrative complexity that this multiplicity of rates would introduce for both employers and DHSS would I suspect far outweigh the benefits which my noble friend hopes to achieve. Indeed, I am engaged at
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the present time on an exercise with the object of finding out where, with safety, we can reduce the amount of regulation. I would hate to be adding unnecessarily to it by this process.
So long as we still have earnings-related benefits—and my right honourable friend's social security Green Paper proposes a phasing out rather than sudden withdrawal of SERPS—it will be necessary to record the contributions paid and to translate these into earnings factors from which benefit rights are calculated. The introduction of the new structure of three different employee rates will make that calculation difficult enough, entailing approximations which err on the side of generosity in order to avoid damage to benefit entitlement on the one hand, or more complex recording by employers on the other. Introducing a series of additional intermediate rates to smooth out the steps would clearly increase these problems.
I have already argued in response to the amendments proposed by the noble Lord, Lord Banks, that the new steps are small, both by comparison with the current cliff edge at the lower earnings level and also in relation to the earnings levels at which they actually occur. I think that we should see how these steps operate in practice before complicating the legislation now before your Lordships. My personal view is that they will not cause the difficulties that my noble friend fears. But he may be right and I may be wrong, in which case we will need to look at this again. In the longer term it is possible—and I put it no higher than that—that when we have seen how the new graduated bands operate we may be able to find if necessary some way of smoothing the steps, particularly in the light of the long-term changes in contributions and their relation to benefits which my right honourable friend has proposed in his recent Green Paper. Meanwhile, I would ask my noble friend to withdraw his amendment.
Lord Mottistone: I thank my noble friend very much for his very full comment on my amendment. Perhaps I should have said earlier that I have worded it in the form of:
"The Secretary of State may by order"
introduce this so as to give him an opportunity not to do it precisely like that. It seems to me that that is what will be necessary when we have gained our experience from these measures. It would be reassuring to know whether there are facilities for doing more than what is provided for in subsection (6F). Indeed, subsection (6F) allows the Secretary of State to alter the number of brackets below the highest bracket.
However, as I see it, there are no powers for the Secretary of State by order to make a modification along the lines of my amendment if it is shown that my fears about industrial relations are very serious ones. It might be helpful to have another order-making power to cover that type of gap. If there is no such power, perhaps I may come back at a later stage in our discussions on the Bill and put foward an amendment providing for such an order-making power without specifying what it does. I do not know whether my noble friend has an answer for me?
Lord Young of Graffham: I can assure my noble friend that I am told that we already have that power.
Lord Mottistone: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
The Earl of Caithness: In order that we may take the second Statement, I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Supplementary Benefit: Board and Lodging
4.28 p.m.
Baroness Trumpington: My Lords, with the leave of the House I shall now repeat a Statement which is being made in another place by my honourable friend the Minister for Social Security on board and lodging payments under the supplementary benefits scheme. The Statement reads as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the arrangements for supplementary benefit payments towards board and lodging charges.
"The House will recall that consultative proposals on board and lodging payments were referred to the Social Security Advisory Committee in November 1984 and that in March of this year the Government laid regulations which came into operation on 29th April.
"The regulations were designed to achieve two main purposes. One was to contain the rapid growth in expenditure and to stop the abuses that had been taking place. The number of ordinary board and lodging cases had risen from 49,000 in 1979 to an estimated 139,000 in 1984, while annual expenditure in this area had risen from £52 million to an estimated £380 million over the same period. There was widespread public criticism that young people were too easily able to settle in such accommodation at the public expense often at levels of charges well above what could be afforded by people in work.
Our second purpose, at least as important as the first, was to ensure continued help at an appropriate level for young people who really do need board and lodging for more than a short time. We therefore took steps to exempt from time limits people such as those who were recently in care; who have children; who are disabled, mentally handicapped are or have been mentally ill; or who are in board and lodging as part of a programme of rehabilitation arranged by, for example, the probation service. We also exempted people living in homes qualified as hostels.
"We made it clear that we would be monitoring the new regulations with great care and would be ready to make changes quickly if the need were shown. That monitoring is of course continuing; but
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the initial indications suggest that, generally, young people with a real need to be in board and lodging for more than a short time should he covered by the various categories of exemption from the time limits for which the regulations already provide. It is therefore important that claimants or anyone else who is concerned about a particular case should ensure that any special circumstances are fully explained to the local DHSS office, who will give them careful consideration before any final decision on benefit entitlement is reached.
"We have however decided that an additional exemption category is needed to cover young people under the age of 26 who are living with their parents or step-parents in board and lodging accommodation. Regulations to achieve this will be laid before the House shortly; and until they come into effect we shall make special arrangements to help those people to whom they would apply.
"The regulations will also enable us to extend the exemption categories to cover other types of case if a need can be shown. As I have indicated, we believe that the present exemptions generally cover those to whom the time limits ought not to apply. But we think it right to ensure that we can act quickly and flexibly if it should become clear that there are other groups who should also be covered.
Mr. Speaker, the Government's objective is to strike a proper balance between curbing undoubted abuse and ensuring that genuine social security needs are effectively met. The additional proposals I have made today will help us to maintain that balance."
That is the end of the Statement, my Lords.
Baroness Jeger: My Lords, I thank the noble Baroness for repeating the Statement. Any amelioration is very welcome to this side, but I wonder why we have had a Statement today. In my view it is because of the severely critical publicity which has arisen following the cruel impact on some of the most vulnerable young people in our community which has resulted from these new rules. I know that I must not make a debate out of a Statement and so I shall ask the noble Baroness the Minister one or two questions. What happens to young people or older people while they are waiting for appeals to be heard? I understand that there is a long waiting period of total impoverishment if a young person appeals against the withdrawal of benefit. Is no discretionary payment made to tide someone over such a difficult period?
We know that the time limits laid down are far too short for many people to find a job, to put down roots, to get onto housing lists; and so there is inevitable hardship. The noble Baroness said that there are exemptions, but the problem seems to be that not every person entitled to exemption knows about it. In fact, some of the tragic cases we have heard about lately seem to suggest that some of these people would have been exempt from these regulations had anybody told them about it.
The noble Baroness has not referred to refugees. She will know that I have raised this point on previous occasions. She and I have had correspondence because of the anxieties of the British Council for Refugees

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about young people coming here from overseas with all kinds of problems of poverty and language difficulties and not being able to get the help that they need.
The Statement referred to the increase in the number of people claiming board and lodging. I wish the noble Baroness had said today, although I know she is only repeating a Government Statement, what the Government are proposing to do to deal with the causes of this homelessness, unemployment and misery. Instead we are given these increased figures. We know that the figures will rise further, because the Government's own social security advisory commission pointed out that the rules would create an army of young nomads roaming the country, having to move from place to place—
Lord Ross of Marnock: On their bikes, my Lords.
Baroness Jeger: It is as my noble friend says, though I do not think many of them can afford a bike nowadays. I appreciate the sympathy of the noble Baroness, but the exemptions are not widely known and are not working out because many of the disabled and mentally handicapped who are in board and lodging accommodation do not seem to be receiving the help and sustenance that they need.
The Statement says that there is to be an additional exemption category to cover young people under the age of 26 who are living with their parents or stepparents in board and lodging accommodation. But what is to happen to young people who have no parents or step-parents? Many of these children or young people do not even know their parents. They have been adrift for most of their lives and are the casualties very often of broken marriages and miserable family situations.
The noble Baroness may recall—I hope she will not mind if I quote it—a letter she wrote to me on 23rd May, referring to a statement I made on a previous occasion. I appreciate the courtesy of the noble Baroness. She always writes fully and sympathetically. She wrote:
"You felt also that the elderly mentally infirm should receive a separate, more generous rate. We do not consider it would be appropriate to introduce a further category, particularly one that would be difficult to define and administer".
There is nothing in the Statement today about any special help for this category of elderly mentally infirm. There is nothing about refugees or young people who are not with parents or step-parents. Though we are glad that the Government are giving a sidelong look at this problem, we believe that they are far from coping with the cruelty of the present situation.
Lord Kilmarnock: My Lords, we on these Benches should like to thank the noble Baroness for repeating the Statement. It shows the beginnings of an awareness of the problems being created by the new rules. To that extent as far as it goes we welcome it. But one has to say that it seems to have been prompted by some tragic instances which have taken place over the last few weeks and which have been reported in the press.
The Statement refers to the categories of exemption and it seems that there are now a number of categories.
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Are the Government satisfied that this information is freely and easily available and that the DHSS guidelines are clear, clearly displayed and available to those who inquire? As the noble Baroness, Lady Jeger, has said, it seems that the only real concession made in the Statement is not very far reaching, covering young people under the age of 26 who are living with their parents or step-parents in board and lodging accommodation. It would seem to cover the case of Vietnamese refugees living in the Access Hotel, Clapham who have been under threat, as many of them, who have received move-on letters, are living at the hotel with their parents. Can the noble Baroness confirm that those move-on letters will now be withdrawn as a result of the Statement? Even if the situation of the young Vietnamese refugees is covered by the Statement, there does not seem to be any more overall cover for the general category of refugees and asylum-seekers. Can the noble Baroness therefore assure us that refugees and asylum-seekers will now be included in the category of exemption and that this will be made clear?
The noble Baroness, Lady Jeger, mentioned refugees and I make no apologies for mentioning them again because they clearly suffer special difficulties. It is important for them to be able to build up links with members of their community, their doctor, to attend English classes at the same institute and to be within easy reach of any advice agencies that they might need. At the present moment they are hampered in their efforts to settle by being forced into a nomadic existence or they are obliged to depend on a voluntary agency to guide them on their every move. Can we have an assurance from the Government that that problem in particular will be included under the extended category of exemption?
Baroness Trumpington: My Lords, I thank the noble Lord, Lord Kilmarnock, for a kind of half-hearted welcome to these new proposals. I am disappointed that the noble Baroness, Lady Jeger, did not see fit to be gracious about the fact that we had speedily recognised, as we said we would, that there was a need for greater flexibility. The noble Baroness, Lady Jeger, asked what happened to people while appeals were being heard. The situation is exactly the same with any appeal against a benefit decision. There are no provisions for changing an adjudication officer's decision on entitlement until new facts are known or until an appeal tribunal overturns that decision.
With regard to refugees, which both the noble Baroness, Lady Jeger, and the noble Lord, Lord Kilmarnock, mentioned, may I remind them—and this applies to all the other points that they raised—that the Secretary of State can use discretionary powers when faced with any new category of people who appear to be in need. This includes the plight of refugees. If there are any particular cases that either the noble Lord or the noble Baroness know about, I hope that they will get in touch with my right honourable friend.
With regard to the Vietnamese in the Access Hotel (to which I think the noble Lord, Lord Kilmarnock, referred) they are receiving ex gratia payments until the regulations come into effect when they will be exempted. I hope that that is a satisfactory answer on

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that point. With regard to the more general question of refugees, young refugees living with their parents in board-and-lodging accommodation will be covered by the new regulations that we intend to introduce. We are in very close contact with the British Refugee Council about the problems of young refugees. I understand that the chief adjudication officer will be issuing additional guidance shortly to help sort out the problems; but in any case the exemption categories, under the new discretionary power that we shall be introducing, could be extended to cover, as I have said, any category shown to have been missed.
With regard to what happens to young people with no parents, new regulations will allow us to extend the exemption categories to any other groups if a need is shown, and of course we shall be looking at this particular problem. It might be that they are living with grandparents who would form yet another category. It would be very rare. The noble Baroness, Lady Jeger, asked whether the new arrangements would not penalise elderly and disabled people. I would say that the new arrangements are designed to ensure that elderly and disabled people can continue to meet reasonable charges for care. Drug and alcohol users and physically handicapped people are likely to benefit from the new proposals.
The proposals include a change in the treatment of attendance allowances for those in private residential accommodation and the introduction of a new level of personal expenses allowance. Both changes are intended to fit more closely the actual needs of people in residential homes and should not cause hardship. We intend to review the limits within the next 12 months instead of freezing them until November 1986, as originally intended. In doing so, we shall have regard to proprietors' behaviour as well. Moreover, there will be generous protection for people already in homes. It is certainly not the intention that anyone should be deprived of the type of accommodation and care that they need as a result of these changes.
4.45 p.m.
Lord Taylor of Blackburn: My Lords, may I thank the Minister for repeating the Statement? How sad I feel that the Statement does not go far enough! Many of us who are active in the voluntary service have, as I have, wives who work in the citizens' advice bureaux. My wife is constantly coming to me and telling me what is going on there and telling me about case after case of people who are not getting the benefits and asking to be moved on from one place to another. There is only one thing for it. It is for this Act to be completely repealed. It is causing more hardship than anything I have known for many years. Therefore, I sincerely hope that the Minister and the officials will realise how difficult it is for those who are working in the field to explain to people what are their entitlements. I hope that something is done very quickly. I know that the noble Baroness has said that the Minister will look at it again and again. I hope that the Minister will take note of the numerous complaints that are coming from all over the country.
Baroness Trumpington: My Lords, the noble Lord, Lord Taylor, is slightly overlooking the fact of the vast
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increase in sums from £52 million to an estimated £380 million in the year. I must say to him that if he knows about all these complaints, I should be very grateful if he would write to me or to my right honourable friend because unless these complaints are brought to our notice, how can we know about them?
Lord Banks: My Lords, can the noble Baroness say whether former foster children remaining in their former foster parents' home are now to be exempt?
Baroness Trumpington: My Lords, there is this terrible moment of silence! I think they are to be exempted and that foster children would count as being as children with parents. If I am wrong, I apologise to the House in advance and I shall write to the noble Lord.
Baroness Turner of Camden: My Lords, is not the vast increase in sums very largely a reflection of the increasing unemployment that we have seen in recent years among young people in particular? I should like to direct attention to some of the publicity that we have had recently in connection with young people because it seems to me that those are the category most at risk, rather than some of the exempt categories. I welcome the exempt categories, of course; but the people who are at risk it seems to me are young people who have left the areas where they were born because of the high unemployment in those areas in the belief that they can get work by moving to other areas, sometimes to the south coast. But when they get there, they find that unemployment still exists there; and they have to have some form of accommodation. That is where the problem lies, so it seems to me.
Baroness Trumpington: My Lords, I think that the noble Baroness is not entirely correct. Of course, unemployment comes into the picture; but there is also the question of population movements and where these young people are finding it most attractive to go, regardless of work opportunities. It is definitely wrong that young people should be occupying accommodation which they would not be able to afford if they were in work and which other people who are in work cannot afford.
Lord Stallard: My Lords, I, too, welcome the Statement repeated by the noble Baroness. I was slightly surprised that the noble Baroness expressed amazement that my noble friend Lady Jeger did not go into ecstacies of gratitude over the content of this Statement. I do not think the noble Baroness should be surprised at that when one considers that we made all the criticisms, some of which are now being replied to, in the Second Reading debate and also in other debates in this Chamber.
Is the noble Baroness aware that we said then, as I would wish to repeat now, that it is a totally unnecessary measure? It was introduced in a panic in response to a report in a newspaper that some kids were living it up at the seaside at the state's expense, The Government were panicked into introducing these regulations. Is the noble Baroness aware that we said then that it would have been far better to await soberly the outcome of the review into social security generally and then to do something more permanent and more

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acceptable than these panic regulations? It is hardly surprising that we are not over the moon, to use a football cliché about this.
The noble Baroness has repeated the figures that she mentioned on Second Reading. They have gone up from £52 million to £380 million. Can she tell us how much of that is taken care of by the normal inflationary process, which has been quite dramatic? Can she say how much of it was taken by the "one-off" exercise in 1982–83 when there had to be such a dramatic increase in the amounts payable that of course it pushed up the figures quite tremendously? It still did not meet the real costs, but to bring it nearer to the real costs there had to be that dramatic increase. That must be reflected in the huge increase she has mentioned.
The noble Baroness mentioned also the huge increase in the number of claimants. My noble friend has already referred to unemployment. How much of an effect has that had? How much has the lack of alternative rented accommodation had an effect? We know that local authorities have cut back on the provision of rented accommodation and the provision of purpose-built hostels and so on. I would ask the noble Baroness to recall that many of the larger hostels are going through a refurbishment process because of fires and tragedies which have occurred in recent years and which have caused them to spend a great deal of money on necessary repairs, rebuilding and so on. That has meant a reduction by thousands in the number of beds.
The noble Baroness may recall that I said to her in a recent debate that within a month of these regulations being introduced 10,000 youngsters in central London would be on the streets. I was wrong: it is more than that. I think that the 500 submissions the department received all made similar statements: they were absolutely horrified at the kind of regulations being introduced.
Perhaps I may say finally that the Government still seem to be dealing with the symptoms and not the causes. It was the causes that I wanted to be dealt with and to be properly discussed as a result of the social security reviews. I would like to say—
A noble Lord: No!
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, if the noble Lord will forgive me, he really is trying the Standing Orders of your Lordships' House a little hard. There is a Standing Order that we do not turn the repeating of a Statement into a debate. The noble Lord is making skilful points, but he is making an awful lot of them.
Lord Stallard: My Lords, I apologise if I am abusing the Standing Orders. It was certainly never my intention to do any such thing. I was trying to ask a number of questions. I was going to ask another question. Is the noble Baroness aware that this time limit—whether it is two, four, six or eight weeks—is totally unrealistic in order to find work or to get oneself put on to the panel of a medical practitioner? Will the noble Baroness review that time limit? I had better not ask any more questions because of the Standing
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Orders, but there are thousands more questions still unasked because of the nature of these panicky regulations that could have waited for a proper debate.
Baroness Trumpington: My Lords, I am lucky enough to be able now to correct myself in what I said in answer to the question of the noble Lord, Lord Banks, about foster-children. They are not covered under the specific change to the exemptions, but that is one group we may well want to cover by the use of my right honourable friend's discretionary powers. I am sorry if I misled the House earlier.
With regard to what was said by the noble Lord, Lord Stallard, in his Second Reading speech, may I say that he made typically socialist remarks, totally regardless—spend, spend, spend—of the fact that the money has got to come from somebody's pockets, and it is coming from his pockets just as much as from those of other people. We have already dealt with all the points that he raised when the order was first debated. They have nothing to do with the Statement that I repeated to your Lordships today.
Baroness Jeger: My Lords, I must protest for a moment against what the noble Baroness has just said. Of course the money comes from our pockets, and from some of us it comes willingly and gladly. We would pay more if we could do something to remedy the evils we have been discussing. I think it was very ungracious of the noble Baroness to make that remark about my noble friend Lord Stallard, because he pays his taxes, as we all do. I am sure we would all do so without regret if we could feel that they were being used for these kinds of purposes.

Social Security Bill
4.57 p.m.
House again in Committee.
Clause 8 agreed to.
Clause 9 [Abatement of invalidity allowance etc., where beneficiary entitled to additional component in pension or to guaranteed minimum pension]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 6:
Page 11, line 36, leave out ("below") and insert ("of the Social Security Act 1975").
The noble Earl said: With the leave of the Committee, I should like to speak also to Amendment No. 7.
Amendment No. 7: Page 12, line 9, leave out ("below") and insert ("of the Social Security Act 1975").
These are purely drafting amendments to correct mistakes in the present wording of the Bill. It is necessary to relate the references to Sections 124 and 126A in Clause 14 specifically to the Social Security Act 1975. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 7:
[Printed above.]
On Question, amendment agreed to.
On Question, Whether Clause 9, as amended, shall stand part of the Bill?
Lord Kilmarnock: I have given notice of my intention to oppose the Question whether Clause 9 shall stand part of the Bill? Clause 9 covers several pages of the Bill. It concerns the abatement of invalidity allowance and so on, where the beneficiary is entitled to an additional component in the pension or to a guaranteed minimum pension. The Government's proposal in this Bill is that in future invalidity pensioners will not be able to receive both the age addition and the earnings-related component on top of their basic pension. In April 1983, 37 per cent. of all invalidity pensioners were receiving both additions. That implied then that about 300,000 claimants would be affected by the change; and I understand that in fact the number now stands at 375,000. Therefore these claimants will lose the smaller of the two additions that they receive.
From November 1984 the three rates of age addition are: £7·50, £4·80 and £2·40. The maximum current payment for the earinings-related addition is £16·21 and the average payment to those receiving this addition is about £3. Thus, someone who is now receiving £3 earnings-related and a £2·40 age addition will lose the whole of the age addition. On the other hand, someone who is receiving £3 earnings-related and £7·50 age addition will lose £3. In fact, owing to the way in which these deductions are to be administered, the earnings-related component will not disappear in this case and instead the claimant will continue to receive the £3 earnings-related and the age addition will be paid net of the £3 at a rate of £4·50: in other words, £7·50 less £3. In this way, the Government can claim that the earnings-related part of the pension is being protected, as promised in the Green Paper, but this is really just semantics.
I wanted to draw the attention of the noble Baroness to the view of Mr. Stewart Lyon the independent adviser on their review, in opposing the abolition of SERPS. One of the reasons that he gave for this was:
"Nothing is said about how invalidity benefits will fit into a regime of compulsory private pensions. Given the small margin for personal invalidity benefits in the private sector does this silence mean that the difficulties are too great and the disabled are to be sacrificed on the altar of expediency?"
Some of your Lordships might wonder why it is right, or how it can be justified, that both these payments should be received together. The reason I think is simple. The Government's argument is that offsetting the age allowance against the earnings-related additional component is based on the notion that the two overlap. But given that the additional component relates to what the individual earned when able to work, which is one thing, and the age allowance relates to compensation for loss of earning power, which is another thing, then in my submission there can be no overlap, since the two were designed in recognition of two totally different circumstances.
I think it emerges that what is really happening is that the Government are using Clause 9 to pay for Clause 14 to which my noble friend Lord Banks will be speaking in due course. In effect, it is giving with one hand and taking away with the other, and this is confirmed in a letter which the noble Baroness, Lady Trumpington—who, I am glad to see, is back in her seat—was kind enough to write to me on 13th June. She says:
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"The savings from offsetting additional component against invalidity allowance build up more slowly than we had anticipated. Our current estimates break down as follows."
The table she then gives clearly shows that the net cost of the concessions under Clause 14 is more than offset by the net savings under Clause 9, to the tune of £25 million over the period between now and 1987–88. The noble Baroness then goes on to say—because this was a matter I raised at Second Reading—that:
"You are therefore quite right to think that overall these three measures will reduce benefit expenditure below what it would otherwise have been, though the effect is not borne only by the benefits for the long-term sick. We have not pretended otherwise, and I believe that both Clause 9 and Clause 12 will save money and are sensible measures fully justified on their own merits".
Of course in that quotation she is referring also to Clause 12, which is not at issue in my amendment. Her argument is that these are sensible measures—I repeat her words—"fully justified on their own merits".
There may be two opinions on this. It seems to me quite extraordinary, as the noble Lord, Lord Stallard, has already suggested, that these measures should be brought forward in this Bill with the Government's Green Paper coming shortly after it, and in fact overtaking it. In Chapter 1.42 of the Government's Green Paper on page 6 they seem to recognise that there are some considerable difficulties in this area, and they say:
"The Government will be giving further consideration to the implications of the new arrangements for invalidity benefits."
On those grounds, I would seriously suggest to the noble Earl who will reply to this debate that the clause should be withdrawn from the Bill at this stage. It is quite inappropriate, particularly during the process of consultation on this document which is supposed to be taking place. In effect, I suppose we are actually performing some of this consultative process this afternoon. In view of that, I would strongly suggest to the Government that they withdraw the clause, that they consult with all the interested bodies concerned, that they have regard to the very serious effect that this will have on invalidity pensioners, and that they come forward with their final proposals; whatever they may be, in the final legislation which follows the consultation on this Green Paper.
Lord Stallard: I want to support the noble Lord, Lord Kilmarnock, in this amendment, and I hope I remain within the Standing Orders in this instance. May I start by saying that we gave a cautious welcome to the announcement about the restoration of the cuts to the invalidity benefit, among others, that had taken place in the Social Security Act 1980. I suggested then that this clause was unnecessary. In fact I suggested that this part of the Bill was unnecessary, because this restoration could have been done in the normal process, in the same way that had been applied years ago to the unemployment benefit and to the invalidity allowance. So there was another reason behind the necessity to introduce such a clause and such a part of a Bill.
Having said that we gave a cautious welcome to that abatement, we certainly did not welcome Clause 9 and the provisions of Clause 9, because that claws hack most of it from many thousands of people—in fact I think the Secretary of State has admitted that half of

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the people who claim, that is half of 750,000, would lose most of the abatement in clawback. There was therefore no welcome for a clause that would claw back the abatement that was being offered in another two clauses. It is true of course that in order to cover this up Clause 9 is extremely complicated. As the noble Lord, Lord Kilmarnock, has already said, it covers five pages—one clause covering five pages of a Bill that was introduced in a panic. Very few people had the time to consider this Bill in the detail required because of the immediate announcement of the social security reviews and the Green Papers. It was all crowded into that time scale and gave no one a real chance of going into this proposal in depth.
However, we have been able to look at it since. We think it is still complicated, but in essence it offsets the invalidity allowance and the additional component to invalidity pension, retirement pension and widows' pension. It offsets one against the other. The noble Lord has already said that. I do not accept—I do not think anyone I have spoken to accepts, and I have spoken to a number of professional people who understand these things—that the Government have made a case out for the overlap. They claim an overlap, but in fact there is no overlap.
I think I should go back a little to talk about when the invalidity allowance was first introduced by Sir Keith Joseph in 1971, in recognition of the fact that people who became incapable of work early in life have not had the opportunity to build up as many assets as those who fall permanently sick at a later age. The invalidity allowance was £7.50 for people who were permanently incapacitated since before the age of 40, £4.80 for those incapacitated before the age of 50 and £2.40 for those incapacitated before the age of 60–55 for women. The additional components were introduced by the Social Security Pensions Act 1975 as part of the eventual all-party agreement, the consensus on the question of SERPS, the earnings related pension scheme. If it had then been considered—and I recall the tremendous amount of consideration and discussion surrounding that measure in 1975 both inside and outside the Palace of Westminster—that the two benefits were paid for the same reasons, then the Government in my view would have taken steps to ensure that the overlapping benefit regulations applied.
Everybody knows about the overlapping benefit regulations and they should have been applied there and then, as soon as it was recognised. I hope that I shall not be told that it took another 10 years for the Government to recognise that there was a possibility of an overlap in these two benefits, because I do not accept that. I hope that the noble Earl will reply to that point. I do not think that the two benefits are the same, and the noble Lord, Lord Kilmarnock, has said the same thing. The rationale for each benefit is totally different, and therefore it cannot be argued now, nor could it be argued in 1975, that there is this overlap. The Government have used this question of overlap as the sole reason for reducing the amounts of these benefits.
I submit that there is another reason and for that other reason we have to look at the Explanatory and Financial Memorandum. There we see that in the first full year, 1986–87, the net cost of restoring the cut in
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invalidity pension will be £65 million, but that the savings that the Government will get from this clause and from Clause 12 are £70 million through Clause 9 and £20 million through Clause 12. So there is an overall profit of £25 million to the Government as a result of the introduction of these clauses. That is the real reason. The overlap is a convenient excuse which the Government thought would hold up, but it does not hold up. The fact is that not only is Clause 9 a nil-cost clause, it is a saving clause and the Government aim to save £25 million as a result of the introduction of these two clauses.
So in two short contributions we have proved that the clause is necessary and that it has to be reconsidered on the basis of the 1971 and 1975 Acts. I hope that the Government will take this away and review it. Then I hope they will come back later and say that they have taken this clause out of the Bill as it is totally unnecessary and that they have made a mistake in claiming that there was an overlap in these benefits.
Baroness Jeger: Very briefly, if the Government are saving £25 million under Clause 9 in 1985–1986 and £85 million in 1986–87, where are they getting it from? They are saving it only because they are taking it away from people who need it. They are taking this money out of the resources which many of these people need.
I wanted to ask why maternity benefit was not included among the items which would be regarded or disregarded, but as I read the Green Paper I see that it is because the maternity benefit is to be abolished altogether. This is another illustration of how this Bill is a total waste of time, since everything in it will be overtaken if the Fowler review goes through.
I want to refer to something that was said in Committee in another place, but I must first say, in passing, that Parliament must be tired of this Bill. It dragged through the Committee stage in another place from 11th December 1984 until 29th January 1985, yet here we are getting it now in what should be midsummer. It has been the most botched-up piece of legislation that I have had to put up with in my long experience.
But to return to what I was saying, the Minister said in Standing Committee E on 15th January 1985 (which is a long time ago), at col. 195 of the Official Report:
"However, the Government's intention remains to bring invalidity benefit into tax as soon as that is operationally possible. The fact that we have restored the abatement without bringing invalidity benefit into tax does not imply that that intention has been abandoned".
So we get these restrictions, these savings on capital expenditure, and a threat that there is to be taxation on these inadequate benefits. I hope that the noble Earl can answer those two questions: what is the relevance of maternity benefit to this clause, and what point have the Government reached in their decision about the taxation of benefits?
5.15 p.m.
The Earl of Caithness: I have listened very carefully to what the noble Lords, Lord Kilmarnock and Lord Stallard, and the noble Baroness, Lady Jeger, have said

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on what we consider to be a very important clause. As everybody has said, Clause 9 is technically a very complicated clause; but, as my noble friend explained on Second Reading, it is intended to provide that two elements which serve broadly the same purpose are not both paid in full.
Noble Lords opposite have argued that these two elements were introduced for completely different purposes; but that is clearly not so and that is where we have a complete difference of opinion. When invalidity allowance was introduced in 1971, it was not envisaged that those falling long-term sick before pension age would receive an additional component which offers the equivalent of an occupational pension, the absence of which was what invalidity allowance was intended to compensate. Duplication of provision can and does occur, and in our view the fairest solution to deal with this is to ensure that pensioners receive the equivalent of the higher of the two additions and that is what the clause does.
To put the financial consequences into perspective, as at April 1983 there were 737,000 invalidity pensioners, of whom 275,000, or 37 per cent., were getting both invalidity allowance and additional component. It is estimated that by November 1985 there will be 850,000 invalidity pensioners, of whom 375,000, or 44 per cent., will be getting both increases. Thus, 56 per cent. of invalidity pensioners will be completely unaffected by the proposals.
The noble Baroness, Lady Jeger, said that this was the most botched-up piece of legislation that she had come across. It is great fun. She is thinking of wonderful new words. I remember that last year she became equally excited about the Health and Social Security Bill. I think she called that the worst rag-bag. She is doing frightfully well. I hope that Roget's Thesaurus comes to her aid for the next social security Bill because with her vast experience she knows far better than I that social security Bills are complicated and cover a wide range of subjects. We look forward to her next instalment in due course.
The noble Lord, Lord Kilmarnock, rushed to the aid of the Green Paper. He answered his own question right at the end when he said that the Green Paper explains that these matters are being further considered. One of the purposes of a Green Paper is to consider a whole lot of matters, and to say that we should wait until we determine the results of the Green Paper after further consultation seems to be the most ludicrous way of legislating because in his opinion—and this is perhaps the Alliance's way of trying to get votes—we should not do anything as we are always looking to the future, to the next consultation, and dare not do it now.
The noble Lords, Lord Kilmarnock and Lord Stallard, asked for further justification of this clause. Invalidity allowance and the additional component, which were introduced at different times, are broadly intended to cover the same purpose and this has led to duplication of cover. Invalidity allowance was introduced as an addition to invalidity pension in 1971 and it provides additional financial help for those people who became chronic sick early in their working lives and who do not have the opportunity therefore to build up additional pension rights.
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But since 1979, it has been possible for invalidity pensioners also to get an earnings-related additional component added to their invalidity pension if they have been working and have paid earnings-related contributions. This was clearly not envisaged when invalidity allowance was introduced and that is why we are now acting to remove the duplication. In our view, the fairest solution is to ensure that the pensioners will receive the higher of the two additions and that is what, in effect, the proposed legislation will achieve.
The noble Lord, Lord Stallard, asked how much people will lose. I can tell him that more than half of all invalidity pensioners will not be affected as they do not receive both invalidity allowance and the additional component. For the remainder, the loss will vary between a few pence and £8.05; but for the majority it will result in a relatively small loss. The average amount of additional component in payment at April 1983 was £2.63. Does the noble Baroness wish to say something?
Baroness Jeger: I was just having a word with my noble friend.
The Earl of Caithness: The noble Baroness, Lady Jeger, referred to Clause 14. I have a good deal of information for her on Clause 14 but perhaps the noble Baroness can wait, as perhaps can the noble Lord, Lord Stallard, who started off on Clause 14. I have something to say on tax in due course.
The noble Baroness also asked about the maternity allowance and whether we should restore the abatement. I can tell her that we have no plans to do so at present but we shall look at this again when the benefits are taxed in the light of the economic and other circumstances prevailing at the time. The noble Lord, Lord Stallard, pointed out that according to the financial memorandum the savings here are about £25 million. That of course is not denied. It is in the financial memorandum and we stand by that.
However, I hope that he is not discounting the immense amount of good that the Government have done towards the long-term sick and disabled. I can mention such things as the ending of the invalidity trap and the reduction from two years to one year for the waiting period for long-term supplementary benefit. Last year—this is more in my mind than the previous two—there was the introduction of the severe-disabled allowance, which alone represented an increase of £20 million. I do not think that the noble Lord is entirely justified when he criticises us solely on making a saving on this clause, but perhaps we can discuss this again. Does the noble Lord wish to intervene?
Lord Stallard: Anybody can quote statistics to prove a case. I can prove that millions of people have lost as a result of the social security measures introduced since 1979–80. We know that pensioners and invalidity pensioners lost as a result of the two weeks that were added to the year in 1980–81. One week is added this year, which means three weeks' lost payments. It is estimated that the cumulative cost to a single person by November 1985 of the invalidity pension changes alone will be £354; and it will be £569 for a married couple. The Secretary of State has

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already said, and the Minister who is replying has said, that half the people will not be affected. He said it as though half means nothing. I put it another way round. I say that half of them will lose. The half is a half of 750,000 people. That is 375,000. He passed over that as though it was nothing. But 375,000 people will lose. Many of them will lose the whole benefit. If you have been getting £7·50 on one benefit and £7·51 on the other and you deduct £7·50 from £7·51, you are left with one penny. So it is possible to lose the lot on this transaction as a result of Clause 9. The losses have not been fairly estimated or enunciated by the Minister who has answered this debate.
The Earl of Caithness: I am sorry if the noble Lord does not think I have been fair. I have spent quite a long time on the people who would lose and on the amounts some people would lose. But the number of people who will lose the full amount is very small. I must make it absolutely clear that nobody is going to lose money. There is no cash reduction here. They might not gain as much if the upratings had gone on both; but as is clearly set out in the memorandum to which the noble Lord has referred, there is a saving on this clause. Although this clause and Clause 14 stand clearly on their own two feet, there is in our view considerable merit in looking at them to some extent together for the benefits that we can give under Clause 14.
I think I have covered all the points that were raised and I hope that the noble Lord will not press for the deletion of this clause.
Lord Kilmarnock: I am grateful to the noble Earl for answering the debate, though I am disappointed that the Government are not going to withdraw the clause when such very good reasons for doing so have been given from various quarters of the Committee.
I really cannot agree with the noble Earl when he says that these two elements are broadly for the same purpose. I thought that the noble Lord, Lord Stallard, had demolished that argument. The invalidity allowance, or age allowance as it is also called, is given in such a way that it is bigger the earlier you become incapable of work to compensate for loss of earning power and thus the capacity to accumulate pension rights. The additional component is calculated on a SERPS basis in respect of past earnings. These are two entirely different things. It will not wash when the noble Earl tells us that they have broadly the same purpose. When he tells us that 56 per cent. of the category concerned will be unaffected, that does of course mean that 44 per cent. will be affected.
As regards Roget's Thesaurus, I really do not think that the noble Baroness, Lady Jeger, will have any need for it in searching for more words such as "ragbag" or "hotch-potch", because she already has an extremely fertile mind. I am sure that it comes quite naturally from her.
The noble Earl said that my claim was ludicrous, but what seems to me and to many of us to be ludicrous is to legislate in this Bill, which will presumably be passed within the next month or two, and then follow it with another Bill which will be partly covering similar ground and which we understand the Government intend to introduce in the
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Queen's Speech in November. If anything is a ludicrous way of legislating, I submit that that is it.
The noble Earl has been quite frank. He has said that this is a cost-cutting or off-setting exercise. That was also the burden of the letter to me from the noble Baroness. They have been quite open about that. It will certainly have been noted by the 300,000 or more people who will be affected. If that is the way the Government want it, so be it, but it does not allow them to congratulate themselves on restoring the abatement in Clause 14 out of the money which they will have accumulated from the operation under Clause 9. That needs to be clear. If that is the road the Government are going to go down, we want to be quite clear about how it is working, and that is the way it is clearly going to work.
I shall read carefully, as I always do, what the noble Earl has said. I am not proposing to divide the Committee on this Motion this evening, but I can promise the noble Earl that we shall certainly come back to this question at Report stage.
Clause 9, as amended, agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 8:
After Clause 9, insert the following new clause
("Voluntary redundancy entitlement to unemployment benefit.
In section 20 of the Social Security Act 1975 (disqualifications for receipt of benefit), the following subsection shall be inserted after subsection (3)—
"(3A) For the purposes of this section, a person who has been dismissed by his employer by reason of a redundancy within the meaning of section 81(2) of the Employment Protection (Consolidation) Act 1978 after the volunteering or agreeing so to be dismissed shall not be deemed to have left his employment voluntarily ".").
The noble Earl said: With the leave of the Committee, I should like to speak to Amendments Nos. 8 and 19 at the same time.
Amendment No. 19: Clause 29, page 27, line 10, at end insert—
("section (Voluntary redundancy—entitlement to unemployment benefit);").
The amendment to Section 20(1)(a) of the Social Security Act 1975 is put forward to maintain our policy that those who are made redundant should not be regarded as having left employment voluntarily and thereby subject to up to six weeks' disqualification for receiving unemployment benefit even though they may have volunteered or agreed to be dismissed by reason of redundancy. This has been the situation until recently when the chief adjudication officer issued new guidance indicating that those who had volunteered for redundancy should normally be regarded as having left employment voluntarily and were therefore subject to a disqualification under Section 20(1)(a). The proposed amendment will restore the previous interpretation and put the matter beyond doubt. I beg to move.
On Question, amendment agreed to.
Clause 10 [Entitlement of married women to Category A retirement persons]:
On Question, Whether Clause 10 shall stand part of the Bill?
5.30 p.m.
Lord Tranmire: As an ex-Parliamentary Secretary of the ministry, perhaps I may congratulate the Government on their decision to remove the very obscure and unpopular married women's half test. However, I should like the Government to explain in some detail exactly what is involved in this provision. It appears that it is retroactive from only 22nd December 1984. There are very many married women who were serving overseas after the war, who were quite ignorant of the married women's half test and who have been fighting to get a retirement pension for many years. How will they be affected by the decision?
It seems that older retired married women will be at a disadvantage when compared with younger retired married women who retired after December 1984. I am sorry not to have given my noble friend notice of this question, but this battle is one that we have been fighting for many years, and that is why I was delighted to see Clause 10 in this Bill.
Baroness Trumpington: I greatly welcome my noble friend's remarks and am grateful for them. I have pleasure in explaining Clause 10, which will extend pension rights to some 25,000 women by removing the residual effects of the married women's half test from 22nd December 1984.
The half test was abolished in 1979 for women reaching the age of 60 after 6th April 1979, but it continued to apply to women who reached the age of 60 before then. Following careful consideration within the department in the light of the European Community equal treatment directive, this clause proposes abolition for the women still subject to the discriminatory test. I hope that the Committee will regard this as a welcome measure and a further step forward in the direction of equal treatment.. The cost of the change will be under £25 million in 1985–86, gradually reducing to almost nothing by 1990.
Clause 10 agreed to.
Clause 11 agreed to.
Clause 12 [Pension increases in respect of adult dependants—equal treatment for males and females etc.]:
Lord Kilmarnock Lord Kilmarnock moved Amendment No. 9:
Page 12, line 42, at end insert ("of at least £10 in excess of the lower earnings limit specified in section 4(1)(a) above").
The noble Lord said: This amendment affects Clause 12, which applies to Category A or C retirement pensioners or invalidity pensioners. It equalises the treatment of additions to invalidity benefit for spouses. The amendment is designed to ensure that earnings of less than £10 above the lower earnings limit will be ignored.
The present earnings limit for wives of invalidity pensioners is £45, and the present lower earnings limit is £35.50. The amendment would merely make the same arrangements for men as for women, which, after all, is one of the perfectly laudable objects of the clause.
The most usual cases are those of invalid husbands whose wives go out to part-time work. It would surely be wrong to force such wives to keep their earnings
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below the lower earnings limit, which would thus deprive them of National Insurance rights. We on these Benches see that as entirely wrong. We believe it may be due to an oversight on the part of the Government and hope very much to hear from either the noble Earl or the noble Baroness that they agree with us on this amendment. I beg to move.
Baroness Trumpington: I regret that I must disappoint the noble Lord, Lord Kilmarnock. Amendment No. 9 seeks to fix the amount which the wife of a retired pensioner or invalidity pensioner may earn and still keep the dependancy increase at an amount even higher than it is now—this at a time when one of the reasons for changing the provision is that it does not provide a realistic measure of dependancy.
The earnings limit is at present £45, as the noble Lord said, and tapered for higher earnings. The amendment would make this a minimum of £45.50. This really will not do. A pensioner's wife may earn however much she can without in any way affecting her husband's pension, but she ought not to qualify him for further benefit unless she is truly his dependant. If she earns more than he himself is getting by way of personal pension, surely she is not his dependant. In strict social security terms he becomes her dependant.
There is another reason why I take this view. We are trying to introduce a measure of equality in the terms and conditions for dependancy increases. The amendment specifies an earnings limit for the wife of a retirement or invalidity pensioner. Another amendment would give the same limit to the husband of a retirement pensioner but does nothing for the husband of an invalidity pensioner. We want a common earnings rule running across the long-term benefits.
Another consideration is the cost of this proposal. Not only would we forgo £10 million of savings to the National Insurance Fund in 1986–87, but we would have to shoulder the cost of giving equality of treatment to the husbands of pensioners. This would mean an additional cost of £1 million. With expenditure on social security running at £42 billion, we must look for ways of containing a burden which, after all, falls upon contributors to the scheme, many of whom have no dependants at all. Against this background, I hope that the noble Lord, Lord Kilmarnock, will see fit to withdraw his amendment.
Lord Kilmarnock: I thank the noble Baroness for her rather tortuous argument, which I shall of course read with the attention I always pay to her remarks. Just listening to what the noble Baroness was reading out has not immediately convinced me. She spoke about a measure of equality, but it seems to me that the amendment is introducing a greater measure of equality than that which is in the Bill as drafted.
Also, the noble Baroness has not answered the very real objection that if the proposals in the Bill stand, wives in this situation will be virtually forced to work below the lower earnings limit and will not therefore enjoy any national insurance rights. That is a very cogent criticism. I will read carefully what the noble Baroness said and will probably return to this point at

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a later stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Invalidity pension]:
Lord Banks Lord Banks moved Amendment No. 11:
Page 16, line 18, at end insert—
("(2) All invalidity pensioners shall be able to claim the total additional benefit which they would have received between 1980 and 1985 but for section 1 of the Social Security (No. 2) Act 1980.").
The noble Lord said: In 1980 the invalidity pension was abated by 5 per cent. In other words, everyone in receipt of invalidity pension received 5 per cent. less than they would otherwise have done. This was regarded by the Government as an interim measure pending the application of income tax to invalidity pension. It meant, however, that the 5 per cent. abatement was suffered by those who would not have been subject to income tax as well by those who would. Attention was drawn at the time to the unfairness of that situation.
Now it appears that invalidity pension is not, after all, to be made subject to income tax, and so it would appear that people who suffered the abatement, and those who would not have been subject to income tax, in particular, did so to no purpose. The Bill restores the abatement. The pension is restored to the level it would have reached had there been no abatement.
However, nothing is done to restore the losses sustained by invalidity pensioners over the years as a result of the abatement. The restoration of abatement will cost £65 million a year, but the Government are saving £70 million a year as a result of the abatement of invalidity allowance where a beneficiary is entitled also to an additional component or guaranteed minimum pension, as referred to by my noble friend Lord Kilmarnock and as introduced in Clause 9. Between November 1980 and November 1985 a single person will have lost a cumulative total of £354 as a result of the 5 per cent. abatement. For a married couple the figure is £569. The amendment would ensure that invalidity pensioners would receive a payment of the sum which they had lost in earlier years. I beg to move.
The Earl of Caithness: I have listened to the noble Lord, Lord Banks, with great care, but I am sure he will not be surprised to learn that I cannot recommend acceptance of the amendment. As the noble Lord pointed out, the Social Security (No. 2) Act 1980 provided for invalidity benefit and the short-term benefits to be uprated by 5 per cent. less than would otherwise have been due. This was part of the Government programme for reducing public expenditure. The fact that the Government have been able to restore the abatement in advance of bringing the benefit into tax does not mean that it would be right to restore the abatement retrospectively and so negative the provisions of the 1980 Act. The fact that the Government are restoring the abatement before
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taxation does not imply that the reasons for introducing it in 1980 have been discredited.
It is common ground with noble Lords opposite that tax on invalidity benefit and similar benefits should be brought in, and this was not denied in another place. This takes me to the point raised by the noble Baroness when we were discussing Clause 9. It is true that because of the way in which the Government have been able to raise tax thresholds over recent years the number of invalidity pensioners who would have been liable for tax would have fallen compared with a few years ago. Indeed, this was one of the factors which the Government took into account in deciding to restore the abatement now. But that does not alter the broad justification for the abatement in the first place.
The Government are pleased to be able to restore the abatement ahead of taxation. We are still considering possible methods of taxation but, as the noble Baroness will be aware, that is a matter for my right honourable friend the Chancellor of the Exchequer. I conclude by saying that there is no justification for going further at this stage.
Lord Banks: It appears from what the noble Earl has said that invalidity benefit is going to be made subject to taxation even though the Government have not yet made it so. That is an important admission on the part of the Government this evening, that that is what they intend to do. If the Government are able to restore the abatement and yet intend to proceed to taxation it destroys the argument that the abatement was introduced in the first place as an interim measure pending the introduction of taxation. It leaves the saving of money as the only argument in favour of it.
I do not intend to press this further this evening, but I am quite certain that we shall come back to this point at Report. I beg leave to withdraw—
The Earl of Caithness: Before the noble Lord withdraws his amendment, he referred to what he said was a major admission by the Government this evening that they still propose to tax invalidity benefit. In fact, it was not a major admission because it has been well known for some time. I reiterate that it is because we have been able to raise the tax thresholds over the years that we have been in office that we have been able speedily to bring in this piece of legislation.
Lord Banks: The impression had certainly got about that as the Government had done nothing as yet to apply taxation they were not now intending to do so. That impression has been dispelled by the noble Earl this evening. There is nothing else that I can add to what I have already said except to repeat that we shall undoubtedly return to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
5.45 p.m.
Baroness Trumpington Baroness Trumpington moved Amendment No. 12:
After Clause 14, insert the following new clause:
("Up-rating benefits.
.—(1) The words "in the month of June" shall be omitted from subsection (1) of sections 125 and 126A of the Social

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Security Act 1975 (annual reviews of benefits for purposes of up-rating).
(2) The following subsection shall be substituted for subsection (4A) of section 125—
"(4A) A review under this section or section 126A below shall cover a period of not more than twelve months beginning immediately after the end of the period covered by the last review under the relevant section.".").
The noble Baroness said: As my right honourable friend the Secretary of State has already announced in another place (and which was printed in the Official Report of this House) the Government propose that the 1986 uprating of benefits should take place in July and thereafter, starting in 1987, it should take place in April. This new clause is to enable this change to take place by removing the present requirement to review benefits each June.
The change will mean that pensions and other benefits will be uprated three times between November 1985 and April 1987, and uprating will thereafter take place at the same time as other changes in personal incomes, notably tax and national insurance contributions. It will also coincide with rent and rates changes and thus have an added advantage for local authorities administering housing benefit. I should emphasise that this clause permits the period between reviews to be less than 12 months but it does not allow it to be more.
There will be a consequential amendment to Schedule 6, which appears as Amendment No. 43 on the Marshalled List. I beg to move.
On Question, amendment agreed to.
Clause 15 agreed to.
Clause 16 [Period of entitlement]:
Lord Banks Lord Banks moved Amendment No. 13:
Page 17, line 11, at beginning insert—
("( ) The two lower rates of Statutory Sick Pay are abolished and the highest rate will apply from the coming into effect of this Act to all levels of earnings.").
The noble Lord said: Under the Bill statutory sick pay is to be extended from eight weeks to 28 weeks, replacing the national insurance sickness benefit entirely for most people. Only the self-employed, the unemployed and a small proportion of employees are excluded from statutory sick pay. At the end of 28 weeks, as is the case now for those on sickness benefit, all those still on statutory sick pay will go on to invalidity pension if they qualify. Sickness benefit is a contributory national insurance benefit. Employees have paid into the national insurance scheme with the expectation that they would receive adequate financial support from the state when unable to work through sickness.
Statutory sick pay is paid in three rates, whereas there is only one rate for sickness benefit. The result is that lower-paid married couples suffer under statutory sick pay whereas single people gain. A single man on £60 per week would receive £27.25 sickness benefit but £35.45 statutory sick pay. A married man on £60 per week, on the other hand would receive £35.45 gross (it would net to £32.26) under statutory sick pay as against £44.05 on sickness benefit. That is nearly £12 less. The amendment seeks to rectify the position
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as far as the lower-paid married man is concerned by abolishing the two lower rates and making the top rate apply to all.
It is not satisfactory—and I freely admit this—that a single contributor and a contributor with an adult dependant should be paid the same amount, but that is a defect which is inherent in the statutory sick pay scheme. We cannot, if the scheme maintains its present structure, help the married man who needs help without also helping the single man who is not so much in need of help. I beg to move.
Lord Kilmarnock: It has always seemed incomprehensible to me that people on lower wages should be assumed to have fewer expenses when sick than people on higher wages. Sickness is sickness. I should have thought that the demands on the family are exactly the same. There is another severe defect in statutory sick pay. As it is often lower than sickness benefit, it means that more people are forced to rely on supplementary benefit. That money will still have to be paid but it is coming from the supplementary benefit rather than from the sickness benefit source.
A further consideration which I think that the Government should have in mind is that in extending the period for statutory sick pay from eight to 28 weeks there may well be a danger of employers sacking employees to avoid payment over that prolonged period. I wonder whether the Government have given consideration to that.
Baroness Trumpington: Perhaps I may answer both noble Lords together. As has been explained, the amendment would abolish the middle and lower rates of statutory sick pay with the result that all employees would receive the top rate when sick, no matter what their normal earnings. The middle and lower rates of SSP, which this amendment seeks to abolish, were introduced in order to preserve an incentive to return to work. This is important. It is still open to employers to pay more to their employees if they choose, and many of course do so under their own occupational sick pay schemes. But it would be wrong to compel employers to pay SSP at rates closely approaching or exceeding normal earnings.
The majority of people who qualify for SSP at the lower rates will be young people and married women working part-time who would rarely be able to claim for an adult dependant if receiving sickness benefit; and even the lowest rate of SSP is higher than sickness benefit for a single person. While I am not saying that no one will ever be worse off on SSP than they would have been on sickness benefit, such a situation will not happen often. It is of course open to any claimants to claim supplementary benefit under the normal rules for receipt of that benefit if their situation warrants it.
With regard to the comparison of SSP rates with sickness benefit, the middle and lower SSP rates of £37.20 and £30 compare with a weekly rate of sickness benefit of £27.25. That is the rate payable to a person without an adult dependant. I want to emphasise here that 80 per cent. of people who get sickness benefit are paid at the £27.25 a week rate. Therefore we can say that most people getting the middle and lower rates of SSP are entitled to more now than they would have been from sickness benefit.

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The noble Lord rightly pointed out that unlike sickness benefit SSP is subject to tax and national insurance contributions, but even so the changes in contribution rates for the lower paid from October will ensure that the net SSP received will still be more than the standard sickness benefit rate. That leaves us with those employees who would have been entitled to sickness benefit for a dependent adult and thus would have received in current benefit terms £44.5 sickness benefit compared with gross payments of £37.20 or £30 SSP. I accept that those are the people who concern the noble Lord.
As I said earlier, only about 20 per cent. of people who get sickness benefit are paid that higher rate. We do not have information as to how many employees receive the middle and lower rates of SSP. Employers are not required to keep those statistics. But, as I have explained, common sense points to there being very few people who would be disadvantaged in that way. Most of those people on the lower rates of SSP would not have entitlement to an increase of sickness benefit for an adult dependant.
The noble Lord, Lord Kilmarnock, asked about SSP adversely affecting the job prospects of the chronically sick and disabled; but we have no evidence that that is so and there is no reason to suppose that the scheme should have that effect.
Lord Banks: I am grateful to the noble Baroness for her reply to this amendment. One of the things that she said was that the three rates were introduced in order to give an incentive to people to go back to work; but that does not apply in the case of sickness benefit. It seems to me that it is wrong to have different principles applying to benefits which are used for the same purpose. Certain categories of people get sickness benefit; others get statutory sick pay. It does not seem to me right that we should have a different set of principles for the one than for the other.
I think that the main point to which we wanted to draw attention—and the noble Baroness had accepted that we have a point—is the position of the lower paid person with an adult dependant. As we have shown, those people are worse off on statutory sick pay. It was their plight to which we wanted to draw attention. However, I do not wish to press the amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
On Question, Whether Clause 16 shall stand part of the Bill?
Lord Stallard: I am in just a little bit of difficulty here. I had originally intended to move that Part III and Schedule 4 of the Bill be left out. I have since been given to understand that that means that I oppose the Question that Clauses 16, 17, 18 and 19 shall stand part of the Bill. I seek guidance on whether it is in order for me to speak to the clauses on the Question whether Clause 16 shall stand part of the Bill or whether I have to deal with each one separately.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): I am advised that the noble Lord can speak to all the Motions together but presumably they will be put separately at the end.
Lord Stallard: I am grateful to the noble Lord. I should have been quite happy to move them separately if it was necessary.
I wish to oppose the Question that Clause 16 shall stand part of the Bill because I do not think that the case for extending the period of statutory sick pay from eight to 28 weeks has been made at all. I do not think that this part of this Bill is necessary. On the contrary, I think that it has aroused a great deal of hostility and anger in all sections of the community, both among those who may receive it and those who will have to administer it. We all recognise that behind all these measures is the cost cutting/nil cost aspect.
I am certainly not arguing that the existing national insurance sickness benefit is adequate or that the scheme is perfect. We have on a number of occasions argued that there is room for improvement. The statutory sick pay arrangements that came into force in April 1983 fell even further short of the inadequate national insurance sickness cover. Right from the beginning the arrangement which placed the responsibility for the payment of the first eight weeks of statutory pay on employers was heavily criticised. I gave a number of examples during the Second Reading of the Bill of the administrative difficulties that small employers in particualr experience. Those difficulties will inevitably be magnified if we increase the commitment from eight to 28 weeks.
I have had a number of letters—I shall not read any of them out at this stage; there will be time later on—to say that small employers are even more concerned than I thought they were. I could not be privy to all their considerations as I had been able to talk to just two or three of them. But it seems that there is widespread opposition among them to extending that statutory sick pay scheme. I can understand why. I should have hoped that noble Lords opposite particularly would have understood why small employers, or indeed any employers, would not welcome the huge administrative burden that is about to be loaded on them by the extension of the scheme to 28 weeks.
Because of their overheads and because no single company can possibly bear the overhead costs in the way that a central organisation can, it must be more efficient and cheaper to operate the sick pay scheme from the centre, as it was with the DHSS operating it through its network of offices, than it is for each separate employer to operate his own. That seems common sense to me, as it does to many small employers. Yet, the Government say that they are simplifying it. I would dispute that and so would the small employers.
Another matter that I mentioned on Second Reading and which I think is worth repeating is that most ordinary illnesses, such as severe colds, 'flu and other viruses, are fairly short lived. It is likely to be the most serious illnesses which last for up to or more than 28 weeks. In consequence, employers more than ever are likely to discriminate against people with records of frequent sickness. That is an inevitable consequence. People who understand industry and commerce and employers, must know that that will happen.
Disability is another one of my particular interests. It is quite often mistakenly equated with poor health

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because of the possibility of absences. The possibility of frequent absences will place those people in an even more invidious position than many of them are in now, given the present circumstances and the present employment situation.
6 p.m.
It has already been noted by employees, small employers and the trade unions that there has been an increase in employers monitoring sickness records. At a recent meeting which I attended in a school, for the first time sickness records of teachers appeared as an item on the agenda. There was already a monitoring of the sickness records of the people in that school. It is happening not only there, but also in industry. It will happen everywhere. It is inevitable that this monitoring process will now take place because of the responsibility, the administrative costs, and everything else that is being loaded on to employers because of this new increased time factor.
I have mentioned the disabled and their difficulties because we know that the rate of unemployment among the disabled is already much higher compared with that among the able-bodied job seekers. An extension to 28 weeks will do nothing to improve their situation. On the contrary; it must worsen their situation. All those who understand their position, and certainly the small businessmen, must accept that.
I repeat the quote that I used on Second Reading. The chairman of the small businessmen's association has said that employers and especially smaller businesses will be viewing disabled applicants with a very unfavourable eye. It must worry all of us that people are even thinking along those lines. Therefore we must begin to query whether this extension is necessary.
I understand, again from recent reports, that some small employers do not even yet realise that they have this kind of responsibility. They have simply said, "Oh, don't bother about it, we will carry on paying", and they have carried on paying a man his full wages while he was absent. That has saved them the necessity of going through all the administrative procedures. They do not realise the implications of continuing with that process into a 28-week period. They have simply glossed over it because it was in relation to a short period of illness and they have not been operating the Act as it ought to have been operated. Thus they now realise that they are going to have a fairly big shock and they are now very strongly objecting to this increase to 28 weeks.
The Minister has said that there was little, if any, difference in the two schemes, the national insurance benefit and the statutory sickness pay. We have proved that for a number of reasons statutory sickness pay is lower, that people when they are sick lose on statutory sickness pay as opposed to national insurance sickness benefit. One of the main reasons for this exercise is to save costs. We understand that. If the Government were as open on this clause as they were on a previous one, they would openly admit that they did this to save money, and therefore they know that people will lose.
We have figures to prove it. For instance, in relation to a married couple, the current rate of national
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insurance sickness benefit is £44.5, whereas the maximum statutory sickness pay would be £42.25. Thus they lose. Single people lose almost the same amount. We know that there are children's allowances, children's benefits and dependents' allowances under the old NISB, which are not given under SSP. We know that SSP is taxed and the other one was not. Thus, there are inevitably bound to be losses to people when they are sick. That is at a time when, in my view, they may be entitled to extra money because of the extra necessity for diets, medicines, special clothing and other costs which they incur as a result of long illnesses. In my view, the attempt to save money is a pretty squalid exercise.
I do not think that the case to extend the SSP scheme has been made out. I never thought that the case had been made to introduce it. Having said that, I recall that when it was introduced in Committee, a Member on the Government side proposed this course of action. He said that it should be extended to 28 weeks. The Government Minister, replying to the debate in Committee, demolished his arguments and pushed the issue to a vote. The Government were opposing any introduction. The Minister said:
"If we were to extend that period"—
that is, eight weeks to 28—
"there would be problems with employees with families. There has already been much criticism of the sick pay scheme on the basis that it provides for flat rate payment, irrespective of family circumstances … That argument would be much reinforced if we were to carry that period beyond 28 weeks".
That did not come from this side of the House at all. It came from the Government Minister replying to a Back-Bencher on the Government side who was trying to do what the Government are now doing in this Bill. I do not know how they will justify these matters, but they will. They have much cleverer research assistants and backers than I have. They can do all kinds of things and no doubt they will. But I suggest that they have not done it correctly.
However, as well as that, the Select Committee favoured a 28-week extension. Those who favoured a 28-week extension favoured it on two conditions. First of all, there would have to be substantial increases in child benefit sufficient to make up for the loss that such families would endure under statutory sickness pay. Now the opposite is true. Child benefit is not being increased. I think it is being cut. It is certainly not being increased to the levels that were envisaged by those who at that time were suggesting that it should be increased to 28 weeks. Secondly, the Select Committee recommended that the low paid should receive normal earnings rather than a substantially reduced figure merely because they were low paid. Both of those conditions would have been acceptable at that time, or would have been partially acceptable, to the people who were suggesting 28 weeks. I therefore submit that the case has not been made out for extension to 28 weeks. It never was made out for the eight weeks and it certainly has not been made out for the 28 weeks. Therefore I oppose Clauses 16, 17, 18 and 19 standing part of the Bill.
Lord Tranmire: In reply to the noble Lord, Lord Stallard, who has just spoken, will the Minister give an explanation of the difference on the taxation side? It is

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perfectly true that the man who is on sick pay and goes on to 28 weeks will have to pay his income tax, his pay-as-you-earn, on it. He will also have to pay his national insurance contributions as an extra on that. It amounts to a great deal.
I think the time is coming when we must have an investigation into the effect of national insurance contributions and pay-as-you-earn on sickness benefit and statutory sick pay. We cannot have one taxed and the other not taxed, and one included in the wage for national insurance contributions. I should have thought the time has come to remit that to a committee to look at and to advise on, so as to get one form of treatment for both.
Baroness Jeger: This may not be the time to have a fundamental debate about the statutory sick pay scheme, though I think that one is very badly needed. We have very little evidence of how it is working out. We have had assurances that matters are going quite smoothly, but I do not know on what evidence that is based. All that I know is that the Explanatory and Financial Memorandum states that as a result of Clause 16 there will be,
"an increase in revenue to the Consolidated Fund from the income tax on statutory sick pay. The overall effect of these changes will be to save about £200 million in public expenditure".
If we are saving £200 million, that means that people on statutory sick pay are getting £200 million less. We are constantly told that any increases have to come out of the taxpayers' pocket. But these increases are going to come out of the pockets of the sick and the disabled, and especially the pockets of those most frequently ill who will be at a financial disadvantage and who will also be at a disadvantage in the employment market because their sickness record causes a nuisance if not an expense to employers. I hope therefore that the Government can say that there is to be some fundamental review of what was a very bad scheme which will be made worse by the extension of time to 28 weeks.
Baroness Trumpington: I shall ask your Lordships to resist all the words of the noble Lord, Lord Stallard. As your Lordships know, Clause 16 extends the duration of statutory sick pay from eight to 28 weeks. As some doubt has been expressed about the advantages of the SSP scheme and the wisdom of extending it, I should perhaps say a few words about this. The move to 28 weeks, liability is not as considerable as it may at first appear. Employers are already dealing with nearly 90 per cent. of short-term sickness spells. The average length of a spell of sickness is about 10 days. Only about 10 per cent. of sickness lasts longer than eight weeks. Of those spells, around half last no longer than 13 weeks. We do not therefore expect the ongoing administration costs of extension to be large. I would, however, stress that we are very conscious of the need to keep procedures as simple and flexible as possible. This is certainly our aim.
We are confident that the extension will be taken successfully on board by employers and will be to the benefit of employers and employees alike. In addition, the employer will be compensated in full for all the SSP that he pays out and for the national insurance contribution payments on that SSP. Although some
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organisations representing small employers objected to the SSP scheme in principle, the majority of comments that we have received on our proposals following the consultation document that we issued have not been against the extension.
With regard to the success of the SSP scheme for both employers and employees, mentioned by the noble Lord, Lord Stallard, SSP was introduced in April 1983 after a long period of consultation with both employers' and employees' representatives, and there can be no doubt about its success. Would the noble Lord, Lord Graham, like me to pause? On the employers' side, the SSP scheme has been successfully incorporated within employers' bankroll systems with little trouble or upheaval, while, for employees, fears expressed about the effect that SSP would have, for example, on job prospects where an employee had periods of sickness, have proved groundless. Indeed, there is evidence—I substantiated this in my speech at Second Reading—that many employees positively prefer the SSP scheme to state sickness benefit. Of course, some mistakes and errors are occurring. It would be very strange if this was not the case. The Government have never sought to deny it. But these are mainly of a very minor nature, and the position will improve with experience.
Also, as I again explained on Second Reading, because we are concentrating our checks on those employers most at risk, the level of mistakes discovered is misleading if applied to all employers. In general, the SSP scheme is working well. With regard to the disabled and SSP adversely affecting the job prospects of the chronically sick and disabled, we have no evidence, as I have said, that this is so. There is no reason to suppose that the scheme would have this effect. It is important not to confuse the terms "disabled" and "chronically sick". Disabled people do not, in general, have bad attendance records. It has been the constant endeavour of Governments of both complexions to increase awareness that a disabled employee is a good employee. His attendance record is likely to be as good as average, if not better.
Before the SSP scheme, employers may have sought to avoid employing people likely to have poor attendance records. I do not believe that SSP has aggravated this. There is no reason to expect this to occur when SSP is extended to 28 weeks. It is interesting to note that in its comments on the proposed extension the TUC confirmed that fears that the introduction of SSP could lead to more dismissals on account of sickness absence did not materialise.
6.15 p.m.
The noble Lord, Lord Stallard, also asked why the extension should be made now when this was opposed by the Government at the start of SSP. As I said during Second Reading, because SSP was a completely new concept for employers, it was thought best to restrict their involvement to the shorter spells of sickness and to look at this again once employers had become used to the scheme. This is sensible. On the question of family benefits, I should emphasise that there is no increase of sickness benefit for children; so there is no difference between SSP and sickness benefit.
My noble friend asked about SSP and tax. The rates of SSP were deliberately set so that, as a whole,

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employees would receive the same net income as they would have done if sickness benefit had been liable for tax and national insurance contributions. As your Lordships know, it remains the Government's intention to bring sickness benefit into tax when it is practical to do so. As for the costings of SSP about which I have been asked, I must make clear at once that there is no question of saving £200 million at the expense of people at the lower end of the scale. I really must ask your Lordships to oppose the amendments of the noble Lord, Lord Stallard.
Baroness Jeger: Before the Minister sits down, can she help me? I quoted the figure of £200 million from page vii of the Bill. I cannot be responsible for any mistake that has been made, although I am not surprised to hear that there are a few more mistakes in the drafting of this legislation.
Lord Stallard: I have listened carefully to the noble Baroness trying to explain this turn-about. I want to read her remarks in detail before making any further comment. I would never agree with some of her figures and statistics. Nor do I accept that small businesses have welcomed this and that there is no problem for them. I shall produce my own statistics, figures and evidence at a later stage. I have reservations about this matter and I shall raise it again at Report stage.
Clause 16 agreed to.
Clauses 17 to 19 agreed to.
Clause 20 [Housing benefits—subsidy]:
Lord Kilmarnock Lord Kilmarnock moved Amendment No. 14:
Page 20, leave out lines 19 to 25.
The noble Lord said: We come now to Part IV of the Bill dealing with housing benefit subsidy. I have raised previously—I was joined on that occasion by the noble Baroness, Lady Faithfull—the worries of the Association of District Councils, of which I have the honour to be a vice-president, concerning the effects of this clause on the undertaking which was given by the Government that there would be no additional costs to local authorities arising from their new responsibilities for the housing benefit scheme.
The association told me that it feared that Clause 20(1)(b) could undermine the 90 per cent. subsidy principle. It saw the power contained there as too wide-ranging, allowing the Secretary of State to make deductions—deductions under almost any heading—at his discretion. The association also pointed out that the exercise of this discretion would not be subject either to affirmative or to negative resolution in either House of Parliament.
The noble Baroness, in reply to me at col. 562 of the Official Report for 3rd June, said that "the amendment"—I think that she meant to say "the clause"—
"will also give the Secretary of State a new power to exclude items which it is clearly not reasonable to meet out of money voted by Parliament for the housing benefit scheme. This power will not be used lightly".
That may be so, but it gives the Secretary of State an unbridled right to exclude any item that he chooses and, of course, that right will continue to his successors.
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I have since heard from the Association of District Councils that its fears about this subsection have been, if anything, strengthened since the publication of the Government's Green Paper Reform on Social Security, which has been mentioned several times this evening. In that review, in Chapter 3, paragraph 70, we learn that the Government consider that the best way in which to subsidise local authorities for their administration expenses under the new housing benefit scheme will be by:
"including administration costs in Rate Support Grant like most other local authority administrative spending. Administration costs will therefore be dealt with in this way from the start of the new housing benefit scheme. The proposal will be discussed with local authority interests".
Frankly, that is rather alarming. When the housing benefit system was introduced the local authority associations were assured that their administrative costs would not be increased.
The consultation document Assistance with Housing Costs of March 1981 stated that the Government accepted the need to reimburse local authorities for any increase in their net administrative costs resulting from the change. However, it rather looks from Chapter 3, paragraph 70, of the review as though the Government may be planning to go back on that and to introduce another system. Of course, the paragraph does conclude with the undertaking that:
"The proposal will be discussed with local authority interests".
Therefore, in view of the (I think) justified alarm of the association and of the fact that there will shortly, presumably, be discussions with local authority interests about how their administrative costs under the housing benefit scheme will be handled in the future, it seems to be quite superfluous to write this power into the Bill—a power which it looks as though will possibly be extremely short-lived. I should like to suggest to the Government that, in view of the fact that the Bill has once again been overtaken by their review, perhaps they will consider withdrawing this subsection pending discussions with the interested parties. I beg to move.
Baroness Jeger: We support the amendment. In view of the housing benefits review which is being undertaken—and we all agree that if anything needs a review it is the housing benefits muddle—it is unfortunate to enshrine in statute and in this particular piece of legislation more confusion about housing benefit. This is not a party issue. I have put forward a view which is widely held among those in the local authorities who have to administer housing benefits and who are experiencing increasing difficulties.
The noble Lord, Lord Kilmarnock, has very clearly set out the arguments. I would only emphasise one aspect which concerns me particularly. The Bill gives so much power to the Secretary of State to decide what is unreasonable when local authorities are working out their housing benefit schemes. If we were to have a Secretary of State with such enormous power that he could go around investigating the housing benefit proposals of every single local authority in the country, then I would suggest, first, that he ought to have something else to do; and, secondly, that it is a deprivation of local democracy which I thought the party opposite were supposed to support.

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There is nothing in the Bill as it stands which could prevent the Secretary of State from deciding that the reduction in subsidy was reasonable or unreasonable. There are no guidelines here; local authorities will not know when the Secretary of State is going to tell them that something which they have decided in good faith to do is reasonable or unreasonable. The noble Baroness the Minister has not been able to help us much today, but surely this is a proposal which the Government, on the basis of good common sense, could take back again. I do not say that there should be no changes in the housing benefit arrangements. However, the Government take this matter on board as part of the total review which is taking place of the housing benefit arrangements.
The Earl of Caithness: I understand the points which the noble Lord and the noble Baroness have made. However, with due respect, I believe that they are based on a misunderstanding of the purpose of this new clause.
The vast majority of local authorities need have nothing to fear from it. Only those authorities which deliberately attempt to abuse the housing benefits subsidy system will be affected. The arrangements for reimbursing local authorities for their benefit expenditure and administration costs will continue to be set out in an annual subsidy order following consultation with the local authority interests. This new clause does nothing to alter that. At Second Reading my noble friend assured the House that the power for the Secretary of State to make deductions from an authority's benefit subsidy will not be used lightly—and it will certainly not be used to make changes in the subsidy arrangements that apply to authorities in general. I can confirm that assurance. The power is there to prevent abuse, and I assure the noble Lord and the noble Baroness that it is needed.
The Secretary of State's existing powers are not adequate to prevent the exploitation of the subsidy arrangements by any authority determined to find a way of doing so. Of course the annual housing benefits subsidy orders can be amended if potential abuses come to light, but it is clearly unsatisfactory for the Government to have to keep reacting in this way and there is always the danger that the more tightly definitions are drawn the more risk there is of unwittingly excluding perfectly proper arrangements made by local authorities.
I must say to the noble Lord, Lord Kilmarnock, that I do not want to go into too much detail because, as the noble Lord knows, there is a case before the courts at the moment. However, to insist to the Committee that we leave out this clause would only facilitate what one local authority is doing to abuse the housing benefits system. I think that that would be a retrograde step and I am sure that the noble Baroness would not want it. We want the housing benefit system to work well; we do not want it to be abused. This clause is included purely to stop the abuse that has happened recently and as regards which there is a court case.
The noble Lord, Lord Kilmarnock, mentioned the Green Paper. I am glad that it has proved to be such fascinating reading to him. The proposals for subsidising local authority benefit and administration costs in the revised housing benefits scheme will be
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fully discussed with the local authority interests. The power in the current Bill is not concerned with these proposals. I repeat, it is there to prevent abuse of the subsidy arrangements in the present scheme. I queried in great detail with the officials whether there should be a narrower power; but, as I have explained, the more tightly it is drawn the more loopholes there are. I knew that this would be raised and I have gone into it in great detail. I am convinced that this power is necessary and I urge your Lordships to accept the Bill as it is.
6.30 p.m.
Baroness Jeger: Is the noble Earl telling the Committee that there is only one case of proposed or expected abuse and it is on the basis of that one single case that we have the clause in this Bill, or is there other evidence?
The Earl of Caithness: No, there is more than one case which, as I said, I do not want to go into in too much detail. Other local authorities are viewing that case with a great deal of interest. If that case succeeds, they are ready to jump on the bandwagon of abuse.
Lord Davies of Leek: I do not want to create a lot of fuss about this. It is mostly phrased anyway; nevertheless I see an ulterior motive. I do not want to make a party point of this; but bit by bit power is going from the people and being centralised under this new system of government—I will invent a word—Thatcherism. It is taking away from the people. Everything is being moved to the centre as though they are gods almighty. Can we not trust the people in local areas? Local councillors are not fools, they are men of all political colours with years of service to the community. When local authorities act daft—if I can use a vulgar phrase—the public come to the rescue of a sane Government. I do not know why the noble Earl is afraid of points of view put from this side of the Committee. I do not want to develop it any further than that because we are all busy and have been speaking long enough about this point.
The Earl of Caithness: I agree with the noble Lord that the great majority of councillors behave sensibly. This is purely a reserve power to be used as a last resort to stop abuse. I am sure the noble Lord, who knows about these matters far better than I do, does not want to see the type of abuse that is being perpetrated in some areas extended and continued. It is for that reason that I discussed this carefully with the officials, and I am now convinced that this power is necessary to stop the limited number of councillors who are abusing the present system.
Lord Kilmarnock: The noble Earl said that he thought that there was a misunderstanding on this point. I doubt that because local authorities are well versed in these matters. He referred to abuse and we agree with him for we do not want abuses. I said at Second Reading:
"While appreciating the Government's wish to prevent exploitation of the scheme by a few authorities (which was mentioned by Lady Faithfull) the association [of district councils] considers that the existing powers of the Secretary of State are adequate for this purpose and that the proposed powers in subsection (1)(b) are unnecessary and undesirable".—[Official Report, 3/6/85; col. 551.]

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That remains their and my position.
When the noble Earl refers to a reserve power it seems to me that he is taking a sledgehammer to crack a nut. He has also referred to a case which is pending and that seems to me to be an additional reason for not rushing into legislation, if it turns out that the powers are already there to prevent the alleged abuse in question.
The noble Earl has said that there will be full discussions with local authority interests which I imagine will take place shortly. That is another reason for not putting this on to the statute book simply for a short or transitional period of time. I was not insisting on leaving out this subsection. I was simply inviting the Government to take the initiative themselves. I was trying to give the noble Earl a chance to make a concession—he has not made any concessions this afternoon—which I am sure his nature inclines him to make from time to time to those of us who speak from these Benches. As he has not offered to do so, I shall not press the matter further. Both I and the association I speak for will want to study carefully what has been said and we are likely to return to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 15:
After Clause 20, insert the following new clause:
("Vaccine damage payments.
In section 1 of the Vaccine Damage Payments Act 1979—
(a) in subsection (1), for "£10,000" there shall be substituted "the statutory sum";
(b) the following subsection shall be inserted after that subsection—
"(1A) In subsection (1) above "the statutory sum" means £10,000 or such other sum as is specified by the Secretary of State for the purposes of this Act by order made by statutory instrument with the consent of the Treasury."; and
c) the following subsection shall be inserted after subsection
(4)—
"(4A) No order shall be made by virtue of subsection (1A) above unless a draft of the order has been laid before Parliament and been approved by a resolution of each House.".").
The noble Earl said: I have great pleasure in moving this amendment and the associated amendments which are Amendments Nos. 17, 18, 20 and naturally the consequential Amendment No. 44 in the Title.
Amendment No. 17: Clause 28, page 26, line 37, at end insert—
("(3A) Section [Vaccine damage payments] extends to Northern Ireland and the Isle of Man.").
Amendment No. 18: Page 26, line 38, leave out ("(3)") and insert ("(3A)").
Amendment No. 20: Clause 29, page 27, line 15 at end insert—
("section [Vaccine damage payments"];").
Amendment No. 44: In the Title, line 3, after ("to") insert ("amend section 1 of the Vaccine Damage Payments Act 1979 and").
These amendments amend the Vaccine Damage Payments Act of 1979 by enabling my right honourable friend the Secretary of State to specify, by order, the amount of the payment under the Act. As noble Lords will be aware, my right honourable friend announced our intention to increase the payment to £20,000 when he made his statement about the annual up-rating of social security benefits on 18th June. My
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noble friend Lady Trumpington also wished to give the good news to your Lordships' House; but, alas, the Statement was refused by the noble Baroness.
The Vaccine Damage Payments Act 1979 does not contain any power to vary the payments and thus it is unnecessary to bring forward the amendment in primary legislation. We believe that it is also right to take this opportunity to include the power to make alterations if necessary by order in the future. I am sure that the Committee welcomes the Government's initiative more than to restore the value of the payment which has stood at £10,000 since the Act was first introduced. I beg to move.
Baroness Jeger: We are very happy to associate ourselves with this amendment. It is the first hit of good news we have had from the Government today and we welcome it.
On Question, amendment agreed to.
Clause 21 agreed to.
Clause 22 [Pensions and gratuities for members of certain Boards]:
On Question, Whether Clause 22 shall stand part of the Bill?
Baroness Jeger: I rise to ask a few questions about this strange clause. The effect of Clause 22 would enable the Horserace Totalisator Board and the Horserace Betting Levy Board to pay pensions to board members with the cost falling to the hoards concerned and not to the Consolidated Fund. I find this a strange creature in the middle of this very strange Bill. I have to ask, first, why we have to have legislation so that the Horserace Totalisator Board and the Horserace Betting Levy Board can make arrangements for pension schemes. Surely it is the Government's policy that all employers should be making their own occupational pension schemes. It is extraordinary to find in this complex Bill that there has to be statutory consent for this. Why cannot the boards make their own arrangemens? How much are members of these boards paid? Why do there have to be special pension arrangements for them?
I do not want to to be too personal; but I understand that among the members of the board there is Lord Allen, who was former Permanent Secretary at the Home Office, I am sure he is enjoying an index-linked pension, quite rightly; Sir Ian Trethowan may not be totally bereft of earlier pension arrangements; my onetime friend, Sir Woodrow Wyatt, who I hope is receiving a modest pension from the other place. I have to ask this question. Are all the employees, including the most modest employees, of these boards going to get pension rights; or is it only these well-paid gentlemen at the top?
Are we not in danger of setting a very dangerous precedent of members of all boards and all quangos now going to have their pension schemes enshrined in legislation? What would be the consequences of that? I have always thought that when people with a record of public service and of distinction and ability are asked to serve on boards of this kind, it is in some ways an honour; it is an interesting job for them and they are not badly paid. I am in some confusion as to why we have to have their statutory rights for further pensions

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enshrined in legislation. I ask these questions really because I want to know the answers, and not in any envious spirit. That may come later, but not at the moment.
Lord Swann: I must take issue with the noble Baroness. It has been my modest experience that the public sector, on occasions such as this, is extremely cavalier about giving pensions to hard-working members of the public. It took me seven years, despite many promises, to achieve a pension as chairman of the BBC. I am glad to see that my director-general is being brought into the fold. I think it is entirely right and proper.
The Earl of Caithness: The noble Baroness has given us a pretty good canter over this clause. I admire her. I think she is a great stayer in heavy going. My noble friend, who is a true thoroughbred if ever there was one, when faced with heavy going, sent for her whip. Successive Governments have recognised the unfairness of asking people to chair these boards without any provision for pensions and there is a clear commitment to rectify the position—even by the party of the noble Baroness. Over the years, the chairmanship of each of these boards has become close to a full-time occupation. The chairmanship of the Tote requires a full-time commitment and each chairmanship of the other two boards calls for three days a week.
Under the clause, pensions will be determined and paid for in the same way that the salary of the chairman concerned is determined and paid for at present. So, in the case of the Tote and levy boards, the boards themselves will determine the pension for their board chairmen, subject to the approval of the Secretary of State. The boards will pay for the pension from their own resources and not from public funds. In the case of the Gaming Board, the Secretary of State will determine the chairman's pension subject to the consent of the Treasury; and the pension, like the chairman's pay, will be a charge on the Consolidated Fund.
Legislation is necessary in order for the boards to be able to pay these expenses as the enabling legislation, which goes back to the Gaming and Lotteries Act 1963 in the case of the Tote, does not provide for pensions for the chairmen. On the current salaries, I think I shall have to write to the noble Baroness, if she would like the figures.
I hope that the Committee will agree that it is only reasonable to provide pensions for people filling such responsible positions and that this Bill does provide for legislative opportunity to do this—something that both sides have wanted. The noble Baroness's party did not find an opportunity; we have done so. I hope that the Committee will support us.
Baroness Jeger: I thank the noble Earl for his usual courtesy. There was only one question which he did not answer: that is, whether pension arrangements would be made for all employees of these boards and not just the top board members.
The Earl of Caithness: I think that, as they are career employees, they have been treated separately from the other employees of the board.
Clause 22 agreed to.
6.45 p.m.
Lord Stallard Lord Stallard moved Amendment No. 15A:
After Clause 22, insert the following new clause:
("Invalid Care Allowance for Married 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—

(a) she is married and either—

(i) she is residing with her husband, or

(ii) he is contributing to her maintenance at a weekly rate not less than the weekly rate of such an allowance; or

(b) she and a man to whom she is not married are living together as husband and wife.".").

The noble Lord said: I beg to move Amendment No. 15A. I think that this is something that should be included in the Bill. Even at the risk of incurring further wrath from the noble Baroness, I should still like to spend some more money because I am not one of those who at this moment is advocating massive tax reductions in order to effect savings at the expense of people on social security. Neither can I compare the people who are going to be affected by this amendment with the people who were affected by my noble friend's previous amendment to Clause 22—I think it is a different argument—except that now that the Front Bench have put themselves into a generous mood, following the opposition to the Question that Clause 22 stand part of the Bill, I hope that they can carry that generosity into this amendment.
What I am really saying—and I have said it so many times—is that the invalid care allowance should be extended to married and cohabiting women. That is what my new clause really says. If we are seized, as most of us are, about care in the community, then this is something to which we must turn our minds: the situation that affects married women in respect of this care allowance. It is the only benefit that is available for carers. The vast majority of carers are married women but they are the only group who cannot at this moment receive the allowance. I have spelt out the words and they are written on the Marshalled List.
The wording of the previous Act, the 1975 Act, was based on the assumption that all married women are financially dependent upon their husbands. I do not think that anybody on either side of the Committee would agree that that is the situation now. For whatever reason, it is certainly not the situation now. In fact, statistics prove that 70 per cent. of married women between the ages of 30 and 54 are in the workforce and that a common reason for having to give up work is the ill health of a relative; so that 70 per cent. of them have to give up work, we know, because of the ill health of a relative of one description or another. And one in three women over 35 are restricted because they have to care for a sick or invalid relative.
The invalid care allowance, in my view, would simply give married women the financial protection to which they are entitled. I think that the amount paid to carers at the moment is £21·50 a week. That is not a great deal in itself but it would be a help to the family budget in those circumstances and it would enable the woman's national insurance contribution to be credited—which it is not at the moment—thereby giving her some financial security in her old age.
I daresay that everyone in the Chamber at this moment could think of examples of people who could benefit, and ought to have benefited, because they have given up half their lives (and some have given up more than that) to the care of an elderly or not-so-elderly or sick or dependent relative. They have forfeited their own earning potential, their own rights, their own pension rights, their own careers. All sorts of things have been forfeited and there is no case in justice for continuing on the basis of the assumptions behind the earlier wording in the 1975 Act and previous Acts.
I say that it would be an acknowledgement of the importance that we place on this caring in the community if we were to say that we will recognise the importance of the people who do the caring and that we will now extend this benefit to married women. I do not think that I need say any more at this stage because I know the Government are in this generous mood following the previous amendment. I hope that that will continue and that they will say that they will look at this and come back at Report stage with a scheme that would help at least to ameliorate some of the problems faced by married women in this situation.
Lord Banks: I should like briefly to support the case that has been put by the noble Lord, Lord Stallard. He has put the case extremely well. As he pointed out, the majority of carers are married women and it has always seemed very unfair that they should not get an allowance which, as the noble Lord has said, is not a very large one. I strongly support the aim of this particular amendment.
The Earl of Caithness: Notwithstanding that we have covered this ground before, I am very well aware of the strength of feeling that invalid care allowance arouses. The words which the new clause is designed to omit from the Social Security Act clearly discriminate against married women and cohabiting women and I would not attempt to pretend otherwise.
At this stage I should like slightly to widen the debate from the very good arguments put forward by the noble Lord, Lord Stallard, and refer to the European Commission directive on equal treatment. The directive came into force last December. In early January a test case was put to the independent adjudicating authorities with the ultimate aim of securing a judgment from the European Court on the application or otherwise of the directive to invalid care allowance.
Our legal advice was, and remains, that the directive does not cover invalid care allowance—a view which the commission shares but which ultimately is a matter for the European Court. I understand that the Social Security Commissioner has referred the case to the court and that judgment will be made in due course. If that final judgment is that the directive applies to the invalid care allowance, the directive would override domestic legislation—but only if the European Court decides that the directive applies to invalid care allowance. We would then need to take stock of our own position in the light of the availability of resources and see how the expenditure could be contained.
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Before leaving that issue I should make it clear that any claims we are receiving from married women are being put on ice. They are being acknowledged, but adjudication will await the judgment of the European Court and the subsequent decision of the Social Security Commissioner. Although our advice has been, and is, that the directive does not apply to ICA, we have never used that as a reason for not extending the allowance to married women. Our record on the implementation of the directive is an honourable one. I have made it clear that our principal reason for not extending the allowance is the cost—an estimated extra £85 million a year at current rates. I think it is fair to say that it was undoubtedly cost which prevented the Labour Government in 1975, when they introduced this, including married women at that time. I think it is quite fair for us to take that into account when considering this matter today.
We have to face the fact that resources are finite. I do not wish to detain your Lordships, but even if £85 million a year were available, within the broader context of care within the community it is by no means clear cut that an extension of ICA to married women would be the best use of resources. In other contexts pressure is brought to bear on behalf of other sectors of the disabled community. In this field, therefore, it is by no means certain that ICA would top the list even if the money were available, despite the persuasiveness with which the case has been argued. It is clear that I cannot advise your Lordships to accept this new clause and, given that the whole issue is now before the European Court, I hope the noble Lord will feel able to withdraw his amendment.
Baroness Jeger: Again I thank the Minister and I assure him that this amendment was not moved in any party sense. Many of us were very disappointed when a previous Government did not put into legislation what we have in mind. In fact, my noble friend Lord Stallard, then in another place, moved an amendment to this effect, and tonight he is really repeating a speech he made on that earlier occasion. At least he cannot be accused of inconsistency.
I read very carefully what was said on Second Reading in the other place in November, 1984—a long time ago it seems—and it is very unclear from what the Minister then said whether we would pay this benefit only if the European Court found that we should. The Minister said—and I quote from col. 712 of Hansard of 26th November 1984:
"We think it right to move against that discrimination, although we are not compelled to do so by the EEC directive".
What I am now asking is: if the EEC directive comes out in support of the payment for married women carers, will the Government then have to find the money? I think that is what the noble Earl said—that the money would have to be found if the court made a judgment to that effect. If the court does not do so, are the Government going to give no further consideration to this problem? I do not think it was within the terms of what the Minister said in the other place that the whole thing would be finished on the result of the European Court's findings and that if we find we do not have to pay, we simply will not pay; in other words, we will pay only as the result of a court directive. The Minister said in another place that he

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was considering the whole problem, apart from the European Court.
The Earl of Caithness: It is too early to anticipate the judgment, and much of what the noble Baroness has said depends on how the judgment, when it comes, is phrased. The reference to the court has only just been made by the commissioner and therefore an early response is not expected. When we receive the decision of the Social Security Commissioner in the particular case of Mrs. Drake, we will consider the implications and what the correct course of action should be at that stage.
Lord Stallard: I am grateful to the Minister for his reply and for the mention of the European Court. I deliberately omitted it because I was not sure whether or not I would be in order. I am grateful for his reassurance, or what seems to be a reassurance, that if the court's judgment goes in favour of Mrs. Drake, the Government will be bound to consider the matter favourably. Certainly that puts a respectable light on the amendment and on the reply the Government have given. I beg leave to withdraw my amendment, on that basis.
Amendment, by leave, withdrawn.
Clauses 23 to 27 agreed to.
Clause 28 [Extent]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 16:
Page 26, line 37, leave out ("extends to Northern Ireland only.") and insert—
The noble Baroness said: Clause 28 provides for the extent to which the Bill applies to England, Wales, Scotland and Northern Ireland. This technical amendment provides that Clause 28 (Extent), Clause 29 (Commencement) and Clause 30 (Citation) extend to Northern Ireland. I beg to move.
On Question, Amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 17:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 18:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
Clause 28, as amended, agreed to.
Clause 29 [Commencement]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 19:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Alport): I have to point out, in calling Amendment No. 20, that "line 14" as it is printed should read "line 15".
The Earl of Caithness The Earl of Caithness moved Amendment No. 20:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
Clause 29, as amended, agreed to.
Remaining clause agreed to.
Schedule 1 [Transfer and revaluation]:
7 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 21:
Page 31, line 20, leave out ("5") and insert ("3").
The noble Lord said: On Second Reading I raised this point about the proposed 5 per cent. revaluation and suggested that 3 per cent. would be a better figure. The noble Lord, Lord Banks, said that he thought that 5 per cent was about right. So far as I can tell, my noble friend the Minister did not comment upon that particular point when she wound up. It is really quite simple. The point is that there is no really good reason for acquiring a higher escalation of deferred pensions than of pensions in payment, since both are a call upon the same pool of money. There seems to be no reason why deferred pensioners should receive preferential treatment over actual pensioners, or indeed over current employees. I beg to move.
Baroness Trumpington: My noble friend will remember that we looked at this at Second Reading, and I have to tell him that I am not persuaded by his arguments. This whole subject was looked at in depth by the Occupational Pensions Board, and they came up with a 5 per cent. ceiling. We think that is about right. We have been criticised for being too generous to the early leaver and criticised also for not being generous enough. So we find ourselves in the middle. That, as much as anything, leads me to believe that 5 per cent. is a fair and reasonable ceiling.
Lord Mottistone: My noble friend has not taken up my point about comparison between deferred pensions and pensions in payment, nor indeed those of current employees. I honestly think that I have not had an answer to this point, either at Second Reading or now. It is not an adequate explanation to say that the Occupational Pensions Board thinks that this is a good figure, because there is a very valid point here which companies need to have answered. I should have said, when I moved this amendment, but did not because we were rattling along, that in moving Amendment No. 21 I was also speaking to Amendment No. 22.
Amendment No. 22: Schedule 1, page 31, line 26, leave out ("5") and insert ("3").
Lord Banks: Taking up the point made by the noble Lord, Lord Mottistone, I do not know whether he is really comparing like with like. He is saying that because, as he understands it, 3 per cent. is the average of the increases that are made in pensions in payment, we ought therefore to increase preserved pensions by the same amount. But if we are dealing with final salary schemes, then up to retirement those people who now may be receiving only 3 per cent. in retirement have certainly received an increase in their pension which has taken account of inflation, have they not? If inflation has been running at higher than 3 per cent., then they have had a higher increase than 3 per cent. It seems to me that that is the comparison with the preserved pension: what is happening with the preserved pension compared with what is happening with the man who is still in his final salary scheme.
Baroness Turner of Camden: As a member of the Occupational Pensions Board I hope that we do not

709
have a different figure from the 5 per cent here. We spent a lot of time talking about it. There were different views on the Occupational Pensions Board at that time, and we came out with 5 per cent. as a majority view. It has to be remembered that this was in the context in which early leavers were regarded as especially disadvantaged. This is trying at least to take away the inequity which early leavers suffer and to make it easier for people to change jobs and not to be tied to their employment. I think this was an issue about which there was agreement on all sides, and there is a lot of public support for this, so I hope that this amendment is not carried.
Baroness Trumpington: May I say that the noble Lord, Lord Banks, is quite right in what he said. I am grateful to the noble Baroness, Lady Turner, who leads me into answering my noble friend when I say that we believe that early leavers are in a different position from stayers. Once somebody has left early there is no one to fight for his interests. That is why we believe that early leavers have been given such a poor deal in the past. They have in effect been subsidising the benefits of stayers, and that is unfair.
Lord Mottistone: I am deeply grateful to both the noble Lord, Lord Banks, and the noble Baroness, Lady Turner, and, at last, to my noble friend the Minister, because I really did not have a satisfactory explanation either at Second Reading or on our first encounter on these amendments, but I now see that there is a very good point to this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 22 not moved.]
Lord Banks Lord Banks moved Amendment No. 23:
Page 31, line 40, leave out from ("person") to end of line 43.
The noble Lord said: The noble Baroness, Lady Trumpington, will be aware that there is much concern in professional circles about the effect of the new Section 52C as it now stands in the Bill. The object of the section is to secure that trustees and managers of occupational schemes may obtain a discharge by taking out insurance policies or annuity contracts for the benefit of members. Such a procedure is one permitted way of dealing with early leavers. There is, however, a fear that in securing one discharge the Bill will take away another.
Lines 40 to 43 state that trustees or managers are not discharged from their liability unless they comply with Section 52C. But in line 37 the new section refers to the provision of "requisite benefits", and requisite benefits are not relevant to contracted-in schemes. So it would appear that trustees and managers of such schemes who seek to discharge their liabilities by taking out insurance policies or annuity contracts in fact would not have discharged them. Accordingly, the amendment seeks to remove lines 40 to 43, which give rise to this situation. I beg to move.
The Earl of Buckinghamshire: This is a technical amendment. The noble Lord, Lord Banks, has outlined the position very clearly and accurately. The discharge as it is currently drafted is inadequate. Legal
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advice has been taken on this subject and I feel sure that my noble friend on the Front Bench will take note of this amendment.
Baroness Trumpington: In speaking to this amendment I hope I can make some remarks that apply equally to other amendments that have been put down by noble Lords to the new Section 52C. I refer to Amendments Nos. 24, 25 and 26.
Amendment No. 24: Page 32, leave out lines 22 to 31 and insert ("that, except in such cases as may be prescribed, any sums which fall to be paid under the policy or contract can only be paid to the person or persons for whom the policy or contract provided for payment of the amount secured by the policy or contra( t or to trustees for any such person; and").
Amendment No. 25: Page 32, line 23, after ("obligation") insert ("(being enforceable by the earner or a person for whom the policy provides or the trustees or managers of the scheme)").
Amendment No. 26: Page 32, line 25 leave out ("occupational pension scheme") and insert ("the policy or contract").
This new section has given us considerable trouble. It was amended in another place, and it is clear, both from the amendments that we have today and from discussions that my department has had with pensions experts, that we have still not got it right. I had hoped to be able to put down Government amendments to meet those points today, but we are still having problems in drafting them.
I can give an undertaking, though, that I hope will satisfy noble Lords. We shall bring forward at Report amendments to this new section which I think will meet all the misgivings that have given rise to these amendments. I shall not apologise further on behalf of my friends, but we have tried very hard, and I am sure your Lordships will agree that it is best to get this right. I hope that this undertaking will be sufficient to enable both the noble Lords who have put their names to this particular amendment and others not to pursue this amendment now but to await our amendments on Report.
Lord Banks: In view of what the noble Baroness has said, I beg leave to withdraw this amendment, and I shall look forward to seeing the Government amendment dealing with this matter in due course.
Amendment, by leave, withdrawn.
Lord Banks Lord Banks moved Amendment No. 24:
[Printed earlier: col. 710.]
The noble Lord said: Although my remarks are covered by what the noble Baroness has said, I think it would be useful to make the points so that perhaps they can be taken into account in the preparation of the Government amendments. This amendment deals with the new Section 52C(3)(b), which also relates to cases where trustees or managers of occupational schemes discharge their liability by taking out insurance policies or annuity contracts. Where this is done, the transfer value accuring to the member is used to purchase a single premium policy and this policy may be on a with-profits basis. If it is on a with-profits basis, there will be a comparatively small guaranteed amount to which bonuses are added until retirement. The resulting cash value on retirement is used to purchase a pension. The resulting pension will not be the same as the pension which would have been

711
provided had the member remained in the scheme until retirement.
The wording of the lines which this amendment would leave out seem to imply that the benefit provided by the policy must be the same as the benefit which would have been provided by the scheme. The amendment seeks to rectify this. In addition, it is not clear from the current wording whether a policy effected in this way would be enforceable by a member and his executor or by the recipient, who might be the widow or another dependant. The amendment clarifies the position by allowing either. Amendments Nos. 25 and 26, in the name of the noble Earl, Lord Buckinghamshire, are an alternative method of dealing with the same problem, and the noble Earl and I should be happy for either of the two alternatives to be adopted. I beg to move.
The Deputy Chairman of Committees: I have to inform your Lordships that if this amendment is agreed to, I cannot call Amendments Nos. 25 or 26.
Baroness Trumpington: I have nothing further to add. I have already given my reasons for asking the noble Lord whether he would kindly not press these amendments.
Lord Banks: In view of those reasons, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 25 and 26 not moved.]
Baroness Trumpington Baroness Trumpington moved Amendment No. 27:
Page 37, line 8, leave ("his widow") and insert ("to any other person in respect of him").
The noble Baroness said: This is a technical amendment which will put right a defect in the revaluation requirements for flat-rate benefits. The requirements apply, for other benefits, to all dependants' benefits provided by the scheme. That for flat-rate benefits covers only widows' benefits. This is quite simply an error and we now wish to correct it. I beg to move.
On Question, amendment agreed to.
Lord Banks Lord Banks had given notice of his intention to move Amendment No. 28:
Page 37, line 20. after ("to") insert ("payment or").
The noble Lord said: In view of the Government's Amendment No. 29, Amendment No. 28 is not moved.
[Amendment No. 28 not moved.]
Baroness Trumpington Baroness Trumpington moved Amendment No. 29:
Page 37, line 20, leave out ("payments made from time to time") and insert ("a payment or payments made").
The noble Baroness said: This is a technical amendment and I am grateful to the noble Lord, Lord Banks, for not moving his amendment. As he and everybody else will have realised, we are single-minded about this. The definition of a money purchase benefit is defective, because it does not cover the situation where the benefit results from a single payment. This is important, because a transfer value into a scheme
712
could well be money purchase based. If the scheme otherwise provides final salary benefits, the money purchase benefit would be the result of a single payment. This amendment will remedy the defect. I beg to move.
On Question, amendment agreed to.
Lord Swann Lord Swann moved Amendment No. 30:
Page 39, line 9, at end insert—
(". Notwithstanding any other provision of this Part, if the scheme is contracted-out then for the purpose of calculating—

(i) the amount of pension which is to be revalued in accordance with this Part; and

(ii) the amount of the revaluation percentage for the period as defined in paragraph 1(2)(a),

the periods to be taken into account shall be the same as the periods taken into account for calculating guaranteed minimum pension and the revaluation of guaranteed minimum pension under that scheme;
except that—

(a) revaluation shall not apply to the pension of any scheme member whose pensionable service ends before 6th April 1986;

(b) pensionable service before 6th April 1985 shall not be taken into account;

(c) the references to the date of the commencement of Part 1 of Schedule 1A shall be construed as references to the 6th April which is or next follows such date of commencement; and

(d) references in the 1975 Act to state pension age shall be construed as references to the normal pension age of the scheme.").

The noble Lord said: I fear that the amendment must look as baffling to your Lordships as some of the schedule itself. In fact, as I shall try to explain, it is intended to "debaffle" your Lordships and a good many other people who deal with pensions, or who are members of schemes, and I think I can explain quite simply how and why that is.
Before the days of inflation it was quite easy to ensure that pension schemes provided reasonable levels of benefit by stipulating the amounts that they should provide from time to time. But with the coming of higher inflation it became necessary to make sure that the pension earned in any one year should maintain its real value right up to the time when it started to be paid. To achieve this, some very complicated requirements for revaluing pensions were built into the Social Security Act 1975. These requirements, however, applied only to occupational pensions used for contracting out. The Bill that we are currently considering introduces equally complicated revaluation requirements into these occupational pension schemes, which are not covered by the 1975 Act because they are not pensions used for contracting out. So far, so good.
7.15 p.m.
But I am surprised to find that the revaluation requirements in the current Bill are significantly different in a number of details from the revaluation requirements of earlier legislation. This means that a scheme member who has contracted out will find complicated differences between the revaluation which applies to the part of his pension used for contracting-out, and the revaluation which applies to the rest of his pension. I believe that we have to try to avoid bringing in yet further complications which are not only unnecessary but which will make it finally

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impossible for a scheme member, unless he be a genius, to understand how the amount of his pension is worked out.
As I said earlier, the 1975 Act introduced a number of complicated requirements and the pensions world has learned to live with them over the last 10 years. The sole purpose of my amendment is to ensure that we do not bring in further unnecessary complexity. I have to admit that the wording of the schedule that I am seeking to amend is itself terribly complicated. I also have to admit that the wording of my amendment, despite the fact that I have taken expert advice, may be defective. But what it is trying to achieve is that the method of revaluation in the current Bill will follow, wherever possible, the method of revaluation already in use for contracted-out pensions.
I appreciate that some differences may have to survive, such as the link to prices rather than earnings. But I want to make sure that the only differences between the revaluation introduced by the 1975 Act and the further revaluation introduced by this Bill are necessary differences. Why, for example, does the present Bill provide for revaluation to be calculated in calendar years, when contracted out pensions are revalued in fiscal years? That is surely a fertile ground for confusion.
I believe that simplifying these revaluation calculations will not only help all those professionally involved with pensions, but, most important, it will help the ordinary man or woman who belongs to a scheme and wants simply to understand how the pension works. I know that your Lordships value clarity and simplicty and I need say no more. I beg to move.
Baroness Trumpington: I listened with enormous interest to what the noble Lord, Lord Swann, said. He is, I know, chairman of the Company Pensions Information Centre, and therefore brings all their expertise to bear as well as his own. Perhaps I may begin by saying that there is nothing in the Bill to prevent revaluation applying to people who leave on or after 6th April 1986. The starting date for these provisions will depend upon a commencement order. But the Government have said that they intend to bring these provisions into effect on 1st January 1986, and that is still our intention. I agree that there is some attraction in linking increases to tax years, because that is how increases in guaranteed minimum pensions are calculated. But, equally, there is no compelling reason why increases to benefits in excess of GMP should be treated in the same way and using tax years has a positive disadvantage.
It might be helpful if I illustrate this point with an example. Let us assume that our early leaver leaves his scheme on 7th April 1986 and reaches pension age on 8th April 1988. If we use tax years, his increase will be based on one year. But if we use complete years, he will have an increase based on two years. In other words, using tax years would often mean that the leaver would lose out. It is therefore in the best financial interests of the leaver to go for complete years rather than tax years.
I sympathise with anything that will help people to understand occupational pensions. I speak here with some feeling because I, too, find the whole subject extremely complicated; but I really question whether
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one method rather than another will be much easier for the average member to understand. Given the choice I think most of them would rather have more money and that is what in the end this amendment is about. We have considered this whole matter very carefully and sympathetically, but we believe that, on balance, the advantage rests with the provisions in the Bill as drafted and I am therefore unable to support the amendment.
Lord Swann: I am grateful to the noble Baroness. I am aware of the point she raises about the amendment's effect in terms of money. In fact, as the years go by it becomes a trivial difference, but I agree that initially there is a difference. However, I do not wish to pursue the matter, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Banks Lord Banks moved Amendment No. 31:
Page 39, line 35, after ("to") insert ("or in respect or).
The noble Lord said: I wish also to speak to Amendment No. 32.
Amendment No. 32: Page 39, line 37, after ("to") insert I or in respect of").
The Bill gives to members of an occupational scheme the right when their pensionable service terminates at least one year before normal pension age to take a transfer value which may be transferred to another scheme or used to purchase a Section 32 single premium policy. The transfer value is defined as the cash equivalent of the benefits "which have accrued" to the individual. That is the phrase used in line 35 and in line 37 of page 39. On page 43 it is stated that where this process is carried out,
"the trustees or managers shall be discharged from any obligation to provide benefits to which the cash equivalent related".
However, in lines 35 and 37 benefits for widows and dependants are not included. It would therefore appear possible that, even though all the cash accumulated in relation to a particular individual had been transferred, the trustees and managers might still be under an obligation to provide widows' or dependants' benefits. To rectify this the amendment inserts—the next amendment does the same a little further along—the words "or in respect of thus including widows' and dependants' benefits. I beg to move.
Baroness Trumpington: I am so grateful to the noble Lord, Lord Banks, for bringing forward these amendments. We think that the Bill as drafted may well have the desired effect, but I agree that it makes sense to put this beyond doubt. The Government are therefore pleased to be able to accept the amendments.
Lord Banks: Just before we approve the amendments, perhaps I may thank the noble Baroness very much indeed for accepting them and for her cooperative attitude.
On Question, amendment agreed to.
Lord Banks Lord Banks moved amendment No. 32:
[Printed earlier: col. 714]
On Question, amendment agreed to.
Baroness Trumpington Baroness Trumpington moved Amendment No. 33:
Page 40, line 46, leave out ("or friendly societies") and insert ("such as are mentioned in section 52C(3)(a) above").
The noble Baroness said: This is a technical amendment. When someone takes a transfer value and uses it to purchase an annuity the annuity will have to satisfy prescribed conditions. It has always been our intention that those conditions should include restrictions on those with whom the policy or contract can be taken out. It was also our intention that the prescribed conditions should not conflict with new Section 52C, which deals with discharging liability on buy out. We now have doubts whether the power in paragraph 13(2)(b) is sufficient to enable us to put conditions on the company providing the annuity, and we have therefore put this provision on all fours with new Section 52C.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
The Earl of Caithness: I think this is an opportune moment for the House to resume, and in begging so to move I think it would be wise to confirm that we shall not return to this Bill before twenty-five past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Hill Farming Bill
7.25 p.m.
Read a third time, and passed.

Local Government (Access to Information) Bill
Report received.
Clause 1 [Access to meetings and documents of certain authorities, committees and sub-committees]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the first amendment:
Page 2, line 14, leave out ("other than the Data Protection Act 1984").
The noble Baroness said: My Lords, in moving my amendment to page 2, line 14, I will for the convenience of the House speak also to the next three amendments on the Marshalled List.
Second amendment: Page 10, leave out lines 13 to 26.
Third amendment: Page 14, line 19, leave out ("other than the Data Protection Act 1984").
Fourth amendment: Page 22, leave out lines 7 to 20.
These four amendments, of which I gave forewarning at Committee stage, in effect alter the relationship of this Bill as it now stands to the Data Protection Act 1984 which is likely to come into force later this year, probably in the autumn. The Data Protection Act is about the protection of information; this Bill is about the disclosure of information. It is important that the provisions of both should operate alongside one another in a way that is as easy as possible for all concerned to understand and operate.
The main relevant effect of the Data Protection Act is to prevent unauthorised disclosure of personal information relating to an identifiable individual and which is either held on computer or is derived from data held on computer. The person or body possessing such information, the data user, is forbidden to disclose it except to a person or persons, the data recipient, whom they have registered with the Registrar of Data Protection. It is an offence to disclose personal information to anybody other than a registered data recipient except in limited exceptional cases which include where the disclosure is required by statute.
At present the Bill forbids local authorities to release information the disclosure of which is prohibited under any other statute. There is, however, one explicit exception to this rule, the Data Protection Act 1984. The purpose of this exception was not to compel local authorities to release personal information held on computer; it was rather to place a decision whether or not to disclose such information in the hands of the local authorities themselves. The schedules to the Bill include among the matters which local authorities may refuse to make public information relating to a particular individual with whom they have dealings whether in their capacity as employer or landlord or in discharging any of their functions. The schedules therefore aim to cover all sensitive information about individuals.
The chief reason for proceeding in this way was that it seemed anomalous to have two classes of personal information in the hands of the local authority; that which is held on computer arising from computer data, which would mandatorily be confidential unless the general public were registered as a data recipient, and that held by more traditional methods on file, where the authority would have discretion of disclosure.
It seemed on balance preferable instead to make the decision to release all personal information, however held, a matter for local authority discretion, as indeed had been the case prior to the Data Protection Act coming into force. On reflection, however, and in the light of discussions with local authority associations, the balance of advantage appears to lie in removing this exception.
This is for three main reasons. First, the Data Protection Act responds to public concern in that it seeks to protect as an intentional act of public policy personal information held on computer or derived from computer data. It quite deliberately stops short of attempting to extend protection to personal information held in other, more traditional forms. It would therefore be difficult to defend mandatory privacy for all personal information held on computer or derived from computer data, excepting information in the hands of local authorities, who would have discretion over disclosure.
Secondly, the law would be clearer and more readily comprehensible to the general public and to local authorities alike if the requirements of the Data Protection Act operated in local government as elsewhere.
Thirdly, in practice a local authority which wishes to exercise discretion over the disclosure of certain

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personal information on computer or derived from data would still be able to do so. It could register for specified information a data recipient. The recipient could be defined in as narrow or as wide a way as the local authority wished, extending even to registering the general public as data recipient.
These reasons appear to outweigh the case for the exception currently included in the Bill. The local authority associations for their part have made it clear that they, too, would prefer to see the exception removed.
The effect of these four amendments is that Section 100A and Section 50A to be inserted into the Local Government Act 1972 for England and Wales and the Local Government (Scotland) Act 1973 respectively, will now provide in their definition of confidential information, information whose disclosure is prohibited by or under any enactment, no longer specifically excluding the Data Protection Act. They will also have the effect that in supplemental provisions under Section 100H and Section 50H, paragraphs overriding the Data Protection Act are removed. I beg to move.
Baroness Nicol: My Lords, I welcome these amendments and can see the argument for having a consistency of approach as far as the Data Protection Act is concerned. However, I have a slight worry about the application of the amendments, which I should like to put in the form of a question to the noble Baroness, who may be able to answer it.
If an authority, or an official or member of an authority, is in a particular case disinclined to accept the provisions of this Bill, or would find it inconvenient to do so, would not these amendments make it possible for that authority or person to record all documentation on computer and then claim the Data Protection Act in defence? I do not believe that many authorities, or officials or members of authorities, would take such a view, but one can see such a situation arising in the case of, for example, a difficult planning application involving a number of protestors, where the authority might wish to avoid complications and might be tempted to make such a defence. Would it be possible to do that under the provisions of these amendments?
Where a local authority normally, as a matter of course, commits all its information to computer—and this is happening more and more as authorities come up-to-date—it will then be required to take a positive step: that is, to declare either the general public or the people wishing to have the information data recipients, in order to escape the provisions of the Data Protection Act and to supply the information. This seems to me to be placing a barrier in the way of giving information to the general public or to particularly interested members of the general public. With that single reservation, I welcome the amendments and look forward to hearing the comments of the noble Baroness on my remarks, if she has any.
Lord Ardwick: My Lords, my noble friend has raised a difficulty concerning this Bill, but I rise chiefly to give the Bill my full support, which I was prevented from doing earlier. I support this Bill wholeheartedly,
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not only as a citizen but also as a newspaper man with long and bitter memories of frustrations imposed by local government. In saying this I must declare that I still have a vestigial interest in so doing.
At this time of the year, amendments to a Private Member's Bill are seldom wise for they will have to pass the scrutiny of another place, which is hard-pressed for time. However, I am delighted to learn that the Government will see to it that there is time. Indeed, the newspaper of the Campaign for Freedom of Information (one of the originators of this Bill) which I received today assumes that the Bill has already passed through all its stages in this House and will return to the other place for approval of the final amendments on 5th July. Somebody in high circles has obviously been very free with this information. I trust that he or she is entirely accurate and that very soon this Bill will pass into law.
Baroness Carnegy of Lour: My Lords, I should like to thank the noble Baroness, Lady Nicol, for her continuing encouragement for what I personally regard as a very important Bill. In answer to her question, her main fear that hiding behind the Data Protection Act might preclude the release of information of the kind she mentioned is not justified. The noble Baroness may recall that the Data Protection Act covers only personal information relating to identifiable individuals. A planning application, such as the noble Baroness suggested, would not be affected; nor would computer information about traffic flows or teacher/pupil ratios in schools.
I agree with the noble Baroness that, increasingly, it is likely that local government information will be held on computer and will, if these amendments are passed, be affected by the Data Protection Act. However, one has to ask this question: why should an individual be protected everywhere but not in local government, so far as personal information on a computer is concerned?
I agree that one might be able to think of circumstances in which personal information could be disclosed if it were held on files but could not be disclosed if held on computer. That is true, but there cannot be very much information that local government would wish to disclose which was personal and therefore covered by the Data Protection Act. At the same time, my honourable friend in another place, the Member for Hornchurch, has constantly said that the Bill could be side-stepped by an authority that was determined to do so. A way could be found. The purpose of the Bill is to change the atmosphere in which some councils operate. On balance, I think that this amendment proposes a better way than the existing provision.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the second amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. In doing so I omitted to say how much I welcome the encouragement given to the Bill by the noble Lord, Lord Ardwick. I hope that he is right that the Government are going to find time for the Bill to get on to the statute book, and that the

719
assumption of the broadsheet, which he welcomes, comes true. I beg to move.
On Question, amendment agreed to.
Clause 2 [Access to meetings and documents of local authorities and certain committees and subcommittees in Scotland]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the third amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the fourth amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 1 [Exempt information]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the fifth amendment:
Page 27, line 16, leave out paragraph 13 and insert—
("13. Information which, if disclosed to the public, would reveal that the authority proposes—

(a) to give under any enactment a notice under or by virtue of which requirements are imposed on a person; or

(b) to make an order or direction under any enactment.").

The noble Baroness said: My Lords, in moving the amendment to page 27, line 16, I should like, for the convenience of the House, to speak also to the other amendments to Schedule 1 on the Marshalled List.
Sixth amendment: Page 28, line 10, leave out from ("above") to end of line 14 and insert ("is exempt information if and so long as disclosure to the public might afford an opportunity to a person affected by the notice, order or direction to defeat the purpose or one of the purposes for which the notice, order or direction is to be given or made.").
Seventh amendment: Page 31, line 1, leave out paragraph 13 and insert—
("13. Information which, if disclosed to the public, would reveal that the authority proposes—

(a) to give under any enactment a notice under or by virtue of which requirements are imposed on a person; or

(b) to make an order or direction under any enactment.").

Eighth amendment: Page 31, line 35, leave out from ("above") to end of line 39 and insert ("is exempt information if and so long as disclosure to the public might afford an opportunity to a person affected by the notice, order or direction to defeat the purpose or one of the purposes for which the notice, order or direction is to be given or made.").
May I first point out to the House that there is an error in the last amendment on the Marshalled List. The final lines of the amendment should read:
"or one of the purposes for which the notice, order or direction is to be given or made".
On 17th May, on Report in another place, my honourable friend the Member for Hornchurch moved amendments to deal with certain planning matters. His explanation is at cols. 653 and 654 of Hansard for that day. As a result, Part I of the new Schedules 12A and 7A to be inserted into the Local Government Act 1972 and the Local Government (Scotland) Act 1973, respectively, now each include
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provisions set out in paragraph 13 in each case. In both schedules paragraph 13 of Part I is qualified by paragraph 6 in Part II.
As the Bill now stands local authorities have discretion to meet in private and to withhold reports and background documents where the intention is to require an individual to do something or to stop doing something. On such matters it would, in certain circumstances, clearly be a mistake for a council to signal its proposal in advance: for example, when a building preservation notice is to be served to ensure that a building which the council considers worthy of listing is not demolished or is unsympathetically altered while the Secretary of State is deciding whether or not it should be preserved. In such a case advance warning that the council is considering serving such a notice could defeat its purpose because the building could be demolished or damaged before the notice is served.
On examination, while the purpose of the relevant paragraphs is clear, the wording seems defective in two ways. First, it is too wide. It would make possible the consideration in private of all notices, not just those which place a requirement on an individual. Secondly, it is too narrow. It fails to cover orders and directions which ought to be covered, but which do not come within the definition of the word "notice". An example of this might be an authority which wishes to make a direction through a development order under Section 24 of the Town and Country Planning Act 1971 and to ensure that a general planning permission granted under the order should not apply to development in a particular area or development of a particular site. If advance warning is given of the intention to make such a direction that would enable, as with a preservation notice, the person affected to frustrate the council from exercising its power—perhaps to commence the development at once.
The four amendments to Schedule 1 correct these defects while maintaining the overall intention of the existing provisions. They do not grant local authorities any additional powers to impose burdens or restrictions on the citizen. They merely seek to prevent existing powers being rendered ineffective through premature disclosure as a result of the Bill. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker (Lord Cullen of Ashbourne): My Lords, would the noble Baroness like to move the remaining amendments together?
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the sixth, seventh and eighth amendments:
[Printed earlier: col. 719.]
The noble Baroness said: My Lords, I have spoken to the remaining amendments. I beg to move.
On Question, amendments agreed to.

Rating (Revaluation Rebates) (Scotland) Bill
Read a third time, and passed.
Lord Skelmersdale: My Lords, I beg to move that the House do now adjourn during pleasure until 8.25 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.48 until 8.25 p.m.]

Social Security Bill
House again in Committee.
Schedule 2 [Information about and registration of occupational pension schemes]:
Lord Mottistone Lord Mottistone moved Amendment No. 34:
Page 47, leave out line 48.
The noble Lord said: In moving Amendment No. 34, I should like also to speak to Amendments Nos. 35 to 40 inclusive.
Amendment No 35: Page 48, line 43, leave out from beginning to end of line 18 on page 49 and insert ("of the current name and current address of the occupational pension scheme and the names of any predecessors of the current occupational pension scheme.").
Amendment No 36: Page 49, line 26, leave out from beginning to end of line 24 on page 52.
Amendment No. 37: Page 53, leave out lines 28 and 29.
Amendment No. 38: Page 54, line 19, leave out from ("section") to end of line 20.
Amendment No. 39: Page 55, line 21, leave out ("or 56E(1)(b) or (c)").
Amendment No. 40: Page 55, line 43, leave out ("or 56E(1)(b)").
The operative amendment is Amendment No. 35, and that is the one on which I shall concentrate. At the moment we find at the bottom of page 48 under new Section 56C(1) in paragraphs (a) to (e) a list of a substantial number of documents which the registrar will acquire and which have to be lodged with him. If we then turn to page 52, we see that new Section 56G(1)(b) on line 40 says that if a document:
"is in the custody of the registrar, any person—

(i) may inspect it; and

(ii) may require a copy of or extract from it".

The subject which we are discussing we also discussed when I resisted initially the acceptance of Clause 3. I shall not go into all the detail that we then covered. But a great deal of a company's arrangements for its pension scheme can by the process that I have just described be available to any person to examine in considerable detail. That could be of harm to the company by disclosing to its competitors exactly how it is running its pension scheme. It seems to me that that goes much further than would be either reasonable or desirable.
It seemed to me from the earlier debate that we might escape the registrar but that we shall almost certainly have the register, even though, as I suggested, it might be run by the Occupational Pensions Board, if one likes, for an economy reason. But if we are to have the registrar, it seems to me that we really ought to remove—and this is the purpose of Amendment No. 35—paragraphs (a) to (e) from new Section 56C(1) and replace them with just the current name and address of the occupational pension scheme. That would be quite enough information for anybody who
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wished to know what sort of pension scheme they were concerned with or might potentially be concerned with. They could then find out all the details that they needed. What is important is that the information would be within the control of the company or the insurance company or other body organising the pension scheme. They can make sure that the wrong kind of person does not obtain this information The wrong kind of person is not the bona fide employee of the company or potential employee of the company, but somebody wanting to do something clever with the information they may gain.
Thus, as we said earlier when we were talking about Clause 3, everybody agrees that it should be easy for people to find out what pension schemes affect them, but it is not reasonable for other people who may have other purposes. Somebody mentioned clever journalists. It is not entirely in the interests of a company to have clever journalists writing articles about the details of their pension scheme. Thus, I think if we are to have the register, it needs to be restrained in the way that Amendment No. 35 requires. All the other amendments, Amendment Nos. 34 to 40. are consequential on this one. I beg to move.
Baroness Trumpington: Before I answer my noble friend, I cannot resist a little tit for tat. Last Wednesday I endured the taunts from the noble Baroness about the absence of people from my Benches. I have to say that I outnumber her representation this evening. It may not be great, but it is a damned sight better than on her side‡
It has become apparent over the years, whenever the issue of a pension schemes register is discussed, that there are very different views about the information which such a register should contain and the functions which it might perform. On the one hand, there is considerable support for a deposit register which could contain the deeds, rules and annual reports of schemes and be open to the public inspection. On the other hand, the amendments proposed by my noble friend Lord Mottistone would provide for simply a tracing register containing only enough information to enable early leavers, for example, to contact schemes with which they may have lost touch. Others would advocate no register at all.
Serious concern has been expressed about the costs and administrative burden which a register might place upon schemes, and about the confidentiality of information which might be placed on public record. The Government have listened carefully to the arguments which have been put forward at various times. That is why we have said that we are still open-minded on the issue. An evaluation of the costs and feasibility of the different options for a register is being prepared and I am sure my noble friend will agree that it would be unwise to reach a final decision before we have had an opportunity to consider all the facts.
Of course we are aware of the fears expressed about the disclosure of certain financial information. This will be taken into account in considering the results of the evaluation now being carried out. In the meantime, I can assure my noble friend that we shall certainly have very full regard to the views which have been expressed. I would therefore ask my noble friend Lord Mottistone to withdraw his amendment.
Lord Mottistone: Two points from my noble friend's remarks strike me. One is that she said considerable support was given to many documents as listed currently in the Bill. Can she enlarge on that and say where the considerable support comes from and, if it is not immediately available to her, can she perhaps let me know in a letter? I ask this because it could be that the considerable support comes from the very sources against which protection ought to be provided. It is difficult to know. As my noble friend said, my amendment would enable an individual, who was personally concerned because of a pension or possible pensions if he went to work for a company, to go only to the people who were providing the pension scheme, which is exactly what I want to achieve. That would seem to me to be perfectly all right for my individual friend. I think perhaps the considerable support might come from people who would derive other benefits from being able to get at this information and would not help the person we want to help, who is the potential pensioner. That is the first point.
The other point is this. My noble friend said that she and her department were considering all the facts before they came to a conclusion. However, she did not really give an indication as to when all these facts might have been examined. Is she able to go as far as to say that that would happen so that she would have time to put down an amendment of her own on these lines at Report stage, or, at the worst, Third Reading? I should hate this Bill to leave this Chamber while the Government were still investigating the facts. Can my noble friend help me on that matter? Is the moment right for me to sit down and invite her to reply?
Baroness Trumptington: That is beautifully timed. On the first point I shall write to my noble friend. On the second point, the answer is: in the near future.
Lord Mottistone: Can my noble friend say that it will be before Report stage? I must press her on this because I think that that would be a matter of considerable importance. If at Report stage my noble friend comes up with an amendment which is perhaps on the lines of that which I have, that is fine and we can forget about it. However, if she does not come up with one, we have to do it at Third Reading and by the rules of the House it would not be proper for me to go into battle on Third Reading. Furthermore, if the outcome at Third Reading is that her amendment which she then puts down is not good enough, we will not have time to correct it because we are the Second Chamber taking this Bill. Thus, it is very important that a conclusion is reached before Report stage.
Baroness Trumpington: Yes, I totally take the points made by my noble friend. He must remember that the Bill has flexibility for requiring any kind of register. I cannot really say whether I shall be in a position to put down an amendment at Report stage. However, when I am writing to him on the first point, I shall include the information he has asked for, and if the noble Baroness wishes to see a copy of the letter, it will be in the Library, but I shall see that the noble Baroness and perhaps the noble Lord, Lord Banks, have copies of any such letter containing that information. We shall then have to take the matter from there.
Lord Mottistone: Yes, that is fine. There is just one final point. What I sought to convey to the Committee when I introduced this amendment was that we have many facts here which are open to "any person"—and I turn again to page 52, line 40. Perhaps when my noble friend is considering any amendment she may have she will bear in mind that that term is very wide indeed. One may think that the term "any person" will invite all kinds of trouble. Therefore perhaps my noble friend may care to think about that. Having made that point—
Baroness Trumpington: The point is taken.
Lord Mottistone: I am assured that the point is taken. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 35 to 40 not moved.]
Schedule 2 agreed to.
Schedules 3 and 4 agreed to.
Schedule 5 [Minor and consequential amendments]:
Lord Mottistone Lord Mottistone moved Amendment No. 41:
Page 64, line 34, leave out from ("Act ") to ("at") in line 35 and insert (" (earnings limits) ").
The noble Lord said: this amendment is a paving amendment to Amendment No. 42, which is the operative amendment.
Amendment No. 42: Page 64, line 37, leave out from ("contribution") to end of line 39 and insert ("the contracted-out percentage of so much of those earnings as exceeds the current upper earnings limit.").
I talked at some length on this point at Second Reading. In another place the Government put down an amendment dealing with this part of the Bill which was not good enough to make the proper adjustments financially that would encourage companies to concentrate on employing the lower paid and not the higher paid.
I pointed out at that stage that because of the effect of this part of the Bill, if not amended, there was a risk that the large companies and more especially the small companies that perform what are called "high tech" tasks might say, "We have to have the high-paid people. We cannot afford to lose them. And so, because it will cost us so much to have them, with the Bill unamended, we shall have to make economies at the bottom end". I am sure that my noble friend Lord Young would find this especially distasteful. The whole point is that this should work the other way round. I invite my noble friend, therefore, to examine my remarks at cols. 546 and 547 on Second Reading, which give the main argument showing why this is important.
It is a fact that under the Bill, as at present constituted, some big companies will be seriously affected. IBM estimates that in a full year it will lose £13 million as the Bill is now written; British Petroleum estimates £9 million; Shell £7 million, and ST and C £4.5 million; ICI £4 million, and so on. There are a whole range of smaller companies that would lose at least £400,000 to £500,000. There is really a need to pay regard to Amendment No. 42, which would ensure that the employers' contracted-out rebate should apply above as well as below the

725
£265 a week upper earnings limit. Correcting the anomaly, it has been estimated, would cost about £300 million in a full year and about £130 million in the current 1985–86 year. Those figures need to be set against the sorts of figures that the Treasury estimated would be the result of the Bill as it stood. But, as I explained on Second Reading, the figures that the Treasury produced to justify it took in all industry, public industry as well as private industry.
Public industries on the whole probably would gain because of the balance of their employees. It is private industry that will lose. As one company has said:
"This additional burden"—
referring to the Bill unamended—
"goes a long way to offset the benefit that we have derived from abolition of the national insurance surcharge".
As such a tremendous effort was made by the Government to abolish that surcharge—it took them some years to get around to doing it—it seems an awful pity to negate it by not making a compensating correction to what they are trying to achieve here.
My amendment is phrased carefully so that it does not strike at the root of what the Government are trying to do. It tries only to make an offsetting balance. It can, however, make a tremendous difference as to how companies behave as a result. I hope that, even if the Government cannot accept the amendment right now, my noble friend will say that they will have yet another look at this point in order to be quite certain that they are not trying to save a few hundred thousand pounds or perhaps even a few million pounds to satisfy the Treasury, which is all theoretical anyhow, before assessing on a proper balance how it will affect private industry which will be the sector to suffer and which earns the money to keep the rest of us going. I beg to move.
8.45 p.m.
Lord Young of Graffham: As my noble friend has explained—I have read carefully cols. 546 and 547 on Second Reading—his intention in the amendment is to extend the contracting-out rebate to the employers' contributions which, by virtue of Clause 7(1) of the Bill, will become payable from 6th October on earnings above the upper earnings limit; that is, some £265 a week for weekly earnings or £13,780 a year. The director-general of the CBI wrote to my right honourable friend the Secretary of State making the same suggestion. My right honourable friend has replied explaining the technical objections to this proposal. I hope that it will assist your Lordships if I now repeat that explanation.
The contracting-out rebate that operates, as I have explained, over that part of the earnings in the range of £35·50 to £265 a week is actuarially related to the liability to provide graduated minimum pensions which contracted-out employers accept in their occupational pension schemes. This liability is, in turn, related to the earnings-related pension liability of which the state itself is being relieved to the extent that a rate above £265 a week would mean giving a new kind of rebate that was quite unrelated to the contracting-out provision. It would amount to a straightforward concession to contracted-out employers whereas others, not contracted-out but
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equally affected by the abolition of the upper earnings limit for employers' contributions, simply would not benefit.
I accept that the entire structure of the earnings-related pensions and contracting-out are very substantially affected by my right honourable friend's recent Green Paper. Under these proposals this technical objection simply would not arise. But then neither does the contracting-out rebate. It would be wrong to tinker with the present system in a way that prejudices the introduction of important new changes such as my right honourable friend has proposed.
In its letter to my right honourable friend, the CBI costed this proposal—here, I agree with my noble friend—at £300 million in a full year. This is a significant objection. It would significantly reduce the £800 million to be raised from employers by abolishing the upper earnings limit in order to offset the £880 million that they receive by virtue of the reduced liability lower down the earnings scale. I am sure that my noble friend would agree that £880 million or £800 million is not mere tens or hundreds of thousands of pounds. We are dealing with substantial amounts of money, in the view of the Treasury or elsewhere.
As your Lordships will see, therefore, employers are already net gainers from our proposals to the tune of £80 million. I suggest that the understandable concern about the abolition of the upper earnings limit, when applied to particular employers' needs, has to be seen in the wider context. My noble friend was right to remind us that last year we were able finally to abolish the national insurance surcharge which will save employers almost £900 million in a full year. This year, as the Chancellor made clear in his Budget speech, there was less room for manoeuvre. It was not possible to make further substantial reductions in employers' costs. Nevertheless, no one would dispute the need to encourage employment; hence the measures now before your Lordships. As I halve said, employers will gain £80 million overall from these measures despite the abolition of the upper earnings limit on their contributions.
About 1·75 million employees earn more than the upper earnings limit. In most cases the extra employers' contributions will amount, at most, to only about 2 to 3 per cent. of gross salary. There is evidence that earnings for such employees have been rising at about 2 to 3 per cent. in real terms for the last two or three years, suggesting that costs of that order can be absorbed without evidently too much difficulty.
I appreciate that there will be some cases where the costs are harder to absorb. But it is worth keeping in mind that paying 10·45 per cent. on all earnings, as employers will have to do for their higher-paid employees, is no more than the employers of the lower paid have done for some time. Indeed, before we started to phase out the national insurance surcharge such employers paid a total rate of 13·5 per cent. In contrast, under the present system, employers' contributions are just 6 per cent. of gross salary for someone on £25,000 a year and 4 per cent. only at £35,000 a year.
In my view the overwhelming point is that it will now be cheaper for any employer to take on new, lower paid employees. Removing the ceiling on

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employers' contributions may have increased costs in respect of some 1·75 million employees, but it has reduced costs for 8·5 million—almost five times as many. It encourages employers to provide jobs, and potential employees to take them, in that one part of the labour market where the problem of unemployment is most acute.
My noble friend's amendment would significantly weaken the Government's ability to provide the encouragement to employment where it counts most. Seen in this wider economic context, I hope that my noble friend will see fit to withdraw his amendment.
Lord Mottistone: It is difficult to agree with a fair amount of what my noble friend has said. As regards the point about my amendment significantly reducing the Government's opportunities to encourage employment in the lower level, I fear—and I said this also on Second Reading—that without my amendment that could be the outcome in many of the companies which matter; namely, the companies which are earning the money for us. That is something of which the Government really must take account instead of producing arguments against it.
My noble friend said on two occasions—and I also mentioned this in my Second Reading speech—that the net advantage or the forecast advantage was £80 million across the board. The difficulty is that companies are all different. The £80 million will be shared out in different ways. However, the companies which particularly need to benefit from it—private industry—will not be nearly so well off as the heavy old creatures which have been around our necks for years. Therefore, the Government should not look at global situations quite so much; they should try to identify where the bite is going to be felt. I quoted several companies which will be individually over £1 million—indeed, over £3 million—worse off because of this. They are all important companies and companies upon which we depend.
I shall not of course make a fuss about this amendment now. However, I should be very grateful if my noble friend would not rely too much upon what the Chancellor wrote to the Director General of the CBI as though that were the end of the story. I hope that he will take this message away and try to persuade the Treasury, I suppose, to have a serious look at the matter or else one may feel that the Treasury are not really interested in the country prospering in the long run. Indeed, that is what we are talking about; we are talking about the companies which earn the money for us. That is much more important than making minor adjustments to balance some part of their books. We must look at what matters to the companies which are earning our living overseas. That is where they should concentrate their efforts. I hope that my noble friend will be able to convey that message to his noble friends and his right honourable friends so that they will have another look at the matter. In the meantime, I shall have another look and I shall almost certainly come back on Report with something. However, if my noble friend comes back with something else which is acceptable, then that will be better still. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 42 not moved.]
Schedule 5 agreed to.
Schedule 6 [Repeals]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 43:
Page 69, line 26, column 3, at end insert—
("In section 125(1), the words "in the month of June".
In section 126A(1), the words "in the month of June".").
The noble Baroness said: I beg to move Amendment No. 43, which is consequential upon the new clause which follows Clause 14.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to to.
In the Title:
The Earl of Caithness The Earl of Caithness moved Amendment No. 44:
[Printed earlier: col. 701.]
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.
House adjourned at four minutes before nine o'clock.