Social Security Bill (Hansard, 12 July 1989)

HL Deb 12 July 1989 vol 510 cc342-403 342

§ Consideration of amendments on Report resumed on Clause 14.

§ Baroness Faithfull moved Amendment No. 12:

§ Page 13, line 28, at end insert— ("(3) In regulation 36(3) of the Income Support (General) Regulations after sub-paragraph (b) there shall be added— 'and (c) any sum paid by the claimant, if he is a member of a family but has no partner, for the care of a child who is a member of his family—

(i) while he is engaged in or travelling to or from that employment, or
(ii) for the purpose of enabling him to engage in that employment." ").

§ The noble Baroness said: My Lords, I spoke to this amendment during the previous stage of the Bill, but I hope that my noble friend the Minister will forgive me if I speak to it again. Many of us in this country are deeply disturbed about single parents. That means the widows, the divorced, all single parents who are caring for children. Before April 1988, if these women wished to go out to work their work expenses were taken into account. By their "work expenses", I means their fares, the cost of putting the child with a carer, a foster parent or putting the child in a nursery.

§ The purpose of this amendment is to reduce the existing major disincentives to work for lone parents, thereby reducing their enforced dependence on means-tested benefits. As is well known to your Lordships' House, there is now a movement on the part of Her Majesty's Government to press single parents to go out to work. That is being done by a unit based on the Home Office because that office is responsible for equal opportunities for women. It is also an interest of the Department of Health and the Department of Education.

§ I believe that I am right in saying that the Minister's right honourable friend the Secretary of State is also pressing single women to go out to work. If they do so, whatever happens, the country must not disregard the children of those single women. Otherwise ultimately it will lose out because the 343 children of the single women will not be looked after properly, they will not be properly cared for.

§ If the woman is drawing a very low wage, then of course she receives income support. But if she is drawing a wage above income support and has to pay for her fares and the money for the nursery, having to deduct the child care expenses from her earnings will involve a very considerable sum. Therefore it is hoped that in order to achieve a situation where the lone parent works without the children suffering, child care expenses should not be taken into account when calculating income support and housing benefit.

§ This is a very important amendment; it concerns more than one Ministry. It concerns the whole policy of Her Majesty's Government to persuade lone women with children to go out to work. I think we must examine not only the position of the women but also that of the children. I beg to move.

§ Earl Russell
My Lords, I am pleased to support this amendment. As I have said before this evening, I am concerned about how much the whole system costs. Where costs can be kept down without causing undue pain to those concerned, I believe that we should try to do that.
The cost of single parents to the social security budget has now reached £3.4 billion. I know that the Secretary of State is concerned about that figure. I share his concern, although I do not necessarily share all his ideas about the solution. It seems to me that the cheapest solution as regards the cost of single parents to the social security budget is contraception. However, failing that, the second cheapest solution where possible is to enable the parents to return to work, to get off benefit and to support themselves and their children—a solution compatible with self-respect as well as humanity.
However, the children do not simply disappear when the mother goes back to work. It is not like the guide book I once relied on, which described a country walk at the end of which you would meet the car which has meanwhile gone round. The children do not "meanwhile go round" and they have to be looked after somewhere. They must have care. Inevitably, care costs money and those who cannot afford the care cannot work. People are quite rightly concerned about the quality of the care which they are receiving for their children. Children are not just to be dumped in a left luggage office but need to be looked after. Therefore, I believe that parents should be in a position to try to find child care of sufficient quality. That means a real risk of a classic poverty trap, and we all know the arguments against that. Therefore, I do not need to prove any further that this amendment is to the advantage of the claimant.
I believe that it is also to the advantage of the Government and even, believe it or not, to the advantage of the Treasury. I have not always expressed myself with great favour about the Treasury but it has a point of view and where it can be heard, it should be. I shall not develop any further the points about women returning to the labour market. I know that the Government are well aware of them. In the debate initiated by the noble Baroness, Lady Turner, on 21st June we developed 344 those points further. I believe that this is a very strong case and I am happy to support the amendment.

§ Lord Skelmersdale
My Lords, I am the first to admit that lone parents, like other parents who wish to work, need to balance their work and family responsibilities. The Government believe that child care is something on which the parents should decide and arrange. However, there are also others who have a very important part to play. Employers are showing increasing interest in child care as a way of helping them to recruit and retain staff as labour markets become increasingly tight. Many voluntary bodies are very active in child care, and the Government provide financial support for a number of them. The Government see their role as to facilitate the development of child care facilities by employers, voluntary bodies and others, and to ensure proper standards.
My noble friend Lady Faithfull, in introducing this amendment, commented on the Ministerial Group on Women's Issues, which is chaired by my honourable friend the Minister of State at the Home Office. In April it announced a plan which included the promotion of partnerships between employers, the voluntary sector, local statutory authorities and others; the issuing of guidance to local education authorities and school governors about after-school and holiday schemes; and encouragement to employers to use tax reliefs available to them to provide, or help with the cost of, child care.
This aims to help lone parents and other parents who want to work. It is relevant to this debate because it demonstrates that the proposition put before the House in the amendment is far from being the only way to help lone parents who want to work. I should like to look now more closely at the change being proposed by the amendments, because it is not so straightforward as it might appear.
As the House knows, there used to be a disregard of child care costs for lone parents receiving supplementary benefit and working part-time. But the House should also know that when we commissioned a study of how it was working, it was found that most lone parents did not actually gain from the provision. Nearly 78 per cent. of the working lone parents in the survey incurred no child care costs and only just over 2 per cent. had costs of more than £10 per week.
Noble Lords earlier this afternoon talked about the social security arrangements and budget adapting to circumstances; that is exactly what the Government did. In April 1988, we replaced this disregard and a complicated general disregard of earnings by the simpler arrangement we have now. Lone parents who receive income support and work part-time receive an earnings disregard of £15 per week, which can in some instances be £5.50 more than they would have received under the previous arrangements. This helps all lone parents who work part-time and receive income support, not only those who have child care costs.
But there is a further point. We need to make sure that what we do help claimants without actually 345 encouraging reliance on income support and damaging their incentives to greater independence. Yet the change which is proposed would in fact do just that. This is because direct help with child care costs from the public purse is not available to people in full-time work. To provide help as the amendment would propose would create a disincentive to leave income support. It cannot be right to do that.
Noble Lords should also be aware that there is little evidence from the inquiries we have received that the absence of a disregard for child care costs is having a disincentive effect on lone parents taking up employment. But we have always said that we will monitor the various new disregards and consider what changes, if any, are necessary in the light of their operation. The noble Lord, Lord Carter, will be delighted that this is not an occasion to mention the OPCS report. However, to be serious as I must be, we are therefore commissioning an independent study to see how claimants generally are adapting to the new rules.
In conclusion, I would like to emphasise that I fully understand the reasons which have led my noble friend to put forward this amendment. But we have already announced plans for action to promote provision of child care, working with employers, voluntary bodies and others. To change the social security rules as this amendment proposes would weaken incentives to greater independence. But we are monitoring the way the new rules work and, in the light of that, will consider whether changes are needed. The House knows full well that we are not frightened of making changes to the 1986 Act arrangements. We have made several this year and I have no doubt that we shall be in the process of making several next year. I hope that that helps my noble friend.

§ Baroness Faithfull
My Lords, I thank the Minister. When one changes from one system to another, there is always difficulty with the bridging process. At the moment there is no doubt that there is a big change of policy on the part of Her Majesty's Government; namely, that lone women should go out to work and that the market forces should take over and provide the nursery accommodation or accommodation for the care of their children. That is only the first step towards this new process. For example, I know that the banks have started crèches. I know, for example, that Marks and Spencer intends to buy in places. Nevertheless, while this new system is taking over there are difficulties for lone parents and their children.
My noble friend the Minister said that it is perfectly possible with a Social Security Bill every year to make changes. I should have thought that there might have been the possibility of accepting this amendment and then, when all the market forces begin to operate—whether they ever will is another matter—it will be possible to take this out in next year's Bill, in so far as we have a Bill every year.
I am therefore disappointed on behalf of all these women and their children and indeed the workforce in the way that Her Majesty's Government want 346 it to work. However, having made my point and underlined it, at this hour of the night I would not consider pressing the amendment. I therefore beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ 8.30 p.m.

§ Lord Henderson of Brompton had given notice of his intention to move Amendment No. 13: After Clause 14, insert the following new clause:

§ ("Applicable amounts.

§ —(1) In paragraph 1 of Part 1 of Schedule 2 to the Income Support (General) Regulations 1987, after the words "applicable amounts and polygamous marriages" there shall be inserted the words "except that, for this purpose, any person aged less than 25 to whom any paragraph in Part 11 of the Schedule l A applies or would apply if he were aged 16 and had not reached the relevant date determined under regulation 13A (3)(b) shall be treated as if he were aged 25."

§ (2) In paragraph 1 of Part 1 of Schedule 2 to the Housing Benefit (General) Regulations 1987, after the words "17(a) and (b)" there shall be inserted the words "except that, for this purpose, any person aged less than 25 to whom paragraph in Part 11 of Schedule IA to the Income Support (General) Regulations 1987 applies, or would apply if he were aged 16, claiming income support and had not reacted the relevant date determined under regulation 13A(3)(b) of those regulations, shall be treated as he were aged 25.").

§ The noble Lord said: My Lords, to use the words of the noble Baroness, Lady Faithfull, at this hour of the night it would be inappropriate to move Amendment No. 13. I have the agreement of the co-signatories to this amendment not to move it. I believe that the noble Baroness, Lady Faithfull, likewise will not be moving Amendment No. 14.

§ [Amendment No. 13 not moved.]

§ Baroness Faithfull had given notice of her intention to move Amendment No. 14: After Clause 14, insert the following new clause:

§ ("Income support for persons aged 16 or 17

§ In regulation 13A of the Income Support (General) Regulations 1987— (a) for paragraph (3) there shall be substituted— (3) In case of a person to whom any paragraph in Schedule IA applies, the relevant date is the date on which he attains the age of 18."; and (b) in paragraph (7) the words "(3)(b) and" shall cease to have effect.").

§ The noble Baroness said: My Lords, the same applies to this amendment. I do not move it.

§ [Amendment No. 14 not moved.]

§ Lord Henderson of Brompton moved Amendment No. 15: After Clause 14, insert the following new clause:

§ ("Employment rehabilitation.

§ . In paragraph 7(1) of Schedule 8 to the Income Support (General) Regulations 1987, after the word "derived" there shall be inserted the words "from employment in a work programme for the rehabilitation of persons who would otherwise be unlikely to obtain remunerative employment or".").

§ The noble Lord said: My Lords, there is no reason why this amendment should take a great deal of time as I had a promising and sympathetic response to my amendment from the Minister in Committee. I therefore withdrew the amendment because I 347 thought it would have been churlish to have done otherwise.

§ I tabled the amendment again today because I very much hope that the Minister will be able to elaborate on his reply given in Committee and because I want to say one or two words myself. In his reply in Committee the noble Lord, Lord Skelmersdale, referred to the employment training programme being open to those with disabilities and other problems, which is indeed the case. However, it does not follow that everyone seeking work rehabilitation is able to use those programmes.

§ The experience of the voluntary agencies which are specially expert and experienced in this field is that many people who have suffered or are suffering a psychiatric illness are simply not able to use the mainstream programmes. It is their experience and their belief that these mainstream programmes have great difficulty in adjusting to the needs of such people. They are needs which are not at all like those of people who have learning disabilities, such as the mentally handicapped. People with psychiatric illnesses are in a different category. What they need is a special stage before they can consider making use of government programmes. Therefore I ask the Minister kindly to take note of that special feature of those who suffer from psychiatric illnesses.

§ Secondly, people who have worked closely with the rehabilitation schemes were pleased, as I was and I am sure the rest of the House was, to learn during the Committee stage that the Government are commissioning—I believe these were the words used—"a comprehensive research programme to monitor the effects of the rules relating to earnings disregards". I think that that is a very acceptable expression of government policy. All I ask is that when this is put into effect the Government will take into their confidence the voluntary organisations which are experienced in this field, make use of their expertise and give them every opportunity to contribute to the Government's thinking.

§ Having made those two points, and hoping for a little further elaboration on the Minister's statement in Committee, I beg to move.

§ Baroness Jeger
My Lords, we support this amendment. It is a modest and very necessary amendment. It comes before your Lordships with the support of some of the voluntary organisations which are carrying out this extremely difficult work of endeavouring to get people who are often written off as unemployable into a pattern of working.
I am sure that all noble Lords will want to pay tribute to organisations such as the Richmond Fellowship, the Peter Bedford Trust, St. Mungo, and others, because they put society in their debt. They are carrying out work that other people do not care about. They work hard to raise funds and they deal on a very personal basis with people who have a multitude of difficulties.
The trouble is that unless the people they are trying to help are on a disability premium, as referred to earlier, they are only allowed to have the earnings limit disregard of £5 per week. If they were on the disability premium they would have a disregard of 348 £15 per week. I am genuinely seeking information. I ask the noble Lord how the department sorts out the £5 people from the £15 per week disregard people? When were these limits set? Are they due for an up-rating? It seems to me that £15 per week is a little enough incentive and that £5 will not give the incentive that is important for some people who have not been in employment and who do not have an established work pattern to agree to go on these courses.
A great deal of very valuable work is being done and it would be a great encouragement to the people operating these schemes if the Government were to show some further understanding and give some assistance.

§ Lord Hylton
My Lords, I give general support to this amendment. So far we have had mention of the mentally handicapped, the physically handicapped and those suffering from psychiatric illness. I draw attention to discharged prisoners who often need employment rehabilitation before they can have any hope of finding work in the normal way. That arises, or course, from the regrettable situation in many prisons where there is a great shortage of work and where, alas and unfortunately, prisoners are being locked up for 22 or 23 hours each day.
The noble Baroness, Lady Jeger, mentioned the Peter Bedford Trust. That is one organisation that is active in employment rehabilitation. On those grounds, as well as all the others cited, I believe that this is an important amendment which, even though it deals with small amounts of cash per week, should be taken very seriously.

§ Baroness Faithfull
My Lords, I add one comment from the point of view of those people who are running these centres. It is difficult to instil into the people—men and women—a desire to work if some are receiving one amount of money and the others receiving less. I have to say that it is difficult to inspire those who are receiving less to work harder when they see their colleagues at the next bench receiving much more. If we are to get them back onto the labour market and into the workforce they should be earning about the same amount instead of having this differentiation within a project.

§ Lord Skelmersdale
My Lords, that again was a most illustrative comment from my noble friend that I shall come to. As the noble Lord, Lord Henderson, said, this amendment was discussed at some length during Committee stage and I am not sure how much I can add to the explanation that I gave then. I do recognise the strength of feeling which exists that something extra should be done to help people who have recurrent mental health problems to get into employment. But I cannot accept that because some of these people qualify for the higher £15 disregard while others the standard £5 disregard this is sufficient justification for raising the earnings disregard for all of them to £15 a week.
My noble friend Lady Faithfull, in essence, asked why they are getting less. The answer is because their disabilities are either greater or lesser. The whole point of the social security system is that people who 349 are more disabled should get more money in various ways. The purpose of the existing structure of the earnings disregards is to recognise and encourage those people with very special difficulties caused, for example, by long-term sickness, lone parenthood or long-term unemployment in the case of couples. I am sure that is right. As the noble Lord, Lord Henderson, said in Committee, some of the group he wishes to help are already getting the £15 disregard because they are entitled to the disability premium.
The disability premium is available to people who, for example, have been incapacitated for 28 weeks or more, or who are receiving invalidity benefit, mobility allowance or attendance allowance or who are blind. People with recurrent mental health problems may well satisfy the qualifying condition for receiving the disability premium and therefore be entitled to the higher earnings disregard. However, I can assure the House that it is not necessary for any of these people to register as a disabled person in order to qualify for the higher disregard. I hope that this will dispel the fears than some might have therefore that entitlement to the disability premium could hamper their future prospects for obtaining employment.
But I must also make it clear that the Government do not believe that increasing the disregard level for young, fit, single people will necessarily encourage them to take up full-time employment. Indeed, I am sure that for some it will have quite the opposite effect by removing the financial incentive of doing so. It has been mentioned earlier that we are reviewing the whole matter of disregards. In answer to a question from the noble Lord, Lord Henderson, I can assure him that the views of those groups running rehabilitation schemes will be taken into account when monitoring the new earnings rules.
I believe that a way of helping the people at whom this amendment is aimed is by making them better informed about the nature and conditions for the existing disregards. In this respect I feel sure that organisations involved with them will wish to continue to play a part. The noble Baroness, Lady Jeger, asked me about up-rating the disregards. These were set on 11th April 1988, which I believe is very recent indeed. The Government make annual decisions on up-rating. Much to the fury of your Lordships the Government do not up-rate some benefits and much to the surprise of your Lordships, others they do up-rate. Therefore I cannot make any guesses as to which benefit and by how much up-rating will take place this autumn.
In the meantime, my officials continue to carry out an undertaking I gave regarding last year's Social Security Bill and remain in contact with St. Mungo Housing. They have met again with its representative only recently. Together they hope to work out how best to help this unfortunate group.
I do not believe it will be productive for me to say any more. I do not believe I can add to the two explanations that I have now given on this matter except to repeat to the noble Lord, Lord Henderson (because I am not sure that he was in the House at the time) what I said in Committee. I am absolutely determined—I have made it a personal 350 crusade—that the more people with disabilities who are able to work should be encouraged to do so, and I maintain that stance.

§ 8.45 p.m.

§ Lord Henderson of Brompton
My Lords, I am grateful to the Minister for his reply, but not quite so grateful as I was for his reply to the amendment moved in Committee which I prefer to this one today. I was in my place when he expressed his own personal interest in helping those who are disabled to increase their determination to find work. I am very much conscious of the fact that he has this matter at heart. I very much welcome that.
Regarding his assurance, I thank the noble Lord for saying that when his officials come to consider the new earnings rules in detail they will take into account the views and consult with the experts in this field. As the noble Baroness, Lady Jeger, rightly said, these experts have put us all in their debt for looking after these people and for encouraging them while trying to lift them out of their hopelessness and dependency before they are rehabilitated by these excellent institutions and devoted people. With that hope for the future and my thanks to the Minister, I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Clause 15 [Housing benefit to take the form of payments or reductions]:

§ Baroness Gardner of Parkes moved Amendment No. 16: Page 13, line 43, at end insert— ("(3) In section 28 of that Act, the following subsection is substituted for subsection (6)— (6)(a) For the purposes of assessing housing benefit an authority shall disregard in determining a person's income the first £10 (or such higher amount as may be prescribed) of any war disablement pension or war widow's pension payable to that person and may by resolution modify any part of its housing benefit scheme to disregard the whole or part of the remainder of any such pension; (b) an authority may by resolution modify its housing benefit scheme in such other respects as may be prescribed," ").

§ The noble Baroness said: My Lords, this amendment is fairly self-explanatory. I spoke in great detail at the Committee stage of the Bill. This amendment would increase the present disregard of £5 by 100 per cent. to £10. It would be of great benefit to all of the war disabled pensioners and war widow pensioners. At Committee stage I was concerned that if we asked for a statutory disregard increase it might disadvantage those whose local authorities are giving a much higher disregard.

§ I have had consultations with the Association of District Councils and it does not believe that will be the case. It believes that those authorities that are already being more generous will continue to be so. That would be of great benefit to everyone. There were other points raised at Committee stage. For example, there was the question of the difference in pension between that of a colonel's widow and a serviceman's widow. I was sent the figures on that matter and, interestingly enough, there was only a difference of about £3 a week between the sums received by the two widows. One received £56 a 351 week and the other £59. Therefore, there was not a difference there to be concerned about.

§ As I made clear at Committee stage, housing benefit helps only those who are in need and therefore are in need of housing benefit. This provision will be of great value. I believe that the Chamber generally agreed on the great merit of these people who had either made a personal sacrifice through the loss of a husband or who had suffered injury themselves, and that they are a particularly deserving group. I beg to move.

§ Lord Trafford
My Lords, at Committee stage I made some remarks concerning a similar amendment moved by my noble friend. I believe that I was mistaken both in the interpretation that I gave to the amendment at the time and in one or two of the remarks that I made. I support what she has to say now. I hope that my noble friend will be kindly disposed towards this amendment with which I agree.

§ Baroness Strange
My Lords, I wish to support my noble friend Lady Gardner of Parkes. I can remember—and I expect that most of your Lordships can, too—when a £5 note in your pocket would buy a whole trolley load of food in a supermarket. Not even a £10 note will now do that. I suppose it might if you filled a trolley with 22 loaves of bread. In this instance we are talking of women whose husbands and chief bread winners sacrificed their lives to their country. I do not say that the country owes those widows a living, but merely that we are a great country and are proud of our people. We owe it to those who died for us to care for the wives they loved.

§ Lord Henderson of Brompton
My Lords, in Committee I briefly supported the noble Baroness and I should like to voice my support this evening. Sadly, the number of people involved is diminishing. It will eventually, in the absence of future hostilities, dwindle down to nothing. In those circumstances, the House should support the noble Baroness, and the Minister and the Government should generously accede to what she proposes.

§ Lord Skelmersdale
My Lords, I am afraid that I am going to be inconsistent again. I hope that on this occasion the House can live with my inconsistency. My noble friend is seeking an extension of the present £5 statutory disregard in housing benefit of any war disablement or war widow's pension. She has proposed an increase to £10, which doubles the present disregard while retaining the discretion which local authorities have to increase the disregard—or indeed to disregard war pensions in full. The amendment—and hence the increase. — applies to housing benefit, and housing benefit only.
By this amendment my noble friend shows herself to be a staunch supporter of the war disabled and war widows. She has attracted support from almost all round the House. I gather that on the Benches opposite silence means consent. The Government 352 wish to be no less supportive. Indeed, as noble Lords will be well aware, this Government have done much for war pensioners. On taking office we completely freed all war pensions and allowances from income tax. We have fully maintained the value of the war pensions and allowances in line with the retail prices index—that is my answer to my noble friend Lady Strange—by means of no fewer than 11 upratings since taking office.
In 1983, we introduced a new mobility supplement for war disablement pensioners, set at a rate higher than the ordinary mobility allowance. From 1984, there have been significant improvements in the age allowances payable to war widows, with substantial extra help for those over 80. And in April 1987, the provision for paying funeral costs for war pensioners dying of their war disablement was significantly improved. There is no mistaking the force and strength of the current of sympathy that is flowing at present around the House in recognition of what the country owes in regard to the sacrifices made by individual war pensioners and war widows.
I am therefore happy to announce to the House that the Government accept the case for this very special and well defined group and will increase from £5 to £10 the statutory disregard of war disablement and war widows' pensions in housing benefit. Moreover, we see the case for extending the increase not just to community charge benefit but also to income support and indeed, in the rare cases where it will apply, to family credit.
There is, however, a technicality: the amount of the statutory disregard is contained in regulations, not in an Act of Parliament, and it follows that the present Bill would not be the right vehicle for conveying this change. The Government would therefore wish to effect the increase by means of an amendment to the appropriate regulations to become effective in April 1990, at the same time as the general up-rating of benefits. I hope that my noble friend will be able to accept this as being the appropriate way of giving effect to the improvement which she is seeking and which I, as Minister with special responsibility for war pensions, warmly endorse.

§ Baroness Gardner of Parkes
My Lords, I thank my noble friend for that reply, which delights me. However, I am still slightly puzzled. He said that the amount is not embodied in an Act but in regulations. It seems to me to be embodied in the Act. My amendment sought to amend the Act. Perhaps he can explain that point.

§ Lord Skelmersdale
My Lords, with the leave of the House, the amount of money is not set out in the Act. It is a general power in the Act. The amount of money is set out in regulations made under the Act. That is what we need to change in order to accede to my noble friend's wishes.

§ Baroness Gardner of Parkes
My Lords, I thank my noble friend for that answer. I had not realised that the £5 was not specified in the previous Act. I knew that the words "statutory disregard" were used. I do not have that section of the Act with me. I am 353 only too pleased to express the thanks of war widows and war disablement pensioners. No doubt I shall be able to send them a copy of Hansard which will show exactly when this will come about.
They have asked me to express their gratitude to the present Minister, my noble friend Lord Skelmersdale, and to my noble friend Lady Trumpington, both of whom have been particularly helpful to them in upgrading their pensions in recent years. The chairman of the War Widows Association of Great Britain, Mrs.Hazel Murphy, wrote to me just to remind people that, while the war pensioners—the man—had always received their pensions free of tax, it was the present Prime Minister who brought in the same concession for the women, who had been disadvantaged before and had had to pay tax and have their money treated as unearned income during the years of bringing up their children. That was hardship for them. They were grateful for that. I know that they will be grateful for this announcement by the Government. I thank the Minister for what he has said and I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Earl Russell moved Amendment No. 17: After Clause 17, insert the following new clause:

§ ("Income support for disabled people.

§ After section 22(4) of the 1986 Act (calculation) there shall be inserted the following subsections (4A) Without prejudice to the generality of the preceding subsection a person shall be treated as a severely disabled person if a medical practitioner certifies in respect of that person that he has a medical condition or other disability and that the extra weekly expenses directly attributable to his medical condition or other disability exceed such sum as shall be prescribed. (4B) In relation to income support and housing benefit the applicable amount for a disabled person shall include an amount in respect of his being a disabled person. (4C) Regulations may specify circumstances in which persons are to be treated as being or as not being disabled. (4D) Without prejudice to the generality of the preceding subsection a person shall be treated as a disabled person if a medical practitioner certifies in respect of that person that he has a medical condition or other disability and that the extra weekly expenses directly attributable to his medical condition or other disability exceed such sum as shall be prescribed." ").

§ The noble Earl said: My Lords, this is an enabling amendment. It allows the Minister to do things by regulations, the normal means of introducing changes in matters relating to income support. It has been drafted mainly with the needs of AIDS sufferers in mind. It could also be of benefit to those suffering from cancer or other terminal illnesses. It allows the Minister to deal with cases where people suffer a disability which causes serious extra weekly expenses and to specify the circumstances in which the severe disability premium—SDP—may be paid to those who stand in need.

§ In many ways the expenses of those who suffer from AIDS are a good deal higher than those of other people. In answering a question in another place the Minister of State estimated that they need something of the order of 150 per cent. of normal protein. His estimate of the extra cost of that per week is £14.19. The Royal Victoria Infirmary at 354 Newcastle calculates it at £30. That discrepancy may not surprise the House, but even at the lower figure this is a quite significant addition to the extra expenses of people living on income support, which does not, I think, provide normally for real luxury in diet.

§ The amendment will also deal with the 28-week period normally needed to qualify for severe disability benefit. In a number of cases, as the noble Duke, the Duke of Norfolk, and the noble Baroness, Lady Faithfull, have already reminded us, sufferers from AIDS may be dead before they have qualified for the premium. From the Treasury's point of view it may be a cheap way of solving a problem, but I do not think it is a good one.

§ The Minister, I suspect, will take the advice of the noble Lord, Lord Carter, and simply say "OPCS" and sit down. But this problem will not wait. A good many people to whom this amendment may apply would be dead well before the OPCS survey could be completed, considered and embodied in legislation after all the necessary procedures. This is genuinely a matter of life and death. I beg to move.

§ Lord Carter
My Lords, I am pleased to support the amendment. As the noble Earl said, there is a real problem for those who suffer from AIDS and HIV infections. It is one of the problems we foresaw with the abolition of the additional payments under the old system of supplementary benefit for items such as heating, laundry and bathing. The Government replaced targeting with the relative inflexibility of the disability premium and the severe disability premium. With the AIDS condition there is severe sweating and incontinence. Pneumonia is almost invariably associated with AIDS with the extra heating costs that are required.
If the Minister mentions the OPCS, I am sure that he will be aware that the questionnaire which was used for the survey did not include any consideration of AIDS or HIV infections. Therefore it would be interesting to know how that survey is supposed to help with this problem.
The amendment moves us only slightly towards a comprehensive disability income which is the target of all of us involved in disability matters. I must say that those of us on this side of the House are very pleased to support the amendment.

§ 9 p.m.

§ Lord Skelmersdale
My Lords, if the noble Earl, Lord Russell, and the noble Lord, Lord Carter, were living in a world where there was no other disability benefit, I could immediately see the logic for this amendment. Of course, there is an OPCS factor in the matter, as the noble Lord, Lord Carter, knows full well. However, I think I should make the point that in the study of the OPCS data the considerations will obviously cover proposals of the kind introduced by this amendment. But I must stress that it would import into the income support scheme some of the worst features of the old supplementary benefit system which so bedevilled it and which led to the urgent need for its reform.
355 The whole object of those changes was to replace subjective judgments of the type which this amendment would require with much simpler objective ones. Moreover, those of us who are very questioning about a comprehensive disability pension would, I think, take that line as a matter of course. As I pointed out just now to the noble Lord, Lord Henderson of Brompton, different levels of disability attract different levels of benefit. I, for one, believe that that policy is correct.
So far as concerns objective criteria, I believe that that has provided certainty for the claimant about his income support entitlement and has improved ease of administration. Flat-rate premiums for the sick and disabled, linked to the receipt of long-term incapacity and disablement benefits, and based on other objective criteria, were one of the major achievements of the reforms. I believe that it would be quite wrong to damage or reverse that situation now.
The rationale of those premiums remains sound, not least because most illnesses are short and do not involve extra cost. It is those which persist long term and which incapacitate for a long time which attract the premiums. Therefore I agree with the noble Earl and the noble Lord that this is a matter which needs to be looked at very seriously indeed. I should, however, point out to the noble Earl that the sum of £14.19 which he mentioned is not the extra cost; it is the cost of a diet as a whole based on 1986 rates. If the noble Earl is interested, the source of that information is McDonald and Forsythe at St. James's University Hospital.
However, I was talking about the amounts which are payable now. I think that it would be appropriate to remind the House that the disability premium currently stands at £13.70 for a single person and at £19.50 for a couple. Moreover, the severe disability premium—payable on top of those amounts—is £26.20 for a single person and double that where both people in a couple satisfy the criteria.
The noble Lord, Lord Carter, in particular, will know that in addition the independent living fund exists to help severely disabled people who need personal care or domestic support to live independently in their own homes. If the noble Lord wanted to twit me he would say that the independent living fund is such a success that the Government are embarrassed by it. I must tell him that the Government are not in the least embarrassed by that fact; indeed, we are delighted at its success.
In view of my arguments, I hope that the noble Earl will see fit not to pursue the amendment at this time of night.

§ Earl Russell
My Lords, I thank the noble Lord for that reply. It is not the first time tonight that we have heard the argument that the proposal in question reintroduces the worst features of the old supplementary benefit system. I am beginning to wonder whether, when the Minister speaks about the worst features of that system, he may occasionally be speaking about certain aspects of it which some of us on this side of the House may regard as the best features of the system.
356 The Minister spoke about objective measures. But there is a little difficulty here, as we may hear later tonight, about objective measures of pain and suffering. It is also an objective fact that not all disabilities are equal to all other disabilities. In fact, I tried to put forward an argument to show that there is here a case for arguing that some disabilities do not have equal expenses with other disabilities.
There is, I think, some force in the remark of Aristotle that justice does indeed involve equality, but equality for those who are equal, and not for all. This objective measure is losing sight of the very real differences between cases.
As regards the sum of 14.19 being the cost of a complete diet, I take the point. However, it makes me wonder whether the passage in my briefing paper which said that this was based on 1896 prices is perhaps not a misprint after all. Nevertheless, with the crumb of comfort that the Minister knows that this matter needs looking at again, I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ The Deputy Speaker (Baroness Lockwood)
My Lords, I must point out that if Amendment No. 18 is agreed to, I cannot call Amendment No. 19.

§ Clause 23 [Recovery of sums equivalent to benefit from compensation payments in respect of accidents, injuries and diseases]:

§ Lord Campbell of Alloway moved Amendment No. 18: Leave out Clause 23 and insert the following new clause:

§ ("Recovery of sums equivalent to benefit from compensation payments in respect of accidents, injuries and diseases

§ 23.—(1) No compensation payment may be made in respect of an accident, injury, or disease unless—

(a) the Secretary of State shall have furnished to the person proposing to make such payment a certificate showing the categories and amounts of benefits paid, or to be paid, by reason only of such accident, injury or disease for the relevant period;
(b) the Secretary of State shall have approved a statement of deductions of the amounts received under categories of benefit which fall within a like head of damage furnished by the person proposing to make such payment to the Secretary of State and to the intended recipient of compensation.

§ (2) This section shall not apply to any compensation in payment for an amount not exceeding 10,000 (or such amount in excess of £10,000 as may be prescribed by regulation) as a single payment or in aggregate with any other compensation payment for the same accident, injury, or disease; or to any "exempt payments" as provided by subsections (4) and (5) of this section.

§ (3) The right of the recipient to receive compensation shall be satisfied by payment of such sum less deduction as appears in the statement of deductions as approved by the Secretary of State; and within 14 days of payment of compensation the person who has made such payment shall pay to the Secretary of State an amount equivalent to such deduction.

§ (4) For the purposes of this section the following are the "exempt payments"—

(a) any payment made to or for the victim under section 35 of the Powers of Criminal Courts Act 1973 or section 58 of the Criminal Justice (Scotland) Act 1980;
(b) any payment to the extent that it is made—

(i) in consequence of an action under the Fatal Accidents Act 1976; or
(ii) in circumstances where, had an action been brought, it would have been brought under that Act;

(c) any payment to the extent that it is made in respect of a liability arising by virtue of section I of the Damages (Scotland) Act 1976;
(d) without prejudice to section 6(4) of the Vaccine Damage Payments Act 1979 (which provides for the deduction of any such payment in the assessment of any award of damages), any payment made under that Act to or in respect of the victim;
(e) any award of compensation made to or in respect of the victim by the Criminal Injuries Compensation Board under section 111 of the Criminal Justice Act 1988;
(f) any payment made in the exercise of a discretion out of property held subject to a trust in a case where no more than 50 per cent. by value of the capital contributed to the trust was directly or indirectly provided by persons who are, or are alleged to be, liable in respect of—

(i) the accident, injury of disease suffered by the victim in question; or
(ii) the same or any connected accident, injury of disease suffered by another;

(g) any payment made out of property held for the purposes of any prescribed trust (whether the payment also falls within paragraph (0 above or not);
(h) any payment made to the victim by an insurance company within the meaning of the Insurance Companies Act 1982 under the terms of any contract of insurance entered into between the victim and the company before—

(i) the date on which the victim first claims a relevant benefit in consequence of the disease in question; or
(ii) the occurrence of the accident or injury in question;

(j) any redundancy payment failing to be taken into account in the assessment of damages in respect of an accident, injury or disease.

§ (5) The Secretary of State may by regulations provide that any prescribed payment shall be an exempt payment for the purposes of this section.

§ (6) Except as provided by any other enactment, in the assessment of damages in respect of an accident, injury or disease the amount of any benefits paid or to be paid shall be disregarded.

§ (7) Schedule 4 to this Act shall have effect for the purpose of supplementing the provisions of this section; and this section shall have effect subject to the provisions of that Schedule.

§ (8) This section and that Schedule shall apply in relation to any compensation payment made after the coming into force of this section to the extent that it is made in respect of—

(a) an accident or injury occurring on or after 1st January 1989; or
(b) a disease, if the victim's first claim for a relevant benefit in consequence of the disease is made on or after that date.

§ (9) In this section "benefit" means such benefit under the Social Security Acts 1975 to 1988, or the Old Cases Act as may be prescribed for the purposes of this section by regulation. compensation payment" means any payment falling to be made (whether voluntarily, or in pursuance of a court order or an agreement, or otherwise)—

(a) to or in respect of the victim in consequence of the accident, injury or disease in question, and
(b) by or on behalf of a person who is, or is alleged to be, liable to any extent in respect of that accident, injury or disease,

and includes, in particular, so much of the payment as represents reimbursement for costs incurred in procuring it, but does not include benefit or an exempt payment; costs", in relation to proceedings in Scotland, means expenses; payment" means payment in money or money's worth, and cognate expressions shall be construed accordingly; relevant period" means—

(a) in the case of a disease, the period of 5 years beginning with the date on which the victim first claims a relevant benefit in consequence of the disease; or
(b) in any other case, the period of 5 years immediately following the day on which the accident or injury in question occurred;

358 but where before the end of that period the compensator makes a compensation payment in final discharge of any claim made by or in respect of the victim and arising out of the accident, injury or disease, the relevant period shall end on the date on which that payment is made whether or not any subsequent payment falls to be made in respect only of taxed costs.").

§ The noble Lord said: My Lords, I beg leave to move this amendment, which stands in my name, conscious of the fact that the view has been taken in certain quarters that it is too cumbersome and that that view, in fairness, may be well-founded. But, if the Government cannot accept like for like as a principle of deductions, and not only accept it but administer it, then it may be better that Clause 23 and Schedule 4 be excised altogether from the Bill.

§ It is understood that a simple alternative proposal to ensure like for like to limit the incidence of deductions to people in respect of loss of earnings and hospital and medical benefit is not acceptable to the Government. The amendment in that regard moved by the noble Lord, Lord Allen of Abbeydale, in Committee was not acceptable to the Government. In short, the Government do not accept the principle of like-for-like, and bring forward no amendment to implement that principle which is less cumbersome than the amendment I am moving. I accept that when I drafted it I had not assistance, and that inevitably it is defective. However, the question which will arise tonight is whether your Lordships will wish to divide on the amendment, albeit with the defects that I freely confess, in order to establish the principle so that, after consultation, the drafting of Clause 23(1)(a) and (b) may be pruned and amended before Third Reading; or, on the other hand, whether your Lordships will wish to excise Clause 23 and Schedule 4 from the Bill so that the Government may think again.

§ I have given due notice that should your Lordships wish to divide on the amendment to establish the principle, as was the intention in Committee, there will be a post-prandial Division, but that if your Lordships wish to divide only to excise Clause 24 and Schedule 4 then, I say it frankly, I shall go in to the Content Lobby because I cannot accept Clause 23 and Schedule 4 as they stand.

§ I have the most cordial relationships with my noble friend the Minister, and I thank him for the efforts that he has made in consultation. He understands my position. It is right that I should make the position wholly plain to your Lordships' House. I shall oppose the clause unless the Government give on the principle. Whether or not that succeeds is a matter of votes in a Division.

§ Let us start with the common ground. It is the best way to start in any analysis. It is common ground that the present practice under which all, half or none of the social benefits received, depending upon the type of benefit, are offset against the settlement or award should cease. Save as regards the CBI, for whom my noble friend Lord Mottistone speaks so eloquently, and the TUC, for whom the noble Baroness, Lady Turner of Camden, speaks, it is also common ground, or was in Committee, that irrespective of the type of benefit, all benefits should be set off to avoid double compensation.

359

§ Against that area of common ground, the question arising on the amendnment is whether that wider area of common ground should be qualified, first, by the like-for-like system of deduction; and, secondly, by the exclusion of settlements and awards of under £10,000. That is the essential question. The complexity of the drafting obscures the essence of the question. Because it is a complex subject, it inevitably requires complex drafting. In that regard, the terms of reference—I beg your Lordships to accept this if you have not read it; I have it with me—of the Touche Ross Report, commissioned by the Government, excluded consideration of a like-for-like system of deductions and all questions of administrative difficulty. It cannot be relied upon to defeat new Clause 23(1)(a) and (b) in the amendment: the essence was excluded.

§ As regards the second aspect of £10,000, there is a finding in paragraph 2.3 of this vast report. It is a magnificent document. I have read it twice, but I am not quite sure what it amounts to. It is a brilliant effort, but I am not sure what it means. I am totally certain that the Government do not have a clue because they have expressly excluded from the report all questions of administration.

§ In paragraph 2.3 one finds that if amounts of less than £1,500 were excluded in 1987, the Government would still recover 95 per cent. of benefit. So what? What on earth does that have to do with the problem with which your Lordships are concerned tonight? That paragraph was wholly related to a question of saving administrative costs. It was not concerned in any way with justice for the victim in the form of these relatively small awards, to which reference was made at the Committee stage and which I shall not repeat. That aspect of the Touche Ross Report may not therefore be relied upon by my noble friend the Minister to defeat Clause 23(2).

§ I am no draftsman and I have received no assistance. I acknowledge that this amendment must inevitably be wrong and defective, but nonetheless I shall move it if it is your Lordships' wish. Why? It is intended to force the Government to accept the principle of like-for-like. It would then be possible by consultation to work out how that principle should be fairly applied. However, it is a matter for your Lordships as to whether we excise the clause altogether.

§ I have removed total benefit and relevant benefit. I have removed benefit from the exempt payments and included it in Clause 23(9). I have simplified the definitions section and retained "relevant benefit". In other words, I have tried to simplify the complexity of the government draft.

§ In Clause 23(1)(a) I have dealt with categories of benefits and amounts. That is quite simple. The Secretary of State could do that at the drop of a hat.

§ I accept that Clause 23(1)(b) is a more difficult proposition. The person proposing to pay compensation sets out a statement of deductions and amounts received under categories of benefit against the like head of damage, but only against the like head of damage. No compensation may be paid until the Secretary of State has approved the proposed like-for-like deductions.

360

§ In a redraft of Schedule 4 there would be a simple appeal machinery in the event of disagreement, and, unless the Secretary of State had given approval within a reasonable time such as two or three months, then payment could be made in accordance with the statement of proposed deductions. The implementing machinery would be put in redraft of Schedule 4. With regard to Clause 23 and the body of the statute, I am concerned only with matters of fundamental principle. It is right to bring the exclusion figure onto the face of the statute in Clause 23(2). This is a matter for your Lordships to decide here and now because of the injustice that arises on the small payments.

§ Why should your Lordships leave it to the Minister? We must decide, on the basis of objective and fair discussion, what we should leave to the Minister. Why should we just leave everything to the Minister? That is something that I have never been able to understand, whichever government have been in power. I am not making a political point; it is a lawyer's point made by someone who believes in constitutional government. There are also consequential amendments.

§ Baroness Turner of Camden
My Lords, I said in Committee that my main argument is against what is proposed in Clause 23 and the schedule. That is still my position. We debated this matter at length in Committee and I do not wish to repeat all the arguments which were so well made by other noble Lords. However, I repeat that my main objection is that we have here two systems in operation. There is the industrial injuries scheme introduced in 1948 which is a system of no fault benefit for which contributions are paid. To establish a right to weekly benefit, which by no means compensates for loss of salary let alone any cost for pain and suffering, an injured employee only has to demonstrate that the accident or injury arose out of or in the course of his employment to qualify for benefit under the scheme.
If there is negligence by some other person or his employer, he then has another and quite separate claim at common law. For many years employers have had to carry employers' liability insurance; in practice it is the insurers who pay compensation payments where there has been negligence or contributory negligence. Fifty per cent. of some benefits is already taken account of in the assessment of damages. What is now proposed and what I find so objectionable—this has already been referred to by the noble Lord, Lord Campbell of Alloway, in moving his amendment—is that all social benefit should be deducted from the compensation received in a negligence claim. I do not accept that at all. I think all kinds of problems will arise. We shall end up in situations where people simply do not receive compensation for pain and suffering. The noble Lord, Lord Campbell of Alloway, has attempted in his amendment to ameliorate that situation to some degree by setting a level of £10,000, below which there will be exemption from deductions.
However, I believe the most objectionable feature to this whole suggestion is not only that it will be extremely cumbersome to administer—a point 361 amply made in Committee and by the CBI and the Association of British Insurers in representations to the Government—but it will also result in a great deal of injustice and inequality. In effect it undermines yet again the industrial injuries scheme. People will end up being a great deal worse off than they are under the present system.
As I have said, I do not wish to repeat all the arguments that we heard in Committee. While I would much prefer not to have this clause in the Bill at all—that is why I put my name to the amendment which seeks to delete it—it seems to me that the amendment of the noble Lord, Lord Campbell of Alloway, ameliorates the position somewhat. As the noble Lord has said, the amendment attempts to deal with the whole issue on a like-for-like basis. As I see it, it attempts to endeavour to ensure that loss of wages will be counted as compensation in a compensation deduction. That is what is meant by comparing like with like.

§ Lord Campbell of Alloway
And hospital expenses likewise.

§ Baroness Turner of Camden
Hospital expenses would also be included in the provision, as the noble Lord says. There is the limit of £10,000. So there would be some amelioration. As I said earlier, I would prefer a situation where the clause simply did not exist at all because I see no justification for it whatsoever. I say that after a great deal of discussion and consultation outside the Chamber with the noble Lord, Lord Skelmersdale, who has been good enough to send me some material, including the Touche Ross report to which much reference has been made. But in default of having a situation where the clause simply does not appear, I support the amendment of the noble Lord, Lord Campbell of Alloway, because it provides some amelioration of a situation which I otherwise find quite unacceptable.

§ Lord Allen of Abbeydale
My Lords, like the noble Baroness, I would prefer the clause to be left out of the Bill altogether. If this amendment is not accepted I hope that when we come to discuss the next amendment I shall have an opportunity to explain my reasons.
The clause now proposed has the two great merits, as the noble Baroness has said, of attempting to deal with the like-for-like problem and introducing a small payment definition of 10,000 with provision for it to be increased as the years go by. To that extent the amendment is certainly an improvement on the clause in the Bill.
However, I see problems. I think that the administrative set-up of the department monitoring settlements between parties, coupled with a right of appeal, could prove very time-consuming and expensive. The proposals do not in any way meet the difficulty, on which I feel strongly, about contributory negligence. I think that there is the practical problem that the clause would have to be rewritten, as I think the noble Lord would be the first to agree, and Schedule 4 would have to be completely redrafted. And here we are at this very late stage of the Bill.
362 As I have said, my position is that this is a valiant attempt and if it were pressed to a Division I would support it. However, I venture to hope that the noble Lord will not press it to a Division in view of the problems that I have just outlined, particularly the problem of getting it licked into shape in the time available. I hope that, instead, we can proceed to the next amendment and discuss whether the clause should stay in the Bill.

§ Lord Mottistone
My Lords, I should very much like to support what the noble Lord, Lord Allen, has just said. As has already been pointed out by my noble friend Lord Campbell of Alloway, I have no time for modification, and I would not support my noble friend's amendment because it seeks to retain what I consider to be a fundamental flaw in the existing Clause 23. I hope to reserve my ammunition for Amendment No. 19, which seeks to defeat the clause altogether.

§ Earl Russell
My Lords, before dealing with the amendment I should, first, like to offer thanks to the Minister, and through him to his officials, for the care and courtesy with which they dealt with the debate which took place on this clause in his office. There we all entered the discussion with real political good will. I believe that if there had been agreement to be reached we would have reached it.
Like the noble Lord, Lord Mottistone, the noble Baroness, Lady Turner of Camden, and the noble Lord, Lord Allen of Abbeydale, I have considerable doubts about the principle of the clause. I would be prepared to compromise on the principles of the amendment drafted with so much care and work by the noble Lord, Lord Campbell of Alloway, if I could be satisfied that that amendment is viable. Here I beg the Minister to do the best he can to satisfy me that compromise on these lines can be made to work, for there is the political will to make it work. The question is, can it? That is a question on which I hope the Minister will satisfy me.
We have here an immense complication caused by the Government, Becket-like, asserting the principle that not even Beveridge compensates twice for the same injury. Whether the principle of double compensation is entirely relevant to the matter of the clause is something on which some of us have a certain amount of doubt. The Government's case would be stronger if the Minister would agree, as a minimum concession, to omit contributory benefits from the scope of his clause. But even if he were to accept the principle of double compensation being wrong—and I do not believe that many of us are quite as worried about that as the Government think we ought to be—lift for the disabled is so difficult that if once in a blue moon they happen to get a windfall I do not necessarily regard that as the worst thing that can happen in the field of social security.
However, even if one accepts the double compensation principle, I do not think that it is easy to follow the Government in their Becket-like elevation of that principle to a lonely eminence whereby it overrides every other principle in the clause. It overrides any attempt to take account of contributory negligence. Between us we have failed 363 completely to find a way in which the clause can be amended to treat cases of contributory negligence in a different way from those involving no negligence at all. That does not satisfy me. It completely overrides the principle of like for like, so damages for pain and suffering may all be sent to pay social security benefits with the result that a person may perhaps end up repaying rather more than he receives in damages. I find that situation thoroughly unsatisfactory.
I see here an incentive to litigation because, if one feels that one needs £10,000 of damages to be satisfied and one must repay £5,000 in social security benefit, one will then ask for £15,000. I understand that the department sees the contrary argument here. As it sees the position, the longer one postpones the settlement to litigation, the more benefit one will receive and the more benefit one will repay. The department thinks that that is an incentive to avoid litigation and settle quickly.
The question between us is which of those incentives is more powerful. Anyone who has studied the odds of the football pools and the size of the prizes will appreciate that the jackpot is the greater attraction. The thought of large and satisfactory damages and the sense of injured innocence will draw people to press claims for damages in the courts. The clause will lead to a vast increase in litigation. I share the misgivings of the noble and learned Lord, Lord Griffiths, that there is a risk that it could swamp the courts.
There is also here an issue of costs. The Government speak throughout of costs to the taxpayer. That is important, but it is not the only form of cost. The question is: are we to have costs paid by the taxpayer or by insurance? Whichever way, we pay, so it is relevant to consider which way we end up paying more.
If we abandon the present system and rely on insurance, we shall end up paying more. We shall have a much more complicated system. Noble Lords need only look at Schedule 4 to appreciate that that must be the case. It is also the basic principle of insurance that one keeps down the cost by spreading the load. I do not see what can do that more fully than a scheme of national insurance. So, in abandoning that and relying on private employers' insurances, we shall put up the costs. To keep down the cost to the taxpayer while increasing the costs to the public by a greater proportion does not seem to me to be good sense.
We must also think here about our industrial costs. We on these Benches have many times drawn attention to the need to encourage manufacturing industry and the need for government to take a more sympathetic attitude to it. In terms of increased insurance premiums, the measure will certainly put up industrial costs. The latest estimate is 8 per cent. It is not the highest estimate and all those estimates are guesses. It might be higher than that.
I appreciate that, under the rules of GATT, we cannot subsidise our exports, but perhaps I may quote the normal accountants' rule: we need not so arrange our industrial affairs as unnecessarily to attract costs. If we do that, we put a handicap in the way of our attempts solve our economic problems.
364 I also see behind this a real move towards a notion of privatisation of liability. It has been suggested in another place that the Government could respond to the shifting of costs of industrial insurance by reducing national insurance contributions. I find that an ominous suggestion. I also find it ominous that the Government reject the view of the Pearson Committee that benefits should be used to reduce the liability of the compensator.
This attempt to privatise liability is, I think, in the Government's sense as well as mine, inefficient. If it has to be done at all I would rather have it done in the way argued by this amendment. However, unless the Minister can convince me that this amendment is viable, I do not think that it can be done at all.
This clause is opposed by the CBI, the TUC, the Association of British Insurers, the Law Society, the Faculty of Advocates and the Medical Protection Society. So is this perhaps a case of all out of step but—and I shall not go on for fear of offending standing orders.

§ Baroness Gardner of Parkes
My Lords, at Committee stage the noble Lord, Lord Allen of Abbeydale, said that he welcomed the provision in the Criminal Justice Bill which was more or less a parallel of this clause. He said that it gave effect—I see that the noble Lord wishes to intervene.

§ Lord Allen of Abbeydale
My Lords, I welcomed it because it did that in exactly the opposite way.

§ Baroness Gardner of Parkes
My Lords, as I read Hansard he said that it, gave statutory effect to the existing practice of deducting social security payments from compensation for criminal injury". I thought that this clause concerned deducting payments for negligence and other injury. Perhaps I am wrong on that point.
I am concerned about whether this amendment changes the whole precedence of recoupment which seems to occur in all sorts of fields. I sit as a member of an industrial tribunal and recoupment is always something that is taken into account in all compensatory awards that are made. Also taken into account is the degree of contributory effect. It is most important that a contributory effect in a case of negligence should be taken into account. As I listened to the debate I understood that this amendment would remove the contributory element.

§ Lord Campbell of Alloway
No, not a bit, my Lords. If my noble friend would allow me to intervene, perhaps I may say that I tried to support this measure at Committee stage. I am attracted to the justice of it but cannot find the logical justification for it because benefits are not relevant to fault. I shall not take up more time but perhaps my noble friend will allow me to say she has got this one upside down.

§ Baroness Gardner of Parkes
My Lords, I thank the noble Lord. I would like to be put right on this matter by the Minister when he replies. I thought there was quite a difference. I understood that under the Government's proposals the recoupment would 365 cease at the date of settlement; otherwise the recoupment could go on much longer. I thought that various considerations were involved such as that the Secretary of State had to agree the amount but there were no criteria given to him to do so. I appreciate that the sheer complexity of this amendment must have made it almost impossible to get right. However, I support the principle of recoupment and no duplication of payment. My support is therefore for whichever argument is heading that way.

§ Lord Trafford
My Lords, I am rather sorry that we are discussing Amendment No. 18 without considering Amendment No. 19. Amendment No. 19 to leave out the clause in a sense goes with the other amendment. It means that we are exchanging the clauses. I accept the fact that it makes acceptance extremely difficult.
This is a complicated issue and I was very impressed with the speech of the noble Lord, Lord Allen, on this very question at Committee stage. I do not wish to say any more about the wording of this amendment. I should however like to take up one point.
The noble Earl, Lord Russell, put his finger directly on the point when, in pointing out that to a very large extent he accepted in broad terms the principle of no double compensation he asked—and this I think is the nub of the matter—this question. Is it therefore the taxpayer who should pay by means of social security in one way or another, in larger and smaller settlements where the social security system—that is the taxpayer essentially—subsidises the payment; or is it through insurance premiums?
If one strips away some of the references to Becket and other matters that came up, the noble Earl's major point was that in effect industrial costs would rise. It would be more damaging overall to finance negligence and injury compensation in this way than it would be by the total removal of social security payments from any compensation.
It seems to me that it is difficult to argue that, whether through contributory or non-contributory benefits, the taxpayer, or indeed the contributor, should necessarily subsidise the payment of compensation by those who should pay it, which is of course through insurance. One insures against a liability to such compensation.
I accept that such provision would be uncomfortable in the sense that it would raise many insurance contributions. I accept that it would be somewhat more complicated in bureaucratic terms. I accept that it may even lead to more litigation as the noble Earl and the noble Lord suggested. Nonetheless, the two fundamental principles that strike me are these. First, it would eliminate double compensation. The only objection that I can see in theory is the argument about the contributory element of payment. Secondly, it would mean that those who should have paid the compensation would be the people who paid the compensation either through premium, or directly if it was not through insurance. However, from that compensation should then be deducted that which has been the contribution of the taxpayer.
366 I cannot see that there is anything wrong or evil about either of those propositions. It is for this reason that I would have reservations about the question of changing Clause 23. I would also have reservations in view of the fact that about 80 per cent. of all these settlements are I believe within his lower figure of £10,000. Also, if I understand him correctly, only about 20 per cent. of such payments amount to benefit.
Nonetheless, leaving those specific figures aside for the smaller sums, those two principles to which I have referred do not seem to be ones which we should lightly discard.

§ 9.45 p.m.

§ Lord Coleraine
My Lords, I listened to the debate in Committee in this Chamber a fortnight ago very much as a bystander. I felt that the debate, in particular that intiated by the noble Lord, Lord Allen of Abbeydale, on the like-for-like amendment went on and on. It took in all the amendments that had been put on the Marshalled List. I felt that that debate was singularly unelightening.
As in all amendments, the amendment called for debate. However, the noble Lord immediately tacked onto it another amendment in which he was interested. Therefore other noble Lords came into the debate and raised their own particular points.

§ Lord Mottistone
My Lords, we are not doing it this time.

§ Lord Coleraine
My Lords, the result was that on that occasion some noble Lords argued one way, and some the other. But all seemed to agree that by so doing they had proved that Clause 23, as it now is, was a nonsense and should be taken away and consigned to the dustbin. To me it was all rather reminiscent in parliamentary terms of the riot scene at the end of the first act of "The Mastersingers". With respect it settled very little.
I find it surprising that tonight we do not have proper amendments to consider. I congratulate my noble friend Lord Campbell of Alloway that he has brought forward one; in fact two tied up into one.

§ Lord Mottistone
My Lords, it is only one amendment—

§ Lord Coleraine
My Lords, he has brought forward the like-for-like amendment and the £10,000 limit amendment and put them together into one. I wish only to talk about the like-for-like amendment. It is well known that a number of authorities have said that the like-for-like principle is correct and is justified. I understand that the Pearson Royal Commission said that as well. So far as I can see, this is not in your Lordships' debates.

§ Lord Campbell of Alloway
My Lords, I welcome any criticism that my noble friend can give of my amendment.

§ Lord Coleraine
My Lords, let me put the point simply in this way. If a social security benefit is for £5,000 loss of earnings and it has, as we are to 367 assume for the purposes of the amendment, to be paid back to the Secretary of State out of the £5,000 pain and suffering award made by a court, then the reason for that is that the court has decided that the pain and suffering is all that has been sustained and there is no loss of earnings. That is putting it at its most simple.
I find it perfectly fair that the injured person will have received an amount which was the actual loss as decided by a court, even if he received it via his benefit and not by a judgment, because in this way he will have received his loss but once and not twice. It is the taxpayer or the national insurance contributor who will benefit.
I have been discussing my noble friend's amendment, but in the way that these amendments have to be treated the debate has moved on to a debate on whether Clause 23 should remain in the Bill. I should perhaps take up once again the question of contributory negligence. I have not understood that there is any problem here. The noble Lord, Lord Allen of Abbeydale, postulated in Committee that £5,000 of benefit—

§ Lord Mottistone
My Lords, we are not taking these together.

Noble Lords
Order!

§ Lord Coleraine
My Lords, it has all along been the case that the whole thing has been taken as one because—

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§ Lord Mottistone
No.

§ Lord Campbell of Alloway
My Lords, to save time, contributory negligence is not before the House in my amendment and is no longer before the House. Nobody has an amendment which raises the amendment introduced by the noble Lord, Lord Allen of Abbeydale, on contributory negligence. Therefore, to speak on it, with the greatest respect to my noble friend, is to waste the valuable time of your Lordships' House.

§ Lord Coleraine
My Lords, I do not propose to speak on contributory negligence then, but when my noble friend reads Hansard in the morning he will see that other noble Lords who have supported his amendment have also widened the argument to the whole question.

§ Lord Mottistone
My Lords, if I might intervene, last time we did that in Committee. That was a mistake. It was my fault. This time, at the request of my noble friend the Minister, we have grouped amendments so that this amendment is separate and the amendments on deleting the clause will be dealt with under Amendments Nos. 19 and 20. This will be a separate debate when this one has been completed.

§ Lord Coleraine
My Lords, I am grateful to my noble friend for making that point. The answer I was giving to my noble friend Lord Campbell of Alloway still stands and I shall not repeat it now. I hope that, if and when this amendment comes to a Division, your Lordships will reject it.

369

§ Viscount Dilhorne
My Lords, it is with very considerable modesty and a remarkable amount of temerity that, having read everything that was said by very eminent and learned Members of the House, I now rise to make a very small contribution. I realise that complexity begets complexity. Social security measures were always an element of tax that I carefully avoided studying in the detail in which I studied other areas of tax. I feel that I am in a large minority of one—I cannot make myself smaller. It seems to me that it is a very simple matter that is put forward by the Government. It is as simple as this when it is put into words: where the compensation to be paid is £100 (that is an easy figure for my limited mathematical capability) and where the social security payment which, I understand is made fairly promptly, for the sake of this example, is £20, there is a claim. The claim comes from a person who is called the compensator. The compensator pays out £100 but only £80 goes to the person who is being compensated, the injured person.
As I understand it, the measure proposed by the Government—and I am probably wrong—is that £20 then goes back to social security. It seems to me that for an additional reason this is a good measure. As I understand it, at present the benefit paid is offset only against special damages. The proposal is to set it against all damages, to put it into one pot. As I understand it, special damages—

§ Lord Allen of Abbeydale
My Lords, I am sorry to interrupt. Am I not right in thinking that the noble Viscount is talking about the merits of the clause and not about the amendment tabled by the noble Lord, Lord Campbell? That is what we are supposed to be discussing.

§ Viscount Dilhorne
My Lords, if the noble Lord will allow me to finish what I am saying, perhaps he will understand what I am suggesting. I started my speech with some deference to him and to what he had contributed. However, I do not agree with his amendment which was moved in the previous debate. I support the Government's proposal; I do not support the amendment of my noble and, if I may say so, nearly learned friend Lord Campbell of Alloway, who is far senior to me at the Bar and is learned in these matters.

§ Lord Campbell of Alloway
But not learned in this House, my Lords.

§ Viscount Dilhorne
My Lords, I said "nearly learned". I understand the position to be that the main cause of complaint is that the benefit paid from the total compensation is recouped, whereas the present offsetting is applied only to special damages. That is a term I understand to mean earnings and expenses. But it is not applied to the general damages. Those are the things which one cannot exactly specify.
As I understand it, the amendment of my noble friend Lord Campbell of Alloway will involve the courts or someone dividing out each element of 370 cost. That seems to me to involve very considerable difficulties because when one settle; a case with another barrister or with the other side, at that stage one takes into account an immense compendium of different factors. One of those factors has already been mentioned—the factor of costs, the costs of continuing to fight.
I am sure that that is a mistake, considering the work that will be done in putting in these different heads. It will complicate matters enormously, it will put—

§ Lord Campbell of Alloway
My Lords, the noble Viscount mentioned my name. I am not contemplating the intervention of the courts. That is a total misapprehension. It will probably go to a social commissioner. There is already an appellate machinery in operation. There is n3 question of involving the courts in this. The concept that this will be overlaid by legal complexities is wholly misconceived.

§ Viscount Dilhorne
My Lords, I am obliged to my noble friend for his help on that matter. For the reasons I outlined at the outset, I support the Government's proposal to recover the benefit paid where that benefit is going to exceed, on the final compensation, the total amount which the person compensated is entitled to receive. On that basis, I support the Government.

§ Lord Skelmersdale
My Lords, clearly after that debate the one trap into which I must not fall is to stray into a debate on clause stand part. My noble friend Lord Campbell has asked that Clause 23 be adapted in two important respects. In my estimation my noble friend Lord Coleraine is absolutely right about that because my noble friend Lord Campbell, like other noble Lords who came to my meeting, which has been so generously praised round the House, characterised our proposals as unfair to the victim.
My noble friend Lord Campbell of Alloway, the noble Lord, Lord Allen, the noble Baroness, Lady Turner, and the noble Earl, Lord Russell, characterised our proposals as unfair in that way. The main cause of complaint is directed at our proposal to recoup the benefit paid from the total compensation payment whereas the present offsetting is applied to special damages, the technical term for loss of earnings and expenses, but not to general damages for things like future earnings losses, pain and suffering, and many other things. But one of the major difficulties is that the 99 per cent. of awards not determined by a court are not broken down into heads of damages.
It would be counter-productive if we had insisted, as recommended by the Faculty of Advocates in Scotland, that all such claims must go to court rather than continue with the sort of informality which goes on now. I appreciate that that is not what my noble friend Lord Campbell wants. Those who have sought to amend the Bill in this respect have acknowledged that the proposals they have made will indubitably complicate matters, involve the 371 courts and slow everything down. I am quite sure that no one wants that.
If we were to take the path urged on us of recouping only from a loss of earnings element, we would face the immediate problem that settlements do not actually express how much of the payment represents loss of earnings. It would be natural, and to both parties' financial advantage, to minimise the amount of benefit which could be recouped. This would be avoidance not evasion but, having looked closely at the matter, we do not wish to leave such a tempting loophole.
When equivalent measures were passed into law in Holland, that was the exact result. There was a transfer from one head of damages to another. It would certainly be counter-productive, knowing of the Dutch example, for the United Kingdom to go down that route. My noble friend Lord Campbell of Alloway has sought to get round this problem in his amendment by putting the onus on compensators to tell the Secretary of State how the payments break down and for the Secretary of State to approve that breakdown.
The noble Lord, Lord Allen, described this approach at the meeting as an administrative nightmare. He accused me of being rather more muted today and perhaps I may now return the compliment to the noble Lord. However, I must say that I agree wholeheartedly with him. My noble friend has amended his wording since our meeting but the main objections remain. How is the Secretary of State to decide what is fair? What criteria is he to use? Has he the final say or will there be an umpire? I must tell my noble friend that I foresee at the very least a delay in compensation getting to the victim, and at most a total muddle.
My answer to the noble Earl, Lord Russell, is that the scheme that my noble friend Lord Campbell suggests in this amendment is simply not workable. It was suggested earlier that I use the term "wrecking" but that has a particular meaning in this House so I do not intend to level that charge at my noble friend.
We know that the average claim takes between two and two-and-a-half years to settle. One of the objectives of Clause 23 is that the earlier the claim is settled, the fewer benefits will be recouped. Under my noble friend's proposal, the greater the delay the more benefits will have to be recouped. That cannot be right. Nevertheless, my noble friend has a point. Neither he nor we wish our very simple system of total damages, to be offset by total state benefits, to work unfairly.
We have the only information about settlements, of which I am aware, in the report which Touche Ross made last year when we were considering this whole matter. It found that where special damages were assessed they formed about 40 per cent. of the payment whereas benefits formed only 22 per cent. of payments. That figure was taken from a statistically viable sample of actual payments made by a number of insurance companies. Since the benefits are less than the special damages, according 372 to the actual examples in the report, my noble friend's worries are unfounded. That is precisely why we are recouping from the whole compensation payments.
My noble friend mentioned paragraph 2.3 of the Touche Ross report. I would reply that the terms of reference on which it was commissioned included, to assess the administrative difficulties for insurance companies …inherent in a recovery scheme of this nature". From what I have said the House will appreciate that the report has clearly done that.

§ 10 p.m.

§ Lord Campbell of Alloway
My Lords, I am obliged to my noble friend for giving way. I quote from page I of the report: We were subsequently instructed by the DHSS not to consider the administrative difficulties which may be faced by the DHSS".

§ Lord Skelmersdale
My Lords, I do not have a copy of the report with me.

§ Lord Campbell of Alloway
My Lords, I have.

§ Lord Skelmersdale
My Lords, clearly that is so because my noble friend has just quoted from it. However, paragraph 2.3, as my noble friend might be kind enough to confirm, recommended that contributory negligence should be ignored but there is no specific mention of like for like.
If we go along my noble friend's route we have, as I said, the example of what happens in the Netherlands where we understand very few payments are now said to be made under the heading of "special damages" and the revenue from recoupment has suffered. So, not only is my noble friend's amendment unworkable in the way it is set up, but the evidence is that it is unnecessary even if one takes the view that benefits should be recouped only from that part of a compensation payment made for loss of earnings. For this reason alone I urge my noble friend not to press his amendment.
I must stress that this clause is not anti-victim; it is designed simply to provide that compensation payments complement each other and do not overlap. I do not think that the fear that repayment claims will affect awards for pain and suffering are justified. However, I recognise from the debate that there are real anxieties in this respect and I undertake to monitor very closely what happens in court awards once the scheme begins to operate. Those awards are the visible tip of this iceberg—only 1 per cent. of claims are actually settled in court—and are the yardstick by which settlements are made. If we find that there is the unfairness for which we have found no evidence at the moment, we will look at the legislation again to see if there is any way in which we can change it without creating a loophole or swamping the courts. That is as far as I can go tonight, but my words are on the record and we will honour the undertaking to monitor the situation.
The second change that my noble friend has made in his new clause is to put a figure on the lower limit for recoupment. I think that there is some confusion about our intentions. We accepted a 373 recommendation by Touche Ross that if we were to refrain from making a claim from awards which were below £1,500 over one-third of all claims would continue to be treated as under the present system and we would forgo some £2 million. This would result in both insurers and the department reducing their administrative costs. The figure of £ 1,500 is of course based on 1987 awards and would mean a total recoupment of £55 million made up of £38 million from the National Insurance Fund—the figure given in the financial memorandum to the Bill—and £17 million from non-contributory benefits. Any figure above this on a more or less real-term basis would not find favour either with the National Audit Office or with the Public Accounts Committee.
This was a sensible measure which we accept. The amount is not in the Bill because by September 1990 the figure will need to be higher to achieve the same sort of result. We therefore left it to regulations which will be made at the same time as the normal up-rating to which I referred earlier this evening. It will be affirmative and so debated fully by the end of the year.
It surely cannot be right to put a figure on the face of the Bill at this stage. Certainly a figure of £10,000 would remove far more cases from recoupment (over 90 per cent. in fact) although they will still be subject to at least 50 per cent. offset over five years in every case. It would also substantially reduce the amount recouped. I appreciate my noble friend's later amendment which provides the power to vary the figure by regulation, but only if it is above £10,000.
There is an unwarranted assumption on the part of some of those who have attacked the Government's proposals that the present rules are somehow invariably better for the victim. My right honourable friend the Minister of State gave an example in Committee in another place on 2nd March which showed quite graphically that this is not so. I must remind the House that under the present rules either 50 per cent. or 100 per cent. of benefits is deducted from a compensation payment from the date of the injury for a full five years after that date, no matter when the settlement takes place, by making assumptions about what benefits will remain in payment. By contrast, recoupment under the Government's proposals will cease at the date of settlement. I venture to suggest that the effect of this major difference has not been universally grasped. It means that if a settlement is made after a year, under our proposals only that year's benefits will be deducted. Under the current rules at least 50 per cent could be deducted for the next four years as well.
At whatever level the lower limit is set, the current offsetting provisions, rationalised to 50 per cent. of all the benefits, will continue to apply. I would also suggest that in general the lower settlements must be among the 80 per cent. which are settled within two-and-a-half years. We have been quite unjustly accused of being unfair to victims. From what I have just said, it will be clear that, however well-intentioned the aim of ensuring that most claims escape recoupment, the actual effect in a 374 number of cases will mean a greater deduction for the victim and will reduce the liability of the compensator to pay the victim at the expense of the benefit system. I hope the House, and in particular noble Lords opposite, will ponder that very carefully. If they support this amendment, they will doubtless be the heroes of the insurance industry. Victims may be less than enthusiastic when they realise the possible implications for their settlements.
I can go on, but it is quite clear that many noble Lords would rather kick out this whole operation from the Bill than pursue the new clause that my noble friend Lord Campbell has taken enormous care to draft very clearly. Therefore, at this stage I leave the matter in the hands of noble Lords.

§ Lord Campbell of Alloway
My Lords, I wish to thank quite sincerely my noble friend the Minister for his courtesy and good humour and to congratulate him on the manner of his presentation according to his departmental brief. But that is the end of the congratulations. The question is whether we divide on this matter in order to establish a point of principle. The questions are like for like and the £10,000. Both are fundamental. If the figure is £7,500, who is going to argue? Let us not talk about £1,500 in 1987. Are we going to let this matter go? Are we going to give the Government a blank cheque? Would your Lordships prefer that this amendment is divided on to force the Government to accept the principle and then to sit down and work it out? Or would your Lordships chuck out the whole clause? I shall be perfectly frank, if I may. I could not care more or less. I put down this amendment as a constructive way of trying to induce the Government to bend. They will not bend. There is no bend. They will not accept the principle. So what are we to do?
Am I to divide the House on this amendment to establish the principle so that the Government can settle down and try to work it out, or are we to chuck out the whole clause and Schedule 4? I really do not know. As regards the Dutch experiment and the problems of what was called the "fiddle", at one stage the Dutch changed the categories of benefit to suit their purpose. That is taken care of in the way that I have drafted the amendment, I have had regard to this in paragraph (b). It has been conceded to be appropriate that in the schedule there would be an appellate procedure. At this hour of the night I do not want to indulge or condescend to detail. I have not ignored some of the questions that my noble friend the Minister appears to imagine I have ignored. I have not, but let us not get on to that score.
Do we want to chuck out the whole clause, or do we want to divide on this amendment? I am in the hands of the House.

Noble Lords
No!

§ Lord Campbell of Alloway
My Lords, I shall take the opinion of the House.

§ 10.12 p.m.

§ On Question, Whether the said amendment (No. 18) shall be agreed to?

375

§ Their Lordships divided: Contents, 28; Not-Contents, 50.

DIVISION NO. 4
CONTENTS
Addington, L.	Lockwood, B.
Allen of Abbeydale, L.	McNair, L.
Bruce of Donington, L.	Manchester, D.
Campbell of Alloway, L. [Teller.]	Pitt of Hampstead, L.
	Ponsonby of Shulbrede, L.
Carter, L. [Teller.]	Rochester, L.
Cocks of Hartcliffe, L.	Russell, E.
David, B.	Saltoun of Abernethy, Ly.
Dormand of Easington, L.	Seear, B.
Feversham, L.	Swann, L.
Halsbury, E.	Tordoff, L.
Hanworth, V.	Turner of Camden, B.
Hatch of Lusby, L.	Willis, L.
Jeger, B.	Winstanley, L.
Lloyd of Kilgerran, L.

NOT-CONTENTS
Alexander of Weedon, L.	Henderson of Brompton, L
Arran, E.	Henley, L.
Belstead, L.	Hesketh, L.
Blatch, B.	Hives, L.
Borthwick, L.	Home of the Hirsel, L.
Boyd-Carpenter, L.	Hylton, L.
Brabazon of Tara, L.	Ingrow, L.
Brougham and Vaux, L.	Jenkin of Roding, L.
Butterfield, L.	Johnston of Rockport, L.
Butterworth, L.	Joseph, L.
Caithness, E.	Long, V.
Carnegy of Lour, B.	Lucas of Chilworth, L.
Coleraine, L.	Lyell, L.
Craigmyle, L.	Mackay of Clashfern, L.
Crickhowell, L.	Morris, L.
Cullen of Ashbourne, L.	Mottistone, L.
Davidson, V. [Teller.]	Sanderson of Bowden, L.
Denham, L. [Teller.]	Savile, L.
Dilhorne, V.	Skelmersdale, L.
Dundee, E.	Strange, B.
Elliot of Harwood, B.	Strathclyde, L.
Faithfull, B.	Thomas of Gwydir, L.
Fraser of Carmyllie, L.	Trafford, L.
Gardner of Parkes, B.	Trumpington, B.
Harvington, L.	Wynford, L.

§ Resolved in the negative, and amendment disagreed to accordingly.

§ 10.19 p.m.

§ Lord Mottistone moved Amendment No. 19: Leave out Clause 23.

§ The noble Lord said: My Lords, after that dramatic occasion, I now seek by moving Amendment No. 19, and speaking to Amendment No. 20, to leave out Clause 23 and Schedule 4 completely, and not to amend them. I do so because, for reasons I shall explain, I think that the best thing the Government can do is not to proceed with having these provisions as part of the Bill.

§ However, before I continue with my argument, I should like to thank my noble friend the Minister for attending a very long meeting with all the people who are interested in this matter at which he gave everyone the chance to have a say. He managed to control the meeting so that we could get away for lunch. He did a first-class job, but I left that meeting no more convinced that that was the fair or proper way to deal with the problem than I had been previously.

376

§ On Second Reading and in Committee I suggested that the simplest way to tackle the problem was for Clause 23 and Schedule 4 to be omitted from the Bill with a view to the Government considering carefully many of your Lordships' detailed criticisms of the clause and schedule. My noble friend Lord Campbell of Alloway said that that might be the answer to the problem; but he went on to suggest an amendment. I do not believe that the matter is basically right for amendment. If they wish to proceed further, the Government could introduce a modified form of legislation in the Social Security Bill which I understand will be introduced in the next Session.

§ The potential loss to the Exchequer of a delay of one year is small by modern standards, and in any case is uncertain. Touche Ross, who advised the Government, said that the value of recoverable benefits probably lay between £37 million and £84 million. The CBI has shown that they might be even less.

§ I have identified three failings in the Bill. I listened to the debate on the earlier amendment. We need, first, to examine what the authority is for what the Government call double compensation. I quote from the Touche Ross report—and I am sorry that my noble friend does not have a copy of it. It states: In 1942, Lord Beveridge, in his report on Social Insurance and Allied Services, found that the existence of an alternative remedy should not prevent an injured person from receiving social security benefits. However, the report stated that this person should not have the same needs met twice".

§ Later it states: The Monckton Committee report in 1946 recommended that an injured person should receive social security benefits in full with no obligation to repay them in the event of an award. However, in arriving at the amount of this award, the court should make a deduction for the benefits paid".

§ That is the present situation, broadly speaking.

§ We are talking about 47 and 43 years ago. In 1942, I was a relatively junior officer on a ship escorting convoys in the Atlantic. I do not know what some of your Lordships were doing. In 1946 I was contemplating leaving the Navy and becoming a medical missionary in India. Life was so different then. Therefore, I think that your Lordships should review this matter.

§ Beveridge based his recommendations on the statistics contained in the Rowntree reports. They went back early into the century. Beveridge said that the alternative remedy should not prevent an injured person from receiving his social security benefits—period! His report went on, but who put other things into his report is anybody's guess.

§ One of the failings is that the Government's proposals deprive companies and employees of double insurance benefits to which they have contributed. They have contributed to national health insurance and industrial injury. Companies will pay twice and effectively receive one benefit. That is basically wrong.

§ One observes that the National Audit Office in 1986 and the Committee of Public Accounts in 1987 thought that the original theory should be adhered to. However, they did not consult industry at all; they only consulted the Treasury. The Treasury would do 377 anything if it thought that it could grab money back. That is in its nature. We pay it to do that. However, that is not necessarily fair or right.

§ The second point is that the insurance company will incur extra administration costs and payments to the DSS, which will be passed on to the customer.

§ The third failing is that all of this adds up to an extra cost. The noble Earl, Lord Russell, said that 8 per cent. or more will be passed on to companies. It will hit them in 1992 when, we are told by the Government—the same government that is trying to impose this clause—that British industry needs to be at its most competitive. Here, another cost is thrust upon them in order to change something which will satisfy some little theory involving a relatively few millions of pounds in terms of general Exchequer expenditure and receipts. It is all about a kind of principle which seems to be falsely based and which is being pursued for bureaucratic reasons. It has been done without an understanding that it would be a good thing to say to companies: "We are not going to impose this clause and the meaning of it upon you; we might go the other way; we want to encourage you to be as competitive as you possibly can in 1992." That is not the situation at all. It is just another little thing.

§ I expect that during the coming years there will be other little things of this nature passing through your Lordships' House which will impose yet another little financial burden—not much for this company, not much for that; they will get some of it back in tax. They will not all get some of it back in tax because not all of them will have to pay full tax. These little arguments will continue, but this goes against the main thrust of what we want to do in 1992. I am sure that this is the reverse of what the Government want to do.

§ I hope that my noble friend and noble Lords who have been listening will agree that this is something which needs to be considered in the wider sense rather than in technical detail. My noble friend ought to agree to go back and try again. I understand that there will be another Bill next year. He can improve on it or even forget it and come back to it in a year's time. I beg to move.

§ 10.30 p.m.

§ Lord Allen of Abbeydale
My Lords, I should like to speak in support of the proposal that this clause should be left out. After our rather extraordinary debate on the previous amendment, I am glad to have the opportunity of explaining briefly why I have formed that conclusion. I accept the desirability in principle of avoiding double payments. So I arrive at the same conclusion as the noble Lord, Lord Mottistone, but by a rather different route. I wish to add my appreciation of all the trouble the noble Lord, Lord Skelmersdale, took in writing to us and talking to us. I am sorry that, like the noble Lord, Lord Mottistone, I remain unpersuaded that the solution proposed in this clause is fair and just.
Like others I have received a copy of the Touche Ross report. I note with some interest that the report is quite frank in explaining that everyone consulted, including other government departments and 378 insurance companies, saw serious objections to the scheme for one reason or another. It seems to me that the clause is unfair for the two main reasons that it fails to deal with the principle of like for like, which we have discussed at some length, and with contributory negligence.
On the first point, I shall certainly not attempt to repeat what I said in Committee to explain why I think that social security payments in general should be set against that element of the compensation award which relates to pecuniary loss, and that element only, and not against that part which relates to pain and suffering and loss of quality of life. I recognise that a most formidable problem is to deal with out of court settlements—that is the vast majority—when sometimes the parties may agree on a compromise total but may not agree on how that total is made up and where there could be a temptation, as the noble Lord, Lord Skelmersdale, said, to inflate the proportion allocated to loss of quality of life.
I fear that Clause 23, like the amendment we discussed last time, is silent on contributory negligence, unlike the 1948 Act which holds the field at the moment. It must surely be right in all fairness to achieve the result that an individual whose compensation award is cut by, say, 25 per cent. because of contributory negligence, should receive more in total—that is, social security payments plus a reduced compensation award—than someone who is 50 per cent. negligent. The Government evidently think not. I cannot for the life of me understand why.
The solution I proposed in Committee was to reduce the calculation of the deductible social security payments by the same percentage as the reduction of the tort award, although I was well aware that the two awards are made on different principles and that this could be only rough justice. It seemed to me that rough justice was better than the total injustice of the Government's clause. However, I recognise that here again we are up against the overriding problem of out of court settlements.
For reasons I can well understand, the Government themselves cannot be certain of what the savings to the Exchequer would be if this clause came into operation. But it would clearly be a sum far far less than the Public Accounts Committee was led to believe. I just do not think that the effort is worth it. At a time when the civil justice review calls for justice to be cheaper, quicker and simpler, the clause goes in exactly the opposite direction. At a time when the Government are economising on staff, the clause will mean, we are told, 100 more civil servants, as well as extra demands on resources for the insurance companies, the lawyers and the rest. At a time when our courts are already overworked, the best legal advice I get is in no doubt that the clause will mean more cases coming to court. Above all, the clause fails the test of fairness. It is fatally flawed, both on the like for like principle and on contributory negligence.
We are from time to time reminded that there is a social security Bill every Session. Like the noble 379 Lord, Lord Mottistone, I think that the Government should take this clause away, along with its twelve pages of schedule, and have another think before putting a revised proposal in some future Bill.

§ Baroness Turner of Camden
My Lords, I rise to support the amendment, to which I have put my name. As I indicated earlier when I spoke on the amendment moved by the noble Lord, Lord Campbell of Alloway, it has always been my intention to oppose the clause altogether. My only reason for supporting the previous amendment was that it seemed slightly to ameliorate the clause in two major respects.
I support everything that has been said by the noble Lord, Lord Mottistone, about the clause. My opposition stems from my feeling that it is grossly unfair to victims. I do not accept what the Minister had to say in that regard. It is grossly unfair, particularly, as the noble Lord, Lord Allen of Abbeydale, has said, in relation to contributory negligence.
The Minister referred earlier to examples. I am indebted to the Law Society for an example which concerns contributory negligence in the case of somebody whose damages were assessed at £5,000 for pain and suffering and £10,000 for loss of earnings, but who was found to have been two-thirds to blame for the accident. He received £6,000 under the 1948 Act benefits. Under the present law he would eventually receive £4,000 from the defendant, calculated as follows: £5,000 for pain and suffering; £10,000 for loss of earnings, making a total of £15,000; less half the 1948 Act benefits (£3,000), making a total of £12,000; less two-thirds for contributory negligence (£8,000). He would therefore eventually receive £4,000 under the present set-up.
Under the clause, if it were in operation, he would receive £5,000 for pain and suffering; £10,000 for loss of earnings, making £15,000; less two-thirds for contributory negligence (£10,000), making £5,000; less all the benefits under the clause (£6,000), and he would end up owing £1,000 to the DHSS. Of course he would not receive any benefit at all for the pain and suffering that he had sustained. It seems to me that for somebody to be injured in an accident and receive no compensation at all for pain and suffering is quite unacceptable. That is the basis for my opposition to this clause.
As other noble Lords have indicated, there are other reasons for objecting. The mechanism suggested in the schedule is cumbersome. It has already been pointed out by those who will have to administer it—the Association of British Insurers, insurance companies, the CBI and so on—that the mechanism for putting it into operation would be very cumbersome.
In my view, and in the view of solicitors who have been involved in this field professionally, it is bound to lead to more cases going to the courts because people will be less willing to settle out of court if they believe that they will lose a large part of the amount on offer. That means that instead of settling out of court they will go into court to try to get as 380 much as they can for their injury. As we know, a great many cases are settled on a compromise basis. Compromises will become much more difficult if the claimant realises that he or she has to lose a large part of the total amount of compensation in repaid benefits.
Noble Lords will already be aware that I take the view that the industrial injury scheme is a quite separate scheme from the situation which applies where there is employer's liability insurance, which all employers have to carry. So the courts will be clogged and it will be much more difficult to settle out of court.
Furthermore, I believe that the amount of money which the Exchequer aims to recoup as a result of this clause will not be worth the effort. I agree with everything that the noble Lord, Lord Allen of Abbeydale, said in that regard.
The Touche Ross Report, for which I am grateful to the Minister for sending me a copy, makes it clear that an apparatus will have to be constructed—probably a co-ordinating centre—in order to recover that money. According to our information, it is likely to raise £38 million a year for the Exchequer. Is it worth all the hassle that it will cause, the injustices that will occur and the delays in courts that will arise when, at the end of the day, a relatively small amount of money will go to the Exchequer? And all for some ideological concept that I do not accept and which, when it is explained to many other people outside the House, they will not accept either.
I do not see any great public demand for what has been proposed in the clause. When it gets across to people working in industry and commerce precisely what that means in terms of industrial injury compensation, the Government will not be very popular either. I therefore support the amendment.

§ Lord Campbell of Alloway
My Lords, I support the amendment. I shall be brief. I am much relieved in many ways that my amendment was defeated because my heart and my whole sense go with this amendment. In so saying, I am not much moved by what the CBI says or does not say by courtesy of my noble friend Lord Mottistone. I assure noble Lords that it is not that matter that concerns me.
I am much more concerned with the analysis of the noble and learned Lord, Lord Griffiths, who has spent his lifetime in that sphere and knows at first hand—not from some brief—what he is talking about, and with that of the noble Lord, Lord Allen of Abbeydale, who was a member of the Pearson Committee. I also, in a small way, have practical experience in that sphere, although not on the same scale as the noble and learned Lord, Lord Griffiths.
I support the amendment because of the reasons given at Committee stage by the noble and learned Lord, Lord Griffiths, and the noble Lord, Lord Allen of Abbeydale. I take note of the fact that, on this occasion, the CBI and the TUC both want the same thing. I am not a CBI man and I do not pay much attention to what it says. I do not think that it is particularly important, but noble Lords should take note when the CBI and the TUC agree.
381 I support the amendment and I hope that the clause will be taken away. As the noble and learned Lord, Lord Griffiths, said, it should be taken away and the Government should think again.

§ Earl Russell
My Lords, I hasten to assure noble Lords that I shall not make the same speech twice. However, I agree with every word of the noble Lord, Lord Mottistone. I should also like to try to clear a little of the confusion that the business has created.
The trouble is that those of us who attended the meeting that the Minister so kindly called have moved on to a further stage of the argument since the Committee stage. That meeting was held with a real will to improve the clause. Bit by bit, most of us have been persuaded that the clause cannot be improved in any of the ways that we wish. That explains the absence of detailed amendments to which the noble Lord, Lord Coleraine, drew attention. We are convinced that they would not work, so we must decide to have either the principle of double compensation or everything else to which noble Lords have drawn attention, such as like for like, contributory negligence and all the rest. We are therefore faced with a straight choice. We either have the clause as it stands or we have no clause.
The nearest that there has been to dissent from that view is the gallant attempt of the noble Lord, Lord Campbell of Alloway, to play Michael Drayton and see whether from death to life, he might it yet recover. The noble Lord has discovered that he cannot; and since we cannot recover the clause, then I think that a great many of us are agreed that we should delete it.
The noble Lord, Lord Trafford (in a speech to which I listened with a great deal of interest) if I understood him aright, put up two arguments which deserve answer. He dealt with the argument of cost to the taxpayer. We are concerned about the cost to the taxpayer; but my position on this issue is that if I save £1 as a taxpayer but have to pay £2 extra on insurance premiums, I do not feel that I have made a good exchange.
The noble Lord also drew attention to the proposition that costs ought to rest on those who have incurred blame. But that point was answered in great detail by the noble and learned Lord, Lord Griffiths, in Committee. He said that we should not suppose that industrial damages are in fact paid by an identified tortfeasor. That is not the way it works. It falls on insurance companies. So once again we have a case in which either we pay or we pay. Therefore I think that it is reasonable to consider in which capacity we pay the less.
I am convinced by the Minister that the amendment was unworkable; but if it was unworkable then so also is the clause unworkable. I am very much impressed by the argument of the noble Lord, Lord Mottistone, about imposing extra costs on industry in 1992. If this Government do not withdraw this clause, they will once again convince a good many of us that they are not a pro-industrial government. They are a government who favour commerce. I am not convinced that they favour industry.

382

§ 10.45 p.m.

§ Lord Trafford
My Lords, I do not wish to detain the House by intervening again in this debate; but I think that the noble Earl has slightly misquoted the point in the argument that I put forward. When I referred to the taxpayer, I was referring to the social security payments not claimed back. I did not at that point deal with the question of contributory and non-contributory benefits in social security payments. I was referring to the taxpayer in general.
When I referred to the insurance payment, it was not from the point of view of any blame regarding any accident that had occurred or any claim for negligence. It was simply a reference to the fact that companies and others carry insurance liability, and I argued that it would be more appropriate that those who had to pay or should pay the compensation should be the people upon whom this charge lay rather than the general taxpayer. With due respect to the noble Earl, that is slightly different from the argument that he said I produced. But I do not dispute that point greatly with him.
Regarding the basic principle, I have nothing to add to what I said earlier. I still believe that the principle on double compensation, despite the original half-quote from Beveridge in 1942, is correct. Although I accept what the noble Lord, Lord Allen, said about the increased bureaucracy—and I think that that is quite likely, and I also believe that there would be a tendency to greater litigation—I do not believe that there would necessarily be greater unfairness, as he suggested.

§ Lord Pitt of Hampstead
My Lords, I find it difficult to understand why in a Bill by which the state seeks to withdraw any contribution to the insurance fund, at the same time the state should be seeking to recoup compensation from people who have been injured and are receiving benefit as a consequence.
It seems to me that as a consequence of Clause 3 we are now in a position in which the benefits that people receive from social security are no different from the benefits that I would receive if I were injured and was paid under the insurances that I hold. Noble Lords will remember that I asked the noble and learned Lord, Lord Griffiths, about this point. He said that in fact the court does not take into account payments that have been made from private insurance. I cannot myself see the difference.
What is happening is this. People have paid for an insurance from which they receive a benefit if they have had an accident or injury. They are not paid in a lump sum, but weekly. Many of the insurances that people carry are like that. They are private insurances. Therefore they are no different. What is more, the contributions are being made by the person and their employer. Again, there are quite a few insurances of that kind, where employers contribute to the insurances of their workmen. Therefore I cannot for the life of me see the difference between those private insurances and the benefit that is being paid through the National Insurance Fund to workmen or anybody else as a result of injuries.
383 From the beginning I found this clause objectionable. I have found it particularly objectionable because it comes in the same Bill in which the state no longer contributes to the National Insurance Fund. I hope that the Minister will be able to convince me that there is a real difference between the contributions that are being made through the National Insurance Fund and those which would have been made through an ordinary insurance to cover accidents and injury. I should like to have the difference explained to me. Unless there is a real difference, then I do not think that the Government are on solid ground.

§ Lord Skelmersdale
My Lords, without repeating in detail what I said in Committee, the basic principle behind Clause 23 is simple. The point has already been made by my noble friend Lord Trafford. It is that no one should receive more money in compensation for an accident from two sources added together than they would from one. This principle has a respectable history starting with Beveridge and more recently backed up, as we have heard, by the Pearson Commission, the National Audit Office and the Public Accounts Committee of another place and, most importantly, by the courts.
In 1948 a compromise was reached whereby 50 per cent. of all social security benefits were rebated, or offset as it came to be known. With the advent of new social security benefits the question arose as to how much this offset should be. The courts have ruled that there should be a full 100 per cent. offset for these so that the very least the Government need to do is to clear up the mess that the law is in in this area.
I am not sure that it helps the debate, but my noble friend commented on 47 and 42 years ago. Forty-seven years ago, I was not even a twinkle in my father's eye. In 1948 I had just become eligible for a tenant's allowance, except that it did not then exist. Knowing all this, your Lordships will wish to know two things. First, what happens to benefits and what happens to the money that has been offset?
Nothing at all happens to benefits, either now or under this clause. That is a point which I made on Second Reading, at col. 566. They will continue to be paid as now, immediately an individual need arises and the qualifications are fulfilled. This is an important point which has been misrepresented in some cases—not, I hasten to add, in your Lordships' House.
Secondly, what happens to the money that has been offset? It goes, surprisingly, to the insurance company to reduce insurance premiums. Under this clause, however, the money will go where it properly belongs; that is, to the state to pay for the social security benefits in question.
That is why my noble friend Lord Mottistone—who, as he has said, has been briefed by the CBI—has led a vigorous campaign to strike out this clause from the Bill. He and it fear that insurance premiums will rise, which, to an extent they will, but—

384

§ Baroness Turner of Camden
Of course they will have to, my Lords.

§ Lord Skelmersdale
My Lords, of course they will. I am glad that the noble Baroness agrees, but both the CBI and my noble friend have forgotten the maxim of this House—something else that was referred to by one of my noble friends behind me—namely, that we all believe in the polluter pays principle. In this connection, it means that someone responsible for an accident will pay for the effects of that accident in full. This maxim is, however, complicated by the fact that by law motorists and employers have to insure themselves against accidents. The effect of this is that the premium payer has to meet the costs of the compensation rather than the individual who causes the accident. The clause does nothing to change that. It happens at the moment and it will continue in the future, whether or not your Lordships approve the clause. Thus insurance premiums will rise.
For employers, Touche Ross originally estimated that they would rise by 16 per cent. But the Association of British Insurers now believes that the figure should have been 8 per cent., a rise to 1–6 per cent. of the total labour bill and an increase of only 0.1 per cent. in total expenditure. This is the amount of money that my noble friend Lord Mottistone is talking about. For motorists the rise will be well under I per cent. I gave these figures on Second Reading and explained then how they would work, so I shall not repeat them.
Before I pursue this case I want to comment on a supposed unfairness exposed by the noble Lord, Lord Allen of Abbeydale. He believes that there should be an allowance in the offset for contributory negligence. My noble friend Lord Campbell of Alloway does not agree any longer. However, as I said, the noble Lord, Lord Allen, believes that the offset should increase according to a percentage of contributory factors to an accident, or, put another way, the greater the proportion of contributory negligence the smaller the proportion of his benefits which would be deducted. He therefore receives proportionately more than the person who in no way contributed to his own injuries. The interesting effect of this would be that, depending on the percentage whereby a person is judged to have contributed to his own accident, he would get more in total benefit. This cannot be right or fair. Indeed, it is not an amendment currently before the House, so I shall not dwell on it now, except to comment on the case put to us by the noble Baroness, Lady Turner.
I note that in the case cited the total amount was £15,000, of which £10,000 was for loss of earnings. The degree of negligence was 66 per cent. so that the person gets £4,000 from the compensator at present, plus £6,000 benefit which we are told the person received. Thus the total is £10,000 when they are added together. But the £15,000 award was compromised by two-thirds, the noble Baroness told us. The person actually receives £10,000 and so loses only one-third. That really does not seem to me to be right.
If we can agree on nothing else this evening, I am confident that we can agree about one thing—that 385 the subject of compensation for injury is a very complex matter. Much of the complication arises from the fact that only about 1 per cent. of all awards are made by the courts. The remainder are informal settlements between the parties. In theory, settlements are based on what the courts would do, but in practice a number of factors are involved and the outcome of the claim is often a compromise by both parties. This has been apparent in the discussions I have had with some of my noble friends and noble Lords opposite.
We have, however, been able to clear up some misconceptions which have arisen about our proposals. Indeed, it would seem that some of those who have sent briefing to noble Lords on this clause have themselves been under some misapprehension. For example, some of your Lordships will have received briefing from a firm of solicitors recently with case histories purporting to show how a claim might be settled under our proposals. One such example gave a settlement figure of £27,500 and benefits of £21,646. It did not say at what point the settlement was made, so we are left to assume it was after five years since that puts our proposals in the worst possible light. We also assume that the £27,500 was net of the offset for benefits—although your Lordships would be forgiven for overlooking this since it was not stated.
The example concluded that all the £21,646 benefits would be deducted from the net figure of £27,500, leaving only £5,853. That is plainly wrong. The clear implication of the example is that compensators will not assume full liability for compensation as the legislation intends but will first apply the present offset and pay the Secretary of State from what is properly due to the victim. Of course, I am sure that this was unintentional. In the example the victim would get only £27,500 in benefit and compensation. In fact, using the assumptions about timing of the settlement and the value of the settlement before offset had been made, assuming that a 50 per cent. offset of benefits had been made, the victim should end up under our proposals with £16,677 compensation which, when added to the benefit, gives £38,323 in all.
Your Lordships may also note that since the Bill was published and it was clear that recoupment would apply only up to the date of settlement, no example has been put forward where a settlement has been made in under five years. And yet in mid-1988 the Industrial Injuries Advisory Council, which the noble Baroness opposite will know well, produced what I believe was an actual case as an example in a paper it sent to the Secretary of State and others. The case was settled after two years, and in Committee in another place on 2nd March at col. 909 of Hansard, my right honourable friend the Minister of State was able to show that while £20,000 would be deducted under the present rules, only £9,500 would be recouped under the proposals.
It has been suggested that our proposals would mean extra costs for compensators because employees will seek higher awards to make up for the reduced sums they receive. However, the present system deducts from their compensation not only 386 benefits already received but what it is estimated that they might get for the five years after the injury or even longer in some cases. There is no reason to believe that these proposals will encourage people to seek higher awards. It is also suggested that more cases than the present 1 per cent. would end up in court. That usually means a delay. Court proceedings, as we all know, tend to take a long time. I agree that this would be to nobody's advantage. But as recoupment ceases at the date of settlement or award, there is a greater incentive to settle as quickly as possible, rather than delay. There may indeed be a bedding down period at the start of the scheme, but we do not believe that our proposals materially affect whether people choose to pursue their claim to a court award.
I should remind your Lordships that 80 per cent. of claims are settled within two-and-a-half years and so most people should receive no less under our proposals than under the present arrangements unless they were to a great extent themselves to blame for their own injuries, which, as I said earlier, I believe to be fair. At present 50 per cent. or 100 per cent. of benefits are offset over a full five years or more in some cases. Roughly speaking, at about two-and-a-half years there is no difference between the net compensation payable, whether the benefits are offset as at present or recouped up to the date of settlement. Indeed, if settlement is made quite speedily, the amount recouped could actually be less than is currently offset.
This is a reform which is long overdue and returns to basic principles. I understand that those closely concerned do not relish a change from the system which they have been used to for 40 years, even though they recognise that change is needed. We are working with those who would have to operate the scheme to ensure that any procedure:3 are as far as possible compatible with what they do now and we do not impose unnecessary burdens on the private sector. The total amount which is likely to be recouped is £55 million in a full year.
The noble Lord, Lord Allen, complained about this and asked why the Touche Ross estimate of £55 million was so different from the National Audit Office's £150 million. The National Audit Office estimate of £150 million, which was seen by the Public Accounts Committee, was based on the only data which was available at the time its report was made. I understand that it was originally produced for the 1978 Pearson Commission Report and increased by the NAO to take account of the passage of time. I am sure that the noble Lord, Lord Allen of Abbeydale, would be able to confirm that that was the figure in the report of the commission of which he was a distinguished member.

§ Lord Allen of Abbeydale
My Lords, I believe that is how the figure came about, but the painful fact is that the PAC was given totally false information as to what would be achieved.

§ Lord Skelmersdale
My Lords, if the noble Lord will do me the courtesy of waiting until I have finished the point, he may be able to attack in an even stronger fashion.
387 The £55 million estimate made by Touche Ross derived from an examination at the beginning of 1988 of a sample of cases provided by the insurance companies. Therefore it is the most up-to-date estimate available and is most likely to be reliable. After this passage of time, I cannot estimate whether the Pearson Commission figure was reliable, but I am quite convinced that, on the most up-to-date figures available, the Touche Ross investigation is certainly the most reliable as to figures available at present. The figure of £55 million includes statutory sick pay of £17 million in addition to the £38 million for other benefits set out in the financial memorandum to the Bill.
The noble Lord, Lord Pitt, spoke of everybody paying insurance, by which I suppose he meant state insurance—the National Insurance Fund. I believe that I can best answer that by pointing out that unemployment benefit, which is probably the largest of these, together with sickness benefit, is already offset. Because they are offset, money goes to the insurance companies and not back into the National Insurance Fund where it properly belongs.

§ Lord Pitt of Hampstead
My Lords, that still does not explain the point I am making. I am saying that if you are involved in an accident, compensation is paid to you. If you have a private insurance, it will not be deducted from that money. That is the difference.

§ Lord Skelmersdale
My Lords, I am grateful to the noble Lord because the point is that you are not being compensated out of private insurance which you yourself have paid for. In the vast majority of cases you are being compensated out of the compulsory insurance scheme which your employer has taken out to pay for any injury which occurs on his property or because of the job for which he employs you. Therefore, the situation is quite different.
As I said in answer to a Question for Written Answer tabled by the noble Lord, Lord Allen of Abbeydale, the department's administrative costs are estimated at about an extra 100 staff at a cost of about £1 million per year.
Perhaps I may now take up the point raised by my noble friend Lord Campbell of Alloway on the last amendment. I shall quote from the introduction of the Touche Ross Report. It states: The terms of reference for our review were: —to establish how much would be recoverable from damage settlements and awards if 100 per cent. of all social security benefits paid in consequence of an injury were to be recoverable by the DHSS; —to assess the administrative difficulties for insurance companies and DHSS inherent in a recovery scheme of this nature". My noble friend went on to read the next part: We were subsequently instructed by the DHSS not to consider the administrative difficulties which may be faced by the DHSS". But those carrying out the review were not instructed not to consider the administrative difficulties to be faced by the compensators. Therefore the situation is quite different.

388

§ Lord Campbell of Alloway
My Lords, it can be seen on reading the report that it did not deal with any other administrative difficulties.

§ Lord Skelmersdale
My Lords, in another place on 26th April, the Opposition spokesman offered what he called a "grudging word of congratulation" because the Government have tackled an extremely difficult problem. We do not find it acceptable that state benefits should subsidise the liability of those responsible for causing injuries simply because the benefit system has already had to pay as a result of those injuries. The present situation is ripe for reform.
We firmly believe that this clause does that in a way which recognises how compensation is dealt with in this country. It is a system which builds on what already happens rather than a radical change. There are incentives for earlier settlements than at present and we have no reason to suppose that this clause will increase the number of cases which are decided by the courts or will deter people from seeking compensation, as they do now.
I have undertaken to ensure that we monitor what happens in court awards to see whether there is any substance in the fears that recoupment would bite into payments for pain and suffering. At present, what evidence we have does not support this contention.
My final point is that whatever happens to this clause will be reflected in Schedule 4—in other words, if this clause continues to stand part of the Bill then Schedule 4 will remain. If the clause disappears, then clearly Schedule 4 will have to disappear with it. I commend the clause to the House.

§ Lord Pitt of Hampstead
My Lords, I have listened to the Minister but I am still disturbed. He has not answered my point. If I carry a private insurance and then I am compensated by the court, there is no clawback in regard to my private insurance.

§ Lord Mottistone
My Lords, perhaps the noble Lord would like me to answer that point.

Noble Lords
Order!

§ Lord Ponsonby of Shulbrede
My Lords, my noble friend is intervening in the Minister's speech.

§ Lord Mottistone
Yes, my Lords, but he has now sat down.

§ Lord Henderson of Brompton
My Lords, this is the Report stage of the Bill. The only noble Lord who can speak more than once with the leave of the House is the Minister.

§ Lord Skelmersdale
My Lords, I thought that my noble friend was replying to this amendment as he moved it, which rather absolves me from returning to the charge.
I have tried to do my best to deal with the point raised by the noble Lord, Lord Pitt. If one is voluntarily paying insurance to cover one's own 389 potential injuries—for example, if you insure yourself against injury in an aeroplane or a train—it would be anomalous for anyone to seek to take away any money paid to you. But when dealing, as we are here, with premiums for national insurance purposes, employers' liability purposes or motor insurance, which are payable by law, I suggest that the position is different.

§ Lord Pitt of Hampstead
My Lords, in what way is it different?

§ Lord Skelmersdale
My Lords, of course it is different, because one pays it voluntarily. That is the quick answer to the noble Lord. Perhaps I should now hand back to my noble friend Lord Mottistone.

§ Lord Mottistone
My Lords, the crux of this matter, to which my noble friend has not addressed himself, is the fact that he assumes, in the words of the Beveridge Report, that double compensation is bad. The noble Lord, Lord Allen of Abbeydale, has gone along with the Pearson Commission. But why is double compensation bad? I give an example at the risk of my noble friend introducing legislation to change the position. I receive two pensions, to both of which I have indirectly contributed. One is paid by the Government—my naval pension, to which I contributed by not receiving as much pay as I should have done for many years. The other is my civil pension which I received afterwards. Nobody has suggested that, having contributed to the two pensions, I am receiving double compensation by having two pensions. Why should they? What is wrong with double compensation if you make two sets of contributions?
I take the case of the companies. They contribute their share of national health insurance. They would expect to be compensated in the way of insurance for anything that comes back to them. They contribute to industrial injury insurance which they would expect to come back to them. When I say "them", I mean companies as a whole. In fact the company pays a share of the national health contribution and so does the individual.
When there is an industrial injury the individual gets the compensation from the national health insurance part of the scheme, but all the other people in the company do not get anything at all. Likewise, as regards industrial injury compensation, the company pays the premium. A company is not simply something nasty with a board of directors, but is made up of a great many people including all the employees.
The employee who has been injured gets a part of the compensation. What is wrong with double compensation? That is where my noble friend, the Government and Sir William Beveridge, in 1942, were sidetracked by some official who wrote into his report that double compensation was a bad thing. It is as simple as that. If you pay two premiums, why should you not be able to recover from both of them?
That is basically what I object to about this clause, and why I should like the Government to take it back and think again. It is not because of all the 390 technicalities and who gets £5,000 and who gets it repaid; it is because double compensation is perfectly all right if you have a double contribution. I tried to say this at Second Reading, and at Committee stage, and I tried to say it earlier in my introduction to this amendment.
I should like my noble friend to say that he is going to take it away and think again because it is based on a wrong premise.

§ Lord Pitt of Hampstead
My Lords, before the noble Lord sits down—

§ Lord Belstead
My Lords, no. We have received some wise advice from the noble Lord, Lord Henderson of Brompton (who knows this House well) which is that the only person who may speak after the Minister is the mover of the amendment. That is my noble friend Lord Mottistone. When he has finished, the matter should be decided by your Lordships.

§ Lord Pitt of Hampstead
My Lords, is the noble Lord, the Leader of the House, suggesting I am out of order? I wish to ask a question.

§ 11.17 p.m.

§ On Question, Whether the said amendment (No. 19) shall be agreed to?

§ Their Lordships divided: Contents, 26; Not-Contents, 36.

DIVISION NO. 5
CONTENTS
Addington, L.	Jeger, B.
Allen of Abbeydale, L. [Teller]	Lockwood, B.
	McNair, L.
Butterfield, L.	Mottistone, L. [Teller]
Campbell of Alloway, L.	Pitt of Hampstead, L.
Carter, L.	Ponsonby of Shulbrede, L.
Cocks of Hartcliffe, L.	Rochester, L.
David, B.	Russell, E.
Dormand of Easington, L.	Saltoun of Abernethy, Ly.
Faithfull, B.	Seear, B.
Feversham, L.	Swann, L.
Halsbury, E.	Tordoff, L.
Henderson of Brompton, L.	Turner of Camden, B.
Hylton, L.
NOT-CONTENTS
Arran, E.	Hesketh, L.
Belstead, L.	Hives, L.
Blatch, B.	Johnston of Rockport, L.
Brabazon of Tara, L.	Joseph, L.
Brougham and Vaux, L.	Long, V.
Caithness, E.	Lucas of Chilworth, L.
Coleraine, L.	Lyell, L.
Craigmyle, L.	Mackay of Clashfern, L.
Davidson, V. [Teller]	Morris, L.
Denham, L. [Teller]	Oppenheim-Barnes, B.
Dilhorne, V.	Sanderson of Bowden, L.
Dundee, E.	Skelmersdale, L.
Elliot of Harwood, B.	Strange, B.
Fraser of Carmyllie, L.	Strathclyde, L.
Gardner of Parices, B.	Thomas of Gwydir, L.
Harmar-Nicholls, L.	Trafford, L.
Harvington, L.	Trumpington, B.
Henley, L.	Wynford, L.

§ Resolved in the negative, and amendment disagreed to accordingly.

391

§ 11.25 p.m.

§ Schedule 4 [Recovery of Sums Equivalent to Benefit from Compensation Payments in respect of Accidents etc: Supplementary Provision]:

§ [Amendment No. 20 not moved.]

§ Schedule 5 [Employment-related Schemes for Pensions or Other Benefits: Equal Treatment for Men and Women]:

§ Baroness Seear moved Amendment No. 21: Page 54, leave out lines 37 to 41 and insert— ("( ) any provision for the preservation of rights accrued before the operative date of this paragraph;").

§ The noble Baroness said: My Lords, with the leave of the House in moving Amendment No. 21, I shall speak also to Amendments Nos. 22, 23, 24, 25 and 27. I am truly reluctant to embark upon what is a new and important subject at this time of night. Nevertheless, these amendments are an attempt to begin to deal with what is in fact an anomaly in our legislation which goes back to the 1970 equal pay legislation. When that legislation was passed, it was agreed that discrimination on the grounds of sex could be continued in relation to both retirement ages and pensions. That principle has been embodied in our legislation ever since.

§ The purpose of these amendments is to take a small step in the direction of correcting that anomaly. I should point out to your Lordships that sooner or later we shall have to correct this. There is no doubt that with directives coming out of the EC, and with the general thrust of opinion today, the continuation of this anomaly in retirement ages and in pension provision is something which will soon have to go.

§ These amendments attempt to bring forward a first stage in that development. What is proposed deals, as your Lordships will be aware, with occupational pensions only; it does not attempt to do anything about the state pension scheme which is another issue. Modestly, it does not attempt—as in many ways I should have preferred—to modify existing schemes. All that is requested, in line with the way that developments are plainly going, is that in all occupational schemes which come into force after 1st April 1990, the permission to have different retirement ages and different pension conditions for men and women will be removed. That is the purpose of the amendment.

§ As I said, it is a step in the direction in which undoubtedly we not only should, but will, be travelling before long. I beg to move.

§ Baroness Turner of Camden
My Lords, at this hour I intend to be very brief. I simply say that I agree with what the noble Baroness said in regard to this series of amendments. Of course, as long ago as 1976 the Occupational Pensions Board, of which I am a member, was recommending that there ought to be equal pension ages in the state retirement scheme because many occupational schemes are geared to what happens in the state scheme.
We still have not reached the point where we have equal retirement ages in the state scheme; but I am 392 quite certain that the day when we reach that stage is not so very far off. There will be directives emerging which will compel us to move along those lines. Moreover, it will not be very long before the Government have to seize this nettle and deal with it. I therefore have pleasure in supporting this series of amendments.

§ 11.30 p.m.

§ Lord Henley
My Lords, I thank the noble Baroness, Lady Seear, for moving the amendment so briefly. I also thank the noble Baroness, Lady Turner, for speaking. I hope that I can be equally brief.
I can, first, meet the noble Baroness half way in respect of the words which she wishes to insert under Amendment No. 21. Her amendment would provide that any provision in a pension scheme which applied to the preservation of rights accruing before the operative date of 1st January 1993 would remain outside the scope of the equal treatment requirements. The schedule already makes such provision in paragraph 3(3). I can assure the noble Baroness, therefore, that the Government accept her intention on this particular aspect of the amendment but I have to advise your Lordships that the wording of the amendment is unnecessary.
I must however, immediately advise your Lordships that I cannot be so forthcoming in respect of the other provisions in the noble Baroness's group of amendments. Amendment No. 21, together with the consequential Amendment No. 27, would also, by the lines which it repeals, require schemes to equalise pension ages, to provide survivors' benefits on equal terms, and to remove any distinction on the basis of sex in the treatment of optional provisions in scheme rules. Those give members the choice to purchase added benefits, to draw their scheme pension from a date earlier or later than normal or to choose which of more than one benefit available they wish to receive.
Amendments Nos. 22 to 24 would continue to permit diferences in pension age, survivors' benefits and optional provisions, but only for those who were already scheme members before 1st April 1990 and for schemes already established before that date. Amendment No. 25 provides similar restrictions to pension schemes established before April 1990 in respect of special provisions for particular individuals.
The House will be aware that Schedule 5 is intended to implement the requirements of the 1986 EC equal treatment directive. When adopting that directive the Council of Ministers accepted that member states were not yet ready to introduce equal treatment in all aspects of occupational social security schemes. It therefore made certain specific derogations, particularly under Article 9 in respect of pension age and survivors' benefits and under Article 2 of the optional provisions. The pension age and survivors' benefit exceptions were allowed until, but only until, the state scheme had equalised treatment in those areas. The Bill takes account of those permitted derogations. The noble Baroness's amendments would either abolish them altogether 393 or restrict them to members of schemes at 31st March 1990. The Government do not think it right to require occupational schemes to equalise their requirement in the state scheme. Indeed, as occupational schemes are set up voluntarily, to do so without considering the full implications could discourage employers from setting up schemes at all.
At this late hour I do not consider it appropriate to have a full debate on the issue of pension age or survivors' benefits. Your Lordships will have the opportunity to discuss those issues when the House considers the report of the Select Committee under the chairmanship of the noble Lord, Lord Allen of Abbeydale, which looked at those issues in the context of the draft third social security equal treatment directive. Your Lordships will at that stage have had time to ponder in depth the Select Committee's recommendations.
Finally, I should like to refer to Amendment No. 25. This relates to single, one-off arrangements for particular individuals. The noble Baroness would wish to remove that exception from the principle of equal treatment. The problem is that as those arrangements apply only to a particular person, there is no one against whom the treatment of that individual may be compared. If, for instance, a scheme makes special provision for the managing director of a company, irrespective of the person's sex, there is no one else in the scheme with that status against whom a comparison can be made. The amendment therefore, if adopted, would be inoperative.
I hope that I have not spoken at too great length in response to the noble Baroness, who nevertheless I hope will recognise that I have not attempted to go in great depth into the issues which she has raised. As there will be a further opportunity for your Lordships to discuss these issues at greater length, I hope that she will feel able to withdraw the amendment.

§ Baroness Seear
My Lords, the reply from the noble Lord is very much what I had expected. The whole purpose of these amendments was to try to stop the Government from taking advantage of the derogations. It provides an opportunity to seize the nettle that will have to be seized sooner or later, while we are making changes in this social security legislation, which is the appropriate place for doing so, and to make a modest advance in relation to occupational pension schemes. I should like to test the opinion of the House to see how much support there is for moving in the direction of greater equality of opportunity in relation to pensions.

§ 11.36 p.m.

§ On Question, Whether the said amendment (No. 21) shall be agreed to?

§ Their Lordships divided: Contents, 18; Not-Contents, 33.

394

DIVISION NO. 6
CONTENTS
Addington, L.	Cocks of Hartcliffe, L.
Carter, L.	David, B.

394

Feversham, L.	Ponsonby of Shulbrede, L.
Halsbury, E.	Rochester, L.
Henderson of Brompton, L	Russell, E.
Jeger, B.	Seear, B. [Teller.]
Lockwood, B.	Swann, L.
McNair, L. [Teller.]	Tordoff, L.
Pitt of Hampstead, L.	Turner of Camden, B.
NOT-CONTENTS
Arran, E.	Hesketh, L.
Belstead, L.	Hives, L.
Blatch, B.	Johnston of Rockport, L.
Brabazon of Tara, L.	Long, V.
Brougham and Vaux, L.	Lucas of Chilworth, L.
Caithness, E.	Lyell, L.
Coleraine, L.	Mackay of Clashfern, L.
Craigmyle, L.	Morris, L.
Davidson, V. [Teller.]	Mottistone, L.
Denham, L. [Teller.]	Sanderson of Bowden, L.
Dilhorne, V.	Skelmersdale, L.
Dundee, E.	Strathclyde, L.
Elliot of Harwood, B.	Thomas of Gwydir, L.
Faithfull, B.	Trafford, L.
Fraser of Carmyllie, L.	Trumpington, B.
Harvington, L.	Wynford, L.
Henley, L.

§ Resolved in the negative, and amendment disagreed to accordingly.

§ 11.42 p.m.

§ [Amendments Nos. 22 to 25 not moved.]

§ Lord Mottistone moved Amendment No. 26:

§ Page 54, line 43, at end insert— ("(h) any additional pension payable under a scheme to a man at any time between the ages of 60 and 65 for as long as—

(i) equality of pensionable age for males and females is not achieved under the State scheme and
(ii) the additional pension is not more than—
1. (a) in the case of a scheme which is a contracted-out scheme an amount equal to the basic component of the Category A retirement pension under the Pensions Act, or
2. (b) in the case of a scheme which is not a contracted-out scheme an amount equal to the basic component and the additional component of the Category A retirement pension under the Pensions Act
which would have been payable to him at that time under the Pensions Act had his pensionable age under the State scheme been 60 (but disregarding any increase for deferred retirement under section 12 of that Act) and
(iii) payment of the additional pension is discontinued immediately he reaches pensionable age under the State scheme.").

§ The noble Lord said: My Lords, I shall try to be even more brief, particularly when I see the Government Chief Whip sitting on the Opposition Front Bench.

§ This amendment raises again the matter of an anomaly in the Bill, as worded, in creating an inequality of total pensions for those companies which have specially arranged adjustments to occupational pensions for men and women between the ages of 60 and 65 to match the different state pensions for them, and thereby to create equality.

§ I do not want to go over the ground again which I spelt out on Second Reading and in Committee. Suffice it to say that I am most grateful to my noble friend the Minister for arranging last Friday afternoon, at a relatively late hour, the meeting 395 between himself and his legal advisers and myself and the CBI's legal adviser, who on an earlier occasion gave counsel's opinion on the matter. I also wish to thank my noble friend Lord Lucas of Chilworth who kindly attended the meeting on my behalf because I had duties in the Isle of Wight at that time. I am also grateful to my noble friend Lord Lucas for helping to ensure that the matter was dealt with expeditiously.

§ At that meeting it was established that both sets of legal advisers agreed that the legal position on the relevant Community directive was not clear, and that there is no authoritative decision of the European Court of Justice on derogation. In consequence, it was agreed that the Government should consider certain actions to clarify these points and to work towards correcting the anomaly.

§ The purpose of the amendment is therefore to give my noble friend the Minister the opportunity to tell the House what the Government propose to do as a result of that meeting. I beg to move.

§ 11.45 p.m.

§ Baroness Turner of Camden
My Lords, my name is also attached to the amendment, which I rise to support. I supported a similar amendment in Committee. I did so because I believe that the EC directive on which the present clause in the Bill is said to be based is capable of a different interpretation from that which appears to have been placed upon it by the Government's lawyers. I believe that the counsel who has advised the CBI—and I have seen a copy of the advice—has a very strong point.
The position in the UK is different from that in many other countries. It is not only that there is a difference between the ages at which men and women retire, which seems to be set in concrete in this country—there are also different retirement ages in, I think, three other EC countries—but we have a different system of pension provisions in this country. We have a rather unique system which involves a partnership between the state pension provision and occupational pension provision. Then we have the system of contracting out.
Some very good occupational schemes are integrated with the state scheme. That means that by the time pension ages of 60 for women and 65 for men are reached there is a gap of five years during which men would not receive equal benefits in the form of the occupational benefit and the state benefit until they reach the age of 65. If employers and such pension schemes had not been willing to provide bridging pensions for the period between the ages of 60 and 65 for men it would not have been possible to introduce a common retirement age of 60 for both men and women.
It seems absurd that a provision which was intended to result in equal treatment of recipients should now be regarded as being illegal under the directive. I cannot believe that that was the intention of the directive. I think that there are grounds for looking at the whole matter again. For those reasons I support the amendment in the name of the noble Lord, Lord Mottistone.

396

§ Lord Swann
My Lords, I shall make only the briefest of comments on the amendment of the noble Lord, Lord Mottistone. I am very much in favour of it. It aims to get rid of a manifest anomaly and injustice, and I am persuaded by the arguments that the noble Lord deployed at earlier stages.
We have the extraordinary situation of an amendment designed to achieve equality of treatment of the sexes in danger of being bowled out because some element of identical totals is different. It sounds to me like the situation in which a man goes to the post office to get his pension and a woman goes to the post office for an identical pension, and if the postmaster hands the man his pension in £10 notes and the woman hers in £5 notes that would be out of order because it is a clear discrimination in the treatment of the two sexes. Can there be anything sillier than that?

§ Baroness Seear
My Lords, we on these Benches strongly support the amendment.

§ Lord Skelmersdale
My Lords, during our previous debate on this issue, I agreed to my noble friend's request for a meeting and was pleased to have the opportunity to meet with my noble friend Lord Lucas of Chilworth and his advisers to look again at the question of bridging pensions. Unfortunately my noble friend Lord Mottistone was unable to be present, as he has explained.
At that meeting I was able to inform my noble friend that we are drafting a letter to be sent to the Commission in Brussels formally requesting its opinion on the application of the directive to schemes which pay bridging pensions. In the light of previous discussions which my officials have had, I have little doubt what the Commission's view will be. If its considered view were other than our own, we should of course reconsider our obligations under the directive and whether an amendment to the current Bill would need to be made between now and 1993.
At that meeting, my noble friend's adviser raised the possibility of the Government accepting my noble friend's amendment pending a decision of the European Court. This is not a Government who pass legislation knowing full well that they will be taken to the European Court. Nonetheless, he suggested that only if the court ruled bridging pensions to be a breach of the directive should we take powers to outlaw them. It was his view that there would be time between any judgment by the court and December 1992 to pass amending legislation. I do not believe that to be the case. It is likely to take almost two years from a case being referred to the European Court to its final judgment. It is simply not possible to obtain a judgment of the European Court in time for amending legislation to be passed in time for operation from January 1993. To await the court's judgment is not a viable alternative.
The other option that has been suggested to us is to follow the recommendation of the Select Committee. We shall respond in due course to its report. In the meantime, I cannot hold out much hope that we shall be able to persuade our European partners to 397 agree to a course that would have the effect of nullifying, albeit temporarily, a provision in the equal treatment field which has already been adopted. Nevertheless, I am now able to go considerably further than I did in Committee and say that, should the opportunity arise to negotiate a stay of execution for bridging pensions, we would most certainly take it up.
The issue of bridging pensions has been considered at length by your Lordships. My department has also looked into the issue in great detail. Our conclusion that the directive does not permit schemes to calculate and pay pensions to men on a more favourable basis than to women, or vice versa, has not altered in the light of the representations which we have considered with great care.
I can assure the noble Lord, Lord Swann, that this is not a case of paying £10 notes with one hand and £5 notes with the other to the same amount. The amounts paid by the pension scheme are different. I accept that the issue is not clear beyond peradventure, but the judgment to which we have come is in our view beyond reasonable doubt. That judgment is backed up by your Lordships' Select Committee.
As to why we need to legislate in this Bill, not only do we need to give pensions schemes time to prepare, but, perhaps even more importantly, we are bound by Article 12 of the directive which says: Member States shall bring into force such laws, regulations and administrative provisions as are necessary in order to comply with this Directive at the latest three years after notification thereof. This means that, having identified our obligations, we must legislate by 30th July 1989. I have been asked privately why I made a remark in answer to the noble Lord, Lord Rochester, earlier today, and that was the reason.
The Government have learnt a lesson, and I hope that the pensions industry has too. It is that we must be doubly sure what our obligations are before we approve European directives. No one, neither the industry nor the Government, had full cognisance of the directive when it was approved, despite full consultation and despite advice by learned counsel; nor could either have been expected to anticipate the judgments in this field which the European Court would come to following the adoption of the directive but before its implementation. If we had, we would certainly have delayed the measure in order to pursue a solution with the industry. With the greatest respect, I must say that the time for this is past.
I am, therefore, grateful for the courtesy with which my noble friend has moved his amendment, but for the reasons which I stated at an earlier stage and which I do not wish to reiterate tonight, I respectfully request him to withdraw it.

§ Lord Mottistone
My Lords, I thank my noble friend for his answer. As I understand it, there will be communication with the Commission. It may be that some amendment will be made to the measure in next year's social security Bill, if the communications with the Commission come through fast enough.
398 However, I shall not pursue the matter with my noble friend. It is asking him to speculate too much too close to midnight. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ [Amendment No. 27 not moved.]

§ Lord Henderson of Brompton moved Amendment No. 28:

§ Before Clause 27, insert the following new Clause— ("Jurisdiction of the Parliamentary Commissioner. In Schedule 2 to the Parliamentary Commissioner Act 1967, social fund officers and social fund inspectors shall be added to the list of departments and authorities subject to investigation.").

§ The noble Lord said: My Lords, I am reluctant to move this amendment at this late hour but I have to do so in view of what I consider to be the unsatisfactory reply of the Minister when I moved the amendment in Committee. The amendment is designed to bring the social fund officers and social fund inspectors within the jurisdiction of the Parliamentary Commissioner.

§ When we discussed this matter during the passage of the Social Security Bill in 1988 I asked how it was that everyone who was present naturally assumed that these officers and inspectors were subject to the jurisdiction of the Parliamentary Commissioner. That included the Minister himself. He made that assumption, as did his noble friends Lord Boyd-Carpenter and Lord Trafford as well as the noble Baroness, Lady Jeger, who was moving the amendment and, I believe, everybody else in the House.

§ Surely the arguments against such a strong assumption by so many experienced people must be immensely powerful to rebut it. I would say that the assumption is made again today if one considers the signatories to this amendment which come from all round the House.

§ I shall not go into details because at the Committee stage I clearly demonstrated that the social fund officers, by reference to the statute, ought to be within the jurisdiction of the ombudsman. They are officers of the DSS, appointed by the Secretary of State and subject to his directions and guidance. What could be clearer than that? There is no right of appeal against their decisions. Indeed, Members of the House tried to introduce such an appeal and the Government would not allow it. So they are not in any way equivalent to the judiciary.

§ The ombudsman of course would not interfere if their decisions were taken without maladministration, but he certainly ought to be able to interfere if there is maladministration. In that respect these officials are no different from any other government officials.

§ So far as concerns the inspectors, the matter may be very slightly different because they are formally appointed by the commissioner. Nonetheless they are certainly not part of the judiciary and are, like social fund officers, obliged to comply with the Secretary of State's directions. Although the department and the Minister were at pains to stress the independence of the inspectors, nevertheless they 399 are not truly independent. Judging from the ombudsman's 1988 report, I would say that he clearly thinks that they are not independent and ought to come within his jurisdiction.

§ Where a matter is in dispute in such an important area it would seem, as I said in Committee, entirely inappropriate that the department should be the judge in its own cause. The noble Lord, Lord Skelmersdale, rather indignantly and rightly said that in fact it was not the department that was judge in its own cause but the Civil Service Department that was the judge. In my view that does not make it any better, because it is not just the department which is judge in its own cause but the Government are judge in their own cause, and that cannot be right.

§ I believe that this is a matter of such importance that it ought to be resolved by an independent judge. After all, it concerns the interpretation of a statute and it can only be done by the independent judiciary. So I press the Minister most urgently and seriously to take steps to ensure that this issue is resolved by an independent judge. We cannot accept the partisan view of the Civil Service Department. For that reason I bring this matter before the House on Report. I beg to move.

§ Baroness Jeger
My Lords, the noble Lord, Lord Henderson, moved this amendment with his usual clarity and erudition. It is not only an important amendment in respect of social fund inspectors and officers; it deals with the basic principles of the Government's right to withstand decisions which in other departments would be under the jurisdiction of the Parliamentary Commissioner. It is a very important amendment. I hope that the Minister will have something helpful to say. It has very wide ramifications and is a matter of considerable principle.

§ Baroness Faithfull
My Lords, I rise briefly to support this amendment. As an ex-director of social services whose clients are very much involved with the social fund I think the provision would be a great safeguard for those clients, for the officers administering the social fund, and the local authorities whose clients are the ones to be involved in this matter. I therefore support the amendment.

§ 12 Midnight

§ Lord Skelmersdale
My Lords, I shall try to be brief because I do not wish to repeat what has been said previously in Committee, or indeed in a certain amount of correspondence between myself and the noble Lord, Lord Henderson. It is perfectly true that having taken advice, I changed my mind in the early stages; but since I changed my mind I have not wavered. I am sure that the noble Lord, Lord Henderson, would accept that.
I am not sure that the noble Lord, Lord Henderson, and other noble Lords, appreciate that in addition to deciding whether to make an award, or the amount to be awarded, social funds officers have a number of other functions conferred on them expressly by Section 33 of the Social Security Act 1986. These are: deciding whether an award is 400 payable by instalments; deciding whether an award is repayable; and deciding whether payment should be made to a third party. In other words, in these respects they act as sort of adjudication officers. As the noble Lord, Lord Henderson, will know, when adjudicators are adjudicating, they are not subject to the Parliamentary Commissioner. Social fund officers are also required by statute to review determinations where an application for review is made in the prescribed time, form and manner, and may review a determination in such other circumstances as they think fit. This is in Section 34 of the Act.
The plain fact is that the social fund officers are acting independently when performing the statutory functions. Neither the Secretary of State nor any other Minister can intervene in the decisions they make under the statutory functions. The comparison that I have drawn with the position of adjudication officers is, I believe, a fair one.
I accept that the position of social fund inspectors is different from that of social fund officers. However, the noble Lord, Lord Henderson, still seems to be under the misapprehension that aggrieved applicants to the social fund have no recourse to having the decision examined by an independent body. This completely overlooks the function of the social fund inspector. He is independent of the department and answers to an independent social fund commissioner. Thus applicants do have access to an independent and impartial review of the decision.
If it would help to convince the noble Lord, and indeed any other Members of your Lordships' House, that the social fund commissioner and her inspectors are independent and acting independently, I invite them to take up the general invitation that the commissioner issued some time ago that anyone who doubts the commission's independence is welcome to visit the Birmingham headquarters to watch what is going on.
I believe that the final question to be addressed—and possibly the key question on this amendment—is whether an applicant is disadvantaged by having decisions made by officers in performance of the statutory functions of social fund officers subject not to the Parliamentary Commissioner but to review by an independent social fund inspector. The Parliamentary Commissioner can only be approached by a Member of Parliament with all the delay implicit in that procedure. An aggrieved person has no direct access to the Parliamentary Commissioner, but he has access to the social fund inspector or the social fund commissioner in the case of maladministration by the social fund inspector.
I really believe that he is far better and more appropriately treated under the existing legislation than he would be under the Parliamentary Commissioner Act. Accordingly, I have no hesitation in asking the noble Lord once again to withdraw his amendment.

§ Lord Henderson of Brompton
My Lords, before the noble Lord sits down, he has not answered my question. It was whether he would submit this 401 matter—which was a question of the interpretation of a statute—to an independent judiciary, an independent judge. It is totally inappropriate that this issue should be decided by the Civil Service Department. In addition to that, what is the authority for saying—I accept that it is the case so far—that adjudication officers are not subject to the parliamentary commissioner? I know that that is accepted. But who made the decision? In what circumstances? Was it made by an independent judicial authority. Or was it too made by the Civil Service Department?

§ Lord Skelmersdale
My Lords, I am afraid that the noble Lord, Lord Henderson, has caught me rather on the hop. Nevertheless I must answer him by leave of the House. As I understand it, it is a decision of Parliament as expressed in the Parliamentary Commissioner Act. If I am wrong I shall write to the noble Lord.
The other matter that he cross-questioned me on I am afraid I am unable to deal with at the moment. I shall have to write to him.

§ Lord Henderson of Brompton
My Lords, I regret to say that I find that as unsatisfactory as the reply given me in Committee. As the noble Baroness, Lady Jeger, said, this is not confined solely to the fund officers. It is a matter of much wider importance, and this is a particular example that I am drawing to the attention of the House. Generally speaking, the interpretation of the Bill when enacted cannot be left in the hands of the Government. It must be decided by an independent judge.
I believe that those who have supported my amendment feel as strongly as I do that this is something that should be pursued. I asked those questions in Committee. I have not had a reply on Report. I can only say that I hope that by Third Reading replies will be forthcoming. Meanwhile I beg leave to withdraw my amendment.

§ Amendment, by leave, withdrawn.

§ Schedule 8 [Minor and Consequential Amendments]:

§ [Amendment No. 29 not moved.]

§ Lord Pitt of Hampstead moved Amendment No. 30: Page 78, line 16, at end insert—

§ ("Income Support: Pregnant women aged 16 or 17

§ 18. In Part 1 of Schedule 1A to the Income Support (General) Regulations 1987, after paragraph 4 there shall be inserted the following paragraph— 4A. A person who is pregnant."").

§ The noble Lord said: My Lords, I shall speak also to Amendment No. 31. I shall not repeat what I said on Second Reading. The purpose of both amendments is to help pregnant women. The first is to help the pregnant 16 to 17 year-old who does not receive any benefit until the last 11 weeks. I do not think that it is in the interests of the child that that should go on. I hope that the Minister, in the period between the Committee stage and now, has given some thought to that and can bring me some better 402 answer than I was given then. I do not think that this is a right thing for us to be doing.

§ My second amendment seeks to give the family premium to mothers bearing their first child. Again it is because of the cost of pregnancy and the consequences again for the child of the mother being in financial straits during that period that I feel we ought to try to help by giving the person carrying her first child the family premium. The mother expecting a second child receives family premium anyway.

§ By doing it this way, all pregnant mothers will receive the family premium. That will help them to meet the costs that go with being pregnant. I beg to move the amendment; I hope that the Minister will be able to say something nice and helpful.

§ Earl Russell
My Lords, I hope that the House will forgive me at this time of night for supporting the amendment.

§ Baroness Jeger
No.

§ Earl Russell
I can only beg the pardon of the noble Baroness. This is a point of some importance. Some of the cases in the briefing papers are really quite harrowing. I do not want to quote them at length at this time, but the reduced rate of income support for teenagers is particularly illogical in the case of pregnant women. I cannot believe that it is doing anything other than giving severe hardship. Although I know that the sins of the fathers are visited on the children, I do not think that the state needs to be an accomplice in the process.

§ Lord Skelmersdale
My Lords, I am not sure that I can help the House very much, especially in relation to Amendment No. 31. As the amendment is drafted, the only people who would get the family premium under this amendment who do not already qualify for it would be couples expecting their first child. I am not at present persuaded that pregnancy of itself gives rise to special needs over and above those already catered for by the issue of free milk and vitamins and the social fund maternity payment, which would justify a special premium. But even if I were, I could not see any justification in giving such a premium for a minority of pregnant women only.
Furthermore the amendment would mean that the premium would be payable from the very beginning of pregnancy—presumably from the moment of conception. I am not certain that it is possible to establish the precise date of this event; but even if the marvels of modern medicine could do so, it could only be done once preganacy had been confirmed some weeks later. This would be very cumbersome to operate. It would inevitably result in retrospective payment in every case, including those where, sadly, the woman loses a child which she was unaware she was carrying. I am afraid that this is just not practical.
Amendment No. 30, which is grouped with Amendment No. 31, seeks to extend entitlement to income support to young women aged 16 or 17 who are pregnant whatever the stage of their pregnancy.
403 I have already mentioned that while most 16 and 17 year-olds are not entitled to income support, we have ensured that the most vulnerable groups are. One of these groups is those who are pregnant and within eleven weeks of the expected date of confinement or who, at a time before this date, are incapable of work because of illness. Noble Lords should note that these are not rules which were made up last year specially for 16 and 17 year-olds who are pregnant. They are the same rules that apply to all pregnant women who claim income support. They too are normally required to be available for work up to the 11th week before the expected date of confinement.
We have guaranteed the offer of a YTS place to all young people who want one. The guarantee is being honoured. It includes young women who are pregnant. Those who are on YTS of course get more each week than they would get on income support. I remind noble Lords that if any pregnant young woman were to meet any problems in getting a YTS place, the training agency would make arrangements for suitable training to be provided for so long as she or her doctor considered appropriate. There is therefore no justification for giving entitlement to pregnant girls before the point at which they are no longer required to be available for work.

§ Lord Pitt of Hampstead
My Lords, I do not suppose that there is any point in pursuing the matter. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ [Amendment No. 31 not moved.]

§ House adjourned at twelve minutes past midnight.