HL Deb 25 June 1990 vol 520 cc1273-325

3.9 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Henley.)

On Question, Motion agreed to.

Lord Carter moved Amendment No. 45: After Clause 14, insert the following new clause: ("Calculation of housing benefit .—(1) Persons who are provided with accommodation under Part III of the National Assistance Act 1984 in premises managed by a person other than a local authority or a landlord who is a registered housing association shall be eligible for housing benefit and the Secretary of State shall prescribe that the amount of housing benefit payable shall be calculated based on the average eligible rent and eligible service charges for residential care homes and nursing homes (excluding homes where the landlord is a registered housing association) in the relevant area. (2) Persons who are provided with accommodation under Part III of that Act in premises where the landlord is a registered housing association shall be eligible for housing benefit on the eligible rent and eligible service charges calculated on the same basis as for any other claimant in private rented accommodation. (3) "Registered housing association" has the meaning set out in the Registered Housing Associations Act 1985; eligible rent" and "eligible service charges" have the meanings set out in the Housing Benefit Regulations.").

The noble Lord said: My Lords, this amendment deals with a problem which we have discussed during consideration of both this Bill and the National Health Service and Community Care Bill. The problem has moved from Bill to Bill but we have not had a satisfactory answer from the Government. We have tabled the amendment to see whether we can take the matter any further.

We are concerned here with the situation which will arise next April when it is clear that it is the Government's intention that housing benefit should play a substantial part in financing the costs of residential care. They propose that rather than calculate housing benefit for each case, as would happen with a tenant, the local authority should have a formula so that a notional rent would be paid to all residents who are placed by local authorities in all types of homes.

There has been a wide degree of participation by the Department of Social Security. However, we still have no concrete proposals as to how housing benefit will be calculated and paid from next April. I am sure the Minister is aware that there is considerable concern among voluntary organisations which run residential projects that the proposal or the formula from the Government will result in a very low notional rent which will not reflect the true costs of rent and services provided. They fear—this point has been made on many aspects of this Bill and the National Health Service and Community Care Bill—that unless we have some concrete proposals in the near future local authorities will not have sufficient time to prepare for next April and we could see considerable delays in the payment of housing benefit, as happened on the last occasion when such changes were made.

We are also aware from reports in the press that local authorities are having to draw up their public expenditure bids for running community care services from next April. They still do not know how much of their expenditure will come through housing benefit and how much through revenue support grant. I should be the first to admit that the formula proposed in the amendment may not be perfect, but it gives the Minister an opportunity to say how far the Government have moved towards proposing a satisfactory formula. I beg to move.

Lord Henley

My Lords, as the noble Lord said, this amendment has already been discussed twice. It was discussed during the debate on the National Health Service and Community Care Bill and also in Committee on this Bill.

I am afraid I have to say that, once again, I do not think that there is much I can usefully add to what I said when this matter was last before the House. The Government made a commitment in the White Paper Caring for People to consult the local authority associations on the method of calculating housing benefit for this new category of cases from April next year. Those consultations are still under way. Bearing in mind the complexity of assessing housing benefit for this type of accommodation under the normal rules, we have proposed that housing benefit for people in residential care should be based on a notional rent. We believe that there would be considerable administrative advantages in such an approach.

Having said that, I can only assure the House that we are giving careful consideration to all the issues raised by the amendment as part of the consultation process with the local authority associations. I am afraid that I cannot go any further than that at this stage. However, I hope that in the light of that explanation the noble Lord will feel able to withdraw his amendment.

Lord Carter

My Lords, we seek clarification on this point. We tried extremely hard, as the Minister acknowledged, to gain some idea of the time-scale involved so that the local authorities and voluntary organisations will know how to plan their activities. Can the Minister give us any hint as to when these consultations will be completed and their likely outcome?

Lord Henley

My Lords, I am afraid that I cannot help the noble Lord as regards the timing of the completion of the consultations. We have another week before what I understand is the suggested day for Third Reading; that is, next Monday. I hope that by that time I shall be able to give at least a hint as to when the consultation process will be completed.

Lord Carter

My Lords, I am not sure whether the Minister's remarks amount to an assurance. However, in the light of his final words, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.15 p.m.

Lord Carter moved Amendment No. 46: After Clause 14, insert the following new clause: ("Carer's premium . In section 22 of the 1986 Act, after subsection (9) there shall be inserted— (10) In respect of a carer, the applicable amount shall include a carer's premium. (11) For the purposes of subsection (10) above, a "carer" is a person—

  1. (a) who is entitled to invalid care allowance or a person who would receive invalid care allowance except for the provisions of the Social Security (Overlapping Benefits) Regulations 1979; or
  2. (b) who would be entitled to invalid care allowance if he were not at pensionable age.".").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendment No. 47. These amendments were moved in Committee by the noble Baroness, Lady Seear. In our view, we received a very unsatisfactory reply from the Government at that time. We made it clear that we would return to the matter on Report.

The proposed new clause is aimed to extend eligibility for the carer's premium to carers over pension age, and to increase invalid care allowance to the level of other long-term income maintenance benefits, such as the basic retirement pension.

Lord Henley

My Lords, I am sorry to interrupt the noble Lord, but can he confirm that he is speaking to both amendments?

Lord Carter

My Lords, I am moving Amendment No. 46 and speaking also to Amendment No. 47.

In discussions on this Bill and also on the National Health Service and Community Care Bill there have been tributes from all sides of the House to the commitment and the contribution of informal carers to community care. However, we recognise that the current provision for carers is poor. The low level of financial support which is available to carers does not take fully into account the loss of earnings and the loss of opportunity to build up, for example, occupational pensions for their retirement. We believe that an adequate, independent income for all carers would be an important step towards proper recognition of their contribution. We all know that the Government save an enormous amount of money as a result of the unpaid services of carers.

We are aware of the Government's proposal as regards the carer's premium, which means that there will be an increase of £10 for income support, housing benefit and community charge benefit. However, that discriminates against the older carers as the invalid care allowance can only be awarded to people who are entitled to the allowance before reaching pension age. Anyone who starts to care after pension age—and this is a situation which will continue to occur as the average age of the population increases—will not be eligible for the carer's premium. In the same way, a carer who started to care before reaching pension age but who did not or was unable to claim the invalid care allowance will also not receive the carer's premium.

We would like to see the carer's premium awarded to all carers who fulfil the conditions for the invalid care allowance, apart from the upper age limit. An increase in the invalid care allowance, which is the subject of Amendment No. 47, to the level of other long-term income and maintenance benefits would be an important move forward. It would especially help those people who are unable to receive income-related benefits due to their savings, including those approaching pension age who have put aside some money for their retirement.

In Committee we drew attention to the excellent report entitled Caring for Carers which was produced by The Sunday Times and the Crossroads Care organisation. In its conclusions on the survey which was carried out the report said: Carers wanted to be heard and they wanted to have resources to care. Two-thirds of the respondents felt that no one ever listened to them, that no one ever cared for them. Nearly all wanted extra resources so that they could continue to care, and care effectively for their loved one". I believe that the report was published on the day we discussed the matter in Committee. The Minister obviously had not had an opportunity to read it. However, it would be interesting to know now whether he has had time to read the report and whether he agrees with us that it illustrates very graphically the urgent need for these two amendments. I beg to move.

Baroness Seear

My Lords, I rise to express my support for these two amendments to which I have attached my name. I think that the relevant points have been made and I do not wish to take up too much of the time of the House. However, underlying both amendments is the case for carers to be considered as people who are doing a job of work rather than people who are just having a contribution made to their income.

The amount saved by the state by having people looked after by carers in their own homes rather than being in institutions is so great, and the work undertaken so demanding, that surely it is reasonable that such people should be given much more support than they receive at present. Invalid care allowance is currently at a very low level. It is quite inadequate to compensate for the kind of work which carers are called upon to carry out.

I should especially like to stress the importance of looking at the position of people who start caring after they reach pension age. The additional costs and strains associated with caring are not related to whether one is above or below pension age; they are just as real when people are over pension age. I very much hope that the Government will think again about this restriction.

Earl Russell

My Lords, I should like to speak in support of the amendment, and to ask the Goverment whether they can recognise a pistol when they see one. I have been looking at the fifth report of the Select Committee on Social Services of another place. It quotes the Royal College of Nursing to the effect that carers are becoming a scarce resource, for reasons that I believe I do not need to go into. It also quotes and accepts the estimate that carers are at present saving the Exchequer £24 billion a year. That is a considerable sum. It is a level similar to that for the whole of the budget for defence and education. If carers should lay down the burden, Ministers may then understand what I mean by a pistol.

Lord Henley

My Lords, as noble Lords have said, we have debated this issue before. I am not sure that I can take the House much further than I did in Committee. We recognise the important role that carers play in the community. We should look at the help that the Government have given, which has increased significantly over the past few years.

Expenditure on invalid care allowance has increased from £8 million in 1978–79 to £184 million in 1988–89. Carers will also benefit from several measures taking effect this year. The invalid care allowance earnings limit has increased from £12 to £20 plus allowable expenses; the allowance will become payable to more carers through the extension of attendance allowance to babies under two and people with a terminal illness; and an additional £10 premium as the noble Lord, Lord Carter, said, is being introduced in the income-related benefits for people receiving ICA.

The noble Lord referred to the Crossroads Report. As he said, it was published on the day the amendment was moved in Committee. He asked whether I had seen it. I have had a look at the report, as I undertook to the noble Baroness, Lady Seear, that I would. We recognise carers' financial needs and we shall keep the report's findings in view in our continuing monitoring of the help provided for disabled people and their carers.

The first amendment seeks to extend the new carer's premium to people who start caring after pension age. I am afraid that that is as far as I can go towards satisfying the noble Lord, Lord Carter. As I believed I advised the Committee, the carer's premium will not be available to people who start caring after pension age. That is because the ICA is not available to people who start caring after pension age. That is the crux of the issue. ICA is not then available because it is an income maintenance benefit. It compensates carers of working age for lost earnings opportunities, but when people reach pension age their relevant income benefit is retirement pension. We have no plans to pay one income maintenance benefit in addition to another, as the amendment proposes. However, as I have already promised, we shall monitor the new premium once it is introduced.

The second amendment seeks to increase the weekly rate of invalid care allowance (currently £28.20) to the same rate as the standard, basic weekly retirement pension (currently £46.90). I can only reiterate what I said on this matter when it was discussed before in Committee. The cost of paying invalid care allowance at retirement pension rate at over £100 million prohibits acceptance of the amendment. The social services committee, as my noble kinsman said, in its recent report, included that proposal in its list of long-term recommendations of improvements for carers. The committee did, however, recognise that such a change is not appropriate at the present time. In considering the committee's report as a whole, we will need to take account of all competing priorities in the area of social security benefit expenditure. The committee did not put a price on its recommendations but they appear to be costly. I hope therefore that the noble Lord will feel able to withdraw the amendment.

Lord Carter

My Lords, as I expected, that was a disappointing answer. It is clear that the Government do not intend to do anything for carers over pension age or for those who are under pension age who are ineligible for ICA. We hear that the findings of the Crossroads Report will be kept in view and that the situation will be monitored. As the noble Earl, Lord Russell, said, the cost of the provision (£100 million) must be set against the savings to the community of carers' unpaid efforts of about £24 billion. We have tried hard to get the Government to change their mind. The only thing we can do is to ask for the opinion of the House.

3.25 p.m.

On Question, Whether the said amendment (No. 46) shall be agreed to?

Their Lordships divided: Contents, 71; Not-Contents, 120.

Ardwick, L. Carter, L.
Aylestone, L. Cledwyn of Penrhos, L.
Birk, B. Cocks of Hartcliffe, L.
Blackstone, B. Darcy (de Knayth), B.
Bottomley, L. David, B.
Briginshaw, L. Davies of Penrhys, L.
Broadbridge, L. Dean of Beswick, L.
Brooks of Tremorfa, L. Denham, L.
Bruce of Donington, L. Donaldson of Kingsbridge, L
Carmichael of Kelvingrove, Ewart-Biggs, B.
L. Ezra, L.
Fisher of Rednal, B. Morris of Castle Morris, L.
Fitt, L. Nicol, B.
Foot, L. Northfield, L.
Gallacher, L. Peston, L.
Galpern, L. Phillips, B.
Graham of Edmonton, L. Richard, L.
[Teller.] Rochester, L.
Hampton, L. Ross of Newport, L.
Hanworth, V. Russell, E.
Harris of Greenwich, L. Sainsbury, L.
Hirshfield, L. Seear, B. [Teller.]
Hollis of Heigham, B. Seebohm, L.
Howie of Troon, L. Serota, B.
Jay, L. Shackleton, L.
Jenkins of Putney, L. Stallard, L.
John-Mackie, L. Stedman, B.
Kearton, L. Stoddart of Swindon, L.
Kinloss, Ly. Strabolgi, L.
Kintore, E. Taylor of Blackburn, L.
Leatherland, L. Thurlow, L.
Llewelyn Davies of Hastoe, Tordoff, L.
B. Turner of Camden, B.
Lloyd of Kilgerran, L. Wallace of Coslany, L.
McNair, L. Walston, L.
Masham of Ilton, B. White, B.
Mason of Bamsley, L. Williams of Elvel, L.
Milner of Leeds, L.
Alexander of Tunis, E. Henley, L.
Allerton, L. Hesketh, L.
Ampthill, L. Hives, L. Holderness, L.
Annaly, L. Hood, V.
Arran, E. Hooper, B.
Auckland, L. Hylton-Foster, B.
Balfour, E. Ironside, L.
Barber, L. Jenkin of Roding, L.
Beloff, L. Johnston of Rockport, L.
Belstead, L. Joseph, L.
Blatch, B. Kimball, L.
Blyth, L. Lauderdale, E.
Boardman, L. Lawrence, L.
Borthwick, L. Long, V.
Boyd-Carpenter, L. Lothian, M.
Brougham and Vaux, L. Lurgan, L.
Buccleuch and Queensberry, Lyell, L.
D. McColl of Dulwich, L.
Buckinghamshire, E. Macleod of Borve, B.
Butterworth, L. Margadale, L.
Campbell of Croy, L. Mersey, V.
Carnock, L. Monk Bretton, L.
Cavendish of Furness, L. Montgomery of Alamein, V.
Cayzer, L. Morris, L.
Clanwilliam, E. Mountgarret, V.
Constantine of Stanmore, L. Mowbray and Stourton, L.
Cork and Orrery, E. Moyne, L.
Cottesloe, L. Munster, E.
Cox, B. Murton of Lindisfarne, L.
Craigavon, V. Nelson, E.
Cullen of Ashbourne, L. Norrie, L.
Cumberlege, B. Nugent of Guildford, L.
Davidson, V. [Teller.] O'Brien of Lothbury, L.
De Freyne, L. Orkney, E.
Denham, L. [Teller.] Orr-Ewing, L.
Dudley, B. Pearson of Rannock, L.
Eccles of Moulton, B. Porritt, L.
Effingham, E. Quinton, L.
Elibank, L. Rankeillour, L.
Elliot of Harwood B. Reay, L.
Ferrers, E. Renton, L.
Foley, L. Rodney, L.
Fraser of Kilmorack, L. Romney, E.
Gainford, L. St. John of Bletso, L.
Gardner of Parkes, B. Saltoun of Abernethy, Ly.
Gibson Watt, L. Sanderson of Bowden, L.
Gray of Contin, L. Selborne, E.
Gridley, L. Sempill, Ly.
Hailsham of Saint Sharples, B.
Marylebone, L. Shaughnessy, L.
Hailsbury, E. Skelmersdale, L.
Havers, L. Stanley of Alderley, L.
Strathclyde, L. Ullswater, V.
Strathmore and Kinghorne, Vaux of Harrowden, L
E. Vinson, L.
Strathspey, L. Wade of Chorlton, L.
Swinfen, L. Wedgwood, L.
Taylor of Hadfield, L. Wharton, B.
Thomas of Gwydir, L. Whitelaw, V.
Thorneycroft, L. Wolfson, L.
Trumpington, B. Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.32 p.m.

[Amendment No. 47 not moved.]

Lord Carter moved Amendment No. 48:

After Clause 14, insert the following new clause:

("Protection of carers who remain in the home.

.—(1) Section 22 of the Social Security Act 1986 (Calculation of Income Related Benefits) shall have effect subject to the amendments specified in subsection (2) below. (2) Where a person has been admitted permanently to accommodation provided under Part III of the National Assistance Act 1948, nursing home or hospital, the Secretary of State shall prescribe that in calculating the claimant's capital, any dwelling shall be disregarded if it is occupied in whole or in part by a person—

  1. (a) whose sole or main place of residence is that dwelling; and
  2. (b) who was providing a substantial amount of care on a regular basis to the claimant (and who was not employed to provide such care by any body in the exercise of its functions under any enactment) prior to the claimant's admission into care or hospital.").

The noble Lord said: My Lords, we discussed a similar amendment when dealing with income support in Committee. This amendment deals specifically with the treatment of the capital value of someone's home when he or she goes into permanent care. When such persons claim income support, the value of the home that they no longer occupy is taken into account and treated as a capital asset. Anyone with more than £6,000 is not allowed to claim income support. While someone is in a home or hospital on a temporary basis, the value of the house is disregarded because it is assumed that the owner will want to return there.

The difficulty arises—and I believe that the Government recognise this—where someone who owns his own home needs permanent care. In this case the home is immediately treated as a capital asset. That can be a tremendous problem, obviously, if a carer is living in the home. That carer may be a friend or relative and may have given up his or her own home to live with and care for the person concerned. The income support legislation at present allows the home to be disregarded as a capital asset if it is occupied by the claimant's spouse or someone who is himself or herself elderly or incapacitated. However, this disregard does not apply to a carer who is under pension age and is neither chronically sick nor disabled.

The practical effect of this is that the value of the home prevents the claimant from receiving any income support and the carer is faced with either providing financial support for the resident or having to move out of the home so that it can be sold and its value realised. The amendment would ensure that the value of the home would be ignored when the home is owned by the claimant but there is living there a carer who had been caring for the claimant before the admission into care or into a long stay hospital. I beg to move.

Baroness Seear

My Lords, I hope that the Government will find it possible to accept this. In the previous amendment we asked for sums of money which the Government—rightly or wrongly—regarded as considerable. The amount of money involved in this amendment is negligible. I hear the microphone whistling, I might wish to make a noise like that at the Minister, but I do not know how to produce it deliberately! The amount of money that this amendment would cost, in comparison with the amount involved in the previous amendment is negligible, but in a number of cases it would make a tremendous difference to the people concerned.

Many carers are not relations and are not themselves elderly and disabled. They are friends who have either been living together for a long time and ore or other of them falls ill; or they are people who have moved in. They have given up their own home and moved in with the person concerned in order to care for him or her. It is extremely harsh that people so placed should have to move out in order that the home can be sold to meet the costs of the person in need of care in an institution. Considering what, in relation to the cost, the amendment would achieve for a small number of people who are in any case under heavy handicaps, it is not a great deal to ask. I hope that the Government will feel on this occasion that they can meet the requirements of the amendment

Earl Russell

My Lords, I too wish to support the amendment. Treating a house as a capital asset is one of the absurdities of present financial thinking. It accounts for much of the credit boom, among other things. Even if it is an asset, it is not a negotiable asset. If people sell their house, where will they live afterwards? I remind my noble kinsman that we shall debate homelessness in a few moments. He might find it rather expensive to turn this amendment down.

Lord Henley

My Lords, although I cannot accept the amendment, that is not to suggest that I am not without sympathy for its aims. I have a feeling that my noble kinsman has gone slightly too far. There are many ocasions when the value of the house is not taken into account as capital. Here we are dealing with the relatively few cases where the carer is under 60 and is not a partner of the disabled person going into care. That carer potentially loses his or her house because it is then counted as part of the owner's income.

I am sympathetic to the aims of the amendment, but if noble Lords will bear with me, I must explain some of the problems. I am sure that the House will appreciate that the needs of the disabled person involve a cost to the taxpayer. The noble Baroness quite rightly mentioned this and said that that cost was negligible. However if the amendment were agreed, the cost to the taxpayer would have to be considered. For example, there is the argument for saying that the value of the home which would have been fully disregarded while the disabled person was living there and claiming benefit should now be realised so that he or she can enjoy a few luxuries in the remaining years.

In terms of cost to the taxpayer, we have unfortunately no clear picture of the number of people entering Part III, a nursing home or hospital, on a permanent basis in the circumstances of the amendment. However, our best guess—and I stress that this is very much a guess—is that in income support alone the cost might be in the region of £18 million.

The current rules are not unsympathetic to the needs of the carers. When disabled people enter Part III, a nursing home or hospital, they often do so on a temporary basis. During this period, which can be considerable, the property is fully disregarded because it is still their home. When the stay becomes permanent, there are other disregards which may help. As I said earlier, the property is fully disregarded if it is occupied by a partner or by a relative of the family who is 60 or over or is incapacitated. Those concessions will apply to many carers.

Although I said I had some sympathy with the amendment, I cannot accept it in its current form as I feel it is drafted too widely. I have in mind, for example, that a concession may be reasonable for some hard cases, such as a daughter who is in her late fifties and has spent over 30 years caring for her disabled parent. However, the same arguments would not necessarily apply to someone who had provided care for only a matter of months and is perhaps in full-time employment.

If there is a need for an amendment, the circumstances in which it is to apply have to be closely defined. The circumstances would have to be considerably tighter than those proposed in the amendment today in order to protect the needs of all parties, including the taxpayer.

The House may remember that a similar amendment was proposed to last year's Social Security Bill. It was considered in another place and the then Parliamentary Under-Secretary, my honourable friend Peter Lloyd, said he would consider whether an amendment was possible in order to catch the most vulnerable carers. Since then we have monitored the position through ministerial and other correspondence. To our knowledge no case has arisen for which the existing rules do not offer a solution. As I have said, I am unable to accept the amendment in its present form. I therefore ask the noble Lord to withdraw it on the understanding that the Government are alive to the situation and will continue to monitor the position to see whether anything more needs to be done for carers.

Baroness Seear

My Lords, before the noble Lord sits down, can he possibly go one step further? If I may say so, he has expressed an unusual degree of sympathy for the amendment. Will he take it away and see whether he can come back at Third Reading with a more restricted amendment that would be acceptable to the Government? Will he consider doing that?

Lord Henley

My Lords, I cannot give an assurance that I could manage that in a week. The same problem arose last year and my colleague Mr. Lloyd said he would continue to monitor the position. However, as I have said, the problem is that it is difficult to find a way of drafting an amendment appropriately to make it sufficiently tight. I cannot give the noble Baroness an assurance that I can come forward with anything at Third Reading. If the noble Baroness cares to try herself, she may—

Baroness Seear

My Lords, I shall certainly try, with or without the Minister's permission, to bring an amendment back at Third Reading.

Lord Henley

My Lords, I did not intend to imply that the noble Baroness needed my permission. She knows she does not need that. However, if she wishes she can have another bash at this matter, but I give no assurance that the Government will necessarily accept what she may come forward with.

Lord Carter

My Lords, I think that is what is called half a loaf. The Minister said that the Government's best guess at the cost of the measure was £18 million. However, he then said that the Government, in monitoring the situation, had found that no cases had arisen which could not be solved by the existing rules. I found that rather difficult to understand.

3.45 p.m.

Lord Henley

My Lords, I said that the cost of implementing this amendment, as the noble Lord has drafted it, would be in the region of £18 million, at a rough guess. The noble Lord has drafted the amendment far wider than I think even he would accept is necessary. I said that I could envisage some hard cases arising. I mentioned a particular example. However, in our year's monitoring we have not come across any such cases.

Lord Carter

My Lords, I am extremely grateful to the Minister for that explanation. I can assure him that the noble Baroness, Lady Seear, and I will come back at Third Reading with a suitably drafted amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Amendments relating to the social fund]:

Earl Russell moved Amendment No. 51: Page 17, line 4, at end insert: ("(2A) In section 33(10) of that Act, at the end there shall be added the words ", but no such general direction shall prohibit payments for deposits for secure accommodation." ").

The noble Earl said: My Lords, the purpose of this amendment is to make it possible to use the money made available through the social fund for the paying of deposits. Any of us who has had the experience of counselling people who are in trouble in one way or another knows that very nearly the first question one has to ask is, "Have you got anywhere to live?" Some 22 per cent. of those who apply for help to the social fund do not have anywhere to live. Some 64 per cent. of those who optimistically apply to the social fund for deposits do not have anywhere to live.

The rules governing the operation of the social fund—my noble kinsman made this clear on Second Reading—permit it to be used to pay rent in advance but not to pay deposits. I quite appreciate that the line must be drawn somewhere, but drawing it at this point rather reminds me of Sir Hudibras who could by analytic skill divide a hair betwixt south and south-west side. I do not see why the line should be drawn in this place. I must confess that the principle behind it escapes me. The effect of it is to make it very nearly impossible to house applicants who come before the social fund needing somewhere to live. The effect of making it very nearly impossible to house them is to make it very nearly impossible to help them effectively, and therefore to make it very difficult to use the money which is already being spent through the social fund in any cost-effective way.

People who apply to the social fund are not likely to be the kind of people who are expected to buy their own homes. It is not likely that they are going to be able to obtain local authority housing. We are told that by 1992 we can expect the number of local authority dwellings being built to be down to something in the region of 6,000. The sums available to house people through housing associations are going down and there are considerable reports of trouble. Therefore the private rented sector is in effect the only hope. That means that those people have to get into the private rented sector which means they must face the fact that the taking of deposits in the private rented sector, for good or ill, is becoming more frequent. I do not wish to argue whether that is good or ill. We have to accept that, like Mount Everest, it is there. It seems that the Government have no objection to it. Indeed, in the Housing Act 1988 they seem to me to have encouraged the taking of deposits.

We have here a somewhat schizophrenic attitude. The Department of Social Security argues that making money available for deposits will encourage landlords to take them so it should not be given, while the Department of the Environment, being aware that landlords will not stay in business unless it is to their profit, positively encourages them to take deposits. I wish the Government would let their left hand know what their right hand is doing. They try to argue that, in effect, if such an amendment were carried it would prime the market for deposits. My noble kinsman said on 22nd May that single payments were, actually stimulating demand for deposits from landlords".—[Official Report, 22/5/90; col. 809.] He was referring there to the situation before 1986.

The arithmetic of that is a little unexpected. In 1986 under the single payments scheme deposits were costing £3 million. In 1988–89 the total amount spent on housing out of GNP was £33 billion. There is a slight disproportion between those figures. In terms of market share I do not see that it is particularly likely that the amount spent on deposits through social security will have a significant effect on the overall state of the housing market.

The Government's argument here seems to be essentially one of cost. I can understand that, as it is a real problem, but my argument here is essentially one of waste. I believe there is no point in spending the money unless one can spend it effectively. Until people can get somewhere to live they cannot get a job, and until they can get a job they cannot get off benefit. That is the object we should be thinking of all the way through, if we are at all conscious of cost. In effect, calculating by the percentage of applicants and the percentage of the social fund money involved, the Government seem to me to be saving £3 million and wasting £40 million. That does not seem to me to be awfully good arithmetic.

I admit that when I put down this amendment I contemplated asking the House to vote on it. However, since then, last Friday to be precise, we have had a statement by the Minister's honourable friend Mr. Spicer about homelessness which I regard as at least a shuffle in the right direction. The Minister's honourable friend Mr. Spicer said some quite interesting things on the subject. He said that talks will be held with voluntary groups to establish a special fund to enable people living in hostels to get over the first hurdle of finding a deposit in order to rent flats. In other words, the Minister's honourable friend has diagnosed exactly the same problem, as I have, but he is talking of setting up a special fund.

There are arguments in terms of administrative proliferation and unnecessary cost against setting up unnecessary funds when the fund that is qualified to do the job is already in place. Therefore I shall ask my noble kinsman whether before Third Reading he will undertake to consult with his honourable friend Mr. Spicer to see whether between them they can evolve any practical way forward on the subject. I would much rather proceed by consultation than confrontation if possible. It is in that spirit that I beg to move.

Lord Carter

My Lords, I was very pleased to support the amendment from these Benches when we discussed it at Committee stage and I am pleased to support it again today. It may help the House if I give a brief idea of the size of the problem in terms of individual payments.

A survey was carried out by the National Association of Citizens Advice Bureaux in March of last year, two months after the Housing Act 1988 came into force. The survey covered 735 of its clients who were private tenants. It showed that for clients who had taken up their tenancies since January 1988 the average amount of payments for rent in advance was £195, the average deposit was £211 and the average premium was £85.

In the experience of the citizens advice bureaux, in most instances such sums are quite beyond the means of clients on income support. That means that unless they are able to obtain help from another source, such as the social fund, clients on benefits are unable to resolve their housing problems by means of the private rented sector. As we know, deposits to secure accommodation are specifically excluded by directive from the social fund. The amendment attempts to deal with the problem and I shall be extremely interested to hear the answer that the Minister gives to the noble Earl, Lord Russell, regarding the fund that was proposed only last week by Mr. Spicer.

Lord Henley

My Lords, perhaps I may say immediately that I fully appreciate the concern of both my noble kinsman and the noble Lord, Lord Carter, for those who find themselves homeless. In replying, I do not believe that I should go over old ground that was covered at Committee stage. However, I should like to comment briefly on our experience under the old single payment scheme.

My noble friend Lord Jenkin presented the main arguments to the Committee in a very clear and cogent manner. He said that to provide deposits to secure accommodation did not help to solve the problem of homelessness; far from it. It could stimulate demand for deposits, it could result in abuse of the scheme by landlords and tenants alike, and it was unfair to people in low-paid work who did not have access to the scheme. That is why we do not feel that the social fund would be the right way to go about solving the problem.

My noble kinsman quite rightly referred to the announcement by my honourable friend the Minister for Housing, Mr. Spicer, last Friday. My honourable friend announced then a new plan to provide emergency shelters for people sleeping rough. He also explained that there would be additional "move-on" accommodation for such people as a step towards normal living. Under those arrangements the Government are allocating some £15 million in the present financial year to provide additional subsidised accommodation for single homeless people. That will take the form of direct access accommodation for people on the streets and "move-on" accommodation to provide longer-term housing for people who are currently living in hostels. There will also be discussions with the voluntary groups concerned about the possibility of establishing a special fund to enable people living in hostels to get over the first hurdle of finding a deposit in order to gain access to rented accommodation.

My noble kinsman asked whether I would consult my honourable friend between now and Third Reading next week. Of course I can give an assurance that if at all possible I shall get together with my honourable friend and consult him on this matter. I do not see the social fund as being the way forward on this matter in terms of providing money for deposits, but I am sure that my honourable friend will be prepared to consider the points that my noble kinsman has raised.

I welcome the fact that my noble kinsman said that in view of the announcement on Friday he would not press the amendment to a Division and would be prepared to withdraw it. In the light of my assurances I hope that my noble kinsman will be able to keep to his original assurance.

Earl Russell

My Lords, I should like to thank the Minister for that reply. It is a little less forthcoming than I had hoped but at least it offers me a crumb of comfort. I must confess that I find it extremely difficult to see the precise line of difference between his honourable friend's proposal and my own, save only that his honourable friend's proposal involves a proliferation of agencies. I do not see that as being a great virtue.

I was of course aware of the speech made by the noble Lord, Lord Jenkin of Roding, in Committee. I answered some of the points that he made. I cannot see the quantitative scale of the amount of money that is likely to come through under the social fund as being sufficient to have any significant distorting effect on market levels.

The problem here is that we have two separate compartments of government thinking which do not seem to meet. If there is any reasonable prospect that those two compartments might come together between now and Third Reading we might get something very much more constructive out of it. In that hope I shall beg leave to withdraw my amendment, but I very much hope that if my noble kinsman is saying that the social fund is not the way forward by the time we reach Third Reading he will come back and tell us what is. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter moved Amendment No. 52: Page 17, line 26, at end insert: ("(4A) After that subsection there shall be inserted— ("(10B) For the purposes of any general direction issued by the Secretary of State under subsection (10) above, a person in receipt of invalidity benefit or severe disablement allowance shall be treated as if he were in receipt of income support.".").

The noble Lord said: My Lords, this is an amendment that we discussed at Committee stage. At that time the Government's answer seemed to be that they recognised the problem to which we had drawn their attention but could not deal with it, either because the social fund had not been running for long enough, it would cost too much to solve the problem or it was just too difficult. We have put the amendment down again to see whether we can obtain a more helpful approach from the Government and at least a recognition that the amendment draws attention to a very real anomaly.

One of the main objectives of the social fund as outlined by the Government was that it should break new ground in the field of community care. The part of the social fund specifically concerned with achieving that objective, as we know, is the community care grants, which allow for the provision of grants rather than loans. They are intended primarily to help those in vulnerable groups such as the mentally ill, the mentally handicapped or chronically sick or disabled and to enable them to return to living in or to remain in the community. The community care grants—or CCGs as they are called—were specifically designed to help those people who under community care policies are to be encouraged to leave long-stay institutions and establish themselves in the community. We are all united in our wish to see that happen.

However, a necessary condition of eligibility for community care grant is that a person should be receiving income support or will shortly do so. However, because of their sickness and disability many people in those groups will be in receipt of disability benefits such as invalidity benefit or severe disablement allowance, which are set at slightly higher rates than income support. Therefore, we have the extraordinary situation that because of that anomaly the very people who should be helped by community care grants—a clearly definable group of people—will be prevented from doing so by a ruling that seems to run directly counter to the community care objectives that we are discussing at the moment in the National Health Service and Community Care Bill. I beg to move.

4 p.m.

Lord Henley

My Lords, during the course of the debate in Committee, I explained that to extend the help available by way of community care grants to those receiving invalidity benefit and severe disablement allowance presented us with very real problems. It would, for example, ignore other deserving groups, such as pensioners, ignore the fact that many of those receiving invalidity benefit have resources which mean that they are significantly better off than those receiving income support, and involve considerable extra funds or, alternatively, severely limit the help that could be offered to others in similar need. For those reasons I cannot accept the amendment.

However, during the course of the debate the noble Baroness, Lady Seear, tried to limit the scope of the amendment. She suggested that help should be limited to a special category of people who were leaving institutions. I then said that I hoped that it might be possible at some point to look at that suggestion. I do not intend to raise false hopes, but I believe that it would be useful to have inquiries made in this area. Even if we are not in a position to extend the scheme at the moment we may be able to do so at a later date if an identifiable group can be found.

The inquiries made so far show that the matter is not so straightforward as both the noble Baroness and I expected. Not only is it difficult suitably to define the category of people we might wish to help, but limiting an extension to those receiving invalidity benefit and severe disablement allowance perpetuates the discrimination of the original amendment. However, as I said previously, we must also resolve the question of equity and, of course, the extra cost involved. Once again I must warn the House that I cannot guarantee that there will be any change.

Finally, I must point out that to make such a change would not require an amendment to the legislation. My right honourable friend the Secretary of State would be able to make any necessary alteration to the way in which the community care grants scheme works by issuing revised directions. I trust that, in view of what I have said, the noble Lord will agree to withdraw his amendment.

Lord Carter

My Lords, I am grateful to the Minister for that reply. As he did in reply to a number of previous amendments, he trailed a hope and left us in the air about what will happen. When Ministers come to the Dispatch Box and talk about equity and extra costs I can only refer them to the poll tax.

The Minister has hinted that at least the Government are aware of the very real problem and are prepared to look at it. I believe that he gave the assurance that if they see a problem they will be able to deal with it through regulations. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 53 not moved.]

Baroness Turner of Camden moved Amendment No. 54: After Clause 15, insert the following new clause: ("Unemployment benefit disqualification . In section 20(1) of the principal act, for the words "26 weeks" there shall be substituted the words "13 weeks" ").

The noble Baroness said: My Lords, as noble Lords will recall. I moved a similar amendment in Committee. I pointed out that at present an unemployed person must wait 26 weeks for unemployment pay—that is the period of disqualification—if he is judged voluntarily to have left his previous employment. For 75 years all governments, including Conservative administrations, were happy with a disqualification period of six weeks. This Government changed it first to 13 weeks and then, without waiting for an appropriate length of time to see how that worked, to 26 weeks.

There may be good reasons for leaving employment; for instance, another offer of employment may not materialise or there may be unsatisfactory or even unsafe working conditions. Young women in particular may suffer from sexual harassment and be too embarrassed or too shy to do anything about it except leave. Such incidents occur especially to the young and vulnerable.

If the insurance officer denies the right to unemployment pay, it is of course true that there is a right of appeal. But I have served on insurance appeal tribunals. Although when I was a member of such a tribunal it attempted to put people at their ease and to make the proceedings as informal as possible, it is a daunting experience for many people, particularly if they are not represented. Most of the people who the tribunal saw had the greatest difficulty in expressing precisely what their case was about. It is also possible to go to an industrial tribunal if it is claimed that one was dismissed because the situation at work had become so impossible that one could not continue to work in it; that is the case of constructive dismissal. Again, people need to be represented at such hearings and normally they take some time to be arranged.

I cannot see that there was a great deal wrong with the six-week disqualification period which existed until relatively recently. No government can agree that people can frivolously leave their employment and then claim benefit. That is why we had the disqualification period originally. But surely 26 weeks is far too long. It can lead to real poverty, particularly for families and those people in areas where there is a relatively high level of unemployment. The Government have already tightened up the conditions for entitlement to unemployment pay; instead of simply being available, one must actively be seeking work. Surely they do not need to disqualify for a period of 26 weeks, particularly since they have not given the 13-week period a fair run to see how it works.

In Committee it was suggested by the noble Baroness, Lady Seear, that a period between six and 26 weeks should be provided in the legislation. I hope that the Government have had time to think about the matter since Committee and will now be prepared to accept my amendment. I beg to move.

Earl Russell

My Lords, on behalf of the Liberal Democrat Benches, I support the amendment. We agree with the noble Baroness that 26 weeks appears to be harsh. It is approaching what might be described on the other side of the Atlantic as "cruel and unusual punishment". We also agree that no state can encourage people wantonly to turn down jobs. However, we believe that the period is extreme. We also agree with the noble Baroness that it can be difficult for anyone outside the immediate circumstances to judge exactly a person's reasons for leaving a job. There is a possiblity of error and, therefore, there is a need for a slightly less stringent punishment.

I was a little taken aback to read in this morning's papers proposals for even further checks on availability for work—these are now proposed for the old and sick unemployed. I wonder what the Government have in mind and whether such checks are really necessary. I believe that, in all walks of life, if one is to keep one's self respect it must remain possible to say, "This is a job in which I cannot serve with honour".

Lord Boyd-Carpenter

My Lords, I hope that my noble friend will not accept the amendment. As the noble Earl will recall, we have discussed the matter in this House on several occasions and there has been no general consensus of view.

It is important to stress that unemployment benefit should not be available to people who deliberately make themselves unemployed. The noble Baroness said that there can be cases in which the people making themselves unemployed have good reason for doing so. However, as has been pointed out, there is an appeal procedure. Therefore, the argument has no bearing on what the maximum penalty should be in cases in which it is decided that the people concerned made themselves unemployed without due or proper cause.

In present circumstances it is important that it should be made clear that, just because one is a little bored with a job or feels like a change, one cannot merely slide out, draw unemployment benefit and then take up another job. It is important that deliberately to make oneself unemployed should be marked as being wrongful and should carry an appropriate and adequate penalty. It is obvious that the old six-week penalty was wholly inadequate and no one seriously defended it. I believe that we should give the current period of 26 weeks a proper run. It might turn out to have a good effect on preventing people deliberately making themselves unemployed. I hope that my noble friend will resist the amendment.

Lord Henley

My Lords, my noble friend will be pleased to hear that I have no intention of accepting the amendment. It was because the disqualification rule was not acting as a sufficient deterrent that in April 1988 the Government increased the maximum period—and I stress the word "maximum"—for disqualification from 13 to 26 weeks. Since then disqualifications have fallen dramatically. Claims have also fallen but proportionately fewer disqualifications are now being imposed. That indicates that the policy of deterrence is working.

I should like to emphasise that the period of 26 weeks is a maximum. It is for the adjudication officers to exercise judicial discretion and to decide an appropriate period of disqualification taking into account all the relevant circumstances. In fact adjudication officers are now less inclined to apply the maximum period of disqualification than they were when the 13-week option was available.

The monitoring of 10,000 cases showed that less than 64 per cent. of disqualifications were for the maximum period. As my noble friend said, an aggrieved claimant has the right of appeal to a social security appeals tribunal. That applies whether he disputes the length of the period of the disqualification, or the disqualification itself.

I believe that my noble kinsman referred to an article in the Independent this morning which announced new changes in the employment service. The change reflects the fact that older workers are now more in demand in the labour market because there are fewer young people available. The Government are keen to encourage employers to widen their recruitment of older employees by treating clients of whatever age in the same way. Now that Jobcentres and benefit services are integrating, fortnightly attendance will ensure that older clients are regularly brought up to date on the latest vacancies available and can enjoy the benefit of the full range of the employment services.

The change will apply only to new clients reaching the time when they might have been given what was called quarterly attender status. It will not apply to existing quarterly attenders. The change applies to older workers only. People with disabilities will not be affected. People who are incapable of work through sickness are exempt from the requirement to be available for work and will also be unaffected.

Bearing in mind the explanation that I have given as to why we do not feel able to accept the amendment of the noble Baroness, I hope that she will feel able to withdraw it.

Baroness Phillips

My Lords, before the Minister sits down, will he define an older worker: Who is an older worker—older than whom?

Lord Henley

My Lords, I know the noble Baroness's interests in these matters. I know she does not like to consider anyone as being older than anyone else. In the past some workers over the age of 50 who have been unemployed for a year or longer were able to sign on as quarterly attenders. That will not be the case. I know that the noble Baroness does not believe in such categories as older workers. Therefore I am sure she will accept that what the Government are doing is right, despite what my noble kinsman said about it being an attack on the older worker. As the noble Baroness does not accept that there are such groups as older workers, I am sure that she will find it easy to support the Government.

Baroness Phillips

My Lords, by leave, I certainly support older workers. The Minister has put it slightly out of perspective. I merely wish to know who is an older worker. He has given me an indication of 50 years. Luckily, because there is a shortage of school-leavers, these old 50 year-olds will have the chance to obtain a job. I am delighted about that.

Lord Henley

My Lords, I hope that I did not misunderstand the noble Baroness. I had always understood that she felt we should not discriminate against older workers; and with that the Government heartily agree.

Baroness Turner of Camden

My Lords, the Minister will not be surprised to learn that I am not at all satisfied with his response. First he has not dealt with the argument that the 13-week period has not been given much of a chance to be tested. For 75 years the disqualification period was six weeks. For reasons with which I do not altogether agree, that was found to be unsatisfactory. We then had a 13-week period. Within a very short time—two or three years—the 13-week period was change to 26 weeks. I do not find his explanations for that change satisfactory.

It seems to me that he is bearing out what the voluntary organisations have told me: that the 26 weeks is regarded as the period to be imposed in the majority of cases. The Minister has confirmed that the maximum period of 26 weeks is applied in about 64 per cent. of cases. I do not believe that the position is satisfactory. It is a very long period indeed to be without unemployment pay. Quite frankly, I share the view of the noble Earl, Lord Russell, who thought that it was a cruel punishment. I think that it is draconian—so much so that I intend to take the opinion of the House on the amendment.

4.15 p.m.

On Question, Whether the said amendment (No. 54) shall be agreed to?

*Their Lordships divided: Contents, 63; Not-Contents, 138.

Ardwick, L. Blackstone, B.
Aylestone, L. Bottomley, L.
Birk, B. Brooks of Tremorfa, L.
Bruce of Donington, L. Lloyd of Kilgerran, L.
Carmichael of Kelvingrove, L. McNair, L.
Milner of Leeds, L.
Carter, L. Molloy, L.
Cledwyn of Penrhos, L. Morris of Castle Morris, L.
Cocks of Hartcliffe, L. Nicol, B.
David, B. Northfield, L.
Davies of Penrhys, L. Peston, L.
Dean of Beswick, L. Phillips, B.
Donaldson of Kingsbridge, L. Richard, L.
Ewart-Biggs, B. Rochester, L.
Fisher of Rednal, B. Ross of Newport, L.
Foot, L. Russell, E. [Teller.]
Gallacher, L. [Teller.] Sainsbury, L.
Galpern, L. Seear, B.
Gladwyn, L. Serota, B.
Graham of Edmonton, L. Shackleton, L.
Hampton, L. Stallard, L.
Hanworth, V. Stedman, B.
Hirshfield, L. Stoddart of Swindon, L.
Hollis of Heigham, B. Strabolgi, L.
Hughes, L. Taylor of Blackburn, L.
Jay, L. Tordoff, L.
Jeger, B. Turner of Camden, B.
Jenkins of Putney, L. Wallace of Coslany, L.
John-Mackie, L. Walston, L.
Kearton, L. White, B.
Leatherland, L. Williams of Elvel, L.
Llewelyn Davies of Hastoe, B. Winstanley, L.
Alexander of Tunis, E. Fraser of Carmyllie, L.
Allerton, L. Fraser of Kilmorack, L.
Ampthill, L. Gainford, L.
Annaly, L. Gibson-Watt, L.
Arran, E. Gray of Contin, L.
Auckland, L. Gridley, L.
Balfour, E. Hailsham of Saint Marylebone, L.
Barber, L.
Beloff, L. Hanson, L.
Belstead, L. Harmar-Nicholls, L.
Birdwood, L. Havers, L.
Blatch, B. Henley, L.
Blyth, L. Hertford, M.
Boardman, L. Hesketh, L.
Borthwick, L. Hives, L.
Boyd-Carpenter, L. Holderness, L.
Brigstocke, B. Hood, V.
Broadbridge, L. Hooper, B.
Brougham and Vaux, L. Hylton-Foster, B.
Buccleuch and Queensberry, D. Jenkin of Roding, L.
Johnston of Rockport, L.
Buckinghamshire, E. Joseph, L.
Butterworth, L. Killearn, L.
Campbell of Croy, L. Kimball, L.
Carnegy of Lour, B. Lauderdale, E.
Carnock, L. Layton, L.
Cavendish of Furness, L. Liverpool, E.
Clanwilliam, E. Long, V.
Constantine of Stanmore, L. Lothian, M.
Cork and Orrery, E. Lucas of Chilworth, L.
Cottesloe, L. Lurgan, L.
Cox, B. Lyell, L.
Craigavon, V. McColl of Dulwich, L.
Crickhowell, L. Macleod of Borve, B.
Cross, V. Mancroft, L.
Cullen of Ashbourne, L. Manton, L.
Cumberlege, B. Margadale, L.
Davidson, V. [Teller.] Merrivale, L.
Deedes, L. Mersey, V.
Denham, L. [Teller.] Monk Bretton, L.
Derwent, L. Montgomery of Alamein, V.
Eccles of Moulton, B. Mountgarret, V.
Effingham, E. Mowbray and Stourton, L.
Elibank, L. Munster, E.
Elliot of Harwood B. Murton of Lindisfarne, L.
Elton, L. Nelson, E.
Fanshawe of Richmond, L. Nugent of Guildford, L.
Ferrets, E. O'Brien of Lothbury, L.
Foley, L. Orkney, E.
Oxfuird, V. Stanley of Alderley, L.
Pearson of Rannoch, L. Strathclyde, L.
Pender, L. Strathmore and Kinghorne, E
Plummer of St. Marlyebone, L. Strathspey, L.
Swinfen, L.
Porritt, L. Teviot, L.
Quinton, L. Thomas of Gwydir, L.
Reay, L. Thorneycroft, L.
Renton, L. Thurlow, L.
Rodney, L. Trefgarne, L.
Romney, E. Trumpington, B.
St. Davids, V. Ullswater, V.
St. John of Bletso, L. Vaux of Harrowden, L.
St. John of Fawsley, L. Vinson, L.
Saltoun of Abernethy, Ly. Wade of Chorlton, L.
Sanderson of Bowden, L. Wedgwood, L.
Selborne, E. Whitelaw, V.
Sempill, Ly. Wise, L.
Sharples, B. Wolfson, L.
Skelmersdale, L. Wynford, L.
Somerset, D. Young, B.

[*The Tellers for the Contents reported 63 names, the Tellers for the Not-Contents 138 names. The Clerks recorded 63 and 137 names respectively.]

Resolved in the negative, and amendment disagreed to accordingly.

4.24 p.m.

Lord Carter moved Amendment No. 55:

After Clause 15, insert the following new clause:

("Income Support for 19 year olds in full-time education

The Income Support (General) Regulations 1987 shall have effect with the insertion in regulation 14(1), after the words "(meaning of child)", of the words "or a person aged 19 who is receiving full-time relevant education within the meaning of regulation 12(a) of these regulations" ").

The noble Lord said: My Lords, the amendment was discussed at Committee stage and we withdrew it to enable us to make a careful study of the reply that was given by the noble Baroness, Lady Blatch.

Having carefully studied the remarks made by the noble Baroness we remain unconvinced by the Government's arguments. The purpose of the amendment is to restore income support payments to parents of 19 year-olds who are still at school in non-advanced education, doing GCE or A-level. Under the old supplementary benefit scheme parents with 19 year-old children who were still at school received an amount in respect of those children which included the calculation of their weekly benefit. When income support was introduced in April 1988 such payments ceased when the child reached the age of 19. A problem arises in that not only do families with 19 year-olds who are still at school lose income support and the applicable amount of child benefit in relation to that child, but if the child is an only child or the last dependent child the family premium is lost.

If the family is headed by a lone parent, the lone parent premium and the one parent benefit will be lost. We are advised that couples can lose up to £43.40 a week, which represents a drop of 47 per cent. in their weekly benefit income, and lone parents can lose up to £53£10 per week, which represents a 59 per cent, drop in income. A lone parent can be left with £36£70 a week to support both himself or herself and his or her child, out of which the parent will have to meet all of their living expenses except for housing costs. Even then they will have to find 20 per cent. of the community charge.

The parents of 19 year-olds are faced with a difficult choice: a period of financial hardship or curtailment of the child's education. The long-term effect upon 19 year-olds of loss of qualification and consequent reduced access to further education or to job opportunities is bound to affect them detrimentally. That situation arises from the arbitrary fact of the child's date of birth and can only be perceived as unfair.

The Minister will probably say in reply that, as his noble friend said at Committee stage, the Government have to draw the line somewhere. It was pointed out in Committee that local education authorities have power to make awards in cases of hardship. Do the Government seriously believe that, with the pressures and costs of implementation of the Education Reform Act and the costs of the poll tax, with the threat of charge capping, extra resources will be made available by the local education authorities in that respect?

It would be helpful if the Minister could deal with the problem that faces lone parents. Would it be possible to single out lone parents for extra help so that they can keep their children in education until the age of 19? We have seen the Government's proposals in regard to attachment of earnings in order to secure maintenance payments. That proposal will produce a substantial saving in benefits and it would be reasonable to direct some of those benefits towards the problem that is met by the amendment. If the Minister does not feel able to go all the way with the amendment, will he consider the question of lone parents? I beg to move.

Lord Henley

My Lords, we debated an identical amendment to this one at Committee stage. I regret that there is very little I can add to what my noble friend Lady Blatch said on that occasion. However, I will reiterate the main points of the Government's arguments.

There clearly must come a stage at which dependency upon parents is no longer appropriate. By the age of 19 a person is well over the age of majority, and most of them will have completed their secondary education and become independent of their parents.

Wherever the eligibility line is drawn, a small number of deserving cases will inevitably fall on the wrong side. To meet that situation, alternative statutory provision exists to alleviate hardship. Local education authorities have power to make awards to help young people in non-advanced education to complete their studies. That situation applies to children of lone parents as well as to others. The local authority has a complete discretion in relation to the amount. From the autumn of this year further help will be available for those studying at colleges of further education. That additional help will not, however, be available to those who are still at school, and I should like to consider their position further.

The noble Lord gave various figures as to potential losses of benefit on a child attaining his 19th birthday. I think the noble Lord was also taking into account child benefit; and of course he is aware that child benefit is taken into account in assessing income support. So he cannot add it on on this occasion to get the same figure.

The noble Lord also asked me to consider whether something could be done specifically for lone parents. I have to say in all honesty that I do not at the moment see any way in which they could be treated separately. If, as part of any further considerations on maintenance and support from liable relatives and so on, something could be done, no doubt we shall bear in mind the point that the noble Lord has made.

Lastly, may I say that the amendment as drafted is defective and primary legislation is also unnecessary. If after further consideration a change is to be made, we can respond at any time that is convenient by means of regulation. I shall consider these matters further; but in the meantime I hope that the noble Lord can withdraw this amendment.

Lord Carter

My Lords, I am very grateful to the Minister for that reply. I was not completely surprised by it. He said that local authorities will have complete discretion, but I believe I am correct in saying that the extra cost of any award they make will all fall onto the poll tax, because it will not be taken into account in the standard spending assessment. We all know the problems that will face local authorities next year under pressure from the Government to keep the poll tax down.

As I said, and as I think the Minister agrees, the defect in the drafting could be dealt with if the Government were disposed to accept the amendment. But I can see that they will not do so, and there is little point in pressing the amendment to a Division, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 p.m.

Baroness Turner of Camden moved Amendment No. 56:

After Clause 15, insert the following new clause:

("Equal treatment of women in occupational and personal pension schemes

.In paragraph 2 of Schedule 5 of the Social Security Act 1989, sub-paragraphs (4)(d), (4)(e) and (4)(f) shall cease to have effect.").

The noble Baroness said: My Lords, this amendment is concerned—

Lord Henley

My Lords, in moving her amendment, I presume that the noble Baroness is also speaking to my amendments which are grouped with it. Those amendments are Nos. 62B, 68A and 70.

Baroness Turner of Camden

Yes, my Lords. But I was not proposing to devote much time to them, because I hoped the Minister would explain exactly what they mean. If I may return to my Amendment No. 56, this is concerned, as it states, with the achievement of equal treatment for women in occupational and personal pension schemes. It is an overall amendment designed to achieve that objective.

As your Lordships know, we have gradually been moving towards full equality of treatment between men and women in occupation schemes for some years. For a long while we had equal access, but this by no means meant equal benefits. But over the years there have been changes designed to reach that objective.

One of the main problems in trying to achieve equality of treatment—and this was highlighted by the Occupational Pensions Board in a report as long ago as 1976—is that we have unequal state pension ages; and in this country, where we have schemes which integrate with the state scheme, that obviously gives rise to a number of anomalies and difficulties. However, it seems fairly clear from recent developments, not the least of which is the Barber judgment, that we shall have to come to terms with Europe so far as equality is concerned, and I have the feeling that the Government probably feel that they have to move in that direction as well.

The purpose of my amendment is to find out from the Minister whether the Government have yet decided what they intend to do in respect either of the Barber judgment or of the other pressures which are being exerted upon us to achieve equality in pension provision. With those few remarks, since the whole issue has been spoken to on many occasions in your Lordships' House, I beg to move.

Baroness Seear

My Lords, may I formally support this amendment? We have spoken to it on a number of occasions.

Lord Henley

Yes, my Lords. As the noble Baroness says, we have spoken to it on a number of occasions previously. As I said when I intervened at the beginning of the noble Baroness's speech, in speaking to Amendment No. 56, I shall also be speaking to Government Amendment No. 62B and to Amendments Nos. 68A and 70 which are consequential. I hope the House will bear with me if I say a little about the Barber case and its implications.

Mr. Barber was made redundant on 31st December 1980 by Guardian Royal Exchange. He was 52. He was denied his pension early, but a women of the same age would have received one. GRE's pension scheme had a higher normal pension age for men than for women and the early pension rules followed suit.

The case went to the Court of Appeal which sought the European Court's opinion on specific questions, so that the Court of Appeal could decide the case. In the event the ECJ ranged much further, pronouncing on wider issues affecting occupational pensions schemes. In particular, the court said that benefits from contracted-out occupational pension schemes must be paid to men and women from the same ages.

Let me say at this point that the ruling does not affect state pensions. Different state pension ages for men and women are specifically permitted by the first Equal Treatment Directive made by the Council of Ministers in 1979. That is not in question.

The Government, like the pensions world, have studied the Barber judgment in considerable detail. I have to tell the House that certain aspects of that judgment are by no means clear. I understand that many eminent figures in the pensions world are unclear as to the precise meaning of the judgment. The Government are considering the legal implications, have identified the need for a new amendment, and are looking to see whether a greater degree of legal certainty is possible. But at the end of the day, only the European Court itself can clarify how it intended its decision to apply. It is not yet clear whether an early opportunity will arise to obtain the court's clarification.

Let me first consider the effect of Amendment No. 56. The noble Baroness's amendment would remove each of the derogations in Schedule 5 to the 1989 Act. This would mean that from 1st January 1993, occupational schemes would be required to have the same pension age for men and women, to pay widowers' benefits on the same terms as widows' benefits and to provide the optional rights without regard to the member's sex. Paragraph 3(3) of the schedule would still continue to exclude rights and obligations accruing in respect of pre-1993 service. Accordingly, the amendment would require equality only in resepct of pensionable service after 1st January 1993.

The amendment appears largely superfluous in respect of pension age and survivors' benefits. The amendment would not achieve anything not already accomplished by the Barber judgment. Indeed, the amendment would not require until 1993 what Barber already requires from 17th May 1990. It is not clear how far the provisions in the 1986 Directive and Schedule 5 to the 1989 Act will still need to come into effect in the light of Barber. The Government will take account of legal advice on the relationship between Article 119 and the Directive before making a commencement order in respect of the schedule. In the meantime, I invite the noble Baroness to withdraw her amendment.

I now turn to Government Amendment No. 62B. The Government have of course been examining the consequences of the court's ruling in the Barber case; in particular, as it might affect contracting-out from the state earnings related pension scheme. Legal advice is that there is a specific problem for occupational money purchase schemes, referred to, I understand, in the pensions world as COMPS; that is, Contrated Out Money Purchase Schemes.

The problem arises from the conflict between the court's ruling in the Barber case, that occupational schemes must equalise the age at which pensions come into payment for men and women, and the current requirement that such schemes may contract out of the state scheme only if they pay the proceeds of investing the minimum required contribution—known as protected rights—to their members at the age of 60 for women and 65 for men. COMPS schemes cannot do this and be consistent with the court's ruling. The aim of the amendment is to provide the necessary framework to enable COMPS schemes simultaneously to remain contracted out and meet the court's requirements.

The amendment provides that COMPS, which put the protected rights into payment at any age from 60 to 65, may continue to be contracted out. Its effect will operate as from 17th May this year—the date of the Barber judgment.

Like other pension schemes, COMPS must of course take legal advice about the implications of the European Court's ruling for their own circumstances. The amendment means that they will be able to pay benefits derived from protected rights from the same age for men and women and remain contracted out of SERPS.

I hope that I have been able to make clear the new arrangements that Amendment No. 62B seeks to provide for COMPS schemes. There is no similar conflict between Community and national law in the case of other contracted-out occupational schemes. They will be able to meet the new equal treatment requirement following Barber and satisfy the contracting-out conditions without changes to the United Kingdom legislation.

I hope that, when we reach my amendment—Amendment No. 62B—the House will feel able to accept it. In the meantime, I invite the noble Baroness to withdraw her amendment.

Baroness Turner of Camden

My Lords, I thank the Minister for that explanation, both in regard to the effect of the Barber judgment and as regards his amendment, Amendment No. 62B. I am pleased to note that the Government are apparently taking legal advice as to how next to proceed. I assume that, when that advice has been thoroughly considered, we may very well have something more to consider in the shape of legislation in order to meet the terms of the Barber judgment. In the present circumstances, there seems no point in proceeding with my amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 56A:

After Clause 15, insert the following new clause:

("Equalisation of the Pension Ages

—(1) Section 27(1) of the Social Security Act 1975 (setting different pensionable ages for men and women) shall be amended so as to set the same pensionable age for men and women which shall take effect no later than 1st January 1995.

(2) The Secretary of State by order shall determine the age at which the same pensionable age shall be set no later than 1st January 1992.

(3)The power to make an order under subsection (2) shall be exercisable by statutory instrument.

(4) Any statutory instrument containing an order under subsection (2) shall not be made unless a draft of it has been laid before and approved by resolution of each House of Parliament.").

The noble Baroness said: My Lords, this amendment concerns not the occupational or private pension schemes but state pension ages. As the Minister said when he spoke to the previous amendment, that was concerned only with occupational schemes, and the Barber judgment relates only to occupational schemes. However, the fact that we have unequal state pension ages in this country has its effect on occupational provision. We have been talking about equal state pension ages for almost as long as I can remember. As I said earlier, in its report on equal treatment in occupational pensions the Occupational Pensions Board drew attention way back in the mid-1970s to unequal pension ages as one of the basic reasons for the anomalies and inconsistencies in pension provision.

There have been two Lords Select Committees. The most recent, of which I was a member, made some recommendations which I think most of us thought were sensible and reasonable. We came down in favour of the idea of a decade of retirement between the ages of 60 and 70. We suggested a pivotal age of 63 for the payment of the state pension and with a long phase-in period as we wanted to safeguard the expectations of women who expected to receive the full basic state pension at 60. The conditions would be the same for men as for women.

As I said earlier, the state scheme pension age is important as regards occupational pension provision, as many occupational schemes integrate with the state scheme. That has led to the phenomenon of bridging pensions. They are now provided by some good occupational schemes which decided to equalise pension ages at 60. In order to make that palatable to men, they have been paying bridging pensions to stand in for the state scheme pension until the men reach the age of 65 and then qualify for the state scheme pension.

We have now been told that that private attempt at equality of treatment is not permissible under EC law as the employers will pay more to the men than to the women despite the fact that they are simply filling the gap caused by the non-payment of the state scheme pension until the age of 65. That is one of the anomalies that has arisen as a result of unequal state pension ages. I shall not refer to the Barber judgment again, except to say that it is bound to have the effect of causing us to look at state pension ages because of the interaction with occupational schemes.

I realise that this is a complicated issue. This is not the only government who have jibbed at taking action. The same could be said of previous Labour Administrations who looked at the possibility of equalising at the age of 60 and decided that it would cost too much. I have given some thought to the problem because it must be solved at some reasonably early date and the pressure is on from the various pressure groups which want to see action fairly soon. I have consulted the Equal Opportunities Commission and the formula in this amendment sets a timetable by which the Government must make up their mind and then gives another relatively short period of time by which implementation will have to be commenced.

By the end of the century, we should have done something about equalising state pension ages. Moreover, if people who are concerned with pension provision—particularly the integrated pension schemes to which I referred—are aware of the programme, steps can be taken in plenty of time to ensure that they take the necessary steps to deal with their own schemes. With those remarks, I beg to move.

4.45 p.m.

Lord Boyd-Carpenter

My Lords, as the noble Baroness said, this amendment raises big issues. She told your Lordships about the consideration that had been given over a good many years to the possibility of equalising our state pensions, or rather national insurance pensions. However, she understated the length of time that that proposal has been under consideration. I can tell the House that, when I was the Minister of Pensions and National Insurance in the late 1950s, we gave serious consideration to the issue. If the department's archives have not been scattered or damaged, my noble friend will no doubt be able to turn up that evidence.

However, the difficulty that we found was that, if you were simply to reduce the man's age to 60, the cost would be enormous and a good deal of it would go in directions in which, although no doubt very acceptable to the recipients, there was no need. On the other hand, if you were to raise the woman's age to 63, as the noble Baroness suggested, you could not do it without giving a good many years' notice. Many people plan their careers in connection with the date on which they become eligible for pension and their terms of employment are often similarly limited. If one were to move the woman's age to anything above the present level, one would, therefore, have to give some years' notice.

Apart from anything else—I clearly remember this point arising in the 1950s—one would have to carry out the process of equalisation over a good many years. Under our political system, that must involve agreement between the major parties as, unless the party which would form the alternative government agreed to the scheme, no government could give sufficient notice to enable the transition to take place properly and regularly. We therefore dropped the idea.

The ages of 60 and 65 go back to Beveridge. I do not know why they were so arranged. On the face of it, it is odd, because I believe I am right in saying that a woman's expectation of life is on average three or four years more than that of a man. The noble Baroness says that it is five years more and she may well be right. If that is so, it strengthens the point that I am making because it means, as has always been the case, that retirement pensions have involved much greater expenditure on women than on men as they have started five years earlier and have ended four, or perhaps five, years later.

Therefore, this is a very serious problem. It has now been pushed into the limelight by the European Court's decisions and because of the obvious inter-connection between the National Insurance pension and the various private pension schemes, particularly the contracted-out schemes. The position is exceedingly complicated.

I say to my noble friend the Minister that the Government must face this problem but equally, they must face it on the basis that it would take a considerable period to put into effect any change without causing real injustice or hardship.

On the abstract merits, as I say, I never understood why Sir William Beveridge chose the 65/60 discrimination. There is a very strong argument for equality. I do not believe that there is much evidence that under a system of equality, women have shorter working lives than men. Indeed, many of us know many ladies of great distinction—one does not need to look beyond this House to see such ladies—who are doing extremely useful work and who are long beyond pensionable age. Therefore, the problem must be resolved.

I should be interested were my noble friend to tell us what is the Government's thinking on this because in a way this is the biggest issue—certainly in financial terms and I imagine also in social terms—in the whole social security system at present and will be so for some years to come. I do not expect my noble friend to indulge in any precise statements of government intentions. Indeed, were he to do so that might mean that he would no longer occupy that distinguished place on the Bench, and no one would regret that more than I because he does the job so well. However, I should be grateful if he could give an indication that the Government are thinking hard about this matter and in particular as to the means to be used. I do not know whether a Royal Commission or similar body is the right solution. However, a careful study is required, not least to try to assess what change would be made as regards the ages of retirement of both men and women were the ages of entitlement to the National Insurance retirement pension to be altered. Obviously that would have very important economic as well as social effects.

I intervene in this debate only to say that this is a big issue, to which the Government must give careful consideration. At present it would be very unwise to expect them to give a snap answer to a question with which, as I have confessed to your Lordships, successive governments since 1950 have funked dealing.

Baroness Seear

My Lords, I respond briefly to the noble Lord, Lord Boyd-Carpenter. If my memory serves me correctly—and I should not like to be put on oath on this matter—I recall Lord Beveridge saying that he chose the age of 60 for women because when the new scheme was introduced, men who retired at 60 could draw a dependence allowance for their wives if, and only if, the wives had reached the age of 60. The phrase which lingers in my mind—it comes from a meeting at that time and therefore cannot be regarded as reliable—is that Lord Beveridge said that women had to be treated the same as wives. Nobody ever has, but that is another point.

There has always been an anomaly as regards the different ages. It is a great pity that the noble Lord, Lord Boyd-Carpenter, who was Secretary of State for Pensions, did not grasp the nettle in the 1950s. Had he done so, we should not now have this problem. However, because the noble Lord failed to grasp the nettle—and I should have thought that he was rather a good grasper of nettles—that does not mean that the problem can be continually pushed aside.

This is a much wider issue than merely what is contained in the Bill. Women are entitled to a pension at the age of 60 only if they have paid contributions. Of course, many women did not pay that contribution. In calculating the cost, has it been worked out how many women are paying contributions and are therefore entitled to receive a pension at the age of 60? As regards giving fair notice to women, let us take the case of a woman who is aged 45. If a woman is told at that age that she will not receive a pension until the age of 63, I do not believe that that is a grave injustice. If I was still 45—and I cannot remember when I was—I might not feel the same. However, I suspect that, because so many women did not pay contributions and a limit was put upon the age, the cost would not be as astronomical as indicated by the noble Lord, Lord Boyd-Carpenter.

I totally agree with the noble Lord, Lord Boyd-Carpenter, that we cannot continue to dodge this problem forever. The noble Baroness, Lady Turner, referred to the recommendations of an all-party committee of this House. I do not know how many more inquiries we need. That committee suggested a 10-year period in which to arrive at a pension at the age of 63 for both sexes. Again if my memory serves me right, as a basis for discussion, the same proposition was put forward by the Equal Opportunities Commission some years ago. Therefore, we are not very far from reaching agreement on this, if only the problem were tackled. I hope that the noble Lord will tell us that the Government propose to do that.

Lord Boyd-Carpenter

My Lords, I obviously misled the noble Baroness. The high costs would arise in connection with men rather than women, because men would be receiving the full retirement pension at 60 or the compromise age of 63. That would involve very large numbers. That would involve the cost of paying the pension and also the loss of a good deal of work because it would encourage earlier retirement. The men would cost the money not the women.

Baroness Phillips

My Lords, I support the amendment. I should like to make a few comments in the wider context to the noble Lord, Lord Boyd-Carpenter, to whom one cannot resist responding. If we continue to say that this matter is complicated, we shall always avoid it. All issues are complicated according to governments. Those of us who were involved with equal opportunities from the angle of sex discrimination will know that many plans which we produced were rejected because they were too complicated. I suggest that the complication arises from the introduction of the question of age. As I understand it, in the police force the number of years served determines the amount of pension paid. We need to have something as simple as that.

I believe that Lord Beveridge had something rather different in mind. At that time, not many women worked outside their own homes. I used to recommend to women that they should opt out because they could not claim the same benefits if they were married women. I am sure the strange dictum still remains as regards pension schemes—and the Minister will know whether I am right—that you cannot receive two government benefits at one time. For example, a young widow who was pregnant could not receive a widow's pension and maternity benefit. Similarly, she could not obtain unemployment benefit if she was receiving a widow's pension and yet was affected by both sets of circumstances.

I suggest that it is important that we should make a start. We cannot continually say that the matter is very complicated. Half the people who could collect the pension will be dead by the time we sort out this matter. It would have been marvellous had the noble Lord, Lord Boyd-Carpenter, grasped the nettle but surely this Government would like to do that. What a wonderful selling point that would be for them as we move towards the election. They can say that they have solved a problem which has beset governments for years. They can say that they have grasped the nettle and dealt with it.

Again, a widow's pension is determined by age. Under a certain age, a smaller allowance is paid, which increases year by year. That is unnecessarily complicated and very often is quite unfair. I hope that the Minister can say that, even if the Government cannot accept the amendment, they will look seriously at this matter. This Bill gives them the opportunity to do so.

5 p.m.

Lord Vinson

My Lords, I support the amendment in general terms of moving towards an equal retirement age for men and women. However, I should like to grasp the most stinging of nettles and say that in practice we should be considering the raising of the retirement age to 66 or more for every one. The economically active people of this country carry the cost of the economically inactive. Thanks to the advance of medical science, that burden is ever increasing. Every projection shows that over the next 10, 15 or 25 years working people will have to carry the cost of a larger percentage of non-working people; that is, the retired.

We therefore have this paradoxical position. We foresee a shrinking labour force. We wish on all sides of the House and elsewhere to keep women at work and to encourage the opening of crèches to enable them to return to work quickly. But at the same time we speak of diminishing the labour force by reducing the age of retirement. The consequences of that can only be a bigger burden through the basic rate of tax which effectively pays for unemployment remaining high and those on marginal earnings being caught even deeper in the poverty trap. At the end of the day those on lower earnings will pay for those who wish to retire at 63 or earlier.

The consequences of lowering the retirement age fall on very fragile sectors of the working population. I urge the Minister, when resisting the amendment (as he no doubt will) to couple his remarks and the future propaganda of the Government with the grasping of the proper nettles—consideration of the real cost of lowering the retirement age and the consequences that that would have on the lower paid people of this country.

Baroness Phillips

My Lords, before the noble Lord sits down, is he aware that the non-working population—as he calls them—who are supported by the working population, are non-working because they are unable to obtain work if they are over a certain age? Many of the non-working would be delighted to work and make a contribution. His argument is dangerous because it may be followed by compulsory euthanasia for those who have been there too long.

Lord Vinson

My Lords, the noble Baroness does not need reminding that more people are working in this country than ever before. When considering changing the retiring dates for the future, we must remember that there is only so much rice for the rice bowl and only so many people to cultivate it. We must encourage people to work. The decade of retirement is an excellent idea. The problem should not he approached with the aim of diminishing the number of economically active; the emphasis should be on increasing them. The more people who work, the more money they generate and the more they raise the base from which dependants can be looked after. There is more rice for the rice bowl.

Lord Henley

My Lords, perhaps I could return to the amendment and not be drawn into discussion on employment law, euthanasia and perhaps even Sir William Beveridge.

I listened with great care to what was said by the noble Baroness and noble Lords. I do not believe that the noble Baroness seriously considers that the Government should commit themselves in this way on an issue of such far-reaching importance as the equalisation of state pension age. However, I suspect that the amendment has achieved what the noble Baroness wanted; namely, further discussion of this very important matter.

The amendment moved by the noble Baroness, it is no exaggeration to say, could crucially affect millions of people. The Government do not accept that this is either the right way or the right time to introduce a measure of such importance. My noble friend Lord Boyd-Carpenter invited me to speculate on the future. He then advised me, if I did not want to spend more time with my family as the expression goes, not to speculate. All I can say is that we are committed to the principle of equal treatment for men and women. Beyond that I cannot go.

The amendment would require the Secretary of State to have determined a common pension age by 1st January 1992 to come into effect no later than 1st January 1995. It gives no help whatever in suggesting how the major issues which flow from it should be addressed. I note also with considerable interest that the amendment appears to bear little relationship to the declared aim of the noble Baroness's party, as set out in its recent policy document, which was to create a "flexible decade of retirement" between 60 and 70.

The noble Baroness raised the case of Barber and bridging pensions. Perhaps I could for the last time briefly mention that difficult point. The effect of the Barber judgment is that schemes must pay equal benefits to men and women from the same age. The implication is that schemes cannot pay a different rate of benefit to one sex but not the other, and schemes with provisions for bridging pensions must seek their own legal advice regarding the effects of that court ruling on their own circumstances. I am sure that the noble Baroness would not expect me to go beyond that.

Perhaps I could spend a few moments on the effects of the amendment. The question of equalising state pension age is a complex one, as everyone is aware. That was stressed by my noble friend Lord Boyd-Carpenter. I think he regretted not grasping the nettle many years ago. As one who was probably still in short trousers when my noble friend should have grasped the nettle, I rather wish he had. It would have saved me the difficult job of standing here trying not to speculate on how the Government might grasp the nettle.

My noble friend knows that it is a complex issue to which there are no simple answers. The Government recognise the force of the argument for equalisation, but as was pointed out in our response to the report of the Select Committee on the European Community, there are major issues to be considered in assessing the pace and direction of change; none more so than costs. The noble Baroness, Lady Seear, raised the question of costs and the fact that many married women would not necessarily have the full contribution record. I do not wish to go further into those cost implications, but that is a point which will have to be addressed in any consideration.

We also need to have regard to the developing pattern of economic activity, future demographic trends—to which my noble friend Lord Vinson referred—and the financial effects of options for change. We need to take account of the assumptions and expectations that men and women now have regarding the age at which they will receive state pension and the retirement plans that they have made.

The amendment takes no account of any of those issues which the Government feel must be evaluated. It ignores the possible effect on the labour market. It takes no account of the expectations of individuals who will have planned carefully when to retire and what level of income they will receive at that time. In particular it will affect many people who have been planning for many years on the basis of retiring at the present state pension age and who expect to receive their state pension at that age. It also ignores the effects of any change on the close relationship between the benefits payable at state pension age and the national insurance contributions which pay for them.

In short, this amendment is not the right way forward. The Government will not be pushed into making precipitate decisions. We will bring forward proposals, but not until all the issues have been fully considered. Until such time I ask the noble Baroness to withdraw the amendment.

Baroness Turner of Camden

My Lords, I am not surprised by the response of the Minister. I did not expect the Government to accept the amendment. As the Minister said, and as all noble Lords who have spoken in the debate will agree, it is an extremely complicated matter.

However, I share the views of all those who, in a very short and interesting debate, said that something must be done very soon. This matter cannot be left as it is. Before the end of the century we shall need to make some determination on equal pension ages. One hopes for a move, as suggested by a number of noble Lords who spoke in the debate—I also referred to it—and as proposed by one of your Lordships' Select Committees, in the direction of a decade of retirement; that decade being between the ages of 60 and 70.

Were we to have such a provision I feel sure that it would meet some of the objections of the noble Lord, Lord Vinson, who was concerned about making inflexible rulings on whether people were economically active. If we had a decade of retirement we would need a pivotal age when the full state pension would be payable. I speak personally in this regard because I was a Member of your Lordships' Select Committee. I am in favour of the age of 63 because to go lower to 60 would prove to be rather expensive. One would have to make actuarial assumptions on the basis that everyone would go for the age of 60 rather than for the provisions of the decade of retirement.

However, in practice, particularly with improving health standards, if we had the decade of retirement between the ages of 60 and 70, large numbers of people would wish to go on working and therefore they would not be claiming their full state pension. Until we do something about it we are bound to have the kind of anomalies that have been thrown up in the controversy over bridging pensions.

As I said when we discussed the previous Social Security Bill, it seems very unfortunate that companies that have equalised pension ages of 60—which are the better companies with better schemes—should now find themselves in the situation of being unable to pay bridging pensions to men between the ages of 60 and 65, although they are making an attempt, as they see it, to produce full equality of treatment at least for people on the receiving end of pension provision.

I do not intend to press the amendment at this time. I am pleased that we have had this debate. I am also pleased that in replying the Minister has indicated that the Government will think seriously about it. Quite obviously, the reason that I have not spelt out the ages and processes in my amendment is that it is designed simply to set some kind of timetable. Everybody would then know that there was a timetable within which decisions would be made as regards equal pension ages. The Government would have the time to consult the various organisations and generally to take public soundings as to what would be the most suitable way to move forward. However, I accept that this amendment is not acceptable to the Government this afternoon. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Lord Carter moved Amendment No. 57:

After Clause 15, insert the following new clause:

Notional capital

"The following new sub-paragraph shall be inserted at the end of Regulation 51 of the Income Support (General) Regulations 1987, and at the end of Regulation 34 of the Family Credit (General) Regulations 1987, and at the end of Regulation 43 of the Housing Benefit (General) Regulations 1987, and at the end of Regulation 33 of the Community Charge Benefits (General) Regulations 1989—

"( ) Where the claimant is treated as possessing capital under this regulation it shall be deemed to diminish in value at the same rate as the value of any weekly benefit calculated in accordance with these regulations which would have been awarded to the claimant were it not for the operation of this regulation, or at such higher rate as an Adjudication Officer may consider reasonable having regard to all the circumstances of the claimant or his family."").

The noble Lord said: My Lords, this amendment deals with a situation which is rather complicated to explain but which in essence is very simple. We believe that there is either a flaw in the drafting of the regulations or a genuine anomaly. We cannot believe that the Government intend to happen what will happen.

The purpose of the amendment is to introduce a diminishing notional capital rule for all means-tested benefits. As the law stands at present, anyone in receipt of a means-tested benefit who deprives himself or herself of capital in order to obtain or increase their benefit is still deemed to possess that capital. If the amount of capital exceeds the various capital limits the claimant receives no benefit at all. If it is less than the capital limit but exceeds £3,000, there is the question of the tariff income which has to be calculated.

If the capital is less than £3,000 it will not affect the claimant's benefit. If the claimant receives any further capital, that will be added to the notional amount which will ultimately lead to a tariff income or to the loss of benefit altogether. We are advised that there is a fatal flaw in the law as it stands. Once a claimant is caught by this flaw he can never escape. In other words, the notional sum of capital is frozen at the amount originally calculated. It is never considered to have diminished in the sense of having been used or spent by the claimant.

For example, a claimant who is deemed to have £8,500 can never become entitled to income support even though he will soon have used up the £501 which put him above the capital for income support. That is either an oversight on the part of the parliamentary draftsman or it is a genuine anomaly. I am sure that the Minister will be grateful that we have drawn it to his attention.

He will be aware that under the old supplementary benefit scheme, which also had a notional capital rule, the social security commissioners held that the capital should be deemed to be diminished at the same rate as the claimant's weekly benefit. This amendment seeks to restore the former and more equitable position and also to allow an adjudication officer to deem that the claimant's capital has diminished at a faster rate than that of the weekly benefit, if it is appropriate to say so in all the circumstances.

We believe that it is important that an adjudication officer should hold this discretion rather than the Secretary of State so that the claimant can appeal against any refusal to exercise a discretion. I beg to move.

5.15 p.m.

Lord Henley

My Lords, the deprivation rule, as it is commonly known, exists primarily to prevent abuse of the taxpayers' money. It provides for a person to be treated as still owning capital of which he has deliberately deprived himself in order to obtain benefit. That is a longstanding provision and a sensible one. Of course it would not be right, nor has it ever been the intention, to treat a person as possessing the same amount of notional capital for all time.

Therefore, I am able to inform the House that the Government already have in train proposals for introducing an amendment from next October into all the income-related benefits—that is, income support, housing benefit, community charge benefit and family credit. That amendment will provide for the capital which a person is treated as notionally still possessing to be reduced over a period of time.

In effect, the amendment will regularise the guidance which is generally operated at present in DSS offices and by local authorities. I regret to say that it is too early to give the House details of the proposed amendment. However, I can assure the House that it will apply in very much the same way as the old diminishing capital rule which existed under the supplementary benefit scheme and which had the support of social security case law.

I am sure that the House will want the new rule to be both fair and simple to operate. I think it is most unlikely, therefore, that we shall be able to take on board the noble Lord's suggestion that there should be a discretion to diminish the notional capital at a higher rate than would have been necessary had the claimant retained that capital. That would introduce a serious and unnecessary complication into the benefit scheme. It would also result in claimants being treated differently and lead to dissatisfaction all round. In terms of equity the important thing is to ensure in regulations that claimants who deprive themselves of capital in order to get benefit do not gain by their actions, but at the same time they are able to re-qualify for benefit. I can assure the House that that is what our amendment will achieve.

In view of that clear intention I hope that the noble Lord will feel able to withdraw his amendment.

Lord Carter

My Lords, I am extremely grateful to the Minister for that explanation. It is indeed good news. Presumably there will be an amendment to regulations.

Lard Henley

My Lords, yes, there will be regulations.

Lord Carter

My Lords, I am sure that that reply will gladden the hearts of all those who have been aware of this flaw or anomaly, depending on one's point of view. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 [Annual increase of certain occupational pensions]:

Viscount Brentford moved Amendment No. 57A: Page 18, leave out lines 4 to 8 and insert: ("(2) On and after the appointed day, schemes to which this section applies should provide members with a pensioners' option.")

The noble Viscount said: My Lords, I move this amendment on behalf of my noble friend Lord Mottistone and in doing so I shall speak to Amendments Nos. 57B, 57C and 57D. My noble friend in unable to be present this afternoon. In moving this amendment I am expressing the views of the CBI, with which I concur. I also wish to ask my noble friend certain questions. The effect of Clause 16 is to make mandatory certain annual increases in pension payments up to 15 per cent. The effect of these amendments is to introduce what I call the pensioners' option.

Under this proposal members of a pension scheme which did not guarantee pension increases of at least 5 per cent. would have an option to change their pension into a lower pension incorporating a guarantee of limited price indexation of 5 per cent. The option would be irrevocable once the pension had started to be paid and would be on such terms that taken as a whole its exercise would not be expected to place extra costs on the scheme unless both the trustees and the employers decided otherwise.

This proposal reflects the recommendation of the Occupational Pensions Board, the Government's advisory body on pension matters. I commend it to your Lordships for three reasons. First, it avoids placing additional pension costs on employers at a time when they are facing significant extra costs as a result, if I may dare refer to it again, of the European Court ruling in the Barber case. Secondly, it provides members of final salary schemes and money purchase schemes, including personal pensions, with the same set of options. It therefore seems to bring uniformity rather than diversity into the law. Thirdly, it makes clear to all pension scheme members that indexation of pensions can be provided only at additional cost and does not fall out of thin air.

The amendment has been put forward in the light of discussions during the debate in Committee. At that time my noble friend Lord Mottistone suggested that many final salary occupational schemes would not be able to afford to provide indexation and that they would have to reduce the pension benefits provided. The Minister recognised (at col. 840 of the Official Report on 22nd May) that some schemes would have to follow such a course. However, the Government's proposal gives no choice to individual members, many of whom might prefer to have a higher initial pension with no guaranteed increases rather than a lower level of initial pension with guaranteed increases. Yet that option is currently open to members of money purchase schemes, whether employer schemes or personal pensions.

During the debate in Committee the Minister said that the Government had decided to exclude money purchase schemes from the compulsory introduction of limited price indexation because members already have the opportunity: to take a flat-rate pension which will not increase or a lower initial pension, but which will increase annually at 5 per cent. or in line with the retail prices index".—[Official Report, 22/5/90; col. 826.]

Why are members of final salary schemes to be denied the option open to members of money purchase schemes? I can see no good reason for this discrimination. The amendments which I have put forward would provide members of final salary schemes and money purchase schemes with the same options.

I do not think that we should shirk from acknowledging that pension funds are not an Aladdin's cave, able to provide, at no additional cost to either the member or the employer, the indexation mooted. They are funded by the contributions of both parties and do not fall out of thin air. In most schemes the introduction of such measures will quickly remove any surplus which may have occurred in recent years and more commonly will lead to a reduction in accrual rates or to increased contributions from both employers and employees. I beg to move.

Baroness Turner of Camden

My Lords, the amendment seeks to write into legislation one of the propositions put forward by the Occupational Pensions Board. It is based on the assumption that some people would prefer the option of a lower pension with some indexation to a pension with no indexation but a higher pension to start with. The noble Viscount called it the pensioners' option.

As noble Lords will know, I was and still am a member of the Occupational Pensions Board. I was not happy with the proposition when it was discussed by the board and I was in a minority in opposing it. However, I and another colleague did not carry our opposition into a minority report because we felt that to do so would weaken the general thrust of the report which, of course, we fully supported. My colleagues on the board were aware of my views on the matter and, not surprisingly, these were voiced when the Trades Union Congress made its views known on the final report which in general it welcomed.

I believe that pensions should be indexed. I should like to see them fully indexed to the RPI. In fact I am quite sure that the day will come when it will seem incredible that we ever thought that we were making pension provision when the pension starts to lose its value almost from the day that it commences to be paid. As we all know, people now live a great deal longer. Many people may expect to be on pension for 20 years. At the end of that period they are likely to be very poor indeed unless their pensions have been protected. They will be a good deal poorer than those in employment since the wages index always rises faster than the RPI and is likely to continue to do so.

The problem about the pensioners' option as I see it is that if it exists it will not increase the pressure for proper indexing. Rather the reverse will be the case. Employers will say, "Well you have the option. You can take a lower pension now and have increases or a higher one now and no increases". I know that research has been carried out which seems to how that people would prefer the former option. But respondents were never asked whether they would simply like what is proposed in the Bill.

On this occasion I support the Government. They were right not to pick up the proposition of a pensioners' option. I hope that the House will decide that it does not want to do so either. I oppose the amendment.

Lord Henley

My Lords, I welcome the forthright support of the noble Baroness. I listened with interest to the speech of my noble friend Lord Brentford in moving the amendments in the name of my noble friend Lord Mottistone. In Committee my noble friend Lord Mottistone sought to reduce the level of pension increases required for the future service from 5 per cent. to 3 per cent. On that occasion my noble friend said: I suggest that this [the 3 per cent. level] will be a reasonable minimum level of increase which the CBI believes could be attainable by most, if not all, final salary schemes".—[Official Report, 22/5/90; col. 838.] With these amendments, however, my noble friend seeks to remove the whole of the provision for pension increases, both in respect of the future service and those to be guaranteed from the proceeds of any surplus in the scheme. The alternative proposed by my noble friend is the pensioners' option. Under this method a member whose pension scheme did not guarantee pension increases as favourable as prices or 5 per cent. would have an option within the scheme to change the pension into a lower pension incorporating a guarantee of limited indexation. The recommendation was put forward in the report of the Occupational Pensions Board—a recommendation to which the noble Baroness, Lady Turner, in a minority, said that she objected. No doubt the noble Baroness will correct me if I am wrong but I suspect that the proposal was put forward as a compromise to try to satisfy those who favoured statutory pensions increases and those who believed that no such legislation should be imposed.

I remind the House that these proposals for pension increases stem from the debate which was generated by our original proposals which would have required increases to be made when a scheme winds up. Varying arguments were put forward as to why this was not the best way to achieve the Government's objectives. We listened to those arguments, discussed ideas with representatives of the industry and concluded that a better balance could be struck between the different areas of pensions policy.

The requirement for schemes to make pension increases acknowledges that the Government's view is that it is no longer acceptable for defined benefit schemes to provide a pension which takes no account of inflation. We recognise that employers will wish to look carefully at their schemes and we are going to give them time to make their plans. Some may decide to alter the accrual rate and some will want to look carefully at the level of contribution made by the employees and themselves. Some may even decide that this is not the type of scheme they wish to offer.

Obviously I understand my noble friend's concern, but I believe, as I said in Committee, that the Government's proposals in Clause 16 and Schedule I strike a careful balance between the interests of the employers and those of members of the schemes. I urge my noble friend to withdraw the amendment, although I do so in a slightly less forthright manner than the noble Baroness.

Lord Vinson

My Lords, no one could argue with the general thrust of the argument.

Lord Henley

My Lords, I am afraid that I must remind my noble friend that this is the Report stage and it is the convention that no noble Lord shall speak after the Minister.

Lord Vinson

My Lords, I apologise.

Viscount Brentford

My Lords, I am grateful for my noble friend's remarks. I am also grateful for the forthright comments made by the noble Baroness, Lady Turner. I should like to make clear the fact that I fully endorse the principle of indexation. I believe that pensions should undoubtedly be indexed. In my view, that is an excellent move forward. However, I am not sure that my noble friend has made clear why there should be this discrimination between the different categories of pension. I shall consider what he said, and, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos 57B, 57C and 57D not moved.]

5.30 p.m.

Schedule 1 [Schedule to be inserted as Schedule 3A to the Pensions Act]:

The Earl of Buckinghamshire moved Amendment No. 57E: Page 32, line 41, at end insert ("unless the Trustees elect to provide in full an amount equal to the appropriate percentage for those members of the scheme who on the valuation day are over such age as the Trustees may determine provided that the effect of such increases is to add to the liabilities of the scheme an amount equal to or greater than the amount of the surplus.").

The noble Earl said: My Lords, I should like to speak briefly to this amendment. On Second Reading, and in Committee, I outlined my anxieties about the distribution of surplus which, if it was spread over the total membership—which can literally go from the ages of 18 to 85 or beyond—would arrive at a distribution which was meaningless at the lower age groups and therefore, in my view, would dissipate the value of that surplus. This amendment, with the drafting of which I am pleased to say I received the assistance of the National Association of Pension Funds, is an attempt to target the use of that surplus to the older age groups of a pension fund.

As noble Lords will clearly see, the amendment covers both those people in retirement and those in the older age groups with active membership. I believe that the amendment goes at least some way towards targeting the use of that surplus. I shall be especially interested to know my noble friend's views on the matter. I beg to move.

Lord Henley

My Lords, I have listened carefully to what my noble friend has said. The points he has made are similar to those expressed in our discussion in Committee on the use of the surplus, when my noble friend Lord Mottistone suggested that to spread the surplus over a very large number of people would not necessarily be the best way to use it. On that occasion the noble Lord, Lord Carter, asked him if discretion would mean that the trustees would have, the discretion to award extra increases in pensions payments to certain groups of employees such as senior executives or directors". [Official Report, 22/5/90; col. 849.] The answer given by my noble friend was, Yes, if the terms of the trust said so". In framing our proposals for this Bill we were anxious to avoid such an outcome. But I can appreciate that there are differing situations in different schemes and that some element of discretion for the trustees might be beneficial. I am therefore grateful to my noble friend for putting forward a suggestion which would give some discretion to trustees to have an order of priority, by age, in how the surplus should be used to provide increases.

I am sympathetic to what my noble friend is trying to achieve, and I should like to give further consideration to his proposal. However, an amendment to the Bill would not be required as we already have the necessary powers. I hope, therefore, that he will be prepared to withdraw his amendment.

The Earl of Buckinghamshire

My Lords, I am most grateful to my noble friend. In my view he has given a most helpful reply. In the circumstances, I beg leave to withdraw the amendment.

Amendment by leave, withdrawn.

Lord Henley moved Amendment No. 58: Page 34, line 24, after ("58A") insert ("of this Act").

The noble Lord said: My Lords, this is a minor amendment, which is merely intended to clarify the drafting of Schedule 1. I invite the House to accept it. I beg to move.

On Question, amendment agreed to.

Schedule 2 [The Pensions Ombudsman]:

Baroness Turner of Camden moved Amendment No. 59: Page 35, line 26, at end insert: ("(6A) The Secretary of State shall ensure that provisions for the funding of the Ombudsman in no way affect the independent operation of the scheme.").

The noble Baroness said: My Lords, in Committee I moved a series of amendments designed to replace the proposed ombudsman with a tribunal. I would still prefer to have the tribunal but the Government, on that occasion, were not disposed to accept those arguments and I did not press my amendments to a Division. However, if we are to have an ombudsman it must be clear to everyone that he is independent, irrespective of the manner in which the office is funded. One way to ensure that this is so would be to raise funding from general taxation; another would be to raise the funding from the industry and then set up an independent board to administer the scheme. The matter will undoubtedly be finally resolved by regulations, but independence, and the appearance of independence, are clearly of the first importance.

In its report, the Occupational Pensions Board suggested that the proposed tribunal should be funded from income generated by the registration service. Clearly, that would be one way forward. I hope that the Government will agree that it is important that this new service should get off to a good start. The ombudsman is to have very wide powers—much wider, I believe, than has been usual with ombudsmen appointed in the past. He is apparently to have powers to make judgments and enforce them. Therefore, it is all the more necessary that he should be shown to be totally independent, especially of the pensions industry. The Consumers' Association, which pressed hard for an ombudsman in preference to a tribunal, is still concerned—even though it appears to have got what it wanted—and fears that the ombudsman may not be seen as impartial unless dependence upon the pensions industry is ruled out from the start. With those comments, I beg to move.

Lord Henley

My Lords, the noble Baroness's amendment has raised the questions of the funding of the pensions ombudsman and his independence. I hope that I shall be able to reassure her on the matter. Paragraph 11 of Schedule 3 gives the Secretary of State powers to impose a levy on occupational and personal pension schemes to meet the costs of the pensions ombudsman and the registry and the grant to be made by the OPB to the Occupational Pensions Advisory Service.

The OPB report Protecting Pensions linked together what it called "help for the individual" because it had, in mind that initial and annual fees for registration would be set at a level which would support the bulk of the expenses of all these functions". The Government agreed that such levy should be imposed, and discussions are taking place with the pensions industry to decide on what basis this levy should be calculated. Of course, this is a matter for regulations. The levy which is derived from the industry will be paid to the Government, who will then be responsible for ensuring that the pensions ombudsman and his staff are adequately funded. There is no intention that the industry itself will have any control, direct or indirect, over the ombudsman. It will be for government to ensure that the pensions ombudsman is adequately funded. As we have already said, there will be no charge on users of the ombudsman.

Therefore, there should not be any fears about the independence of the ombudsman. I hope that the noble Baroness will agree that the amendment is superfluous and, accordingly, I invite her to withdraw it.

Baroness Turner of Camden

My Lords, I thank the Minister for that very clear explanation. I am much relieved to learn of the way in which it is intended to fund this new office. I am also pleased to learn that it will quite clearly be under government control without the possibility of any pressure being exerted from the industry—at least, that appears to be the case. In the circumstances, I beg leave with withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 60 not moved.]

Clause 18 [Registration of occupational and personal pension schemes]:

Baroness Turner of Camden moved Amendment No. 61: Page 21, line 11, at end insert: ("(7A) The Minister may by regulation require money purchase and personal pension schemes to comply with the requirements of this section, following the quinquennium 1988 to 1993.").

The noble Baroness said: My Lords, when this issue was discussed in Committee, I supported an amendment moved by the noble Earl, Lord Buckinghamshire, the object of which was to compel all types of pension schemes, not simply final salary schemes, to uprate pensions in line with the provision that these be increased by 5 per cent. per annum or the RPI, whichever was the lower figure. On that occasion, the noble Earl said: It seems clear to me that the Government are determined to proceed with legislation to compel pension schemes to increase pensions in payment. I believe that they should recognise that in all pension schemes—whether final salary, money purchase occupational or personal pension schemes—the end product is the same: a pension. Therefore, all schemes should be treated the same. Either all of them should be compelled to provide increases in payment or none of them should". [Official Report, 22/5/90; col. 825. I believe that to be correct, and in his reply the Minister did not appear to disagree with that proposition.

However, he said that it was too early to reach any decision about it since it had only been possible to contract out of SERPS by means of private personal pensions since July 1988 and had only been possible to do so via COMPS since April 1988. He argued that time was needed and suggested that we should await the review at the quinquennium beginning April 1993.

My amendment takes the Minister at his word; but it needs to be written into the Bill if it is intended at some future time that all pension schemes should be covered by the same provisions. Clearly they should; and it should be clearly signalled to providers and purchasers of the scheme benefits that the same conditions will apply to their schemes as to final salary schemes after 1993. That might have the effect of ensuring the continued growth of final salary schemes since employers would see no benefit in attempting to change over. Furthermore, it would give added security to those who have decided to opt for alternative methods of retirement provision. I beg to move.

Lord Vinson

My Lords, one cannot but help support the general principles behind the amendment; but will my noble friend the Minister bear in mind that any attempt automatically to increase or to index pensions in payment, unless there is a fairy godmother who can provide the money at some point, would be putting an unquantified obligation on company balance sheets or the provider of any money purchase scheme be it aggregated or disaggregated? There is only one way to meet that dilemma—that is, to make available to the private sector the same levels of indexation as are available to pensions given to those in the public sector. That calls for a continuous issue of generous tranches of index linked gilt-edged bonds. With that, aggregated money purchase schemes, which are company schemes, or straight money personal purchase schemes, can knowingly and positively meet their future obligations. I hope that my noble friend will have that thought in the back of his mind when he makes his reply.

Lord Henley

My Lords, I was very much taken with the conciliatory way in which the noble Baroness moved the amendment. Clearly she has given thought to the points I made when the issue was discussed in Committee last month, and has now brought forward an amendment which is superficially attractive.

It may be helpful if I remind the House briefly of the reasons why we have decided to exclude money-purchase benefits, including personal pensions, at this time from the requirement on other occupational schemes to guarantee pension increases in line with the retail prices index up to a maximum of 5 per cent. a year for future service.

First, members of personal pension schemes and money-purchase schemes already have the opportunity to use the proceeds of the investment made on their behalf to choose a pension which has provision for some sort of indexation after retirement.

Secondly, we believe that there is a proper time to consider this whole question, and in view of the short time that has elapsed since it has been possible to contract out of SERPS by a money-purchase scheme or by means of a personal pension, we do not believe that that time is now. Employers and individuals have entered into commitments on the basis of the terms and rebates which apply to the current quinquennium, which ends in 1993. The noble Baroness has of course taken that point on board in the terms of her amendment.

The question of pension increases in those schemes will, as I have previously said, be considered as a part of the terms for contracting out of SERPS for the next quinquennium; that is, for the period beginning in April 1993. That review, which will begin next year, considers the reductions in the Class I standard rates of contributions for those contracted out (and therefore affects the rebate paid in respect of personal pensions) and the factors affecting the cost to occupational pension schemes of providing guaranteed minimum pensions.

If, in the course of that review, the Government decide that it would be appropriate to extend the current proposals to include money-purchase benefits, including personal pensions, then I can assure the noble Baroness that we shall bring forward the necessary legislation.

I hope that I have sufficiently reassured the noble Baroness for her to feel that there is no need to have the amendment written on to the face of the Bill. I hope therefore that she will feel able to withdraw it.

5.45 p.m.

Baroness Turner of Camden

My Lords, I thank the Minister for that explanation. The wording of my amendment provides that the Minister "may by regulation". It does not say that he would have to require it following the 1988–1993 quinquennium. However, in view of the assurance that the Government will consider the whole issue in the course of the review and will, if they think it necessary, bring forward legislation, there is no point in pressing the amendment at this stage. Therefore I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Schedule 3 [Occupational and personal pension schemes]:

Baroness Turner of Camden moved Amendment No. 62: Page 46, line 5, at end insert: ("(3A) No refund shall be made to the employer in the event of wind-up until benefits have been increased to the maximum allowed under the Inland Revenue regulations.").

The noble Baroness said: My Lords, with this amendment we are looking again at the vexed question of surpluses. The OPB did not deal with who owns the surplus. In fact we were not asked to do so. It is a difficult question, particularly when final salary schemes are often funded on a balance-of-cost basis. On the other hand, the money is subscribed for pension purposes, and employees have some justification for considering that it is their money paid in as a form of deferred salary. The fact that in the past such surpluses acted as a magnet for predators is a further cause for concern and is one of the reasons why the OPB was asked to consider the matter and report. The OPB paid particular attention to that problem. There had been a spate of contribution holidays when employers had decided unilaterally not to pay any money into the scheme for a specific period. That was widely misunderstood and often deeply resented if there were no corresponding contribution holidays for employees.

The amendment deals with what happens to the surplus on wind-up. The OPB recommended that surplus assets remaining after liabilities on pensions on payment had been discharged should be returned to the employer; but a number of organisations, the TUC and the Consumers' Association among them, believe that that is insufficient to deter a predator. They believe that the surplus should be used to improve the benefits. Therefore, the amendment proposes that on wind-up the first call on the surplus should not just be the provision of increases for pensions but that benefits in the scheme should be increased up to Inland Revenue limits. Only when that has been done, should the residue be returned to the employer. That is fair and reasonable. After all, a pension fund exists to provide pensions. We hope that the Government will feel disposed to accept the amendment. I beg to move.

Lord Henley

My Lords, the position, as the noble Baroness is aware, when a scheme winds-up will match the general requirements for pension increases. In the event of a scheme winding up it will be a liability on the employer to provide increases at the level of prices up to maximum of 5 per cent. in respect of pensions accruing after an appointed day. For pension rights based on service before then, increases will depend on the extent of increases already guaranteed as a result of the new requirements and any additional surplus emerging when the scheme winds up.

That is a substantial improvement for the member of an occupational scheme if it does wind up. The employer will have to make good any deficiency in the assets of the scheme in order to ensure that the members will receive their entitlements under the rules of the scheme. Where the scheme has generated a surplus, it must be used to provide additional benefits.

The amendments moved by the noble Baroness would, however, go much further than that. Requiring that no refund should be made to the employer would, effectively, be giving greater priority to maximising pension provision before debts could be honoured to a number of creditors, who in a large number of insolvencies do not get back what they are entitled to. We do not believe that that is the right way to proceed.

Inland Revenue limits are not reached by the vast majority of schemes. The usual way in which schemes operate is that members pay a specified rate of contribution and the employer pays whatever contribution is recommended by the actuary from time to time in order to maintain the scheme in long-term financial balance. In this balance of cost approach, the employer has to meet any deficiency, but if he has over-funded, there is entitlement to some of the surplus. We believe that the Government's proposals in the Bill are a measured and responsible step towards improving the position of members in schemes which wind up. They strike a balance between the interests of employers and those of employees. I therefore urge the noble Baroness not to press the amendment.

Baroness Turner of Camden

My Lords, I note what the Minister said. What the Government propose represents a substantial improvement for members of schemes and I welcome the suggestion. My amendment goes further on the basis that pension funds are there to provide for pensioners and for the scheme beneficiaries and that there should not be any return to the employer until commitments to the employees and the pensioners have been met. However, I see little point in pressing the amendment at this stage. It goes further than the Government's proposals, and perhaps we should be grateful for the improvements that we have obtained. Therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Buckinghamshire moved Amendment No. 62A: Page 47, line 15, at end insert: ("(5) Any restrictions prescribed in accordance with this section shall, insofar as compliance would require the disposal of shares or other securities or the recall of monies loaned, allow a period of 2 years from the date of their introduction to the date by which they must be complied with and, insofar as compliance would require the disposal of land or property (other than land), allow a period of 4 years from the date of their introduction to the date by which they must be complied with. The Secretary of State, or such other person appointed by the Secretary of State, may grant an extension to the period within which restrictions prescribed in accordance with this section must be complied with to an occupational pension scheme for which compliance with such restrictions would require a reduction by 50% or more of the proportion of its resources invested in employer-related investment. When considering requests for such extensions, the Secretary of State or other appointed person will regard the future ability of the occupational pension scheme to meet its liabilities to its members as paramount.").

The noble Earl said: My Lords, I am aware that at the Committee stage my noble friend said that he would consider some of the suggestions made on self-investment in a sympathetic light. I myself did not speak but I hope that the amendment will be helpful in concentrating our minds on the difficulties of disinvesting quickly, particularly in property.

The first paragraph of my amendment recognises that the disposal of property is more difficult than the disposal of shares. The second paragraph would allow time for funds with a high level of self-investment to remove that high level. With some assistance from the National Association of Pension Funds, I considered whether or not an attempt should be made to cover complete exemption from compliance. However, it was decided that not only would this exemption be difficult to remove if it were later decided that it was not necessary, but to give the Secretary of State the power to set a lengthened deadline would allow virtual exemption in suitable cases.

What is a suitable case? Many pension funds have investments in their own shares. Several others have recently undertaken in good faith investments in property of some significance. This was all quite properly done and without real concern at that stage. However, the Bill now places strains on these funds if they have to liquidate rather quickly.

I hope that, while recognising the importance of curtailing self-investment in the future, the amendment will go some way towards pointing out the direction and showing that there are difficulties in doing that immediately. I hope that my noble friend on the Government Front Bench will be able to respond favourably to the amendment. I beg to move.

Lord Henley

My Lords, I am sympathetic to the type of problems that my noble friend has outlined. However I must reserve the Government's position until we have seen the results of the report that my noble friend may know we are commissioning in order to provide up-to-date information on the extent of self-investment, the sectors in which it is concentrated and, in particular, what the problems will be in restricting it. Some preliminary work has already been undertaken and the main study is due to begin early next month.

When we receive that report in the early autumn we will then be in a position to consider and come forward with firm proposals. I hope that in the light of those reassurances my noble friend will feel able to withdraw his amendment.

The Earl of Buckinghamshire

My Lords, I am grateful to my noble friend the Minister and pleased to hear that the survey is being brought forward in the manner that he has described. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Henley moved Amendment No. 62B: Page 48, line 33, at end insert: ("Contracting-out conditions: age at which pension or annuity is to commence under a money purchase scheme 5A—(a) In section 32 of the Pensions Act, in subsection (2B) (modifications of Schedule 1 to the 1986 Act in its application for the purpose of determining whether a money purchase scheme can be contracted-out) after paragraph (d)(ii) there shall be inserted— (iii) for the references in sub-paragraphs (3)(a) and (7)(a)(i) to the date on which the member attains Pensionable age there shall be substituted a reference to a date not earlier than that on which he attains the age of 60 nor later than that on which he attains the age of 65; and". (2) The amendment made by sub-paragraph (1) above shall be taken to have come into force on 17th May 1990.").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 56. I beg to move.

On Question, amendment agreed to.

Schedule 5 [Minor and Consequential Amendments]:

Baroness Turner of Camden moved Amendment No. 62C: Page 57, line 9, leave out sub-paragraph (3).

The noble Baroness said: My Lords, this is not a pensions matter, I seem to have left those behind now. I move the amendment rather late in the day because I have only just had a case brought to my attention that is important enough to be raised by way of amendment. It relates to occupational deafness. I have here the details of a case of a retired 74 year-old man who had worked with percussion hammers for a total of 17 years up to January 1981. As a result of the work upon which he was engaged, he became severely deaf. He claimed disablement benefit in 1981 but that claim was refused because under the rules then in force he had to have worked a total of 20 years in jobs carrying the risk of deafness.

In 1983 the number of years was reduced to 10, but a time limit was introduced preventing victims of occupational deafness claiming disablement benefit more than five years after they had last worked in a job with a risk of deafness. Little publicity was given to the new rules and the man in question did not find out about them until a few months after the five-year time limit had expired. He immediately reclaimed but the DSS refused to consider the claim, despite an Act of Parliament which at that time obliged the department to allow late claims where there was good reason for delay.

In a test case brought last October, the Court of Appeal said that the DSS had been acting illegally and sent the case back to a tribunal for further consideration. The DSS was refused leave to appeal to the House of Lords. As I understand it, the Bill and the proposal in this clause of the Bill will mean that the law will be changed retrospectively so that despite the victory in the Court of Appeal, this pensioner will be denied benefit. I also understand that this could have an effect upon a number of similar cases. If that is so, I do not believe it is right that the law should be changed retrospectively in this way in order to prevent people who have won cases in the Court of Appeal from receiving benefit to which they might otherwise have been entitled.

For those reasons, I put down this amendment rather late in the day. I hope to hear the Minister's explanation of the case to which I have referred. I beg to move.

Lord Boyd-Carpenter

My Lords, I hope that my noble friend will be able to answer the point that has been made by the noble Baroness. On the face of it, to change the law retrospectively and deprive individuals of benefit on which they have won a legal decision seems a somewhat oppressive action. It may well be that the noble Baroness has misunderstood the position and that my noble friend will be able to explain it. If he cannot do so then I feel that the Government might be subject to some criticism.

Lord Campbell of Alloway

My Lords, I should like some clarification as to how this operates. I understand that one can change the law by statute. It may be unfair or it may not. What I cannot understand—and I wonder whether my noble friend the Minister could deal with this point—is how this can operate retrospectively from the time of Royal Assent. Can the provision do that or have I misunderstood the position?

6 p.m.

Lord Henley

My Lords, perhaps I may deal first with the individual, Mr.McKiernon, and whether he will be awarded benefit. We understand that his case will be heard by an appeals tribunal on 5th July, and that final adjudication and promulgation will occur soon thereafter. If his circumstances satisfy the current law, including the Court of Appeal judgment in his case, he will be awarded disablement benefit along with any arrears.

Following the Court of Appeal decision in this case, the law on occupational deafness reflects neither this Government's intentions nor those of any previous government. I remind the House that the original proposals suggesting a scheme for the payment of disablement benefit for occupational deafness, which operates under the industrial injuries provisions of the Social Security Act 1975, were proposed by the Industrial Injuries Advisory Council as long ago as 1973. Those proposals were accepted and introduced in February 1975. They included a provision that a claim had to be made within one year of leaving the relevant occupation. Subsequently, in 1983, this restriction was eased so that a claim could be made within five years of leaving the relevant occupation, often described as the five-year rule. The scheme has operated on this basis ever since.

However, when in October 1989 the Court of Appeal considered the case of Mr.McKiernon it was held that Regulation 25 of the Industrial Injuries Prescribed Diseases Regulations, which deals with the five year rule, was ultra vires because it failed to mention specifically that it modified Section 165A of the Social Security Act 1975 which deals with time-limits for claiming benefits.

I must stress that the Court of Appeal made no criticism, explicit or otherwise, of the five-year rule itself. It was simply a matter of defective legislation. In its judgment, the Court of Appeal restricted its comments to Regulation 25. However, we have studied the implications for other regulations. Regulation 36, which deals with occupational asthma, makes a similar provision to Regulation 25, and requires a claim to be made within 10 years of a person leaving the occupation to which asthma is attributed before a claim can succeed. On the criterion adopted by the Court of Appeal, Regulation 36 is open to the same objections as Regulation 25. Less obviously, the vires of Regulation 6(2)(c) which deems the date of onset for occupational deafness to be the date of the claim is also questionable.

We have considered carefully the implications of this judgment. Without the provision which is the subject of the amendment of the noble Baroness, Lady Turner, a search would be necessary for all past claims for both occupational deafness and occupational asthma. Furthermore, awards which have been made following the judgment in Mr.McKiernon's case would continue beyond Royal Assent. We estimate that the public expenditure cost of this would be well in excess of £100 million. I must put it to the House that this is no time to indulge in unplanned and unintended expenditure of this magnitude on the basis of a technical legal deficiency. This is especially so when the underlying policy intentions which are involved have been accepted without quibble by governments over the past 15 years. I hope that, bearing those comments in mind, the noble Baroness will feel able to withdraw her amendment.

Baroness Turner of Camden

My Lords, I shall look carefully at what the noble Lord said as the matter is rather complicated. However, I must say that the legal advice I have received states: without giving any publicity to the proposal, the Department is using the Social Security Bill now going through Parliament to change the law so that the result of Mr. McKiernon's case will be reversed retrospectively. This means that despite his court victory, Mr. McKiernon's right to Disablement Benefit (and the rights of others in the same situation) will be taken away entirely". I found it quite incredible that the Minister should say that if my amendment were carried by your Lordships' House and reached the statute book it would cost £100 million to implement. That seems an extraordinary figure. I do not think the Minister has dealt with the argument that what is happening is an attempt to change the situation retrospectively following a decision of the Court of Appeal. As I understand it, the wording in sub-paragraph (3) which has this effect states: and any former regulations which they directly or indirectly re-enact with or without amendment, shall be taken to be, and always to have been, validly made". As I understand that wording, it has the effect of taking away the rights of people who are in the position that Mr. McKiernon is in. I find the position quite unacceptable. In the circumstances I have no alternative but to test the feeling of the House.

6.5 p.m.

On Question, Whether the said amendment (No. 62C) shall be agreed to?

Their Lordships divided: Contents, 61; Not-Contents, 121.

Ardwick, L. John-Mackie, L.
Aylestone, L. Kilmarnock, L.
Birk, B. Llewelyn-Davies of Hastoe,
Blackstone, B. B.
Bottomley, L. Lloyd of Kilgerran, L.
Bruce of Donington, L. Longford, E.
Carmichael of Kelvingrove, McIntosh of Haringey, L.
L. McNair, L.
Carter, L. Mason of Barnsley, L.
Cledwyn of Penrhos, L. Mayhew, L.
Clinton-Davis, L. Mishcon, L.
David, B. Molloy, L.
Denington, B. Moran, L.
Ennals, L. Morris of Castle Morris, L.
Fisher of Rednal, B. Mulley, L.
Gallacher, L. [Teller.] Nicol, B.
Galpern, L. Northfield, L.
Graham of Edmonton, L. Peston, L.
[Teller.] Pitt of Hampstead, L.
Gregson, L. Prys-Davies, L.
Grey, E. Richard, L.
Grimond, L. Ross of Newport, L.
Hampton, L. Seear, B.
Hatch of Lusby, L. Stedman, B.
Hollis of Heigham, B. Stoddart of Swindon, L.
Houghton of Sowerby, L. Tonypandy, V.
Howie of Troon, L. Turner of Camden, B.
Hughes, L. Wallace of Coslany, L.
Jay, L. White, B.
Jeger, B. Williams of Elvel, L.
Jenkins of Hillhead, L. Wilson of Rievaulx, L.
Jenkins of Putney, L. Young of Dartington, L.
Allerton, L. Boyd-Carpenter, L.
Annaly, L. Bridgeman, V.
Arran, E. Brigstocke, B.
Auckland, L. Brougham and Vaux, L.
Balfour, E. Buccleuch and Queensberry,
Barber, L. D.
Belhaven and Stenton, L. Buckinghamshire, E.
Beloff, L. Campbell of Alloway, L.
Belstead, L. Campbell of Croy, L.
Blatch, B. Carnegy of Lour, B.
Blyth, L. Carnock, L.
Borthwick, L. Cavendish of Furness, L.
Clanwilliam, E. Macleod of Borve, B.
Coleraine, L. Malmesbury, E.
Constantine of Stanmore, L. Mancroft, L.
Cork and Orrery, E. Manton, L.
Cox, B. Margadale, L.
Craigavon, V. Marshall of Leeds, L.
Cross, V. Merrivale, L.
Cullen of Ashbourne, L. Mersey, V.
Davidson, V. [Teller.] Monk Bretton, L.
Deedes L. Mountevans, L.
Denham, L. Mowbray and Stourton, L.
Dilhorne, V. Munster, E.
Eccles of Moulton, B. Murton of Lindisfarne, L.
Elibank, L. Nelson, E.
Elton, L. Nugent of Guildford, L.
Fanshawe of Richmond, L. Orkney, E.
Ferrers, E. Oxfuird, V.
Fraser of Kilmorack, L. Pearson of Rannoch, L.
Gainford, L. Pender, L.
Gardner of Parkes, B. Peyton of Yeovil, L.
Gibson-Watt, L. Quinton, L.
Gray of Contin, L. Reay, L.
Gridley, L. Renton, L.
Grimthorpe, L. Renwick, L.
Hailsham of Saint Rodney, L.
Marylebone, L. Saltoun of Abernethy, Ly.
Hanson, L. Sanderson of Bowden, L.
Harmar-Nicholls, L. Shannon, E.
Henley, L. Sharples, B.
Hertford, M. Skelmersdale, L.
Hesketh, L. Stanley of Alderley, L.
Hives, L. Stevens of Ludgate, L.
Holderness, L. Strathclyde, L.
Hood, V. Strathmore and Kinghorne, E.
Hooper, B. Swinfen, L.
Hylton-Foster, B. Teviot, L.
Jenkin of Roding, L. Thomas of Gwydir, L.
Johnston of Rockport, L. Thomas of Swynnerton, L.
Joseph, L. Thorneycroft, L.
Kaberry of Adel, L. Trefgarne, L.
Killearn, L. Trumpington, B.
Kimball, L. Ullswater, V.
Kinnoull, E. Vaux of Harrowden, L.
Lauderdale, E. Vinson, L.
Lindsey and Abingdon, E. Wade of Chorlton, L.
Liverpool, E. Wedgwood, L.
Long, V. [Teller.] Wise, L.
Lucas of Chilworth, L. Wynford, L.
Lyell, L. Young, B.
McColl of Dulwich, L.

Moved accordingly, and, on Question, Motion agreed to.

Baroness Blatch

My Lords, I beg to move that further consideration on Report be now adjourned.

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