Lords Sitting of 22 May 1990

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers— Read by the Lord Bishop of Portsmouth.

Lord Wade of Chorlton
Sir William Oulton Wade, Knight, having been created Baron Wade of Chorlton, of Chester in the County of Cheshire, for life—Was, in his robes, introduced between the Lord Belstead and the Lord Johnston of Rockport.
Viscount Devonport—Took the Oath.

Satellite Broadcasting
2.47 p.m.
Lord St. John of Fawsley Lord St. John of Fawsley asked Her Majesty's Government:
What is their general policy on satellite broadcasting.
Viscount Ullswater: My Lords, the Broadcasting Bill establishes an enabling framework which will allow the development of satellite television while maintaining proper programme standards. The extent to which satellite television develops will be a matter for the market and not government regulations.
Lord St. John of Fawsley: My Lords, I thank my noble friend for that reply. But can I ask him to go further than the Broadcasting Bill? In view of the great potential satellite television has for the future, should not the Government positively encourage new entrants into this field, which would create a market and by competition raise standards?
Viscount Ullswater: My Lords, yes. The United Kingdom is limited by international agreement to five domestic channels all of which have been allocated to British Satellite Broadcasting. By contrast there is no such limit on the development of non-domestic satellite services which do not use scarce UK broadcasting frequencies. There is virtually open-ended scope for a diversity of different channels in different hands from other satellites such as Astra. I agree with my noble friend that competition and diversity should ensure high standards in order to survive.
The Earl of Halsbury: My Lords, on a point of order, a Bill is in the Printed Paper office. Anyone can get it by trotting down the corridor. Is it not a misuse of Question Time to anticipate the Second Reading of a Bill set down for 5th June by raising the subject at Question Time? It seems to be a misuse of Questions.
Lord Denham: My Lords, I think that the generally accepted rule in this House is that any noble Lord is entitled to ask any Question and it is up to the noble Lord concerned to decide whether the Question is a proper one to ask. It is always up to the Minister who is replying to decide whether it is a proper Question to answer, but I think that the House usually makes its own rules of order and you cannot lay down any hard and fast rules. You just take each case as it comes.
Baroness Birk: My Lords, is it not true that the most contentious issue with regard to satellite broadcasting is multi-media ownership? Does not the Minister therefore think it right that all satellite stations whose programmes are transmitted to and within the UK should be subject to the same cross-media ownership rules which apply to all TV stations?
Viscount Ullswater: My Lords, the Bill provides that no non-domestic satellite operator should be allowed to have more than a 20 per cent. stake in a domestic satellite service, UHF television, including regional Channel 3, or national radio licences. That limit will be reciprocal. The Bill also leaves open the possibility of limiting the number of non-domestic satellite licences which any one group could control.
Baroness Birk: My Lords, I am sorry to come back, but, with great respect, the Minister cannot give that as a complete answer when it is well known that Sky Television and Mr. Murdoch own about 30 per cent. of the national daily papers and even more of the Sunday papers, which blatantly breaks that rule.
Viscount Ullswater: My Lords, I did not say that. A non-domestic satellite service may be owned by a newspaper interest. I said that a non-domestic satellite service was not able to own more than 20 per cent. of the domestic satellite or national television channels.
Lord Bridges: My Lords, will the Minister explain how the Government intend to exercise their jurisdiction over non-domestic satellites?
Viscount Ullswater: My Lords, services such as Sky, which has been mentioned, will be licensed as non-domestic satellite services. They will be bound by the consumer protection requirements set out in Clause 6 of the Bill which go beyond matters of taste and decency. They will be required not to editorialise on political and controversial matters, to preserve due impartiality in dealing with such matters and to present news accurately and impartially.
Lord Parry: My Lords, does the Minister accept that, despite the quality of his Answer, the House is concerned by what is known as the alien footprint on our culture and that the previous questioner has laid his finger on the point? What control do the Government intend to exercise over influences on our culture that come from outside, despite ownership of those services?
Viscount Ullswater: My Lords, under the Bill all UK-based satellite services will be subject to consumer protection regulation. The Council of Europe convention and EC directive both prohibit such things as pornographic broadcasts from states which are parties to them. As a long stop, the Bill also includes powers to prosecute anyone in the UK who advertises on or otherwise supports a foreign satellite service identified as unacceptable.
Lord Moyne: My Lords, has the Minister seen an American programme entitled "God Power" in which a weight-lifting champion in a bathing suit asks for money in order to give power to the deity? Does he not consider that such commercial exploitation of religion is a desecration of it?
Viscount Ullswater: My Lords, I regret that I have not seer the programme to which my noble friend alludes, but it is certainly an interesting point. As the noble Earl, Lord Halsbury, told us, the Broadcasting Bill will be with us before long and I am sure that we shall debate the subject then.
Lord John-Mackie: My Lords, can the Minister anticipate when we shall reach saturation point in TV channels?
Viscount Ullswater: No, my Lords. I do not think I can.

Satellite Broadcasting

  Deforestation: Brazilian Rain Forests
  2.55 p.m.
  Lord Renton Lord Renton asked Her Majesty's Government:
  What proportion of the world's carbon dioxide is produced by the burning of tropical forests and where, and what representations they have made and propose to make to the Government of Brazil to prevent such destruction.
  The Minister of State, Foreign and Commonwealth office (Lord Brabazon of Tara): My Lords, it is estimated that deforestation accounts for about 20 per cent. of global carbon dioxide emissions each year. Ministers have regularly raised our concern for the protection and conservation of the rain forests with the Brazilian Government both here and in Brazil, most recently when President-elect Collor visited London in February and on 17th May when my right honourable friend the Minister for Overseas Development met Dr. Lutzenberger, Brazil's Environment Minister, in London.
  Lord Renton: My Lords, I thank my noble friend for that helpful Answer. Is he aware that at the present rate of destruction the whole of the Amazon rain forest will have vanished by the end of the century with serious consequences for the whole of mankind and that it will cause the greenhouse effect to take place early in the next century? Will the Government pursue their efforts to try to stop that terrible destruction?
  Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his Question. As I said in my
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  original Answer, we have talked to the Brazilians about this matter a good deal. My right honourable friend the then Minister for Overseas Development signed the United Kingdom-Brazil memorandum of understanding on environmental co-operation in Brazil only last July. We are now working up a number of proposals under that memorandum. The president has himself undertaken to give priority to conservation. His early actions, including the appointment of Dr. Lutzenberger as Environment Secretary, give grounds for optimism, so we can at least be quite hopeful.
  Lord Molloy: My Lords, in view of their highly commendable action, have the Government decided to raise those issues at the United Nations and wherever else this country is represented so that the example of their discussions with Brazil can be enlarged upon and other tropical forests can be saved?
  Lord Brabazon of Tara: Yes, my Lords. A number of United Nations agencies are involved in that field and we play a full part in all of them.
  Lord Campbell of Croy: My Lords, can my noble friend clarify a matter arising from the wording of the Question on the Order Paper? Is not more damage done by the removal of the forests, which absorb carbon dioxide through chlorophyll in their leaves, rather than through the production of carbon dioxide in the process of burning?
  Lord Brabazon of Tara: Yes, my Lords. I think my noble friend is right. Burning has an immediate effect of damage, but the more serious effect is the removal of the forests themselves. I gave an estimate of the figure involved in my original Answer.
  Lord John-Mackie: My Lords, does the Minister agree that another 4 million acres of forest in this country would help?
  Lord Brabazon of Tara: My Lords, I am sure that the noble Lord has a good reason for asking that question, but the scale of the problem is somewhat greater than we could deal with on our own. It is a worldwide problem. If the current deforestation in the world goes on as it is at the moment for the next 10 years or so, it is estimated that an area of forest 10 times the size of England and Wales will be lost.
  Lord Dean of Beswick: My Lords, did the Minister have a chance last weekend to view the programme on the destruction of the rain forests in Guyana and the appalling rapidity with which that is taking place? That is a very poor country with hardly any other resources. Is not an answer that industrialised countries should give considerably more financial aid? Otherwise, they may well be banging their heads on a closed door.
  Lord Brabazon of Tara: My Lords, I did not have the opportunity to see the programme to which the noble Lord referred. However, I am obviously aware of the world-wide scale of the problem. That is why we 'as a country are addressing it through bilateral and multilateral agencies.
  Baroness Ewart-Biggs: My Lords, can the Minister say what proportion of our international aid budget goes to environmental protection projects? Can he also say whether the Government are supporting Survival International, an organisation campaigning to save the Yanomani Indians who live in the Brazilian forests and who are in danger of extinction because illicit gold mining is poisoning the rivers? Has he made representations to the Brazilian Government about their decision to allow the gold prospectors into the rain forests?
  Lord Brabazon of Tara: My Lords, I cannot say whether we support the charity to which the noble Baroness refers. We expressed our anxiety about the indigenous people of Brazil during the President of Brazil's visit to the United Kingdom. We hope that the government will act positively in controlling the illegal activities of goldminers in the Amazon.
  Lord Clinton-Davis: My Lords, will the Minister indicate whether the Government have pursued with the government of Brazil the hopelessly inequitable system of land tenure which makes it impossible for the indigenous people of the rain forests to do other than eke out a bare existence by the destruction of that which is necessary for their survival?
  Lord Brabazon of Tara: My Lords, as I said in my original Answer, my right honourable friend the Minister for Overseas Development met the Brazilian environment Minister on 17th May. Among the matters he raised were our proposals for helping the Brazilians with that problem. Since the memorandum of understanding was signed last July, we have been working out project proposals. So far we have identified one worth £2·5 million which has been agreed. We are preparing another eight projects covering sustainable forestry management and research into the genetic resources of the forests. We hope that most of those will be under way this year. So we have not been inactive in this matter.
  Lord Stoddart of Swindon: My Lords, does not the scale of the assistance which we give to such countries, limited by the meanness of the British Government, restrict the amount of overseas aid to only 0·35 per cent. of our gross national product?
  Lord Brabazon of Tara: My Lords, not at all. We have an extremely generous overseas aid programme. It amounted to over £1·5 billion last year. It is not the British Government's money to which the noble Lord refers; it is that of the taxpayers.
  Lord Cledwyn of Penrhos: My Lords, is it not the case that external debt is the greatest barrier to conservation, for example, in the Amazon forests which comprise one-third of the total of all tropical forests? What is the immediate policy of Her Majesty's Government towards third world debt?
  Lord Brabazon of Tara: My Lords, the United Kingdom supports the international debt strategy which provides financial assistance to debtor countries conditional upon their pursuing economic
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  reform. We welcome the opportunity of debt for nature swaps creating additional resources for environmental protection on a small scale. However, we are not convinced that that works on a large scale. Such arrangements are not generally appropriate for government involvement. Aid resources are better used in direct support; for example, in our forestry initiative.

  Community Charge: Effects
  3.4 p.m.
  Lord Monson Lord Monson asked Her Majesty's Government:
  Whether, in the light of the recent Institute of Fiscal Studies report that families earning between £150–£300 a week will lose on average £190 a year from the change from domestic rates to the community charge whereas those with £600–£1, 000 a week will gain on average £210 a year, they will consider altering income tax allowances and thresholds to restore the relative net spending power of high and low earners to the levels prior to the introduction of the charge.
  The Paymaster General (The Earl of Caithness): My Lords, my right honourable friend the Chancellor will determine the level of income tax allowances and thresholds in his Budget in the usual way, taking account of the economic circumstances prevailing at the time.
  Lord Monson: My Lords, I thank the noble Earl for that non-committal reply. Does he not agree that the central issue is that the flat rate poll tax has transferred large sums of money from those who are only modestly well of f to those who are very well of f. It is that specific aspect of the poll tax which nearly everybody in this country, regardless of political affiliation, considers to be unfair. If only for the sake of self-preservation, while the Finance Bill is still in Committee in another place, will the Government not consider amending the Bill so as to restore the relative net spending power of high and low earners respectively to what it would have been if domestic rates had not been superseded by the poll tax?
  The Earl of Caithness: My Lords, one would then have to arrange a survey of a new set of figures different from that on which the IFS made its survey. It made the survey taking as a base the 1989-90 rates bills uplifted for inflation. It has not attempted to estimate what rate bills would have been this year. Your Lordships will be well aware that local authorities have imposed a 34 per cent. rate rise this year.
  Lord Boyd-Carpenter: My Lords, will my noble friend also have in mind the fact that the greater part of the expenditure of local authorities is provided from national taxation which follows a system of graduation for which the noble Lord, Lord Monson, has such enthusiasm?
  The Earl of Caithness: My Lords, one must remember that about half or a large proportion of

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  local authority finance comes from the taxpayer. Another part comes from the business community and the third and final part from the community charge payer.
  Lord Bruce of Donington: My Lords, without in any way diminishing the thrust behind the Question of the noble Lord, Lord Monson, would it not be in the public interest for the Government to kill two birds with one stone; that is, to abolish this ridiculous poll tax and also to secure the early retirement of the Prim; Minister who has imposed it upon the nation?
  The Earl of Caithness: My Lords, as usual the noble Lord is very quick to criticise but offers nothing in its place. Will the noble Lord tell us what he has in mind for the ro of tax?
  Baroness Carnegy of Lour: My Lords, does my noble friend agree that the Institute of Fiscal Studies' figures have probably been totally invalidated by your Lordships' recent decision to ring fence an enormous area of taxpayers' money which is to be spent through local government? Would it not be better to postpone that decision until we know whether the House of Commons agrees that that transfer of money to the taxpayer should be upheld?
  The Earl of Caithness: My Lords, my noble friend has a valid point. It is also worth putting on record that the IFS study does not take account of very generous transitional relief offered by the Government to the taxpayer. It does not take into account the take-up of community charge benefits which an; substantial and greater than those that existed under the rating system. It does not take account of the charge capping of high spending authorities. The Government have put forward a lot of money in support of those on low pay. However, in order to help mitigate community charge bills, I understand that some of your Lordships are betting on Lord Bertie which is running this afternoon at Salisbury races.
  Lord Monson: My Lords, when the noble Earl says that community charge benefits are substantial, is he aware that young people earning less than £94 per week gross may have to pay as much as 10 per cent. of their income in community charge, which hardly suggests that the benefit system is very well structured?
  The Earl of Caithness: My Lords, as the noble Earl will know, under the inequitable rating system only some 18 million households paid rates. Some 36 million adults will pay the community charge. The benefits system which the Government have put forward means that about 10 million people—that is, one charge payer in four—will qualify.
  Lord Molloy: My Lords, in view of the facts mentioned by the noble Lord, Lord Monson, is it right, as I have read in some newspapers, that the Prime Minister has decided that changes must be made? If that is so, when will they be made?
  The Earl of Caithness: My Lords, the noble Lord will recall that we were constantly changing the rating system in order to make it fairer and we are presently looking at certain representations submitted to us.

  Sizewell B Power Station
  3.10 p.m.
  Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
  Whether they have now received from Nuclear Electric the revised costs of Sizewell B power station.
  Viscount Ullswater: My Lords, my right honourable friend the Secretary of State for Energy has just received from Nuclear Electric plc the latest progress report on Sizewell B. Detailed discussions on the report will be held with the company in the near future.
  Lord Hatch of Lusby: My Lords, is the noble Viscount aware that the Secretary of State received the report last Wednesday and that it showed that, according to latest estimates, Sizewell B will now cost well over £2 billion at 1987 prices, compared with the figure the Government gave in the past (which was given to me by the noble Viscount) of £1·8 billion also at 1987 prices? Is the Minister further aware of the criticism being made by the all-party Energy Select Committee of another place of the conduct of the Department of Energy in not monitoring the rapid steep rise in the cost of building nuclear power stations?
  Viscount Ullswater: My Lords, the management of Nuclear Electric plc is responsible for all aspects of the project. Naturally, as a shareholder, my right honourable friend the Secretary of State for Energy is keenly interested in the progress of the project. He will be discussing the report in detail with the top management of the company.
  Lord Stoddart of Swindon: My Lords, on the basis of the new costs for Sizewell B, can the noble Viscount state, or has he been advised, what the price per unit will be for electricity generated in Sizewell B?
  Viscount Ullswater: My Lords, the implication of the review of electricity costs from the station will need to be considered with the company. Nuclear Electric plc has already signed a contract with the public electricity supply companies until 1998. That should cover the first four years of Sizewell B's active life. The price that Nuclear Electric receives for its output is determined by the contract, not by the cost of the output. Consumers therefore will not be affected.
  Lord Williams of Elvel: My Lords, if Sizewell B's first four years are contracted out at a fixed price, as I understood the noble Viscount to say, on that price will Sizewell B, on the capital costs now

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  announced, be profitable or unprofitable? If it is profitable, what will be the return on capital employed?
  Viscount Ullswater: My Lords, as I said, Nuclear Electric plc has a contract with public electricity supply companies for eight years. Nuclear Electric plc negotiated that contract in the knowledge of its latest estimates on the cost of output from Sizewell. If estimates of cost of output were to change, so would the rate of return earned. That is a commercial risk which the management of Nuclear Electric plc had to take into account when negotiating the contract.
  Lord Williams of Elvel: My Lords, I am sorry to press the noble Viscount. I am sure that he is aware that the rate of return will be calculated on the capital cost of the project. If the capital cost goes up on a fixed price, does that not mean that the rate of return comes down? At what point does the rate of return become negative?
  Viscount Ullswater: My Lords, I do not think that we should be obsessed with the short term. Apart from the diversity and environmental contribution of nuclear energy, a lot can happen to the price of electricity over the 40-year life of a nuclear power station. It would be a brave man who speculated on the relative economies of fossil and nuclear generation of energy over that period.
  Lord Hatch of Lusby: My Lords, will the noble Viscount again advise the House whether the figure which I quoted and which has been widely quoted—over £2 billion—is the latest estimate made by Nuclear Electric pic? If it is, despite what the noble Viscount says regarding the cost of electricity will that not automatically increase the nuclear levy on the privatised companies?
  Viscount Ullswater: No, my Lords. The noble Lord spectulates in his own way regarding the price. I have already answered his secondary question concerning the cost of electricity from Sizewell B.

  Business
  Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Social Security Bill will be adjourned at about 7.30 p.m. for about one hour and that during this adjournment the London Docklands Development Corporation (Vesting of Land) (London Borough of Southwark) Order 1989 and the Drug Trafficking of fences Act 1986 (Designated Countries and Territories) Order 1990 will be taken.

  Business of the House: Debate, 6th June
  The Lord Privy Seal (Lord Belstead): My Lords, I beg to move the Motion standing in my name on the Order Paper.
  Moved, That the debate on the Motion in the name of the Lord Jenkins of Hillhead set down for
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  6th June shall be limited to 5 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "2½ hours" and "25 minutes" for "20 minutes".—(Lord Belstead.)
  On Question, Motion agreed to.

  Social Security Bill
  3.15 p.m.
  The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
  Moved, That the House do now again resolve itself into Committee.—(Lord Henley.)
  On Question, Motion agreed to.
  House in Committee accordingly.
  [The CHAIRMAN OF COMMITTEES in the Chair.]
  Lord Carter Lord Carter moved Amendment No. 61:
  Before Clause 10, insert the following new clause:
  ("Radiation exposed Crown employees: benefits
  —(1) In the principal Act, after section 78, there shall be inserted the following Chapter—
  "Chapter VA: Radiation Exposed Crown Employees.
  78A.—(1) Subject to the provisions of this Act, a person shall be entitled to a benefit or benefits, to be known as radiation exposure payments, payable at a prescribed rate or rates, if he is—

  (a) a radiation exposed Crown employee who suffers from a relevant disease;

  (b) the widow or widower of a radiation exposed Crown employee who suffered from a relevant disease; or

  (c) a person entitled to child benefit in respect of a child of a deceased radiation exposed Crown employee who suffered from a relevant disease.

  (2) Subsection (1) above shall come into force six months after the passing of the Social Security Act 1990.
  (3) In this Chapter—
  "a radiation exposed Crown employee" means a person who, while serving as a member of Her Majesty's forces or in any other prescribed employment under the Crown, was, or is deemed in accordance with regulations to have been, exposed to ionizing radiation as a result of his participation in activities connected with a prescribed test or series of tests of a nuclear device or devices;
  "a relevant disease" means a disease presumed to have been caused by service as a radiation exposed Crown employee.
  (4) for the purposes of this section, any disease specified in column 1 of Schedule 9A to this Act, which a radiation exposed Crown employee develops or has developed at any time after the last day on which he was, or is deemed in accordance with regulations to have been, exposed to ionizing radiation as a result of his participation in activities connected with a prescribed test or series of tests of a nuclear device or devices, but not longer after that day than the maximum period specified for that disease in column 2 of that Schedule, shall be presumed to have been caused by service as a radiation exposed Crown employee, and no other disease shall be presumed to have been so caused.
  (5) The Secretary of State may at any time make an Order amending Schedule 9A to this Act in such manner as he considers appropriate in the light of medical evidence.
  (6) Where, on the day before such an Order comes into force, a person is treated as suffering or having suffered from a relevant disease for the purposes of this section, or would have been so treated if his claim for benefit under this section had been determined, the provisions of Schedule 9A shall apply in his case as if the Order had not been made.

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  (7) Regulations may prescribe circumstances in which a claim for benefit under this section is to be determined as if an Order under subsection (5) above which came into force after the date of the claim had been in force on that date.
  (8) Notwithstanding the provisions of subsection (2) above, the first regulations under subsections (1) and (3) above shall be made before subsection (1) comes into force.
  (9) Before making the first regulations under subsection (1) above, it shall be the duty of the Secretary of State to satisfy himself that the benefit or benefits payable under that subsection by virtue of those regulations will be on the whole as favourable as the benefits that would be payable under section 76 above to persons in similar circumstances if the relevant disease were prescribed for the purposes of that section and the other conditions of entitlement to benefit under that section were satisfied.
  (10) A claim for benefit under subsection (1) above made within 12 months after the day on which the Social Security Act 1990 was passed shall be treated as if the provisions of that subsection and of the first regulations under subsections (1) and (3) above had come into force on that day and as if the claim had been made on that day or on the first day on which the claimant satisfied or would have been satisfied the requirements for entitlement to the benefit, whichever is later."
  (2) In section 93(1) of the principal Act, there shall be added at the end—
  "(f) a question whether a person is or was on any day a radiation exposed Crown employee for the purposes of Part II, Chapter VA."
  (3) In section 113(1) of the principal Act, for the words "Chapter V" there shall be substituted the words "Chapters V and VA'.
  (4) In section 115(3) of the principal Act, for the words "those relating to industrial injuries benefit" there shall be substituted the words "Chapters IV to VA".
  (5) After Schedule 9 to the principal Act there shall be inserted the following Schedule—
  "Schedule 9A
  Diseases Presumed to have been caused by Service as a Radiation Exposed Crown Employee

  Disease

  Maximum period

  Leukaemia (other than chronic lymphocytic leukaemia)

  40 years

  Cancer of the thyroid

  40 years

  Cancer of the breast

  40 years

  Cancer of the pharynx

  40 years

  Cancer of the oesophagus

  40 years

  Cancer of the stomach

  40 years

  Cancer of the small intestine

  40 years

  Cancer of the pancreas

  40 years

  Multiple myeloma

  40 years

  Lymphomas (except Hodgkin's disease)

  40 years

  Cancer of the bile ducts

  40 years

  Cancer of the gall bladder

  40 years

  Primary liver cancer (except if caused by cirrhosis or hepatitis B)

  40 years"

  (6) In section 63 of the Social Security Act 1986 (annual up-rating of benefits)—
  (a) the following paragraph shall be inserted after subsection (1)(i)—
  "(j) specified in regulations under section 78A(1) of the Social Security Act 1975, "; and
  (b) in subsection (3)(b), for the words "or (ee)" there shall be substituted the words "(ee) or (j)".").
  The noble Lord said: This amendment introduces a new clause into the Bill and concerns the 22,000 British servicemen and approximately 3,000 Crown employees who participated in the British nuclear weapons testing programme between 1952 and 1958. To put it more accurately, it concerns the dependants of those men since those concerned are dying
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  disproportionately from leukaemia, myeloma and other cancers.
  The Government claimed that those involved in the nuclear testing programme were not exposed to radiation and therefore there is no connection between their cancers and the tests. However, hundreds of those who took part confirmed that they wore no protective clothing or the dose meter film badges to reveal the level of exposure. It is therefore not correct to say that everyone was protected and wore the dose meters to indicate the levels of their exposure to radiation.
  After years of pressure the National Radiological Protection Board conducted a study and reported in 1988. I am sure that when the Minister replies he will tell us that the study showed that apart from leukaemia and myeloma there is no evidence to link other cancers with the test programme. However, the study actually showed three things: first, that leukaemia and myeloma were probably caused by participation in the test programme; secondly, that other cancers were probably not caused; and, thirdly, that more research and study are required.
  There are now a number of widows—only a few—receiving a pension because their husbands died from leukaemia or myelmoa after 1988. For those whose husbands died of leukaemia and myeloma before 1988, the report I fear came too late. The next report from the NRPB is not due until 1991. If that report finds that some other cancer—of the pharynx or the stomach—is linked to exposure to nuclear radiation in the 1950s, will there be another group of widows whose husbands died too soon?
  Many who have studied the NRPB report claim that it was deeply flawed. It was discovered that the records of service supplied by the Ministry of Defence to the NRPB did not include all those who participated in the test. An important category was missing. All the files of those who had claims outstanding for pensions as a result of their participation in the tests were not included. By definition those most likely to weight the statistics to show a high incidence of cancer were not included.
  The new clause is modelled almost exactly on legislation which was passed into law in America in 1988. The Americans are way ahead of us in their research in this matter. Existing American legislation is almost certainly due to be improved this year with the manifestation caps being lengthened and more diseases that are compensatable being added to the list.
  Report No. 5 of the National Research Council, Biological Effects of Ionising Radiation, concluded that all the previous understandings about which low levels of radiation cause various diseases have been wrong. I refer in passing to the recent new evidence from Sellafield suggesting that workers exposed to radiation should consider not having children. We know that new evidence is appearing all the time regarding the dangers of exposure to radiation.
  Either the American servicemen exposed to the American nuclear test programme were somehow biologically different from the British servicemen,

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  or the Americans, with 250,000 men involved compared with our 25,000, have got all their research wrong and are compensating their servicemen unnecessarily. In fact, 400 British servicemen were present at the American tests. Those Americans who stood beside them then are now eligible for compensation but the British servicemen are not.
  The new clause is drafted to be very flexible. Considerable scope is left to the Secretary of State to fix the compensation levels, to add to or subtract from the list of prescribed diseases and to change the manifestation levels. The clause was in fact drafted with technical help from the department.
  To sum up, the Americans with all their research facilities and expertise have decided that there is a connection between exposure to ionising radiation in the nuclear test programme and a number of defined cancers and are therefore paying compensation. Hundreds of British servicemen who took part in the programme are stating categorically that they were not issued with dosemeter badges to reveal the level of their exposure.
  A memo dated 20th May 1953 from the Ministry of Defence—it was classified Top Secret at the time—states:
  "Tests were vital to discover detailed effects of various types of explosion on equipment, stores and men, without various types of protection".
  Some men were barred from wearing protective clothing and were asked to roll in the dust after the explosions to test the effect. Indeed, the NRPB report commissioned by the government stated:
  "Some aspects of the results, however, suggest that a real hazard was associated with the programme".
  In another place the Government admitted that the cost of compensation is in the order of £4 million to £5 million.
  A letter dated 20th September 1951 from the commander of the first British nuclear test, Rear-Admiral Torlisse, to Rear-Admiral Brooking, stated:
  "Radiological safety must be one of the chief concerns of the naval commander, but equally evidently, some degree of risk must be run by some people if we are to achieve the full purpose of the trial. As naval commander I must expect to have to order or approve the acceptance of some degree of risk. This is a customary service obligation, but it is performed in the knowledge that the Admiralty accept liability for those killed or injured in duty".
  I cannot do better than conclude with the words of President Reagan in his statement to Congress on signing the Radiation Exposed Veterans Compensation Act of 1988. He said:
  "The adjustment applies only in respect of specified diseases—primarily cancer of various organs—that manifest themselves within 40 years after the veteran last participated in a military radiation-related activity or, in the case of leukaemia, 30 years after such participation … Instead, the Act gives due recognition for the unusual service rendered by Americans who participated in military activities involving exposure to radiation generated by the detonation of atomic explosives. The Nation is grateful for their special service, and enactment of [the Act] makes clear the Nation's continuing concern for their welfare".
  I beg to move.
  Lord Walton of Detchant: My purpose in adding my name to this amendment, so eloquently moved by the noble Lord, Lord Carter, is to probe the
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  intentions and views of the Government on this extremely difficult and complex issue.
  I have no claim to be an expert on the effects of ionising radiation on the human body, but naturally I have some familiarity with the literature that deals with this extremely complex subject. One takes account of the views expressed by world renowned experts such as Sir Richard Doll in the United Kingdom, who, after very careful study of the evidence relating to this matter, came to the conclusion, on the one hand, that the association between exposure to radiation during nuclear tests and the development of various forms of cancer was extremely weak. On the other hand, the experts of the National Radiological Protection Board came to the conclusion that there could well be an association between such exposure and the development of certain forms of leukaemia.
  The whole issue of the extent to which exposure to ionising radiation can be responsible for the development of leukaemia and other forms of cancer is extremely difficult. If one were to attempt to deploy all the scientific evidence for and against the views expressed it would occupy the Committee for a very long time indeed. I simply say that so far as I am concerned I wholly accept the view expressed by the NRPB to the effect that there is a probable but by no means certain association between such exposure and the development of multiple myeloma and various forms of leukaemia.
  The evidence from the United States to which the noble Lord, Lord Carter, referred has developed the argument further. It suggests that it cannot be proved beyond reasonable doubt that there is no such association between radiation exposure and the development of other forms of cancer. For that reason the United States has accepted the necessity and propriety of awarding compensation to those developing the forms of cancer listed in the proposed Schedule 9A in the amendment who were involved in nuclear test programmes.
  In this country the evidence is that war pensions and widows' pensions have been awarded to certain individuals suffering from myeloma and various forms of leukaemia other than chronic lymphatic leukaemia. of course to acquire the award of a war pension it is my understanding that the standard or burden of pro of is not as strong as it is in many other circumstances. The association does not have to be proved beyond all reasonable doubt or even on the balance of probabilities; but if there appears to be a prima facie case to suggest that such an association is valid, a pension may be awarded. That is my understanding.
  No one can define precisely the cause of many forms of cancer. There are certain forms of cancer such as that of the lung where the association with smoking, for example, is incontrovertible. There are other forms of cancer which are due to environmental exposure to toxins of various kinds. However, in the case of most forms of cancer listed in the proposed schedule no such evidence has yet been adduced and the purpose of the amendment, therefore, is to invite the Government to consider whether they feel that the possibility of such an association would make it appropriate for such

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  individuals and their dependants to be awarded compensation or pensions.
  It is impossible to conclude that all the forms of cancer listed in the schedule which have developed in service personnel or Crown employees taking part in these programmes many years ago must have been the result of such exposure. For example, we know that the levels of radiation to which some of those at a distance from the tests were exposed may well have been, at the most, no greater than those levels to which individuals living in, for example, the county of Cornwall are exposed, where the level of background radiation is five times that in other parts of the United Kingdom. Exposure may have been no greater than that. Certainly we cannot in any circumstances prove that such an association exists. However, it is equally impossible to prove that such an association does not exist.
  Hence, the question I ask is this: Is it the Government's wish and intention to consider favourably the position of those who have been involved in such test programmes? Will they consider the payment of pensions or compensation to them or their dependants in the case of the development of those conditions listed in the schedule? I support the amendment, as I have said, in a probing capacity.
  3.30 p.m.
  Lord Henley: It may be of use in the debate if I intervene at this stage and speak fairly briefly. I shall speak again at the end of the debate before the noble Lord, Lord Carter, decides what to do about his amendment.
  Lord Parry: I hope that my question will not be blocked out by the Minister answering at this stage.
  Lord Henley: It may be of use to the Committee if I speak now. I reassure the noble Lord that I will answer his and any other points towards the end of the debate before the noble Lord, Lord Carter, concludes and decides what to do about his amendment.
  I wish to begin with the question of the standard of pro of which the noble Lord, Lord Walton, mentioned. Under the War Pensions Scheme administered by my department, if a claim for a war pension is made within seven years of service ending under Article 4 of the Service Pensions Order, there is a presumption in favour of the claimant in that the onus is on my department to show beyond reasonable doubt that disablement or death is not due to service.
  The standard of pro of applicable to such claims is identical with that required in criminal trials. The department has to prove the opposite. The result is that a claim under Article 4 should not be rejected unless it is established beyond reasonable doubt that the conditions for an award are not fulfilled. If a claim is made for a war pension after seven years—that is what we are talking about here—under Article 5, the onus is on the claimant to show, on the balance of probabilities, that disablement or death is due to service.
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  The article provides that where a reasonable doubt exists, the benefit of that reasonable doubt shall be given to the claimant. I emphasise that very low balance of pro of, and I ask the Committee to compare it with the balance of pro of required in the criminal courts and elsewhere. As Members of the Committee will know, in the criminal courts matters are decided beyond reasonable doubt, and in civil courts they are decided on the balance of probabilities.
  Therefore, I am sure that the Committee will agree that the law surrounding claims for war pensions sides very much with the claimant. Because of that, we have been able to award pensions, as the noble Lord, Lord Carter, rightly said, in respect of some of those who participated in the UK nuclear weapons tests in the 1950s. I wish to correct one brief point which the noble Lord made. I believe he was in error. It is always open to those who were widowed before 1988 to reapply for a war widow's pension if the husband died of two particular conditions which I shall come to later and which were revealed after the publication of the report in 1988.
  This amendment reflects the anxieties which have been expressed in the House and elsewhere about the programme conducted in the South Pacific and the suggestion that it has bequeathed a legacy of illness to those who participated. Most of those who took part were young; and now, inevitably, they are middle-aged or elderly. Some have developed ill-health; and others, sadly, have died. The amendment is based on the presumption that exposure to radiation during participation in nuclear weapons trials is responsible for these illnesses and deaths. I believe such presumption to be unfounded.
  It is a sad fact that many of those men who participated in the United Kingdom nuclear weapons test programme would be suffering from cancer by now or would have died if they had spent their entire national service in this country and had never gone anywhere near the South Pacific. It is understandable that some of them, knowing that radiation can cause cancer, should associate their illness in middle age or old age with the participation in the programme over 30 years ago. I stress that there is no evidence, either medical or scientific, to link participation in the nuclear weapons test programme and the ill health which some of the participants have subsequently suffered.
  The nuclear safety standards and procedures were drawn up and implemented during the test programme with commendable and professional thoroughness. They bear favourable comparison with the standards in force today. While the Government, aware of concern about the tests, have remained confident over the years that the safety precautions taken were perfectly adequate and that personnel were not subjected to any significant health hazards, they commissioned the National Radiological Protection Boad to undertake a study of the health of the participants and to investigate whether it showed any correlation with radiation exposure.
  I remind the Committee at this stage that this was an independent survey involving staff from

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  the Imperial Cancer Research Fund and the use of eminent consultants. The initial protocol made clear that the study team would seek to eliminate bias and would conduct checks of the data supplied. It would investigate original records; and, so far as possible, it would verify all important data. The report describes in detail the elaborate checks that were done; the direct involvement of staff from the Imperial Cancer Research Fund and the use of eminent consultants such as Sir Richard Doll and others, particularly in the confirmation of the causes of death on death certificates. The death certificates, which are not held by the MoD, show that considerable pains were taken to ensure independence.
  Furthermore, the fact that the BMJ has accepted for publication a summary of the report and its findings demonstrates the scientific validity of the study. The scientific reputations of the authors are unassailable. The report shows how thoroughly all sources of bias were investigated and either eliminated or taken into account in the findings.
  After examining well over 100, 000 records of various kinds, identifying 22, 347 individuals as test participants and comparing their mortality and cancer incidence records with those of a similar number of controls of men who had not participated in the tests but who had served in tropical or sub-tropical areas while the tests were being carried out—it was a mammoth exercise—the NRPB report concluded:
  "small hazards of leukaemia and multiple myeloma may well have been associated with participation in the nuclear weapons programme, but that such participation has not otherwise had a detectable effect on the participants' expectation of life or on their total risk of developing cancer".
  As I have already said, under the provisions of the war pensions scheme, where there is reliable evidence which raises a reasonable doubt whether a condition is due to or aggravated by service, the benefit of that doubt must be and is given to the claimants.
  Our doctors in the war pensions branch were satisfied, having studied the NRPB report in 1988, that it provided just that evidence for the rejection of claims for war pensions relating to solid cancers. However, in the case of multiple myeloma and leukaemia, other than chronic lymphatic leukaemia, our doctors considered that, even though the NRPB report did not prove that these two conditions were linked with exposure to radiation, even on a balance of probabilities, nevertheless it contained statistical evidence which raised a reasonable doubt about those conditions being attributable to service by men who participated in these tests.
  Consequently, as I have explained, in line with the war pensions legislation, we have been able to review and consider claims for war pensions for those who satisfy the criteria identified by the NRPB report. Therefore, there is already in existence the appropriate legislation to provide pensions in cases where there is some reliable evidence which raises a reasonable doubt whether a condition is caused or aggravated by service. I am satisfied that further legislation is both unnecessary and unjustified.
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  The 1988 report included information collected up to a cut- of f point of 1st January 1984 though the NRPB continued to accumulate data on mortality and cancer incidence among the participants and the control group. Therefore, the NRPB recommended that a further study should be undertaken to validate and analyse this additional data. The Government agreed to commission such a further study aimed at analysing the data up to a new cut- of f point of 1st January 1989, which is five years after the earlier one. The NRPB has stressed that this recommendation is not based on any new and worrying evidence, but rather on a wish to be able to give a definitive statement in the light of the additional data accumulated between 1984 and 1989.
  Clearly, this further study, due at the end of next year, will provide a valuable up-to-date picture of mortality and cancer incidence among the nuclear test participants and the wider general community. It is hoped that the report from the new study will be available by the end of next year, although I must stress that the NRPB has full responsibility for the conduct, timing and methodology of the study. The Committee will, I am sure, agree with me that members of the NRPB and their colleagues who will be involved in this most important work must be allowed complete freedom in the way they undertake their tasks. We shall of course await the NRPB's further report with interest and will take full account of the findings to the extent that they provide any additional information that might affect participants' entitlement to war pensions.
  In the meantime I can only reiterate the Government's view that while we have the greatest sympathy for those who served the nation so well and are now in ill health, there really is no evidence which would support claims that the majority of cancers specified in the amendment are attributable to service in the United Kingdom nuclear testing programme. I exclude the two cancers which I mentioned. We have not reached this conclusion lightly. We were aware of concerns over the health of some of those who participated in tests and we commissioned the NRPB to provide facts on mortality and cancer incidence. We have accepted that part of the report which concluded that small hazards of leukaemia, other than chronic lymphatic leukaemia, and multiple myeloma may have been associated with participation in the testing programme, and we are paying war pensions as a result. Equally, we have accepted the other conclusion of this independent and expert study, which was that participation has not otherwise had a detectable effect on expectation of life or on the total risk of developing cancer.
  I shall deal at the end of the debate with further points raised. I hope that Members of the Committee will recognise that this is an emotive subject but I ask them to acknowledge that the Government's case is based on sound evidence.
  Lord Carter: I shall wish to respond to all those points at the end of the debate. It would help the Committee if the noble Lord could say how many war pensions have been awarded since 1988 in

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  respect of leukaemia and myeloma in response to the NRPB report.
  Lord Henley: My understanding is that a total of seven have been awarded—six to widows whose husbands died as a result of the two diseases and one to a war pensioner.
  Earl Russell: On behalf of the Liberal Democrats I should like to support the amendment. I shall not gild the lily by elaborating the arguments so well put by the noble Lords, Lord Carter and Lord Walton of Detchant. I should like, if I may, to answer some of the points made by my noble kinsman. I concede the one strong point in the government case. We do not know which of these deaths are the consequence of the nuclear tests. What we are dealing with here is a con-elation. We are dealing with a group of people in which there is an incidence of cancer far higher than the national average.
  Lord Henley: Perhaps I may correct the noble Earl. What I have just been saying and what the NRPB figures have shown is that there is no higher rate of cancer among this group than among the rest of the population. That is why we used a control group of another 20, 000 people who had the same background of serving but not near nuclear tests. It is only with the two cancers that I have mentioned—multiple myeloma and leukaemia, excluding chronic lymphatic leukaemia—that there seems to be a slightly higher rate. In that case we have accepted that that could be attributable service and we are awarding pensions as a result.
  3.45 p.m.
  Earl Russell: I confess that I do not have the figures to hand but I am extremely surprised by what I hear. Perhaps we shall hear more detail of it later.
  I should like to answer some of the other points that have been made. The noble Lord referred to the seven-year burden of proof. That is a perfectly reasonable argument in normal conventional warfare. If one is shot in normal conventional warfare, one knows it. But it is of the essence of nuclear war and nuclear testing that an injury may occur and surface very many years later. Therefore the seven-year formula seems to be very hard indeed to apply.
  My noble kinsman may express anxiety about taking a. breach of the seven-year formula as a precedent. I do not think that it will be a precedent very of ten. Nuclear war is not a common occurrence. If it should happen on a really large scale we would be concerned with other questions beyond requests for compensation. In any future testing, which does not seem to be in prospect at the moment, a great many more precautions would be taken than on this occasion. We have heard accounts given of people being asked to roll in the dust. I am not sure that I find that very easy to reconcile with the argument that the protection offered was perfectly adequate. Indeed, I am not sure that at that stage of the nuclear weapons, programme the protection offered could be perfectly adequate. I do not think that we had any
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  idea then what perfectly adequate in this context really meant.
  Finally, there is an argument of trust. People who risk their lives and their health in the service of the Crown need to know that they will, if they receive serious injury, be compensated or in extreme cases that their dependants will be compensated. That is a matter of trust and not many people would serve the Crown without it. We have been given a figure of £4 million to £5 million. The Government have to consider which is more expensive—£4 million to £5 million just once with no great prospect of it happening again, or a breach of trust which would live in people's memories and not redound to the Government's credit.
  Lord Parry: In terms of the average age of the Committee the Minister is quite young. If he were not he would have a sense of dé jà vu as we listened to his response at the Dispatch Box this afternoon. In the course of the debate I have been reminded by my noble friend Lady Phillips of the arguments concerning pneumoconiosis and silicosis and the causes of those conditions. Members of the Committee will not need to be reminded of the various issues that have arisen since in which the burden of pro of has taken so long to establish that generations have died in agony as a result of the postponement of real intervention.
  It is also understood by supporters of the Government that what the Government lack in the country is an understanding of the fact that they care. I have always assumed that they care. I have always assumed that their failure to communicate is part of their problem. This is an issue on which they can demonstrate clearly and immediately that, while they understand that the figures they have been quoting to us are the burden of the pro of for doing nothing, there is within those figures an equal burden of pro of for acting immediately.
  I am bound to point out to the Minister that 40 years ago I taught in a town with a population of some 2, 200. There were two young men in my class. The name of one of them comes easily to mind. I can give the Minister his name—Ronnie Adams. I can give the noble Lord his address—Trinity Terrace, Burton, in the county of Pembroke, which is now within Dyfed. I have been in touch with his widow, as indeed has the Conservative Member for Pembroke, Nicholas Bennett. He and I have exchanged letters and have always tried to work in harmony together to get justice for the widow of that man.
  Ronnie Adams was one of those young people who were taken out to the site. He was in close proximity to the explosion. He was advised to turn his back on it and to count to 60; and 60 seconds later to turn around to see what he could see so that he could report it. Now I report to the Committee that he died two years ago of one of the two diseases of which the Minister has spoken.
  Lord Henley: I tried to make it clear—perhaps I did not make it clear enough—that his widow would be entitled to put her claim back. If the war pensioner died of one of the diseases that I mentioned I am

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  sure that his case would get a sympathetic hearing. That is why I tried to stress that the standard of pro of which we apply in war pensions is a generous one. Where there is a reasonable doubt the benefit of that reasonable doubt will be given to the claimant.
  Lord Parry: The Minister will understand that I lived with this question when uncles of mine were asked to agree to allowing their lungs to be submitted for examination after they died so that the reason for death could be proved. It is in that context that I have been dealing with this individual case. While he is correct to argue that the widows of these men can raise an appeal, he must realise that many of them are unlikely to be able to deal with the processes of appeal. They are likely to be at a grave disadvantage when it comes to dealing with any department to obtain rights which fall due to them.
  I should like to stress that clearly there has been a point at which young people in this country doing their duty—some servicemen and some civilians in attendance on them—have been subject to risks which, as the noble Lord said, were not properly understood at the time. However, they are understood now. I say to the Government: for heaven's sake, demonstrate your caring and do your duty.
  Baroness Carnegy of Lour: I understand the point about servicemen and Crown employees who were accompanying the servicemen at these tests. However, I should like to point out to the noble Lord, Lord Carter, that it seems to me that we should not leave out the civilians who worked during the war in the university research teams on the back-up research which supported the tests that eventually led to the development of the first two nuclear bombs.
  Those people were engaged in research which was not fully understood at the time. The amount of radiation to which they were exposed was probably much less, but on the whole they were unprotected. For many years they worked in an atmosphere full of radioactivity. It seems a pity to me to narrow the issue down to service pensions. However, I realise that at this stage it is probably only a probing amendment.
  I should say that I took part as a university employee in a very humble capacity in this connection when I was very young. In my view, the considerations mentioned by the noble Lord apply in this case. Moreover, the generosity and the approach on the pension side are probably not as great because if we are talking about disability pensions for those people they would probably not be getting a service pension.
  Lord Boyd-Carpenter: I think that noble Lords felt some sympathy for my noble friend Lord Henley when he was speaking to this amendment. As he so rightly said to the Committee, this is a very emotive matter and one upon which Members of this Chamber on both sides naturally have strong feelings. I am troubled by two aspects of the matter. First, it is apparently now accepted that in the case of two forms of cancer, myeloma and leukemia, if a
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  person who was exposed to radiation during these tests dies a pension will be granted. That is very good news.
  However, certainly to the layman—and I claim no medical knowledge whatever—it seems difficult to draw a sharp distinction between those two forms of cancer and others. I pose this question to my noble friend. Can we be sure and clear in our minds that that is a valid distinction and is to be accepted in cases of myeloma and leukemia when exposure may be the cause of the disease, while, on the other hand, other forms of cancer can be excluded? As a layman I find that distinction hard to understand.
  My second point concerns the operation of the war pensions scheme. I must say to my noble friend Lady Carnegy of Lour that, although one has great regard for the people in civilian life who conducted this extremely dangerous research, they are subject to a different system. Their case must be looked at under different rules. In this debate we are looking at the issue under the terms of the war pensions scheme. I speak with some experience on the matter as I was responsible for the scheme for six and a half years. I know that it is true, as has been said, that it tends deliberately to err on the side of the applicant. In particular, it does not call for anything to be established beyond reasonable doubt as is the case with so many other claims under many other schemes.
  Taking those two aspects together—that is, the question of trying to draw a line between those two forms of cancer and others and the application of that to a system which believes in erring, if it has to err, on the side of the injured person—I wonder whether we are wise to draw the line where it appears to have been drawn. I know nothing of the experiments carried out in the 1950s, save to say that it is obviously the case that no one at that time understood nuclear radiation and its horrors. Therefore, with the best intentions in the world, the precautions taken cannot have been what they would be if similar tests were carried out today. However, that casts no reflection upon those responsible for them; people simply did not know the dangers. Surely that fact introduces another element of doubt which makes one a little unhappy.
  My noble friend spoke about the preparation of another report. However, I was a little sad to hear him say that it would not be available until the end of next year. Given the age of some of the people concerned and at least the possibility that their health may have been damaged by the exposure to which they were undoubtedly subject—they undoubtedly suffered a measure of radiation—it is somewhat unfortunate that the report will not be available for another 18 months. I wonder whether my noble friend is prepared to say, even if he does not feel able—and he appears not to be able—to accept that in a war pension case it would be sensible to give the benefit of some doubt to the applicant, whether the publication of the report can be expedited. If the report is already in preparation, I cannot see why a further 18 months is required. It must be enormously disappointing to those who are interested in the case of these people.

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  When my noble friend finally replies, I hope that he will be able to reassure Members on both sides of the Committee that he is not simply drawing the line where it now rests and standing upon it for at least 18 months. I hope he can reassure us that the Government realise that this is not a matter upon which many people think that the conclusions are absolutely clear. If those conclusions are not absolutely clear, I am sure the Government will understand that people in all parties, both inside and outside of Parliament, would be more than happy if the provisions were stretched a little further to include people who undoubtedly served our country many years ago. These people served both Crown and country and during such service they were undoubtedly exposed to some risks to which ordinary people were not exposed.
  Perhaps the Government should take a deep breath and reconsider the matter. The sums of money involved are very small compared with those discussed yesterday. I wonder whether my noble friend would be prepared to take back a little of what he said and discuss with his right honourable friend whether we can be so absolutely certain of the distinction between those two kinds of cancer and others for it to be right to deprive people who undoubtedly served our country of this benefit. In that difficult situation—believe me, I do not under-rate the problem for a Minister and a department—perhaps there is a case for taking a deep breath and saying that this is a comparatively small sum. As I know, it does not set any awkward precedent and unhappily it would not last for long. Therefore, rather than risk leaving those who served this country with a feeling of bitterness and a sense that they have been let down by the country, is it not better to try to move some way in their direction?
  4 p.m.
  Lord Henley: My noble friend Lord Boyd-Carpenter said that as a layman he found it difficult to distinguish. All of us here, with perhaps one or two exceptions, are laymen. Obviously we have to take advice on these matters. I am advised that it is quite easy for medical experts to distinguish between the cancers. I am glad that my noble friend stressed the special nature of the war pensions scheme. He has a great deal of experience. It is important to stress, as I did at the beginning of the debate, that the standard of pro of is merely that we ask that where a reasonable doubt is shown, the benefit of that reasonable doubt shall be given to the claimant.
  My noble friend also asked that I put pressure on my right honourable friend to urge the NRPB to expedite the report. We have always stressed the independence of the report. I think that it would be wrong for me or, for that matter, my right honourable friend, to put pressure on the NRPB to expedite the report. That body has said that the report will be available by the end of next year. Any interference by myself would lead to accusations that we were interfering with the fairness and impartiality of the report.
  Lord Boyd-Carpenter: Does my noble friend consider that he would be treating the board with perfect respect if he suggested that there was great anxiety in Parliament over the matter and that an interim report might be helpful?
  Lord Henley: I am sure that the NRPB will be aware of this debate. I shall make sure that it is aware of the comments made by my noble friend and other noble Lords who have spoken. If any new evidence should appear before the date mentioned, from whatever source, it is still open to the doctors in the war pensions branch of my department at Norcross to consider whether that evidence applied to the individual claimant and whether, as a result of our standards of pro of, any claimant was eligible for a war pension. For that reason I stress what my noble friend emphasised—the generous onus of pro of with regard to war pensions.
  I stress again the point raised by my noble kinsman Lord Russell that there are not higher rates of all the cancers excluding myeloma and leukaemia other than chronic lymphatic leukaemia among the approximately 20, 000 people who were examined. Within the group and the control group—and I stress that the control group was the same size consisting of people from the same background who had served around the world but not near nuclear tests—there was no higher rate of incidence of these cancers other than the two I have mentioned. I do not know the figures but it was slightly greater. Nor was the rate any higher between the control group and the original group than that in the general population.
  Lord Parry: Will the noble Lord admit that in a town with a population of 2, 222 from which two citizens, both of them now dead are tested, the figures seem to indicate that there must be a higher average than usual?
  Lord Henley: What I have been trying to stress is that approximately 22, 000 people took part. The control group was a similar size. I appreciate that there might be oddities in one town of 2, 000 where the figures are higher, but it is not a big enough sample. We have taken a sample the same size as the group of those who took part in the tests.
  Perhaps I may return to the point raised by the noble Lord about his friend and neighbour, a harrowing case. If the facts, as he put them, are correct and this widow's husband died either of multiple myeloma or leukaemia other than chronic lymphatic leukaemia, she is likely to be eligible. However I cannot adjudicate on that case at the Dispatch Box.
  Lord Carter: Perhaps I may intervene. If the husband died of a cancer other than leukaemia or myeloma and had been involved in the nuclear test programme, since the evidence is before the war pensions board at the moment, the widow would not be able to prove this. She would have no reasonable chance of proving that those cancers were associated because the department relies entirely on the NRPB report to deal only with leukaemia and myeloma. Is that correct?
  Lord Henley: The noble Lord is absolutely correct. The noble Lord's noble friend Lord Parry stated that in that case he thought it was either multiple myeloma or leukaemia. On those facts it is likely that the widow could be eligible. However, I cannot adjudicate on the matter at the Dispatch Box. No doubt, with the support of the noble Lord and my honourable friend, the Member of Parliament for that area, Mr. Bennett, she will receive every reassurance. I give the noble Lord the assurance that the war pensions department itself will look at the case. I do not know whether the widow has already made a claim and been turned down. In that case, we shall ensure that it goes to appeal.
  Lord Parry: I am grateful to the noble Lord.
  Lord Henley: Having dealt with that matter, I wish to answer a few other points made by noble Lords of a factual nature. The noble Lord, Lord Carter, mentioned the memo of 20th May 1953. It stated that tests were vital to discover detailed effects of various types of explosions on equipment, stores and men without various types of protection. This is true. Tests were carried out and for the purposes of the test articulated dummies were used. At no time during the United Kingdom tests were humans used as guinea pigs.
  At no time during the test programme—this was something that the Government were accused of both by the noble Earl, Lord Russell, and the noble Lord, Lord Carter—were participants asked to roll in the dust. To ask that would have been irresponsible. As the ground level temperature would have been extremely high, this would have been very difficult.
  My noble friend Lady Carnegy of Lour suggested that civilians should be included within the definition of nuclear test veterans. Twenty-one United Kingdom atmospheric nuclear weapons tests took place at Monte Bello Islands in Western Australia, the Emu Field and the Maralinga Range in South Australia; and at Maiden Island and Christmas Island in the Pacific. Visits to these locations were spread over 15 years. All United Kingdom servicemen and male employees at the then Atomic Weapons Research Establishment at Aldermaston and the Atomic Energy Research Establishment at Harwell who were known to have visited any of the 15 locations during this period were included in the study of the population as test participants.
  I turn now to the situation in America. The noble Lord, Lord Carter, quite rightly said that the Americans have introduced such a scheme. I believe that the list of cancers is more or less copied straight from the American list. The United States decision to consider awards for certain diseases is entirely a matter for the United States Government. The United Kingdom's testing programme was conceived and conducted under the control of United Kingdom personnel quite separately from the American test programme. The United States records included situations in which many more participants were known to have experienced measurable radiation exposures that were significantly greater than those received by the bulk
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  of the United Kingdom participants in the United Kingdom tests.
  I go back to the NRPB report. I can only reiterate that it shows that there is no evidence in the case of any cancers other than the two I have mentioned. However, there is a statistically greater chance that cancers may have been caused by taking part in the tests. With that in mind it is quite right that the Government should award war pensions to those who are suffering from leukaemia, other than chronic lymphatic leukaemia, and multiple myeloma which may have been associated with participation in the testing programme. We have accepted the conclusion of this independent and expert study that participation in the tests has had no detectable effect on other cancers, on expectation of life or on the total risk of developing those cancers.
  I hope that, bearing those comments in mind, the noble Lord will feel able to withdraw his amendment. I hope I have given him assurances that where there is evidence we certainly shall be able to award war pensions. I stress, however, the low standard of proof. Without evidence I do not think it would be right to go down that road.
  Lord Walton of Detchant: I hope the Committee will forgive me for speaking again before the noble Lord, Lord Carter, closes on the amendment. I have two or three points to make. First, there are substantial differences in character between, on the one hand, multiple myeloma and leukaemia and, on the other hand, the various forms of solid cancer which are listed in the proposed new schedule. Secondly, I was much reassured to hear the Minister say that widows and dependants of those who were involved in the test programme and who died from leukaemia or myeloma may in retrospect apply for pensions. That was a reassuring comment. I trust there is no time-limit upon that provision.
  I was also glad to hear of the second study that is being carried out by the National Radiological Protection Board. It is quite clear that the first report of January 1988 was produced after the most careful and earnest consideration by some of the country's most distinguished epidemiologists, radiation biologists and physicians. As the Minister rightly pointed out, that report did not demonstrate any significant difference in the incidence of solid forms of cancer between those exposed to radiation and a control population. However, it demonstrated a significant increase in myeloma and leukaemia. The Government's decision has been based on that evidence. As I said in my opening remarks, that statistical and epidemiological evidence did not prove an association but neither did it disprove an association. That is a point of considerable importance. That is why I raise the issue and why I agreed to add my name to this amendment.
  Finally, I was very glad to hear the assurance from the Minister that if the new NRPB study demonstrates a significant increase in the incidence of solid forms of cancer in those involved in the test programme there is a probability that the Government will reconsider the issue and that if an interim report shows that to be the case the matter will be reconsidered as a matter of urgency.
  4.15 p.m.
  Lord Carter: I wish to express my gratitude and the gratitude of those outside the Chamber who are most intimately concerned with this matter—that is, the survivors from the test programme—for the debate.! shall deal with a few of the points that were raised. I was glad to hear the remarks of the noble Lord, Lord Walton of Detchant, who is a world expert in this matter. The noble Lord referred to the different opinions among experts on this subject. He emphasised the fact that although the NRPB was not able to prove that an association with other cancers existed it could not prove that such an association did not exist.
  In opening the debate I made a point to which the Minister referred. I mentioned the widows whose husbands had died of leukaemia and myeloma and who had applied before 1988. In those days they were turned down. Even if widows can now apply under the war pension scheme as regards leukaemia and myeloma, and perhaps for other cancers in future, they have to go through the whole business of appeal and pro of, even if the balance of pro of is on their side. My noble friend Lord Parry referred to that. The Minister was good enough to confirm that the lumber of awards granted since 1988 comes to the princely total of seven.
  Why have the Americans allowed compensation? They have carried out an immense research effort involving 250, 000 people, with all the cost that that entails. The list of cancers referred to in the amendment is taken directly from the American study. I hope the noble Lord, Lord Henley, will not mind if I say that I thought his answer on the American point was rather thin. I have heard the phrase " British is best" used in a number of contexts, but I do not think I have ever heard it applied to the nuclear testing programme. However, apparently the Americans did not carry out the testing programme as carefully as we did and therefore there was a greater risk of cancers on their side.
  The Minister referred to the thoroughness of the testing programme. We have the evidence of literally hundreds of men who were present on that occasion. They cannot all be lying when they say that they were treated as guinea pigs. They were not issued with protective clothing or dose meters. I do not believe that was done intentionally at the time. As the noble Lord, Lord Boyd-Carpenter, pointed out, knowledge of these matters in the 'fifties was much poorer than it is today. However, the Minister did not deal with my point on the NRPB's study that the files of all those who had applied for pensions were excluded from the study. Those people who were applying for pensions by definition had a higher incidence of cancer.
  We are now told we shall have to wait for another report and further study. Some men will have died by then. We obtained a report on leukaemia and myeloma only after years of pressure. Finally the Government agreed to have that study carried out. The study revealed what many people had suspected. It revealed that there was an association with certain types of cancer. I feel I should repeat the quotation from the NRPB report that I made at the beginning, which states:
  774
  "Some aspects of the results, however, suggest that a real hazard was associated with the programme".
  We heard all the arguments about the association with solid cancers with equal certainty before 1988 when servicemen were arguing that there was an association. In the absence of the NRPB report the Government understandably denied the association. Now of course they have had to admit to the association because it has been revealed by that independent report.
  The noble Baroness, Lady Carnegy of Lour, mentioned university research. In that research people were not deliberately exposed to radiation, but many civilians and servicemen involved in the testing programme were deliberately exposed to it. That I think is the difference. The speech of the noble Lord, Lord Boyd-Carpenter, was extremely helpful. I believe he was the noble Lord who confirmed the figure which I gave as regards the cost of this measure being £4 to £5 million. There are about a thousand people involved and, sadly, for reasons we all understand, it is a reducing figure.
  I should like to repeat a phrase that the noble Lord used. Could the Government just for once take a deep breath and give those men the benefit of the doubt? The noble Lord, Lord Henley, was extremely brave when he said that we were all laymen in this matter. However, I should think there is more expertise in this Chamber on this subject than there is almost anywhere else in the country.
  The Minister said there was no evidence of higher rates of solid cancers in those exposed to radiation in the testing programme. However, that was exactly what was said as regards leukaemia and myeloma until the NRPB report was issued. The Government, to their credit, changed their stance when that report was issued. We now know that seven people are receiving war pensions as a result of that report.
  I shall conclude with Chernobyl. We were told at the time that the incidence of leukaemia was limited and that the effects of the radiation were limited. We now find that the incidence is much greater than at first thought and the effects much longer lasting. In every case of exposure to ionising radiation it has been revealed that the danger is greater than first thought.
  I am very disappointed with the Minister's answer. He has given nothing to the people who asked us to put their argument. It is not a matter on which I like to divide the Committee. However, without an assurance from the Minister, other than the promise of an interim report at some stage, that those people will receive help, all I can do is seek the opinion of the Committee.
  4.20 p.m.
  On Question, Whether the said amendment (No. 61) shall be agreed to?
  Their Lordships divided: Contents, 112; Not-Contents, 129.

  DIVISION NO. 1

  CONTENTS

  Airedale, L.

  Ardwick, L.

  Annan, L.

  Auckland, L.

  775

  Aylestone, L.

  Kinloss, Ly.

  Birk, B.

  Kirkhill, L.

  Blackstone, B.

  Lawrence, L.

  Bonham-Carter, L.

  Leatherland, L.

  Bottomley, L.

  Listowel, E.

  Brightman, L.

  Lloyd of Kilgerran, L.

  Brookes, L.

  Lockwood, B.

  Brooks of Tremorfa, L.

  Lovell-Davis, L.

  Bruce of Donington, L.

  Mackie of Benshie, L.

  Callaghan of Cardiff, L.

  McNair, L.

  Campbell of Eskan, L.

  Mais, L.

  Carmichael of Kelvingrove, L.

  Masham of Ilton, B.

  Mason of Barnsley, L.

  Carter, L.

  Mayhew, L.

  Cledwyn of Penrhos, L.

  Milner of Leeds, L.

  Clinton-Davis, L.

  Molloy, L.

  Cocks of Hartcliffe, L.

  Monson, L.

  Craigavon, V.

  Nicol, B.

  Crawshaw, L.

  Northfield, L.

  David, B.

  Ogmore, L.

  Davies of Penrhys, L.

  Oram, L.

  Dean of Beswick, L.

  Parry, L.

  Dormand of Easington, L.

  Peston, L.

  Ewart-Biggs, B.

  Phillips, B.

  Falkland, V. [Teller.]

  Pitt of Hampstead, L.

  Feversham, L.

  Porritt, L.

  Fisher of Rednal, B.

  Portsmouth, Bp.

  Gallacher, L.

  Prys-Davies, L.

  Galpern, L.

  Rea, L.

  Gladwyn, L.

  Ritchie of Dundee, L.

  Glasgow, E.

  Robson of Kiddington, B.

  Glenamara, L.

  Rochester, L.

  Graham of Edmonton, L. [Teller.]

  Russell, E.

  Sainsbury, L.

  Greenway, L.

  Seear, B.

  Grey, E.

  Serota, B.

  Gridley, L.

  Shackleton, L.

  Hampton, L.

  Shannon, E.

  Harris of Greenwich, L.

  Shepherd, L.

  Hatch of Lusby, L.

  Stallard, L.

  Hayter, L.

  Stoddart of Swindon, L.

  Henderson of Brompton, L.

  Strabolgi, L.

  Hirshfield, L.

  Taylor of Blackburn, L.

  Hooson, L.

  Tordoff, L.

  Houghton of Sowerby, L.

  Turner of Camden, B.

  Howie of Troon, L.

  Underhill, L.

  Hunt, L.

  Wallace of Coslany, L.

  Hutchinson of Lullington, L.

  Walston, L.

  Hylton, L.

  Whaddon, L.

  Jacques, L.

  White, B.

  Jeger, B.

  Williams of Elvel, L.

  John-Mackie, L.

  Winstanley, L.

  Kennet, L.

  Winterbottom, L.

  Kilbracken, L.

  Wise, L.

  Kilmarnock, L.

  Young of Darlington, L.

  NOT-CONTENTS

  Aldington, L.

  Cork and Orrery, E.

  Alexander of Tunis, E.

  Cottesloe, L.

  Allerton, L.

  Cullen of Ashbourne, L.

  Annaly, L.

  Davidson, V. [Teller.]

  Arran, E.

  De La Warr, E.

  Belhaven and Stenton, L.

  Denham, L. [Teller.]

  Bellwin, L.

  Donegall, M.

  Beloff, L.

  Eccles of Moulton, B.

  Belstead, L.

  Elibank, L.

  Bessborough, E.

  Elles, B.

  Blatch, B.

  Elliott of Morpeth, L.

  Brabazon of Tara, L.

  Erroll of Hale, L.

  Brookeborough, V.

  Fanshawe of Richmond, L.

  Brougham and Vaux, L.

  Ferrers, E.

  Buckinghamshire, E.

  Fieldhouse, L.

  Butterworth, L.

  Foley, L.

  Caithness, E.

  Fortescue, E.

  Campbell of Alloway, L.

  Fraser of Carmyllie, L.

  Campbell of Croy, L.

  Fraser of Kilmorack, L.

  Carnegy of Lour, B.

  Grimston of Westbury, L.

  Carnock, L.

  Grimthorpe, L.

  Clanwilliam, E.

  Hailsham of Saint Marylebone, L.

  Cockfield, L.

  Coleraine, L.

  Harding of Petherton, L.

  776

  Harmar-Nicholls, L.

  Orr-Ewing, L.

  Henley, L.

  Pender, L.

  Hesketh, L.

  Pennock, L.

  Hives, L.

  Plummer of St. Marylebone, L.

  Hood, V.

  Hooper, B.

  Quinton, L.

  Howe, E.

  Rankeillour, L.

  Hunter of Newington, L.

  Reay, L.

  Hylton-Foster, B.

  Renton, L.

  Ironside, L.

  Renwick, L.

  Jenkin of Roding, L.

  Rodney, L.

  Johnston of Rockport, L.

  St. Aldwyn, E.

  Joseph, L.

  St. Davids, V.

  Kaberry of Adel, L.

  St. John of Fawsley, L.

  Kimball, L.

  Saltoun of Abernethy, Ly.

  Knutsford, V.

  Sanderson of Bowden, L.

  Lauderdale, E.

  Sandys, L.

  Lindsay, E.

  Selkirk, E.

  Lloyd of Hampstead, L.

  Sempill, Ly.

  Lloyd-George of Dwyfor, E.

  Shaughnessy, L.

  Long, V.

  Slim, V.

  Lucas of Chilworth, L.

  Somers, L.

  Lyell, L.

  Stodart of Leaston, L.

  McColl of Dulwich, L.

  Strange, B.

  Macleod of Borve, B.

  Strathclyde, L.

  Malmesbury, E.

  Strathmore and Kinghorne, E.

  Mancroft, L.

  Manton, L.

  Strathspey, L.

  Marshall of Leeds, L.

  Sudeley, L.

  Merrivale, L.

  Swinton, E.

  Mersey, V.

  Terrington, L.

  Morris, L.

  Teviot, L.

  Mottistone, L.

  Thomas of Gwydir, L.

  Mountevans, L.

  Tranmire, L.

  Mowbray and Stourton, L.

  Ullswater, V.

  Moyne, L.

  Vaux of Harrowden, L.

  Munster, E.

  Vinson, L.

  Murton of Lindisfarne, L.

  Wade of Chorlton, L.

  Nelson, E.

  Westbury, L.

  Northbourne, L.

  Whitelaw, V.

  Nugent of Guildford, L.

  Wolfson, L.

  Orkney, E.

  Wynford, L.

  Resolved in the negative, and amendment disagreed to accordingly.
  4.28 p.m.
  Earl Russell Earl Russell moved Amendment No. 62:
  Before Clause 10, insert the following new clause:
  ("Entitlement to income support
  In section 20 of the 1986 Act, for subsections (3) to (4N) there shall be substituted the following subsection—
  "(3) A person in Great Britain is entitled to income support if—

  (a) he is over the age of 16;

  (b) he has no income or his income does not exceed the applicable amount;

  (c) neither he nor, if he is a member of a married or unmarried couple, the other member is entitled to family credit or would be so entitled if he or she claimed it; and

  (d) except in such circumstances as may be prescribed, he is available for employment or attending a full-time course of study." ").

  The noble Earl said: When I woke up this morning my wife assured me that I had been making speeches to this amendment in my sleep. Naturally I asked whether I had made sense. She replied, "Yes". That worried me. It may illustrate that I have prepared this amendment with rather more thoroughness than the last. It may also illustrate the fact that the matter has been with us for some time, and that it is beginning to get under my skin. It is essential that one should not make speeches to amendments in one's sleep. When one gets to that point, one begins to think that it is about time that something was

  777
  done about the problem so that it is taken away and one does not have to worry about it.
  The amendment deals with another effect of the changes in the 1986 Act: the provision for 16 and 17 year-olds who are denied eligibility for income support and who are supposed to register for the YTS. When that provision came into effect in October 1988, the statistical effects were interesting: 70, 535 teenagers were taken from the unemployment register, but only 14, 677 were added to the YTS register. There is obviously a discrepancy between those figures.
  One should like to know where the missing teenagers went. The number of filled vacancies at job centres during that period was rather lower than usual. Therefore, it does not appear that that massive body of teenagers was put into employment, which was the theoretical object of the exercise. They simply disappeared. When I walk along the Strand and see the number of people who are begging, I begin to think that I know where a considerable number of them went. Begging was not the object of the exercise, but it is the effect which has been achieved. It is extremely unfortunate.
  The Government's position depends upon the theory that a guarantee of a YTS place is offered. The guarantee is clearly extremely defective. We hear regularly of cases of people for whom YTS places are not available, for example because of pregnancy. Occasionally there are problems with race. Sometimes there are problems with disability. By far the biggest problem results from people having no home. One of the teenagers in the Strand who was interviewed by the Independent put the matter very bluntly,
  "No home; no job: No job; no home."
  That is not the result of fecklessness; it is not the result of an inability to work. As the noble Baroness, Lady Seear, stated last year, it is difficult to turn up for a job interview in clothes in which a noble Lord would not garden. One cannot sleep rough in the streets, because one has nowhere else to go, and then turn up, looking suitably spick and span in order to impress an employer. It has been done, and the fact that it has been done at all is pro of that within that group of people there is a very considerable determination to work. That it is not done regularly is no matter for surprise.
  The root of the problem is the determination that teenagers should live at home. That is something that has not happened before and it does not seem to be happening now. When it does not happen, it gives rise to acute problems.
  We hear regularly about teenagers who have been thrown out by their parents; for example, as a consequence of a personality clash. Those kinds of things happen and we are not going to stop them. Sometimes it happens as a consequence of a second marriage and sometimes for reasons that are a good deal mere personal and indefinable.
  One situation in which the offer of a YTS place is insufficient is that of those who have been subjected to child abuse. Those people, when they leave home, feel the need to conceal their whereabouts from their
  778
  parents. Therefore, they do not register for the YTS. That would enable them to be found.
  There is justice in the point made last year by the noble Baroness, Lady Gardner of Parkes, that not all charges of child abuse are true. That statement needs to be repeated. If a charge of child abuse is falsely made, it is a sign that something is badly wrong in the family. To ask a parent to take back a child who has made a false charge of child abuse, as if nothing had happened and without investigation, is asking the parent to do something superhuman. Where a false charge is made, it indicates that something else is wrong that needs investigation.
  The noble Baroness, Lady Faithful, has previously spoken about those who have been in local authority care and who have no home to go to. Since last year the Government have introduced the notion of estrangement premium. That is a very welcome change so far as it goes; but the administration of that premium gives rise to considerable dissatisfaction. The word of the parents as to whether a child can satisfactorily return home regularly appears in practice to be taken without question. In child abuse cases that is an utterly unsatisfactory measure. There are other circumstances where the parents' willingness to have the child home is not necessarily sufficient pro of that that is where the child ought to be.
  There is also considerable dissatisfaction in relation to the administration of the severe hardship allowance. One third of claims are refused. In cases of pregnancy there is very severe difficulty in obtaining the severe hardship allowance. I remember a case that was brought to our attention last year. A 16 year-old who was pregnant was attempting to live on the £15 YTS bridging allowance. She was possessed only of one single skirt which she could get to meet round her waist. She was found not to be in a condition of severe hardship. That kind of case makes one think that the severe hardship provision is not a sufficient cure for the problem.
  The problem is this. What is to happen to teenagers who have left home for reasons which seemed good to themselves and reasons upon which it is very hard for us to pass judgment? They have no home to go to and are therefore unable to settle down anywhere where they can obtain a YTS place.
  There is the question of crime. I was interested to read a report from the Nottinghamshire probation service which was published in the Independent on 23rd April. The report stated that about one third of the teenagers who came into the hands of the Nottinghamshire probation service had no home. They usually came from familiar categories: those who had been victims of child abuse, those who had been thrown out by their parents and those who had been in local authority care. I do not know how big the iceberg is of which that is the tip, but I suspect that it is larger than we should like. The situation is capable of becoming extremely expensive over the passage of time.
  I regret to say that there is the option of prostitution, for both sexes. The noble Baroness, Lady Faithfull, has drawn our attention to that matter and I shall not elaborate on the subject.
  There is also the option of begging, as I know to my cost. Since I know it to my cost, I wonder whether, strictly, I should declare an interest in moving the amendment.
  We are told that the justification for the Government's position is the doctrine of the perverse incentive; that the benefit system should not offer a perverse incentive to leave home. I find that doctrine difficult to follow. First, the arithmetic is wrong. The costs of independent living are a great deal higher for most people than the value of the services that they receive in the parental home. They are a great deal higher than the somewhat attenuated rates of income support available for those between the ages of 18 and 24. If the Government think that there is a perverse incentive to leave home, they have not done their sums correctly.
  I am surprised by the notion of human nature that is behind the doctrine of perverse incentive. To be a teenager on the run is not a very comfortable way of existing. It is a way of life that involves considerable hardship, considerable fear and considerable risks. The notion that people would undergo such hardship for the sake of a temporary few shillings extra in benefit implies a very curious perception of human nature. It seems to me to involve an almost Marxist obsession with economic motive. I do not believe that people are like that. Neither do I think that most of them have so much indifference to their long-term future. I am sure that most of them would like to become established in regular employment. However, they need a place to live before they can do so and since deposits cannot be obtained from the social fund—something to which we shall return later today—there is almost a road-block between those people and their finding a roof over their heads.
  The benefit system is not having the effect of providing an opportunity to float people of f benefit and get them into employment, which I am sure is what we want to see. It is having the effect of kicking people down and locking them into the structure of living on benefit. That is exactly the opposite of what the Government and we wish to see happening. In fact this is a process of dismantling the lifeboats. It is peculiarly short-sighted.
  It is a cliché but nevertheless true to say that most young people are at a crossroads in their life and it is valid to say that there is a tide in the affairs of men. If young people are adequately established in employment and in a household of their own, there is a prospect of a long-term process of earning their living, to the benefit of both themselves and, if I may say so, the Treasury. If they get pushed down into sleeping rough, they are pushed into a situation which it is very hard indeed to get out of.
  This is where the benefit system is having the effect of encouraging a lifetime cycle of deprivation. That is not, as the Government seem to think, because benefits are addictive. I think that the Government severely overrate the attractiveness of social security benefits; they are not that large. That is the result of kicking away the ladder so that people cannot climb out. I believe that it is a short-sighted policy. I beg to move.
  Lord Carter: I was very glad from these Benches to add my name to this amendment. As the noble Earl said, we have been over this ground before. However, there is no harm in doing that because it is very important. We hope that eventually the Government will accept the strength of our arguments.
  As the noble Earl said, this amendment would allow some young people who are living independently to claim income support until they have found themselves a suitable youth training place for a job. The Committee will agree that it is essential that homeless 16 and 17 year-olds should be given the income, time and opportunity for their attempts to find either temporary or permanent accommodation. One of the benefits envisaged by the amendment is that the guaranteed income support encourages board-and-lodging providers and hostel proprietors to allow young homeless people who are not on youth training schemes to move into accommodation. There is growing evidence that even when hostels have been set up specifically for young people they are turning them away. That is because the young person has no income and cannot afford the rent.
  The noble Earl referred to the figures from Nottingham. We are aware also of the increase in homelessness among young people in London and under the Vagrancy Act the increasing number of convictions of young people for begging, particularly in London.
  I am sure that the Minister will refer in her reply to the matter of availability of places on the youth training scheme. Shelter has advised us that 45, 000 young people are not catered for at the moment under YTS. All these young people are potentially either homeless or have other problems to which the noble Earl referred. We have argued this case on a number of occasions and on different Bills. I hope that the Government will see the strength of the arguments.
  4.45 p.m.
  Baroness Seear: I should like briefly to support the amendment and emphasise a point alluded to by other speakers. One of the Government's reasons for refusing to give support to 16 to 18 year-olds is an assertion that there is a YTS place for all youngsters who want one. Therefore they are deliberately not weighting. I believe that the Government should look again at this matter. It may be that numerically that is true although I believe that in many areas that is not so. However, even if it were true, YTS is meant to be a training scheme. If it is not the right training for a youngster, it is absurd to push him or her arbitrarily into training just because there happens to be a training place in a particular occupation. It is a waste of training provision and will not lead to any satisfactory result.
  Moreover, it is not fair on the employers. If employers are trying to provide decent training, the last thing they want is a conscript who has been pushed into training that he does not want. He will be a disruptive influence and have the effect of making it a much less good training programme for all the other youngsters who are there. The

  781
  Government would be more consistent if they were to say that people should be properly selected for the training because it is suitable training for them. If the scheme is just being used to find any kind of employment for youngsters who happen to be around without a job, the Government should give up the pretence that it is primarily a training scheme.
  Lord Stallard: I too support this amendment. I shall no: repeat the arguments of the noble Earl in his excellent opening speech on the subject. He pointed to an experience that many of us have had when working in voluntary organisations and seeing the effects of a whole number of social security Acts over the past 10 to 15 years. I do not need to add to what he said.
  The noble Baroness said that YTS places are available. They ought to be available but the sad fact is that they are not. We debated this matter last year and I remember noting that in Glasgow there were 1, 429 places short of the number of applications. The youngsters simply could not get on to the youth training schemes. The same is true of other major cities and certainly of London. Although we were led to believe that there were enough places for those who needed them, I feel that the Government seriously underestimated the number of people eligible for places. The numbers have never been matched.
  The Government also misunderstood or undervalued the reasons why youngsters leave home. I know that they tried to put this matter right when they introduced a special allowance in 1989 and the Minister, Nicholas Scott, announced some slight improvement in benefits. However even that was insufficient to take care of the problems. He did not seem to accept the seriousness or multiplicity of the reasons why youngsters leave home these days.
  Perhaps I may illustrate the argument by one or two examples sent to me by the citizens advice bureaux. From time to time they send me details of a number of different cases. I have chosen one or two about people who are on youth training schemes. Obviously these youngsters fulfil the requirement demanded and on which the Government seem to rest their case. One case is that of a 17 year-old girl on a youth training scheme. She has had to look after her 14 year-old sister since their father died and left them alone. They have £38·25 per week to live on which must cover food, bills, clothing, household expenses and fares to get to the youth training scheme. How can anybody justify that? These people are doing what they have been told to do. They are on a YTS and qualify for what is available. For two growing youngsters, one aged 17 and one: 14, who have all the expenses that we know must be encountered in their situation, how can £38·25 be sufficient?
  Another example is that of a youngster in Cleveland. He is 17 years old and living in a flat after coming out of care. Most people can perfectly understand why this youngster already finds himself in difficulty. Young people have to come out of care; they can no longer stay there. We all understand that. When he came out, this fellow went on to a
  782
  YTS placement. He complied with what was demanded and was given the enhanced payment of £29·50 a week. He was also receiving £21·92 in housing benefit. However, he had to add to that sum £12·20 a week because the payments bear no relationship to the rents that are being charged for accommodation up and down the country. He is therefore left with £14·90 each week for all meals, clothing, travel and other costs.
  He is in dire circumstances. He is badly in need of the obvious household equipment but he cannot obtain it. Nor can he attain a community care programme because he does not have income support. We are asking that such a person be given income support. He might then be able to qualify for the grants and loans available to everyone on income support. But because being under age he does not qualify for it, he does not qualify for the other benefits that he urgently needs in order to exist.
  We cannot dodge those issues. Examples exist in their thousands. The noble Earl pointed out the consequences of not dealing with those problems. I have lists of cases of youngsters in terrible circumstances from up and down the country.
  When the Minister replies, I hope that she will consider the genuine difficulties of youngsters who have been taken of f or refused income support. They are now suffering severe hardship because they failed to obtain income support and so to qualify for other benefits.
  Lord Boyd-Carpenter: The Committee is being asked to approve a proposal for which there is obviously a certain amount to be said, but equally obviously would involve quite substantial national expenditure. It is significant, and there are perhaps grounds for complaint, that neither the noble Earl who moved the amendment nor any of the three noble Lords who supported it, have given the faintest indication of what the cost of implementing it would be. I appreciate that they do not have the means that the Minister has for giving an accurate assessment on such a matter. On the other hand, it is hardly fair to ask the Committee to approve a proposal with no indication whatsoever of the cost to public funds. Most reasonable people look at these amendments on social security matters partly on their merits, but also weighing against their merits how much they would cost and therefore how much they would prevent being spent on other worthy causes.
  When the Minister replies, I hope that she will at least furnish Members of the Committee with the cost to public funds of these proposals. I suspect that they are substantial.
  Lord Hylton: I invite the Committee to consider the costs of not accepting the amendment. What will be the burden that falls on the police? What will be the cost to the courts? What will be the cost in borstal training and imprisonment? What will be the cost to hospitals? What will be the cost of failing to improve the present parlous situation? In 1986 the previous regulations were changed. I foresaw that there would soon be a considerable number of sturdy vagrants in this country—to use old poor law

  783
  terminology. I am sorry to say that that has come to pass. One has now only to go into virtually any Tube station in the London area to meet these people. They may be sturdy at the moment but for how long can they retain their health when, as we have known from the debates on the National Health Service, it is extremely difficult for these people to have access to primary health care?
  of those 45, 000 who have been mentioned already who have no job or YTS provision how many are seeking work and failing to find it? How many are seeking to get into hostels and are being turned away? I strongly support the amendment.
  Baroness Fisher of Rednal: The noble Lord, Lord Boyd-Carpenter, mentioned costs. We have to ask ourselves: who is now picking up the tab and paying? In most cases it is charities which are involved in care for the homeless young. I speak with some experience of St. Basil's in Birmingham. It is the largest charity for young people in the city and has a very extensive programme of care. However, for those charities that are specialising in care for the homeless young, help is needed at the initial stages from the Government. Otherwise they cannot continue with the long term rehabilitation. It is very of ten a long process of rehabilitation. It is not just a few chats with a welfare worker. The costs are being met by charities in the main. Similarly when the Government decided to cut back on the social fund, charities were used by social services. Many organisations obtained donations to provide a gas stove or an overcoat for such people. The charities had to pick up the tab for the cutback in the social fund. The charities are now having to do so because they do not wish to see young people on the streets.
  The noble Lord, Lord Hylton, mentioned the other cost—the social cost. He failed—I do not criticise him for it—to say how the tourist trade is being affected by the situation. When people come to the great capital city they are put of f by seeing people in a similar state to those in Bangkok or some other far away place. That is another cost.
  What will happen to those young people? Will they become the people involved in the Strangeways incidents of the future? Do they feel that they have been left aside by the Government? Long term investment has to be considered and not the parsimonious short term amount involved if the Government agree to the amendment.
  Lord Boyd-Carpenter: Before the noble Baroness sits down, will she deal with this point? I accept thoroughly what she said in her last few sentences. Surely we should know the figures.
  Baroness Fisher of Rednal: It is always strange that people wish to know the figures. The people who have the figures are the Government. They can collect them from social security services, from charities and from other similar organisations which inform the Government of their figures. However, evidently the Government do not wish to add them up and to give the information.
  Lord Northbourne: The figures are not that difficult to work out. If there are 45, 000 people in this category and we suggest that they should receive another £1, 000 a year, I make that £45, 000. If they should have another £2, 000 a year, the figure is £90, 000. It is not difficult to work out. The noble Earl, Lord Russell, made his speech in his sleep. I hope that he will continue to make it in this Chamber until something is done. The situation is a blot on the escutcheon of this country. I urge the Government to respond positively.
  Baroness Carnegy of Lour: We must all consider this matter in depth. Some people are falling through the net and are in trouble. There is no question about that. The Government have tried specifically to give help through the severe hardship provisions and others. It may well be that those provisions are not operating properly. My noble friend should take note of what has been said and should consider whether they are operating properly.
  However, we have to be careful about the amendment. The noble Baroness, Lady Seear, said that it was not much good for one to go on a YTS if it was not exactly what one wished to do, and if it was on a different subject or aspect of work from that in which one was interested. I was surprised to hear her say that, as someone who has played such a great part in developing YTS. If you are in trouble and away from home and you go on a training scheme and can get into something that provides you with a little money, gets you into the work habit and enables you to make contacts, that is probably the best thing any young person in that position can do. The places are there. In our desire to help the people who have missed out, we should not forget that the places are there. When we discuss the subject in other contexts, we must also remember that there is an increasing shortage of young people for work and that young people are now in demand.
  Paragraph (d) of the amendment states that those people would not receive support if they were available for employment. However, as the noble Earl, Lord Russell, said, you are not available for work if you are not spick and span but are living in a cardboard box or sleeping in the subway. You cannot be available for employment because people simply do not look at you when you walk in and you probably dare not do so. Those people are therefore ruled out by the amendment. It would not work for them.
  I must also remind the Committee that many parents with 16 or 17 year-old children are glad that it is no longer possible for them to say, "I and my pals are going to the city to get a flat and live of f benefit". They used to be able to do that, but it became more and more difficult and is now virtually impossible. Many kids are not leaving home because of that. If the amendment is accepted, we shall go back to square one and to all the problems that there were before. I am sure that there is no one in the Committee who does not know someone who has said that he or she is glad about the present position or that it is an improvement. However that does not mean that there are no young people in trouble. It is perfectly true to say that voluntary organisations must pick up the tab.

  785
  The Government must fine-tune matters as much as possible. I do not think that the noble Earl's amendment does that. The people about whom we are most worried are not available for employment. They will not make themselves available. I do not think that the noble Earl's figures need to be taken as gospel truth, because no one knows how many people were earning then and how many are earning now. It is not possible to tell whether they are earning. The figures are difficult to come by. In a way, I am glad of that because many young people are not, as it were, on the books, but are all right for cash. They have a small amount of income because they earn it. I do not think that the amendment will achieve the objective that it seeks, but I hope that the Government will look hard at the way in which arrangements are currently targeted and try to fine-tune them better, because all is not 100 per cent. well.
  5 p.m.
  Lord Carter: Perhaps I may deal with the point about numbers raised by the noble Lord, Lord Boyd-Carpenter. It was a fair question. The social security statistics for 1989 reveal that, the last time a count was made, on 31st May 1988, 53, 000 of 16 to 17 year-old men and 48, 000 women were receiving income support, so the figure is about 100, 000. A large proportion of those people would now be either on a youth training scheme or living at home. Having got the number who would now be eligible under the amendment, one would guess that the figure would be well under half of the 100, 000—perhaps 30, 000 or 40, 000—which, at £1, 000 a year, would be in the order cf £30 million or £40 million. That is the best that I can do. I hope that the Minister perhaps has a more accurate answer.
  Lord Northbourne: I must apologise for my slip of the tongue. I said £45, 000 when I meant £45 million.
  Baroness Macleod of Borve: I should like to congratulate the Government upon what they have done so far, but I should also like to say that it is certainly within my knowledge that the resources have not been targeted correctly until now. I shall ask the Minister on behalf of most speakers this afternoon whether she will take the amendment away and see what can be done. I know that that is difficult and that many people are worried about those people who are, in my estimation, the most vulnerable in society for the reason given by the noble Earl, Lord Russell.
  There are all kinds of categories of young people—I shall not elaborate again—who are in serious trouble. For instance, if they receive a YTS place miles out in the middle of the countryside, they are not likely to know of somewhere to live. If they do not know of somewhere to live nearby, how will they find a place to live if they have no money in their pocket with which to find it? Something should be done for those people as well as those who are not able to go on the YTS schemes. As my noble friend Lady Carnegy said, some of those people fall through the net. If they put their mind to it, the
  786
  Government will be able to do something about the matter.
  Baroness Blatch: When I woke up this morning, I thought that I had been listening to the noble Earl speaking to the amendment all night. However, unlike his wife, I shall not comment on the sense or otherwise of what he said.
  This is an important topic and, by the time I have addressed all the points that have been raised, I hope that I shall have convinced the Committee that the Government have taken the issue extremely seriously. If I have understood it correctly, the amendment would make some quite fundamental changes in eligibility for income support. I shall try to take the amendment bit by bit.
  Perhaps I may deal first with the proposal that title should start at the age of 16. The Committee will remember that a crucial change in social security provision was introduced in September 1988 under which income support was withdrawn from most 16 and 17 year-olds. The point of the change was to prevent young people, with their whole life ahead of them, sliding straight into the benefit culture, which we believed would not be in the best interests of the young persons, their families or society as a whole. The withdrawal of benefit was complemented by the introduction of a government guarantee of the offer of a suitable Youth Training Scheme place for everyone who wanted one.
  There will always be some young people who may not be able to participate in training; for example, the long-term sick and lone parents. There will also be those who are unable to take advantage of the YTS guarantee immediately, such as those just released from custody and those forced to live independently. For those vulnerable groups, income support is still available.
  In addition to the normal rules, income support can be paid where the young person would otherwise suffer unavoidable severe hardship. That safety net enables young people at serious risk to receive benefit while looking for a job or a Youth Training Scheme place. That probably answers in part the point raised by my noble friend Lady Macleod of Borve. The existing income support provisions strike a balance between providing support for vulnerable youngsters without encouraging young people's dependence on the state.
  Young people of 16 and 17 are at a delicate and important stage in their life. They need encouragement to fulfil their potential and equip themselves for their future career. Giving them immediate access to the benefit system on leaving school, as this amendment would, must seriously jeopardise these aims.
  Moreover, the amendment goes far wider than simply restoring the situation for 16 and 17 year-olds to that which existed before September 1988. It seeks to alter a basic condition for receiving income support. It makes income support available to people in work whether they are single or married, with or without children. The amendment removes in its entirety the current rule which prevents income support from being paid, except in special

  787
  circumstances, where a claimant or his partner is, to quote the legislation, in "remunerative work".
  The Committee will wish to know that the term "remunerative work" refers to paid work of at least 24 hours, on average, a week. Currently, that rule operates to ensure that income support remains primarily an out- of -work benefit for people on low income. It also maintains a clear and helpful distinction between income support and family credit, which, as Members of the Committee will know, is the benefit available to working families with a dependent child on low income. This distinction saves working families with children the confusion and doubt over whether to claim income support or family credit and was a crucial plank of the 1988 reforms.
  This amendment will not only blur that distinction but introduce inequity. If the proposal were to succeed many claimants wishing to receive income support would have to be considered for family credit in order to prove that they would not qualify for that benefit. This would surely lead to many fruitless claims to family credit, thereby delaying decisions on other claims and generally causing false hopes, confusion and dissatisfaction among claimants.
  Importantly, the amendment would allow single working people and childless couples to receive income support regardless of the number of hours they work. Their entitlement would depend solely on the level of their income. In other words, it would turn income support into an in-work benefit, contrary to the fundamental principles, shared by consecutive governments, of this and previous schemes.
  It would also mean that working couples with children and a mortgage whose income is above the level for which family credit can be paid may qualify for help under income support simply because of their mortgage commitment. Members of the Committee will be aware that family credit makes no allowance for mortgage and that the major source of government help for owner occupiers in work is through mortgage income tax relief. This would mean that families with similar commitments but only slightly different levels of income would be treated differently, with the families on higher earnings receiving more help because they would qualify for income support rather than family credit, which carries with it eligibility to assistance towards mortgage costs.
  That is something which this Chamber could not countenance. However, I am afraid that this is what will happen if the amendment is accepted. Moreover, the proposal will act as a disincentive to work more hours, as income support and hence the help with mortgage costs would be lost.
  All of this would have a significant benefit and administrative cost, and I shall discuss the question of costs later. It is a burden which would fall entirely and unfairly on the taxpayer. This amendment is likely to create many more problems than it would solve.
  Additionally the amendment seeks to remove the condition that a person who is required to be
  788
  available for work must also actively seek it in order to obtain income support. The Government are totally opposed to a restoration of the position existing prior to October 1989 which enabled an unemployed person to satisfy the adjudicating authorities of his availability for work simply by a single attendance at a jobcentre.
  The Government are committed to encouraging people to take positive steps to secure a place back in the world of work. All the evidence suggests that the vast majority of claimants have willingly accepted that it is their responsibility and to their benefit to take steps to seek work actively.
  The marked absence of criticism of the new arrangements suggests that we have succeeded in creating a fair and flexible framework that has been able to deliver the behavioural changes that the legislative changes last October sought to induce. Adjudicating officers can take important factors like local labour market conditions into account in determining whether an unemployed person has taken reasonable steps to find work; people can combine job search activity with part-time study or voluntary work; and most of the small but significant minority who have so far been warned about inadequate job search have reacted positively and taken steps to remedy this. To move back to the position prior to last October would be an entirely retrograde step against the interests of the taxpayer, employers and, above all, the unemployed. I am grateful to my noble friend Lady Carnegy of Lour who made that point.
  Finally, we come to the last element of this amendment. This attempts to open up the social security system to all people attending a full-time course of study. The Committee will be well aware of our overall policy that those in full-time education should not, other than quite exceptionally, rely on the social security system for their financial support.
  However, this amendment, if accepted, would give eligibility to income related benefits to the vast majority of claimants attending a full-time course of study. It would include those who stay on at school or go to a college of further education and who currently have no title to social security benefits. It would also include students during term time and short vacations. It also lacks precision in that there is no definition of a full-time course of study.
  The amendment would transfer the cost of student maintenance away from the education system, where we believe it belongs, to the social security system. This would involve significant administrative costs. It would also represent an untenable step backwards from our long stated objective of removing students from a social security system which was not designed for them.
  On costs, a point raised by my noble friend Lord Boyd-Carpenter, taking into account all elements of this amendment the total cost would be £225 million.
  I now address the particular anxieties of vulnerable groups in this instance. First, I turn to the point raised by the noble Earl, Lord Russell, on no job, no home; no home, no job.
  5.15 p.m.
  Lord Carter: On the point of costs, the noble Baroness mentioned the figure of £225 million taking into account all elements. Does she have a breakdown of the various parts of the amendment, because obviously it is those in full-time study who are adding to the costs?
  Baroness Blatch: I have a figure and I shall give it to the noble Lord.
  On the point raised by the noble Earl, Lord Russell, homelessness is not a bar from entry to YTS. The March improvements to which I referred, announced by the Secretary of State for Employment, specifically targeted homeless youngsters building on a pilot scheme in Birmingham which got together all agencies involved with homeless youngsters. It is important to say a few words about that scheme because it was very relevant to the points raised in the course of the debate.
  In Birmingham the training agency brought together all those dealing with homeless young people, including initial training providers, social workers., careers officers and hostel staff. That resulted in effective procedures and contact between those groups for improving the help which initial trainees, receive. It provided a model of how to develop resource networks for training providers and other professionals so that they could take appropriate roles in supporting trainees with problems. As a result any homeless young person who is offered a hostel place will be found an initial training place on the same day. That secures the hostel place and if it subsequently emerges that the young person is on an inappropriate initial training scheme, a transfer to another provider will be arranged. The Committee will agree that that was an interesting pilot scheme which has been successful and it is intended to build on it.
  The noble Baroness, Lady Seear, raised the problem of the right training not being available in the right place. That was also mentioned by other Members of the Committee. The Training Agency will do all it can, including providing specific training for individuals. It has resources to do so but in the end it is better for youngsters to have—
  Baroness Seear: The noble Baroness says that the Training Agency has resources. Those of us dealing with the Training Agency in one way or another at present are only too acutely aware that the funds are growing less and less and many special schemes are being cut back quite drastically as a result. I hope that she will look at that matter before she says that it is properly financed.
  Baroness Blatch: The Government have a well publicised guarantee that all young people will receive training places on training schemes as appropriate to their needs as possible. If the noble Baroness has examples of where that guarantee has not been met, we must address the issue of resources in that area.
  There was a reference to the difficulties of young pregnant girls. We shall address that specifically on
  790
  a later amendment. However, all 16 and 17 year-olds are covered by the Government's guarantee of an offer of a place on a youth training scheme if they so desire. That includes those who are pregnant. If any young woman who is pregnant meets a problem of securing a place on a training scheme, the Training Agency will make arrangements for suitable training to be provided for as long as she or her medical advisers consider appropriate.
  Special provisions are also made to allow a school-leaver who is pregnant to enter on a training scheme up to two years late, and a young woman who leaves a scheme because of pregnancy can return up to a year later and continue her training for the full period. We are also moving towards making training options more effective for young pregnant women; for example, through the provision of short care-related courses where that is a better option. That will be discussed in more detail later.
  The noble Earl, Lord Russell, also mentioned severe hardship provision. Each severe hardship claim is considered on its individual merits. Factors which are taken into account include a young person's health and vulnerability, which will include child abuse; the availability of income or savings; the prospect of a speedy entry into YTS; the availability of casual work and whether the young person has friends or relatives who can put him or her up. The Secretary of State has given a commitment that all severe hardship decisions will be made within 24 hours, because we all know the urgency of such cases, although for practical purposes payment is usually made on the same day as the case is referred.
  I believe it was the noble Lord, Lord Carter, who asked about vacancies. The total number of vacancies is 160, 944 places unfilled in March of this year. The breakdown for that in round figures is, South East 20, 000; London 12, 000; South West 13, 000; East Midlands 18, 000; West Midlands 22, 000; York and Humberside 19, 000; North-West 23, 000; Northern 9, 000; Wales 6, 000 and Scotland 15, 000. All those figures were rounded down, not rounded up.
  The noble Lord, Lord Stallard, made reference to the comparability between income support and YT allowance, and which would be the more appropriate. Perhaps I may say that the actual amount received by a young person on a YTS is greater than the income support rate. He mentioned the case of a girl on the YTS looking after her 14 year-old sister; a 17 year-old looking after a sister is not required to register for YTS. She would qualify for income support for herself and her sister in the normal way.
  I now come to the breakdown of the figure I gave earlier of £225 million requested by the noble Lord, Lord Carter. For 16 and 17 year-olds—that is the first part of the amendment—the cost would be £90 million. For those seeking work it would be £50 million. To remove the remunerative working rule would cost £115 million.
  My noble friend Lady Carnegy of Lour mentioned people falling through the net and being caused severe hardship. The schemes, she suggested, were

  791
  perhaps not working properly. I can give some assurance that improvements in administration introduced last November, including automatic referral for severe hardship, are having some impact. The scheme continues to be monitored. We must be flexible in modifying the scheme as we go along.
  Another point raised by my noble friend Lady Carnegy concerned young people who perhaps do not fit the bill. A very interesting modification is being made—a kind of step to YTS called initial training. It is available before the actual YTS and is particularly helpful for disadvantaged young people or young people who are difficult to place.
  Perhaps I could briefly outline some of the changes and modifications that have been made. The Secretary of State has continued the establishment and guarantee that liaison officers will be available to deal with difficult cases. That links to the point I have just made in response to the comments of my noble friend. More leaflets are available for YTS advisers. Direct links have been established between hostels and training providers. There has been improved guidance to careers officers which is very important, and special leaflets are available for 16 and 17 year-olds who require income and support advice.
  Considerable modification has already taken place with the promise that schemes will be monitored and watched. I believe that we should be flexible in our approach to meet the needs. In my rather lengthy response to the amendment I believe I addressed the needs of each vulnerable group mentioned in the debate. For all those reasons I can in no way support the amendment. It will fundamentally alter major aspects of the income related benefits. It will bring into its net groups of people for whom it was not intended and for whom I believe it is not appropriate.
  I hope that I have convinced the Committee of the Government's commitment to these young people and also of the fact that the amendment is not appropriate in this instance.
  Lord Carter: I thank the Minister for the figures she gave. I certainly do not want to enter into argument, but I find her remarks difficult to follow. She said that the cost of applying the scheme to 16 and 17 year-olds would be £90 million. As I pointed out, the last time the figures were collected in May 1988 there were around 100, 000 young people in receipt of income support at around £1, 000 per year. That brings the figure to £100 million. If the figure of £90 million is correct, that means that 90 per cent. of that 100, 000 have not been found new places on the YTS scheme. I find that very hard to follow.
  Perhaps the noble Baroness will read what I said and write to me. It is an awkward point, but I do not understand where the £90 million comes from.
  Baroness Blatch: I will write to the noble Lord if I have more to say on that issue.
  Earl Russell: Not for the first time I owe an answer to the noble Lord, Lord Boyd-Carpenter. He said that I should have costed the amendment. I do not think the noble Lord was in his place last night when
  792
  I did cost one of my amendments. I was roundly taken to task by my noble kinsman who had, of course, more material at his disposal for that purpose.
  One reason why I did not cost the amendment is that we are here dealing with a floating population. They are people who have slipped through the net and who are of ten very hard to quantify. Had I costed the amendment I should have had some hesitation regarding the accuracy of my figures. I am not arguing with the noble Baroness's figure of £225 million. It is probably a generous calculation, but I will not dispute it. However, I strongly agree with the noble Lord, Lord Hylton, that we must calculate that against the cost of not implementing the amendment. My opinion, for what it is worth, is that the cost of not implementing the amendment is likely to be a good deal higher.
  I turn to the Minister's speech. I hesitate to describe it as the triumph of hope over experience because I did not see very much evidence of the experience. It was government theology. It was a careful reasoning of abstract principles. People with some experience of the subject have acute difficulty relating the speech to the world they know.
  I shall not elaborate on my remarks regarding the severe hardship fund. I have not met anyone who is satisfied with it. I will not elaborate further on the point that labelling someone a vagrant is a self-fulfilling prophecy. That has been true since 1601; it has been established many times over.
  I shall deal with the point concerning the YTS. It is worth pointing out that the YTS is an employer-run service. The employer has a right to refuse. So long as that right exists it is not ultimately compatible with the assurance that there is a guarantee of a place for every person. Also, it does not answer the point that homelessness is a bar to placement.
  One aspect of the amendment is that people applying for rented accommodation face, very reasonably, from people who are in business for a pr of it, a request to show some guarantee of income. One effect of the amendment would be to make it possible for people to guarantee that they would be able to pay the rent. That would make it a lot easier for them to obtain accommodation and therefore to look for employment.
  It is worth repeating that it is a term of this amendment that people shall genuinely be available for work. We would not have tabled the amendment otherwise. All that has been said regarding benefit culture is wide of the point. The amendment is deliberately drafted to exclude that reply. I had hoped it would.
  There is agreement between us that the ultimate objective is to float people of f benefit and place them in the world of work. It cannot be said too of ten that that objective is common to all sides of the Chamber. However, what we disagree about is how to do it. I speak as one who has spent a great deal of his working life advising people not very much older than those we are dealing with in the amendment. Very of ten, what is vital to young people in a state of emotional turmoil—as those who have left the parental home frequently are—is a few days'

  793
  breathing space during which they can sort things out and get on their feet again. I have seen innumerable people do that with complete success. Many of them now not only earn their living, but do so with great national distinction.
  We believe that the benefit system can give people a leg-up; but the Government seem to think that they have to give them a kick in the pants. That is not an effective way to persuade people back into work. The Government are bringing about a benefit dependency, which is precisely what they fear. It is not the first time in history that a government, terrified of something, have taken measures which did more than anything else to bring it about. I must seek the opinion of the Committee.
  5.30 p.m.
  On Question, Whether the said amendment (No. 62) shall be agreed to?
  Their Lordships divided: Contents, 87; Not-Contents, 130.

  DIVISION NO. 2

  CONTENTS

  Addington, L.

  Kilmarnock, L.

  Airedale. L.

  Kirkhill, L.

  Ardwick, L.

  Lawrence, L.

  Aylestone:, L.

  Leatherland, L.

  Birk, B.

  Listowel, E.

  Bonham-Carter, L.

  Lloyd of Kilgerran, L.

  Bottomley, L.

  Lockwood, B.

  Briginshaw, L.

  Lovell-Davis, L.

  Brooks of Tremorfa, L.

  Mcintosh of Haringey, L.

  Bruce of Donington, L.

  Mackie of Benshie, L.

  Campbell of Eskan, L.

  McNair, L.

  Carmichael of Kelvingrove, L.

  Mais, L.

  Masham of Ilton, B.

  Carter, L

  Mason of Barnsley, L.

  Cledwyn of Penrhos, L.

  Milner of Leeds, L.

  Clinton-Davis, L.

  Nicol, B.

  Cocks of Hartcliffe, L.

  Northbourne, L.

  Darcy (de Knayth), B.

  Northfield, L.

  David, B

  Ogmore, L.

  Davies of Penrhys, L.

  Oram, L.

  Dean of Beswick, L.

  Parry, L.

  Dormand of Easington, L.

  Peston, L.

  Ewart-Biggs, B.

  Phillips, B.

  Falkland. V.

  Pitt of Hampstead, 1.

  Fisher of Rednal, B.

  Portsmouth, Bp.

  Gallacher, L.

  Prys-Davies, L.

  Galpern, L.

  Ritchie of Dundee, L.

  Gladwyn, L.

  Rochester, L.

  Glasgow, E.

  Russell, E. [Teller.]

  Glenamara, L.

  Seear, B.

  Graham of Edmonton, L. [Teller]

  Serota, B.

  Shepherd, L.

  Gregson, L.

  Stallard, L.

  Grey, E.

  Strabolgi, L.

  Hampton, L.

  Tordoff, L.

  Hatch of Lusby, L.

  Turner of Camden, B.

  Henderson of Brompton, L.

  Underhill, L.

  Hooson, L.

  Wallace of Coslany, L.

  Howie of Troon, L.

  Walston, L.

  Hylton, L.

  Whaddon, L.

  Jacques, L.

  Wigoder, L.

  Jeger, B.

  Williams of Elvel, L.

  Kagan, L.

  Winstanley, L.

  Kennet, L.

  Young of Dartington, L.

  Kilbracken, L.

  794

  NOT-CONTENTS

  Aldington, L.

  Layton, L.

  Alexander of Tunis, E.

  Lloyd of Hampstead, L.

  Allerton, L.

  Long, V.

  Ampthill, L.

  Lucas of Chilworth, L.

  Arran, E.

  Lyell, L.

  Auckland, L.

  McColl of Dulwich, L.

  Belhaven and Stenton, L.

  Macleod of Borve, B.

  Bellwin, L.

  Malmesbury, E.

  Belstead, L.

  Mancroft, L.

  Blake, L.

  Manton, L.

  Blatch, B.

  Margadale, L.

  Blyth, L.

  Marshall of Leeds, L.

  Borthwick, L.

  Merrivale, L.

  Boyd-Carpenter, L.

  Mersey, V.

  Brabazon of Tara, L.

  Monk Bretton, L.

  Brookes, L.

  Monson, L.

  Brougham and Vaux, L.

  Morris, L.

  Buckinghamshire, E.

  Mottistone, L.

  Butterworth, L.

  Mountevans, L.

  Caccia, L.

  Mowbray and Stourton, L.

  Caithness, E.

  Munster, E.

  Campbell of Alloway, L.

  Murton of Lindisfarne, L.

  Campbell of Croy, L.

  Nelson, E.

  Carnegy of Lour, B.

  Nelson of Stafford, L.

  Carnock, L.

  Nugent of Guildford, L.

  Clanwilliam, E.

  Oppenheim-Barnes, B.

  Cockfield, L.

  Orkney, E.

  Colnbrook, L.

  Orr-Ewing, L.

  Cork and Orrery, E.

  Pender, L.

  Craigavon, V.

  Pennock, L.

  Crawshaw, L.

  Plummer of St. Marylebone, L.

  Davidson, V. [Teller.]

  Denham, L. [Teller.]

  Quinton, L.

  Donegall, M.

  Rankeillour, L.

  Downshire, M.

  Reay, L.

  Eccles of Moulton, B.

  Renton, L.

  Elibank, L.

  Renwick, L.

  Elles, B.

  Rodney, L.

  Elliot of Harwood, B.

  St. Aldwyn, E,

  Elliott of Morpeth, L.

  Saltoun of Abernethy, Ly.

  Fairhaven, L.

  Sanderson of Bowden, L.

  Ferrers, E.

  Seebohm, L.

  Fortescue, E.

  Selbourne, E.

  Fraser of Carmyllie, L.

  Selkirk, E.

  Fraser of Kilmorack, L.

  Somers, L.

  Gardner of Parkes, B.

  Stanley of Alderley, L.

  Grimston of Westbury, L.

  Stodart of Leaston, L.

  Grimthorpe, L.

  Strange, B.

  Hailsham of Saint

  Strathclyde, L.

  Marylebone, L.

  Strathmore and Kinghorne, E.

  Harmar-Nicholls, L.

  Henley, L.

  Sudeley, L.

  Hesketh, L.

  Swansea, L.

  Hives, L.

  Swinfen, L.

  Hood, V.

  Thomas of Gwydir, L.

  Hooper, B.

  Thurlow, L.

  Howe, E.

  Tranmire, L.

  Hylton-Foster, B.

  Ullswater, V.

  Ironside, L.

  Vaux of Harrowden, L.

  Jenkin of Roding, L.

  Wade of Chorlton, L.

  Johnston of Rockport, L.

  Westbury, L.

  Joseph, L.

  Whitelaw, V.

  Kaberry of Adel, L.

  Wolfson, L.

  Kimball, L.

  Wynford, L.

  Kinnoull, E.

  Young, B.

  Knutsford, V.

  Zouche of Haryngworth, L.

  Lauderdale, E.

  Resolved in the negative, and amendment disagreed to accordingly.
  5.38 p.m.
  Baroness David Baroness David moved Amendment No. 63:
  Before Clause 10, insert the following new clause:
  ("Income Support: persons under 18
  In regulation 13A of the Income Support (General) Regulations 1987, for paragraphs (2)(b) and (3) there shall be substituted the following sub-paragraph—

  795
  "(b) for the period for which that paragraph applies or, if the date on which he attains the age of 18 falls within that period, for so much there of as falls before that date.".").
  The noble Baroness said: I should first explain to the Committee why I am moving this amendment. It was originally tabled in the name of the noble Baroness, Lady Faithfull, and myself. The noble Baroness, Lady Faithfull, was to have moved it but unfortunately she cannot be here today. However, she has asked me to tell the Committee that the amendment has her wholehearted support. I only wish that the noble Baroness were here to move the amendment herself.
  I must say immediately that this is a much more modest amendment than the one we have just debated. It is simpler and much less costly. The purpose is to abolish the limits on income support entitlement to 16 and 17 year-olds living away from home and instead to allow them to claim income support until they find a suitable youth training place or employment. That will give these young people a little more assistance and a little more time.
  I do not know whether many noble Lords have received the document Hard Times from Shelter. It should be read by people discussing this problem of homeless young people who are in difficulties. The document outlines some really heartrending cases. There is a very real problem of which everyone is now beginning to be aware.
  The pamphlet Hard Times produced by Shelter reveals the difficulties that many homeless young people have in finding youth training places. As has been said before, it is unreasonable to expect young people who have become homeless immediately to settle into a job or youth training while coming to terms with the problems of being homeless. In addition, many employers are unwilling to offer training to homeless young people. The quite common rule is: "No address—no training".
  I am sure that the Committee will take as read the great number of examples I have. I shall not go into them now. I shall be very glad to lend the pamphlet from Shelter to anyone who cares to read it. If passed, this amendment will allow some young people living independently to claim income support until they have found a suitable youth training place or a job. It is essential that homeless 16 and 17 year-olds are given income, time and opportunity to attempt to find temporary and permanent accommodation.
  One benefit of this amendment is that guaranteed income support encourages board and lodging proprietors and hotel proprietors to allow young homeless people who are not on a youth training scheme to move into accomodation. There is growing evidence that even where hostels have been set up specifically for young people they are being turned away because young people have no income and cannot afford the rent. In addition, some landlords demand a deposit and if that cannot be given a young person is not given a place.
  As the noble Baroness, Lady Blatch, said, there have been some government initiatives. In her reply to the previous amendment she referred to the liaison officers. They are appointed to assist homeless young people to find a youth training place,
  796
  and that is welcome. However, it remains to be seen whether that will provide any material assistance for the majority of homeless young people. I hope that the Minister is listening to what I am saying about liaison officers. There will be approximately 6, 750 trainees for every liaison officer appointed, which must severely restrict their ability to provide comprehensive and individual advice.
  Further, it is to be hoped that young people will not be coerced into unsuitable training schemes merely because places are available immediately. The noble Baroness, Lady Seear, made that point, and it is a very true one. Young people must be allowed to make vocational choices if they are to succeed in what they are doing. I also wish to say something about those leaving care. It has been discovered that in London and elsewhere about 40 per cent. of those who go to places such as Centrepoint, where the homeless are cared for, have come out of care. They are in a special category. Those of us who were involved with the Children Bill when it went through the House spoke a great deal about that subject. Quite a number of those affected came to see us to put their case, which they did extremely well and very strongly.
  I am sorry that the noble Baroness, Lady Macleod, has gone. She made her point earlier. She told me that she sympathised with this amendment. She was also involved in speaking about those who were leaving care. We should remember them in particular when we are asking for this extremely modest addition to what they receive at present. It is an extension of the time when they receive either a severe hardship or a bridging allowance or the child benefit extension. They really need this extra provision.
  The noble Baroness, Lady Faithfull, told me that she thought that the department had some sympathy for this amendment and I hope very much that that is true. I hope that when the Minister replies she will be able to tell me that the department will have another look at the question. This is a very simple and modest amendment. Both the noble Baroness, Lady Faithfull, and I hope that this matter can be looked at. We shall be very happy if that is so. We shall be happy to talk to Mr. Scott or to anyone else in the department if that can be arranged. I beg to move.
  5.45 p.m.
  Baroness Blatch: Income support is still payable to the most vulnerable groups of young people. It is paid without time restriction to, for example, disabled people and lone parents. Other young people who either have no parental home, or who have good reason why they cannot live at home, are also entitled to income support during the same period as the child benefit extension period. That was a point specifically raised by the noble Baroness. Vulnerable people can get income support during the child benefit extension period.
  This group includes, for example, those who have of necessity to live independently because they are estranged from their parents, or those at risk of physical or sexual abuse. The Government therefore recognise that these young people are likely to need

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  a little longer, and greater support, to find a suitable YT place but they are nevertheless still guaranteed the offer of a YT place. That was also a point raised by the noble Baroness.
  In addition to the normal rules, income support can be paid where the young person would otherwise suffer unavoidable severe hardship. This safety net enables young people at serious risk to receive benefit while they are looking for a job or a YT place. Since November 1989, every young person claiming benefit is considered under the severe hardship provision if not otherwise entitled to income support.
  We have continuously monitored the effect of the changes. We have done this through the collection of information from local DSS offices and the severe hardship unit. We have also set up regular meetings with representatives from voluntary groups involved with young people as a way of gaining feedback. There have been a number of reports published, as the noble Baroness, Lady David, said, by, for example, the National Association of Citizens Advice Bureaux which we have carefully considered. As a result we have introduced a number of changes—many of which I mentioned on the previous amendment—primarily to improve the way claims from young people are dealt with.
  We have always recognised that some youngsters need special consideration in the provision of a YT place. That does not mean that we should give up on them. Their problems can be accommodated in a number of ways, first, through the training scheme itself which aims to provide quality training tailored to the needs of the individual. This includes those youngsters with special training needs such as those who lack motivation or who have severe emotional or behavioural problems. Secondly, initial training offers in-depth assessment and remedial help for young people who would otherwise have difficulty in being accepted or coping with training schemes. This is intended to bring youngsters with problems to a point where they are ready for mainstream training.
  In addition, and as I have said previously, in March this year the Secretary of State for Employment announced a package of operational improvements in dealing with applications for training, places. These included the establishing of guarantee liaison officers in each training agency area office to act as a focal point for investigating cases of difficulty in YT placement, and the revision of guidance to careers officers so that it adequately covers the need to take account of the special needs of difficult and vulnerable groups.
  I noted what the noble Baroness had to say about the ratio between the liaison officers and young people. The assumption was made that every single young person, in relation to the training officer, has particular problems. That is probably not true. She said that she would find some value in being able to talk to my right honourable friend Mr. Scott in the department. I am very pleased to say that his door will be open and she will be very welcome to come and talk in the department about these concerns.
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  This amendment is not appropriate at this time and I hope that the noble Baroness will feel able to withdraw it.
  Baroness David: I thank the Minister for her reply. However, I feel the same about that as did the noble Earl, Lord Russell, about the reply to his amendment. So many of these issues were talked about, such as the child benefit extension. That lasts only for a limited period of 12 or 16 weeks. The bridging loan is £15 and it lasts for eight weeks only during a 52-week period. Between September 1988 and January 1990, there were 21, 218 applications for severe hardship payments and one-third of those—over 7, 000—were refused. Therefore, these provisions are not absolute panaceas.
  I am extremely dissatisfied with the Minister's reply. The only good part of it was the statement that the Minister's right honourable friend Mr. Scott will have his door open. I hope therefore that the noble Baroness, Lady Faithfull, and I will be able to see him. I shall not push the amendment having been told that and without discussing it further with the noble Baroness, Lady Faithfull. For the moment, but certainly promising to come back, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Earl Russell Earl Russell moved Amendment No. 64:
  Before Clause 10, insert the following new clause:
  ("Housing benefit: persons under 25
  In section 22 of the 1986 Act, after subsection (2) there shall be inserted the following subsection—
  "(2A) In relation to housing benefit the applicable amount for a person aged under 25 shall be the same as if he were aged 25." ").
  The noble Earl said: I need not detain the Committee for as long with this amendment as I did with the previous one. There is a considerable amount of common ground. Both deal with the issue of young people living away from home. The first was concerned with income support, this is concerned with housing benefit.
  Lord Henley: Is the noble Earl speaking to the three amendments in the grouping, Amendments Nos. 64, 194 and 196? That is my understanding. If he is not, it would be quite useful to know.
  Earl Russell: My noble kinsman is quite correct. However, the bulk of what I have to say pertains specifically to Amendment No. 64.
  The amendment deals with housing benefit. The effect would be to restore to people under 25 the same rate of benefit as is available to older people. The amendment does not touch upon income support. It always strikes me as curious about the Government's position that they place what is in effect an economic obligation on teenagers and young people to live at home. They do not create a corresponding obligation on the parents of the household. Therefore, people may be forced to do what they cannot do.
  The Government may consider the possibility of placing an obligation on parents to continue housing their children up to the age of 25. That has been

  799
  tried before. The obligation was created in the Act of 1601. It was abandoned for the perfectly good reason that it turned out to be unenforceable. I fancy that if it were tried now it would turn out to be unenforceable again. If the Government are not prepared to grasp that nettle and place an obligation on parents to house their children, they cannot fairly place an obligation on the children to live with the parents.
  The whole question of the lower rate of social security for younger people is based on the premise that they live at home. As soon as that premise ceases to be valid, the whole argument for the lower rate ceases to be valid. As the amendment concerns itself only with housing benefit, it is automatically targeted only to those who live away from home. I simply cannot see how it comes about that the cost of living is lower if one is young. If anything, the tendency is the reverse. Experience possibly teaches some of us how to manage a budget. It takes a good many years to learn to do that properly. However, rent costs the same; food costs the same; electricity costs the same; gas and water cost the same; and, as we all know, the poll tax costs the same. Why should it be supposed that people can live more cheaply simply because they are under 25? I have never heard a coherent answer to that question.
  The effect is to produce a distinction between young people who live away from home and young people who do not. I am sure we will be told that it will have the effect of creating a perverse incentive to live away from home. I doubt that very much. Housing benefit is targeted only to housing costs. The costs of living away from home amount to a great deal more than housing costs. One has to provide all one's own food instead of having it provided in the parental home.
  Were this to become law and people were to leave home they would not by any stretch of the imagination be better of f. If they left home it would be because they wished to do so for other good reasons. We must continue to accept that there may be good reasons for wishing to leave home before the age of 25. I beg to move.
  Lord Henley: My noble kinsman concentrated on Amendment No. 64. Bearing in mind the long debate we had on Amendment No. 62 and to a lesser extent on Amendment No. 63, I shall follow him and concentrate on Amendment No. 64. A great many of the points on his later amendments have to some extent been covered.
  Amendment No. 64 seeks to abolish the lower applicable amount for people under 25 in housing benefit. This would mean that housing benefit for claimants of all ages would be calculated using the full adult rate of personal allowance in all cases—£36·70 for those under 25 instead of £28·80.
  We have accepted that special considerations apply to the way housing benefit is calculated for 16 and 17-year olds who live independently. There was a real risk that the lower rate of personal allowance applicable to this group was having a disincentive effect on YTS trainees and those school leavers in low paid jobs. As a result we abolished the lowest
  800
  rate of personal allowance in housing benefit in July last year and assimilated the rate for 16 and 17-year olds with that for those aged 18 to 24. This means that, following the up-rating in April, all young people under 25 have their housing benefit.
  One of the principal features of the reformed scheme of benefits was to adopt common rules in order to ensure that people at similar levels of income would receive the same amount of help, whether working or not. Those getting income support and others at equivalent income levels should be able to get the maximum level of assistance with rent and community charge—100 per cent. of eligible rent and 80 per cent. of community charge liability in all cases. This revised structure has for the first time integrated help with housing costs within a coherent system of income-related benefits. I accept that, for housing benefit, we have departed from this principle in the case of 16 and 17 year-olds. This was a special case where we accepted that the lower rates of benefit applicable to this group could have a real disincentive effect for those in low-paid work or on YTS schemes. I do not believe that the same arguments apply to the 18 to 24 age group and do not believe that we should consider a further departure from the alignment principle in this case.
  Housing benefit is calculated to ensure that all young people in employment or on YTS and claiming housing benefit will be left with at least their income support applicable amount to live on after paying their housing costs. I believe that a scheme designed to help with housing costs should do just that, and should not offer young people an incentive to leave home.
  For those reasons we remain committed to an age-related structure of personal allowances in income support and other income-related benefits. This provides the most straightforward and effective approach. I hope therefore that the noble Earl will feel able to withdraw the amendment.
  Baroness Phillips: Before we go any further perhaps I may raise a small point of procedure. The Minister asked the noble Earl if in addition to moving Amendment No. 64 he was speaking to Amendments Nos. 194 and 196. The noble Earl accepted that he was concentrating on Amendment No. 64. Surely there is a mistake. Amendment No. 196 appears to have no relevance to Amendment No. 64. Amendment No. 196 deals with pregnancy, which may or may not occur whether or not one is 25 or under. I cannot see the link. Perhaps the Minister can explain.
  Lord Henley: I accept that pregnancy can occur at ages both above and below 25. I do not know whether there is an increased likelihood either way. The matter of groupings is one for negotiation between the usual channels. My understanding is that the amendments were grouped. As the noble Baroness will know, the note at the top of the groupings list reads:
  "Although every effort is made to secure agreement to these groupings, they remain informal and not binding. It is therefore open to any Peer to speak to an amendment in its place in the Marshalled List".
  When we reach Amendment No. 196—I must warn the noble Baroness that it may be at a quite late hour

  801
  although I am sure that she will still be here—she may like to speak to it then.
  I asked my noble kinsman whether he was speaking to all three amendments because at the beginning of his speech he mentioned Amendment No. 64. He confirmed that he was speaking to all three amendments but said that he would rather concentrate on Amendment No. 64 because some of the points raised by the other two amendments had already been covered during earlier discussions. I have concentrated on replying to Amendment No. 64. However, I shall be quite happy to return to Amendments Nos. 194 and 196 at a later stage.
  6 p.m.
  Lord Carter: My name also is attached to Amendment No. 196. In my view it would be better to discuss both amendments at a later stage than speak to them now. I also suggest to the Minister that perhaps it was a little unwise of him to invite Members on this side of the Committee to be present later this evening.
  Lord Henley: I am not sure whether noble Lords opposite can manage to do so on two nights in a row.
  Lord Graham of Edmonton: Right; that is a challenge!
  Earl Russell: I am most grateful to the noble Lord, Lord Carter, for his extremely helpful intervention. Amendment No. 196 needs considerable debate because it raises rather different issues from those contained in this amendment.
  As regards Amendment No. 64, I must say that I am hardly surprised by the Minister's reply; indeed, we have heard most of what he said many times before. He does not seem to recognise that there is a considerable case for independent living in many situations and that occasionally it may be in the interests of parents. However, we have pursued all these arguments at considerable length. In the circumstances, I think it would be appropriate for me to withdraw the amendment rather than pursue the matter at this stage. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 10 [Amendments relating to the social fund]:
  Earl Russell Earl Russell moved Amendment No. 65:
  Page 14, line 39, after ("may") insert (", by statutory instrument, ").
  The noble Earl said: Amendment No. 65 occurred to me while I was reading the judgment of Lord Justice Woolf. It is grouped with Amendments Nos. 66, 68 and 71. They form a package of amendments. When discussing the power of the Minister to give directions in the administration of the social fund, Lord Justice Woolf said that in effect these directions have the force of law. I am not quoting his words verbatim, but I think I am quoting the exact sense. He said that he found it very difficult to believe that Parliament had given the Minister power to give
  802
  directions having the force of law without even telling Parliament that he had done so; but nevertheless he had come to the conclusion that Parliament did so.
  In my view, we should reflect whether we acted wisely when we gave the Minister that power. I entirely accept the judgment of Lord Justice Woolf that we did give him that power. These directions are capable of making quite considerable changes in the administration of the social fund. They are capable of altering substantial provisions and some of them are matters of widespread concern within this place. The effect of the amendment, which is a very modest one, is no more than to make that power subject to the negative resolution procedure. I am not asking for a debate on every occasion and I am not asking for the power to vote; I am simply asking that this Chamber should be told what is going on.
  Apart from the intrinsic importance of some of these directions, it can sometimes be difficult to succeed in keeping track of all the changes in the details of social security law which happen by means of directions and various other regulations. We should be told what is going on. Lord Justice Woolf has given us a plain hint in this respect. I hope that we shall take it. I beg to move.
  Lord Henley: When we devised the social fund we made it clear that the scheme should operate flexibly but within strict financial limits. We considered that the best way of achieving this was through a budget and a number of directions issued by my right honourable friend the Secretary of State. This was clearly spelt out in the White Paper Reform of Social Security— Programme far Action which preceded the legislation.
  My noble kinsman's amendments seek to achieve two aims. The first would force the Secretary of State to make statutory instruments before he can issue directions relating to the management and control of the budget and the criteria for eligibility. The second would subject those statutory instruments to annulment by a resolution of either House of Parliament.
  My noble kinsman's amendment is not unexpected, given his comments during the Second Reading of the Bill. These included reference to Lord Justice Woolfs surprise, which the noble Earl repeated, at the wide powers given to the Secretary of State. I was delighted that he gave a full account of this section of the judgment by going on to point out that Lord Justice Woolf had nevertheless concluded that this had in fact clearly been Parliament's intention.
  The social fund is already subject to regulations relating to the way in which applications are made to the fund and for reviews. These, however, govern procedural issues. Through Clause 10 we are seeking additional regulation-making powers to cover similar matters, and we trust that these regulations will make the scheme simpler to understand and administer. Why then have we not simply extended these powers to include the issuing of directions? Our reasons are simple. A series of restrictive regulations is inappropriate for a fund which is expected to operate flexibly, using discretion to

  803
  target help where it is most needed on a wide variety of people in a wide variety of circumstances. Nor could a regulated scheme cope with rapidly changing circumstances.
  That is a view that the court has accepted. I should like to draw the Committee's attention to the relevant section of the judgment, in which Lord Justice Woolf pointed out that it could:
  "with justification be said on the Secretary of State's part that his power to give directions enables him to change the rules rapidly if this is required by a change of circumstances and in order to obtain consistency".
  Our purpose in introducing Clause 10 is to reaffirm our original policy of providing help to those in greatest need within a sound financial framework by making the Secretary of State's powers in this area explicit. At the same time we are giving Parliament a further opportunity to discuss the principles which underlie the way in which the scheme operates.
  Finally, perhaps I may turn to the noble Earl's amendment specifying that the proposed regulations or orders should be subject to annulment by a resolution of either House of Parliament. It may be helpful if I explain that under Section 83(4) of the Social Security Act any regulations or orders issued under Sections 32 or 33 of that Act are already subject to annulment in this fashion. For those reasons, I cannot accept the noble Earl's amendment.
  Earl Russell: Again, the Minister's reply does not come as a great surprise to me. Not all of his reply was directed towards the purpose of this amendment. I was not attempting to open up the question of the administration of the social fund. In discussing constitutional questions, we must separate form from substance. We shall have plenty of opportunity presently to discuss how well the social fund is or is not administered. The proposal is concerned with the constitutional form in which the Minister gives his directions. What is at stake in this amendment is not whether the social fund is well or badly adminstered or whether its principles are right or wrong; the question is whether it is under parliamentary control.
  The growth of the bulk of administration necessarily puts the principle of parliamentary control under stress. The advantage of the negative resolution procedure which I suggested is that you do not have to take up parliamentary time with every single measure put forward. Clearly the bulk of legislation being processed would make that impossible.
  The advantage of the negative procedure is that we can take it up only when it happens to give rise to concern. Where there has been a real doubt, as there has been about how far the social fund was cash limited, it is worthwhile having an opportunity in Parliament to dispel that doubt. I do not think that this is an issue which is worth taking to a Division now. However, it is of continuing concern. I should like my noble kinsman to draw to the attention of his right honourable friend the Secretary of State that this type of question is likely to go on being asked in the future. With that remark, I beg leave to withdraw my amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 66 not moved.]
  Earl Russell Earl Russell moved Amendment No. 67:
  Page 14, line 47, 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 to secure accommodation".".)
  The noble Earl said: This amendment is concerned with the adminstration of the social fund. Its effect would be to give power to social fund officers to provide money for deposits for rented accommodation. We have already dealt to a certain extent with the problem of obtaining accommodation. That difficulty of ten consists largely of difficulty in finding the money for a deposit to take up a tenancy. People who are or have recently been in crisis are not usually in a good position to possess savings.
  The NACAB report on the social fund shows that 22 per cent. of the applicants to the social fund are without their own home. That is obviously a quite significant part of their problem. Sixty-four per cent. of those who optimistically asked for help with deposits were homeless. Finding money for the deposit is a necessary passport for them to escape homelessness; escaping homelessness is a necessary passport for obtaining work.
  A high proportion of those who suffer from these difficulties are young single people. That appears in the administration of the social fund to be a low priority category. The NACAB report drew attention to one social fund officer who told an applicant for money from the social fund that single people were never in crisis. I wish to ask my noble kinsman, when he replies to the amendment to confirm publicly and in a place where social fund officers may come to hear of it, that that is not government policy.
  Deposits are becoming increasingly normal in the private rented sector. For people who are in an emergency and looking for accommodation the private rented sector is likely to be the only place to which they can go. They cannot buy houses; there is no prospect of that. The stock of local authority housing is diminishing for reasons with which we are all familiar, and we touched on the subject recently. So it is only the private rented sector that is available.
  The 1988 Act regularised the taking of deposits and has done a good deal to encourage it. One would have thought that that might have produced a change in the administration of the social fund. However, it does not seem to have done any such thing. Directive 12(o) directs that there should be no help with deposits, therefore people who are homeless and in crisis are once again locked into the benefit system and denied the opportunity to escape. It is the Government who are responsible for spreading a dependency culture. I know that it is contrary to their intention, but it is not contrary to the effects of their actions.
  These people are driven into bed and breakfast accommodation for the homeless. We heard a little last night about the difficulties that that can give rise to. This is the way in which an underclass is

  805
  produced. It fails to float people of f benefit and so leads to a pr of ligate waste of public money. I know that there are cases—some were mentioned in another place—such as that of the two 17 year-old girls who were thrown out by their parents. They slept on the floor and went of f to work in the morning. Some of us may have done that for a single night; I do not think that many of us would like to do it regularly for two weeks on end.
  Another Member of the other place recounted meeting a young man sleeping rough under the arches. He was asked why he did it and why he was not in work. The man replied, "I am in work, I am working every day, but it will take me two weeks to earn the money to get a deposit so that I can even go and look for a place to live". I hope that the young man stuck it out for the two weeks. It is a difficult requirement to put in people's way.
  The Minister's right honourable friend Mr. Scott, speaking an another place on 6th March (col. 417 of the official Report) attempted to answer a fairly similar amendment. He estimated its cost at slightly over £3 million. I remind the Committee that that is on a social fund budget of £210 million. The budget is being distributed in a way that means that 22 per cent. of the applicants cannot be effectively helped; they are given money without being effectively helped. Assuming that the money that goes to 22 per cent. of the applicants is wasted because it denies them the opportunity to get of f benefits one might say as a rough estimate that the Government are wasting £40 million in order to save £3 million. That does not seem to me to be good budgeting.
  The right honourable gentleman also said that the effect of that amendment would be to encourage the taking of deposits. In that case, the remedy would have been to stop the taking of deposits. Yet it seems that it is government policy to encourage that. I have said before that the Government seem to suffer from lack of what the noble Lord, Lord Wilson of Rievaulx, used to describe as a "half back" line. There seems to be nobody to draw attention to the effects of the policy of one ministry or another.
  I have drawn attention before—and I know other noble Lords have also done so—to the conflict between the policy followed in the 1988 Housing Act and that followed by the Department of Social Security. It is an unfortunate conflict. Accepting this amendment would be one thing that the Government could do which would go a little way towards getting their act together. I beg to move.
  Lord Jenkin of Roding: I hope that the Committee will not be beguiled into accepting the arguments of the noble Earl, Lord Russell, or accepting his amendment. When I was Secretary of State for the Social Services—and that ended in 1981—the administration of the supplementary benefit scheme, and in particular the administration of the single payments system within the supplementary benefit scheme, was already causing severe problems for the whole system. The people who suffered from that were not only the staff of the social security offices who had formidable problems—as anybody who
  806
  ever attempted to study the "A" code, would recognise—but many of the claimants. It became totally impossible for anyone ever to know the real entitlement. I gave the order that it should be published, and the "A" code was published in 1980 for the first time. It had never been published by our predecessors. It brought home to everybody the way the system had grown and had reached the level of becoming unmanageable. That was by 1981.
  In 1981 the cost of deposits as single payments under the old scheme was about £18, 000, and amounted to about 750 payments. Five years later, by 1986—towards the end of the old scheme—the cost had risen to the figure that the noble Earl mentioned of £3 million, and it covered 33, 000 payments. I have just worked out on my calculator that that represents a multiplication of something like 167 times. Yet the noble Earl said there was no evidence that the availability of deposits under the supplementary benefit scheme encouraged landlords to demand deposits. The figures that I have mentioned on the growth of the payment from the supplementary benefit scheme—
  Earl Russell: Will the noble Lord give way?
  Lord Jenkin of Roding: I shall give way as soon as I have finished the sentence. The noble Earl has engaged the attention of the Committee for a considerable time this afternoon. I have calculated the amount that he has already asked us to spend and I believe it comes to over half a billion pounds. However, I may have got that wrong. In the five years since I ceased to be Secretary of State for social services the amount has multiplied 167 times. That occurred because the payment was available. Landlords knew that they could demand deposits because tenants could go to the supplementary benefit office and obtain payment for those deposits. I believe it is flying in the face of reason to argue that this availability did not encourage landlords to demand deposits.
  The noble Earl said that if the Government did not like deposits they should have passed legislation to ban them. If I may say so, that is an absolutely typical left-wing response. It is a typical left-wing response to say, "If you don't like something, pass a law against it". I believe it is far more sensible to cease to make the money available if one thinks it should not be shelled out in that way. That of course was the change that was made by the conversion to the social fund. However, I recognise the argument that has been advanced that some landlords still, for one reason or another, demand a deposit and, if they have to choose between a tenant who can pay it and one who cannot, they will naturally choose the tenant who is prepared to pay and he is more likely to get the accommodation.
  What is the present system? In many cases a deposit is, in effect, rent in advance. It is not unreasonable, particularly when one is dealing with people of relatively limited means who perhaps have an uncertain income, to take some rent in advance before letting a room in one's house, so as to ensure that one is not out of pocket if the tenancy has to come to an end.

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  Help for the payment of rent in advance is available from the social fund through budgeting loans for people who have been on income support for some time. There are also social fund crisis loans for people who do not have enough money to live on, whether or not they are receiving benefit. Those are loans. We have debated this matter on many occasions. However, the repayment terms for the loans take into account an applicant's income, his existing and future commitments and, in the case of crisis loans, there is normally no question of requiring repayment until the crisis period is over.
  Once a person is in accommodation he is entitled to housing benefit, as we discussed earlier. In these circumstances if we reverted to the former system—that is what the amendment seeks to do—whereby a claimant could seek help from the fund to pay a deposit whenever a deposit was demanded, we would simply open the way to all the abuse of the system that occurred before. Abuse did occur. Some landlords refused to repay deposits when tenants moved on. The system was abused in some cases by tenants who took fresh deposits and obtained fresh allowances every time they moved, notwithstanding the fact that their deposits might have been repaid. It was a thoroughly bad scheme. The deposit system was one of the features of the scheme that had to be ended when the change to the social fund took place. However, the noble Earl is now asking us yet again to go back to what really were the bad old days. I hope the Committee will have none of it.
  Lord Carter: I was pleased to add my name to the amendment on behalf of these Benches. I was surprised to hear the noble Lord, Lord Jenkin, as a former Secretary of State for social services, express some pride in the social fund. I believe the social fund is almost the worst aspect of the much vaunted social security reforms in the 1988 Act. We should remind ourselves that the purpose of this amendment is to remove the total ban imposed by the Secretary of State on social fund payments, either through grants or loans, for deposits for accommodation. While a payment for rent in advance can be made, but only in the form of a loan, the directions of the Secretary of State prohibit any kind of payment, even a crisis loan, for a deposit. This amendment would prevent the Secretary of State from issuing any direction which would ban payments for deposits. It would still be open to him to issue guidance on this subject which social fund officers would have to take into account. However, that guidance would not be binding on them.
  The noble Lord, Lord Jenkin of Roding, referred to the growth in single payments from £18, 000 to £3 million. I believe those were the figures he mentioned. That could also be taken as a sign of the crisis in housing that has resulted from the policies of the Government between 1981 and 1986. The noble Lord said, entirely correctly, that loans can be granted for the payment of rent in advance. I was sent some interesting figures by the Central London Social Security Advisers Forum. The Paddington office of the DSS was mentioned. That office deals, not surprisingly, with large numbers of homeless
  808
  people, both families and single people. The figures of that office for the first year of the social fund show that it refused 62 out of 73 loan applications for rent in advance. On the other hand the office admits to receiving only five crisis loan applications for rent in advance, of which only one was refused. That illustrates a difficulty with the operation of the social fund. It is the policy of the Paddington office not normally to give crisis loans for rent in advance. People who inquire about such payments are not given an application form. Instead they are advised that they do not qualify and are advised to leave the office, even though the guidance allows the use of these loans for rent in advance.
  As I have already said, I believe the operation of the social fund is the worst aspect of the 1988 social security reforms. I entirely accept that there were some problems with single payments. The social fund was a valiant attempt to remove some of the problems which resulted from single payments, but it has resulted in a situation which has made a large number of the poorest people in society much worse of f, and in some cases destitute.
  Lord Seebohm: I should point out that in industry nowadays, for security and other reasons, more and more salaries are paid monthly in arrears. One sometimes has a long wait after starting a job before one is paid. I should point out, quite independently of what the noble Lord, Lord Jenkin, said, that there is a general tendency now for rent to be paid in advance. If one has to wait a month for one's salary, that is rather a long wait. This amendment is only a permissive amendment. It does not mean that grants will necessarily be given in a great number of cases. However, I think grants should be permissible in view of the great change in the way that salaries are paid.
  Lord Jenkin of Roding: Before the noble Lord sits down, I should ask him whether he agrees that most reasonable employers are only too happy to offer a new employee starting work a sub, as it is called, after a fortnight or even a week. They are happy to do this for a new employee who clearly needs money in his pocket in order to be able to live. It would be a rum employer who was not prepared to offer that in the interests of keeping that employee.
  Lord Hylton: Some 25 years ago the Catholic Housing Aid Society in London made loans to people who needed deposits to secure accommodation. At that time the sums involved were quite small, but nowadays the sums have multiplied enormously. However, the society still grants the odd loan for that purpose when there is no other source from which the money can be found.
  Lord Henley: The Government fully share the concern for the homeless, but I feel that this amendment is not the right way forward. I am not sure that this is the moment for a general debate on homelessness. We should stick to the question of deposits.
  I wish to turn to a point which I feel is very important to get across. The point was raised by my noble kinsman Lord Russell. He referred to a social

  809
  fund officer as saying that young, single people are never in crisis. The noble Earl asked me for reassurance that that was not the Government's policy. I can assure him that that is not government policy. It is an example of bad practice and we should certainly like to hear of such incidents.
  The amendment was debated in another place. I expect that I shall repeat a great deal of what was said there, but there are important points to get across, it may be helpful if I take as my starting point the reasons why help with deposits for accommodation were excluded from the social fund in the first place. Under the old single payments scheme which preceded the social fund, help with deposits to secure accommodation was available to people receiving supplementary benefit. However, the scheme is fraught with problems. There was evidence that the help provided under those arrangements was not achieving its purpose of helping people on supplementary benefit to secure accommodation. On the contrary, it was actually stimulating demand for deposits from landlords, resulting in an enormous rise in the amount paid for deposits over a very short period.
  I am glad that my friend Lord Jenkin mentioned the figures. In 1981, when he ceased to be Secretary of State for social services, 750 payments for deposits were made, at a cost of £18, 000. By 1986 the number had risen to 33, 000 deposits, at a cost of over £3 million. Having mentioned that figure, perhaps I should correct a point which was raised by my noble kinsman. My right honourable friend the Minister of State did not estimate the cost of providing deposits under the social fund at £3 million. The figure of £3 million which he quoted was the cost of single payments for deposits in the last year of the scheme. I believe that my noble kinsman misunderstood my right honourable friend: it was the 1986 figure which he quoted.
  As my noble friend Lord Jenkin said, there was a colossal increase between 1981 and 1986. That increase in expenditure was something that no responsible Government could ignore. Moreover the increasing demands for deposits by landlords made it more difficult for others who did not meet the strict criteria for a single payment, or who were in low-paid work, to obtain accommodation. There was also evidence of abuse of the system by tenant and landlord alike. For example, as has already been said, some landlords refused to return deposits when the tenant moved on, and some tenants moved repeatedly, claiming a deposit each time to get the additional money.
  It was against this background that, when the social fund was introduced, it was decided to exclude help with deposits from the scope of the fund. Instead, people on low incomes who need assistance to secure accommodation may obtain help from the social fund through loans for rent in advance, as my noble friend has already said. Help with the cost of rent thereafter may be available from housing benefit. We believe that, in deciding the extent to which help should be provided through the social security system, this balance is right, given that the
  810
  primary responsibility for housing rests with other agencies.
  I have no doubt that the movers of the amendment are sincere in their belief that providing help with deposits from the social fund will make an impact on the problem of homelessness. However, our experience of operating such a scheme for deposits under the system of single payments was, as I have explained, that the system itself ended up exacerbating the very problem it had set out to help resolve. In the light of that experience I am not convinced that providing help with deposits from the social fund would be an appropriate, or a satisfactory, solution to the problems of helping people to obtain accommodation. I hope, therefore, that the noble Earl will feel able to withdraw the amendment.
  Lord Carter: My Lords, before the noble Earl decides what to do with the amendment, perhaps the Minister will comment on the figures which I quoted regarding the refusal of crisis loans for rent in advance. Rent in advance is a very common requirement. Can the Minister say whether it is the policy of the department that crisis loans should not be used for rent in advance? Experience at the office in Paddington which I mentioned, which deals with a great many homeless people, has shown that the vast majority of applications for loans for rent in advance were turned down.
  Lord Henley: I do not have the figures for rent in advance. I can tell the noble Lord that, of all claims in the crisis category, 90 per cent. are successful. If I can find the figures for rent in advance I shall certainly let the noble Lord know. For all claims in that category, the figure is 90 per cent.
  Earl Russell: I listened with interest to the speech of the noble Lord, Lord Jenkin of Roding. He seemed to have an allergy to the notion of single payments. I have detected that before in other speeches from the Government Benches.
  In the course of research I have from time to time looked at accounts of the administration of social policy over a good many centuries. From the very beginning of the system a great deal of money has always been spent in the form of single payments, for the simple reason that, life being what it is, that is normally the way in which need arises. If you set your face against single payments in the determined fashion adopted by this Government, you set your face against the real world. When you do that, the real world has a tendency to turn its face against you.
  The noble Lord also accused me of typical left-wing thinking. Listening to him expressing a very deep, principled hostility to landlords, I felt that a great deal of what he had said was rather more typical of left-wing thinking than anything I had said today. He also drew attention to the rise in the cost of the scheme from £18, 000 to £3 million and argued, with typical Thatcherite thinking, that because the need is greater, therefore it must be less thoroughly met.

  811
  The noble Lord made a most ingenious attempt to argue that the increase in the taking of deposits was the result of market forces operating through the social fund. I find it very hard to believe that the social fund represents a significantly large proportion of the demand for rented housing to force up the level of deposits on its own. I had understood from listening to the debates on the Housing Act 1988 that it was government policy to encourage the taking of deposits.
  I accept that there has been abuse in the administration of deposits from time to time. That should be controlled. However, there is abuse in a great many areas. There is daily abuse of the roads, but I have not noticed that this Government therefore want to close them. In an area of great need such as housing, one cannot say that because there is an abuse one must take away the use. It is the Government's policy, many times stated, to expand the private sector, and it is in the private sector that the taking of deposits is increasing fastest. Therefore, the effect of their present policy is to push people towards the private sector and then lock them out when they try to go there. I do not see the sense in that.
  I thank my noble kinsman for acknowledging my sincerity. I must, equally, acknowledge his. However, I do not believe that he has entirely come to terms with the scope of the problem. What I have been given is principles. What I am trying to offer in return is experience. It is about time that the Government's principles encountered the experience of those who know most in this field.
  I do not intend to divide the Committee tonight, but I shall read with a great deal of care what the Minister and the noble Lord, Lord Jenkin of Roding, have said. This is a problem which will not go away until there is a solution. With those words, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 68 not moved.]
  Lord Carter Lord Carter moved Amendment No. 69:
  Page 15, line 5, after ("description") insert ("other than for the purposes of promoting community care.".).
  The noble Lord said: With this amendment we come to the heart of the debate on the social fund. It is important that we should remind ourselves of what has happened. The main purpose of Clause 10 is to give the Secretary of State power to issue directions to social fund officers forbidding them to make any payment in excess of their local office budgets. It ends a period of uncertainty as to the Government's intentions following their dramatic defeat in the High Court on 20th February. We now know that the social fund's cash limits are to be inflexible.
  When the 1986 Bill, which introduced the social fund, was debated there was strong opposition to the whole idea of cash limiting a fund which was intended to be the last resort of the poorest members of the community, who at the same time were to be made even poorer by the new income support scheme.
  Whatever case there may be for limiting other parts of government spending, cash limiting the social fund can only lead to arbitrary refusal of payment for essential needs. That is precisely what has happened. As demand has risen, the social fund officers have been forced to adopt increasingly restrictive criteria and have removed entire categories of claimants from eligibility for payments. I have previously referred to the experience of one office.
  The restrictions have varied from month to month and from place to place, thus removing any semblance of fairness from the operation of the fund, as well as preventing it from achieving its fundamental aim of meeting essential needs.
  When the Bill passed through this House and another place there was some debate as to whether the social fund would be cash limited. The noble Baroness, Lady Trumpington stated:
  "We have decided, however, that the fund will not at first be subject to a formal cash limit on its introduction".—[official Report, 15/7/86; cols. 848–9]
  We know what happened after that. There were to be local office budgets, instead of the so-called cash limits, and social fund officers were sternly forbidden to overspend. We know the problems that that situation caused for the Government, which resulted in the High Court judgment of 20th February.
  The Minister has attempted on a number of occasions to persuade me across the Dispatch Box that there is a difference between a budget and a cash limit. The pretence that a rigid budget is different from a cash limit was finally abandoned at Committee stage of the Bill on 8th March in another place. The Minister, Mr. Nicholas Scott, claimed once again that the social fund had a fixed budget, not a cash limit. When asked to explain the difference, the Minister replied:
  "The only difference between a cash limit and a budget is that cash limit is here a technical Treasury term. When a cash limit is imposed, it cannot be exceeded. Budgets, in practice, are exactly the same thing. It is a semantic point".
  We have been trying to argue that point since the social fund was first proposed. I am very pleased to see that the Minister in question has finally accepted the arguments that we have made in this House and in another place.
  I do not apologise for repeating what I stated in relation to the last amendment. The cash limit is not a cash limit but a budget—the same as a cash limit. The guidance was not guidance, but it was illegal. The increase in the social fund resources was 4-4 per cent. for 1990-91, compared to a rate of inflation of 9 to 10 per cent. The social fund is one of the sorriest aspects of the much vaunted reforms in the 1988 Act. The amendment goes some way towards redressing part of the damage that has resulted from the operation of the social fund. I beg to move.
  Lord Henley: I spoke on the generality of the clause when speaking to the first amendment in the name of the noble Earl, Lord Russell. The Committee will be aware that similar, but by no means identical, amendments were introduced when the Bill was in another place. Those amendments sought completely

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  to remove budgetary control over the social fund, whereas this amendment seeks to do so only in respect of payments made for the purpose of promoting community care. It may be that this change is intended to make the amendment more acceptable; I regret to say that is does not.
  The Government made it perfectly clear when the scheme was being devised that the social fund should operate flexibly but within a strict financial framework. The changes that we are making to the legislation under Clause 10 will ensure that the scheme continues to operate in the way in which it was originally intended that it should.
  A scheme of loans and grants operating within a firm budget ensures that money is concentrated on those who are in greatest need. We have been enabled to recycle money that was recovered from loans so that the same money can be used to help more people. What would be the effect of operating without budgetary control over awards for community care? It would require additional funds over and above the extra £10 million that we have made available to the social fund for next year.
  I make it clear that that is not an option. We have an overriding duty to the public to use responsibly the money that it provides in the form of taxes. The alternative is to reduce the money available to meet other needs from the fund, with the result that many applicants who now receive help would not be helped in the future. I cannot believe that the noble Lord would wish that to be the situation.
  I appreciate the idea behind the amendment, which might seem eminently reasonable in theory. However, in practice it has the very serious drawbacks that I have identified. Therefore, I ask the noble Lord to withdraw his amendment.
  6.45 p.m.
  Lord Carter: I am neither surprised nor disappointed to hear the answer of the Minister. It is exaclly what I expected. We heard once again the extraordinary phrase that the fund will operate flexibly but within a strict financial framework. That sounds like bank managers I know. If one has to keep to a financial budget, which has a cash limit, in a demand-led situation—and that demand results from the operation of many other aspects of the 1988 Act—there is only one answer. Any economist will tell you that the answer is rationing. That is exactly what is happening to the social fund: it is being rationed. It is described as being a responsible use of money. This Chamber has heard of many examples of what happens in practice in relation to the social fund.
  We will return to this matter again and again because we feel that it is our duty to do so. I repeat the central point. The Government are rationing resources among the poorest in society. There is a difference between that side of the Chamber and this. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Earl Russell Earl Russell moved Amendment No. 70:
  Page 15. line 19, at end insert:
  ("(4A) After that subsection there shall be inserted the following subsection—
  ("(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 Earl said: This is the last amendment, I am sure the Chamber will be pleased to hear, that I shall move for a while. The effect of the amendment is to make invalidity benefit, as well as income support, a passport to community care. This is a practical and fairly small amendment which will make it easier to achieve the intended effect of the community care proposals.
  At present invalidity benefit does not operate in the same way as income support—as a passport to community care. The amount is £1 per week above the level of income support. If one receives invalidity benefit, one is excluded from benefiting from community care. I find that situation a little curious. Community care is largely concerned with people who have suffered poor mental or physical health. I find it difficult to follow the logic that invalidity benefit should exclude one from something which is designed for precisely that kind of purpose.
  The effects are distinctly unfortunate. I should like to give one or two examples. A psychiatric patient who had twice attempted suicide was discharged from hospital. He wanted to furnish a completely bare place into which he had moved. Those of us who have looked at completely bare houses and flats in the course of house-hunting know how depressing they can look before one furnishes them. The man was told that because he was obtaining invalidity benefit, he was not eligible for a community care grant. He could not furnish the flat. As has been remarked in relation to that case, it is very difficult for someone with mental illness to return successfully to live in the community.
  The theme that I have been drawing upon is that restrictions are imposed which have the effect of locking people into dependency instead of giving them a chance to climb out and rebuild their lives. I hope that that is very much the opposite of what is intended.
  Another example concerns a homeless single man who was discharged from hospital. A flat was found for him with help. He was denied a community care grant for purchasing a cooker, without which he would need to eat out each week. He was refused a community care grant for the simple reason that he was receiving invalidity benefit.
  That restriction defeats the object of an exercise which we on this side of the Chamber, and in particular these Benches, should like to see succeed. I shall listen with a great deal of interest to what my noble kinsman has to say about this matter. I beg to move.
  Lord Carter: I am pleased to support this amendment from these Benches. My name was supposed to be attached to the amendment but somehow it did not reach the Marshalled List.

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  It is worth reminding ourselves of the practical effect of the failure to accept the amendments that we propose. It is a comparatively small change that is proposed. We have had advice from the citizens advice bureaux, and I shall quote just two examples from many which they have given me. The citizens advice bureau in Devon reported a case of a client with multiple sclerosis who was discharged after two years in hospital. He was in receipt of invalidity benefit and so was excluded from receiving any help from the social fund to establish himself in the community and set up home. The citizens advice bureau in Greater Manchester reported the case of a man who was discharged after three years in an alcoholic rehabilitation unit. He was in receipt of invalidity benefit at a rate of 40p in excess of his potential income support entitlement and was therefore refused a community care grant.
  It is clear that this measure is not working as community care grants are intended to work. This amendment is intended to put that situation right. I hope that the Minister will accept it.
  Lord Hylton: of its nature a hospital is a total institution and very expensive to run, whether it is for long-stay or short-stay hospital care. One therefore completely understands the Government's wish to see patients discharged from both types of hospital care. What we all have to face is that there will be consequential costs, which are the consequential costs of handling people within the community and enabling them to cope with their own lives in a community setting.
  To disqualify such people who are emerging from hospital on the grounds that they happen to be receiving invalidity benefit seems to be sheer madness. I very much hope that the Government will treat this amendment with rather more sympathy than they have so far shown to many previous amendments.
  Lord Henley: I am sorry that the noble Lord, Lord Hylton, thinks that we have treated many of the previous amendments with lack of sympathy. I regret that I cannot accept this amendment, but I hope that I can make some perhaps more sympathetic noises which might go some way toward pleasing my noble kinsman and other noble Lords. I do not know whether that will be the case, but I shall certainly try.
  Given that one of the main purposes of community care grants is to help people to re-establish themselves in the community following a stay in institutional or residential care, opening up the scheme to people other than those who are eligible for income support may, at first glance, appear consistent with the policy behind the scheme. There is little doubt that a number of people leaving institutions become entitled to invalidity benefit at a level which exceeds the income support for which they might otherwise qualify on their return to the community and that as a result they are ineligible for community care grants. But it is a fact that in any scheme involving finite resources a line on where to give help has to be drawn somewhere.
  816
  It is always difficult trying to establish where the line of eligibility should be drawn. Whatever decision is taken, there is always a deserving case which will fall on the wrong side of the line. As I said earlier, the social fund is intended to focus the available resources on those in greatest need. Directing help to those in receipt of income support is the most logical and objective way to achieve that.
  To extend the scheme only to those in receipt of invalidity benefit and severe disablement allowance would be to ignore the many other deserving groups—for example, pensioners—who, although in very similar circumstances, would continue to be excluded. Nor would it take account of the fact that many invalidity pensioners receive considerably more in weekly benefit than those on income support. Also of course there is the question of cost. In order to meet the additional demand on the scheme from increasing the number of groups eligible to obtain community care grants, it would be necessary to increase the social fund budget considerably. Even if additional money could be made available, we should have to consider carefully whether extending the number of groups eligible for grants would be the best use for such resources. The alternative of opening the scheme to people on invalidity benefit and severe disablement allowance without an increase in funds would result in many people on income support being refused grants in the future.
  However, the social fund is still a relatively new scheme. It is generally accepted, even by opponents of the scheme, that the demands placed on it in the first year of operations were untypical. It is only in the year just ended that the scheme has been tested fully and clearly. There must be a question about whether that is sufficiently long enough for us to consider major changes to the scope of the scheme, such as the one envisaged by the amendment. There are also significant changes taking place in community care which it seems only sensible to consider very carefully in any consideration of change to the current community care grant arrangements.
  Against that background and the many difficulties which would be associated with an extension of the scheme, I hope that the noble Earl will feel able to withdraw the amendment. I assure both the noble Earl who moved the amendment and the noble Lord that, as with all aspects of the social fund, we shall continue to listen to representations, continue to monitor the operation of the scheme very carefully, and consider whether any changes are necessary in the light of experience.
  Baroness Seear: Before the noble Lord sits down, I should like to raise one point with him. I fully understand that there has to be an upper limit beyond which people cannot apply to the social fund for community care payments. But cannot a special category be made of the people who are coming out of institutions under the programme that we have been discussing in the National Health Service and Community Care Bill? They are a quite clearly defined and easily recognised case.

  817
  People move out of the institutions and into accommodation where they try to look after themselves in the community. Would it not be a way to consider this matter to look upon those people as part of an establishment in the community, which would not in any way confuse them with people on invalidity benefit who are already living in the community and do not have to make that additional expenditure.
  As we have said repeatedly in connection with the National Health Service and Community Care Bill, the problem of resettling the people who come out of hospital will be very great. The Government want that to happen. This surely is one way in which that very difficult path could be eased.
  Lord Henley: I appreciate that the noble Baroness is trying to be very helpful—and I think she is being helpful—in trying informally, as it were, to tighten the amendment and bring it down from merely invalidity benefit and severe disablement allowance (which is. the object of the amendment) to just this one group. I imagine that this is a group which it might be quite easy to define carefully for the purposes of such amendment, as the noble Baroness suggests. I cannot give her at this stage—and it is very unlikely that I shall be able to do so—the reassurance that she would like other than to repeat what I said at the end of my remarks; namely, that we accept that the scheme is a new scheme and in time we shall have to look at how it develops and the changes that may have to be made to it.
  Certainly I hope that at some point it might be possible to look at the suggestion made by the noble Baroness, which is very helpful.
  Earl Russell: I accept that the line has to be drawn somewhere. However, I do not quite follow why the Government chose to draw it where they did. The purpose of these grants is to assist people to re-establish themselves in the community, as my noble kinsman said. I do not understand why invalidity benefit disqualifes one from needing help to re-establish oneself in the community. I should have thought that this was precisely the kind of case that the Government intended.
  As my noble friend Lady Seear said, the case of someone who has just come out of hospital is very different from the case of an able-bodied pensioner living in his own home. I cannot see why the Government cannot distinguish them. Although the Government have to draw the line somewhere, as all governments have to do, it simply passes my understanding why they drew it at this place.
  Nevertheless, for the time being I beg leave to withdraw the amendment. I hope that the monitoring is rather more effective in producing change than it usually is.
  Amendment, by leave, withdrawn.
  7 p.m.
  [Amendment No. 71 not moved.]
  Clause 10 agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 72:
  After Clause 10, 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 "6 weeks".").
  The noble Baroness said: The objective of the amendment is to change the provision in present social security legislation that disqualifies from benefit for 26 weeks any one voluntarily leaving employment without good reason.
  For over 75 years, from 1911 to 1986, six weeks was held to be a long enough period for disqualification. In 1986 it was changed to 13 weeks and more recently, with hardly any time in between to monitor the effects of that change, the period was doubed to 26 weeks. The loss of benefit for up to six months means a penalty of £971 for a single claimant and £1,570 for a married couple at the 1990–91 benefit rates. Those claiming income support do not suffer the full penalty but their normal entitlement is reduced by £14·70 a week.
  Adjudication officers have full discretion with regard to the length of time for disqualification; but in the majority of cases it would appear that they simply apply the 26-week period as a rule. There is opportunity to appeal but many claimants are not aware of that right or are sceptical about it. Sometimes they have been actively discouraged from appealing by being told that they had no chance.
  The Government have never produced convincing arguments for their departure from the practice of 75 years. Of course they do not like people choosing to be voluntarily unemployed. However, relatively few people do so. There are of ten good reasons for voluntarily leaving employment. The pay may be far too low. The employer may seek to impose unacceptable working conditions. The employee may leave believing that he or she has other employment available and the alternative may simply fall through. There may be sexual harassment. That is far more common in offices and factories than many people understand. Young women are particularly vulnerable and may be too upset or embarrassed to do anything other than get out as quickly as they can. There is the opportunity to have recourse to industrial tribunals but again that is a long-winded matter. In the meantime, for 26 weeks the individual has no benefit.
  Employers may make things so difficult for particular employees that they feel that they have no alternative but to leave. I shall be told that such an employee could plead constructive dismissal before a tribunal and could appeal against an adjudicating officer's decision. Again, those procedures take time and in the meantime the individual has to go 26 weeks without benefit.
  I cite those cases because they are all too common. They are part of the pattern of working life for many people. The Government have set their face against those who are undeserving, who voluntarily make themselves dependent upon benefit. But the degree of "voluntarism" is of ten hard to assess and the result is real poverty. Many people can manage for six weeks, but for six months it becomes totally

  819
  impossible, particularly if there are children to be cared for.
  Why do the Government feel it necessary to retain this 26-week provision when they have already altered the legislation relating to entitlement to require individuals actively to be seeking work and not merely available for work, as was the previous requirement? Is it not enough to retain the six-week period plus the actively seeking work requirement? Why do the Government act so punitively against people who in the main are in lower paid employment? Is it part of the Government's intention to compel people to stay against their will in dirty, unsafe and low-paid employment for fear that if they try for something else and fail they will be regarded as undeserving and will have to do without benefit for 26 weeks?
  Last week I returned from a visit to Eastern Europe. In Prague and Budapest I had the opportunity to talk to people who were euphoric at having got rid of, as they saw it, a very heavy and authoritarian regime. I spoke to them about what seemed to me to be at least a basic social provision that they had had under those regimes, unpopular though they were. They said, "You think we had full employment. We had full employment but we had no choice about the jobs that we had". Are we aiming to create such a situation for people who are in the main in lower paid employment? That is not good enough. I ask the Government to reconsider the provision in the legislation and to revert to the six-week provision. I beg to move.
  Earl Russell: I support the amendment. There may be circumstances which make it necessary to leave a job. They may be very difficult to explain to a tribunal. Nevertheless, it may sometimes be necessary to leave a job in order to maintain one's self respect. Any Minister who has resigned on a point of principle is likely to understand that.
  Baroness Blatch: The new clause would make the maximum disqualification for voluntary unemployment the same as it was before October 1986. Up to that time six weeks was the maximum period of disqualification which an adjudication officer could impose on those who had, for example, lost their employment through misconduct or voluntarily left their employment without just cause.
  This Government increased the maximum period of disqualificaton to 13 weeks in October 1986 and to 26 weeks in April 1988. That was done because it was clear from our monitoring of adjudication officers' decisions that, at a time when the number of unemployed claiming social security benefits was falling, there was a marked increase in the percentage of claimants who were disqualified due to voluntary unemployment. It was clear during 1987 that the existing maximum sanction of 13 weeks' disqualification was still not an effective deterrent for those who were prepared to opt for benefit at the expense of contributors to the National Insurance Fund and taxpayers in general.
  The prime purpose of unemployment benefit is to insure members of the working population against
  820
  unforeseeable spells of unemployment. It follows, as in any insurance scheme, that a person cannot be covered for circumstances which are of his or her own making. Leaving a job with no other job to go to or being dismissed for misconduct cannot lead to benefits from unemployed insurance.
  People are of course free to leave one job and go to another. We are not discussing such people. Nor are we discussing those who lose their employment through redundancy or because they are not up to a job. As the noble Baroness, Lady Turner of Camden, said, since 1911 penalties have existed to discourage voluntary unemployment. Those were explicitly restated in the Social Security Act 1975 which was passed by a Labour Government. The reason for that restatement is to be found in the Beveridge Report, which said in paragraph 326:
  "Disqualifications, as at present, will apply to men refusing suitable employment, dismissed for misconduct or leaving their work voluntarily without just cause".
  Beveridge made his reasoning quite clear in his report. Paragraph 130 stated:
  "The correlative of the State's undertaking to ensure adequate benefit for unavoidable interruption of earnings, however long, is enforcement of the citizen's obligation to seek and accept all reasonable opportunities of work, to co-operate in measures designed to save him from habituation to idleness, and to take all proper measures to be well. The higher the benefits provided out of a common fund for unmerited misfortune, the higher must be the citizen's sense of obligation not to draw upon that fund unnecessarily".
  Throughout the history of unemployment insurance in 1911, 1948, 1975, 1988 and until today, the objective has remained the same: to discourage voluntary unemployment. As I understand it, Members of the Committee on the other side do not disagree with that objective. Nor do they disagree with the method used to attain it, because they have used the same method—disqualification for unemployment benefit and the reduction of income related benfits. They even reduced the income related benefit of the day, supplementary benefit, at a time when it was much lower in real terms than it is today. It seems to me that the only area of disagreement between us is that we are concerned to have an effective penalty. Members of the Committee on the other side are still not interested in doing so.
  We have carefully monitored the effect of the April 1988 change to 26 weeks. Apart from collecting statistics within the department and undertaking a special inquiry into decisions given by adjudication officers, we commissioned Social and Community Planning Research to undertake a survey of claimants during the period December 1988 to February 1989. We announced in November 1989 that we had received the findings of those two monitoring exercises and that copies of both had been placed in the Library. They showed that, while claimants' understanding of benefit sanctions was low, there was general acceptance about the need for a penalty. The effect of sanctions on job search was seen as variable. For some, the resultant loss of income increased the pressure to find work quickly. For rather more, there was concern not to take a job which might prove unsuitable and might, therefore, expose them to sanctions in the future.

  821
  We did of course debate this issue at great length during the passage of the 1989 Bill. There have been no new arguments or evidence which persuade me that the Government should accept the proposed amendment to the 1975 Social Security Act.
  We have never suggested that the majority of unemployed people are not keen to find work and keep it when they have found it, but, as Members on the other side will know, there is a small minority of unemployed benefit claimants who make little real effort to maintain themselves. The present sanctions ensure that the message to that group is clear—that they cannot expect to receive their full entitlement to social security benefits if they refuse employment or give up employment voluntarily before they have found alternative work, unless they have good cause for doing so.
  In 1988 the Government were conscious that some long-term unemployed claimants might be deterred from accepting unfamiliar work which, if they gave it up later, could incur a sanction for leaving voluntarily. We therefore introduced the employment on trial provision as an incentive for those who have been out of work for at least 26 weeks. Those claimants can take up new employment in the knowledge that they will not lose benefit if they give the job a fair chance by working in it for at least six weeks and leave no later than 12 weeks after starting. That provision came into operation on 9th October 1989 and will have assisted those long-term unemployed who have accepted unfamiliar work.
  The Government have also recognised that the unemployed require time in which to seek work in their usual occupation without being subject to a sanction for refusing employment without good cause. The "permitted period" provisions in the Social Security (Unemployment, Sickness, and Invalidity Benefit) Amendment No. 2 Regulations 1989 allow adjudication officers to determine an appropriate permitted period between one and 13 weeks which takes account of the claimant's relevant skills, qualifications, training and employment history. That provision is working. It is but one indication that we are concerned that sanctions should work effectively to deter only those who do not take all reasonable steps to avoid unemployment.
  As a final safeguard, the "good cause" provisions give those faced with possible disqualification ample opportunity to show the adjudication officer that they have acted reasonably. If they are dissatisfied with the adjudication officer's decision, they have the right of appeal to a local social security appeal tribunal and on a point of law to the Social Security Commissioner. That, we believe, is an adequate safeguard for the claimant.
  I am sure that the noble Baroness was not comparing provisions in the United Kingdom with those in Eastern Europe. They do not bear comparison. However, I note the point that she makes about the plight of people in Eastern Europe.
  I hope that, with that explanation, the noble Baroness will consider withdrawing the amendment.
  Baroness Seear: Perhaps I may make a point before the noble Baroness sits down. Surely we all agree that there must be some sanctions and some penalties because certain people abuse the position. Without necessarily supporting the amendment, I should point out that 26 weeks is a long time—it is six months—to be without benefit. There is a big jump between six weeks and 26 weeks. The penalty of having no money coming in for half a year is very heavy. Will the noble Baroness consider whether there might at least be a half-way house between six weeks and 26 weeks? We do not deny that there must be a penalty. It is simply that the penalty seems to be rather draconian.
  7.15 p.m.
  Baroness Blatch: I believe that I gave a fairly detailed explanation of how we arrived at the 26-week period. There is a balance. The important objective is to ensure that voluntary unemployment is not made easy or, if it is resorted to, that there is a penalty. However, I have also given assurances—the noble Baroness, Lady Turner, raised this point—that there are circumstances in which a young person who feels aggrieved could have recourse to the appeal system.
  Baroness Turner of Camden: I am disappointed that the Minister has not responded to the constructive suggestion made by the noble Baroness, Lady Seear. We on this side accept that there must be some disqualification. As I said in my opening remarks, there was a disqualification of six weeks for 75 years. It is a question of the length of period.
  In addition to that long period of disqualification, the Government have tightened up in previous legislation the entitlement to benefit provisions. You must now be actively seeking work instead of simply being available for work. I should have thought that the "actively seeking work" provision, perhaps combined with a period longer than six weeks but less than six months, might be a much better way of going about matters.
  I do not intend to press the amendment to a vote tonight, but I shall think seriously about what the Minister has said and may come back with a different form of wording or a different suggestion on Report. I am certain that there must be a half-way house and not simply a period of six weeks, as we suggest, or of six months, which is quite unacceptable. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 73 not moved.]
  Lord Carter Lord Carter moved Amendment No. 74:
  After Clause 10, insert the following new clause: ("Eligibility of those in full-time education for income support
  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: Although this amendment is a new clause, it does not deal with a new benefit. The purpose of the amendment is to restore to

  823
  parents income support payments for 19 year-olds who are still at school in non-advanced education; in other words, those who are doing GCSEs and A-levels.
  Under the old supplementary benefit scheme, parents whose 19 year-old children were still at school used to have an amount included in their weekly benefit in respect of their upkeep. Since April 1988, when income support was introduced, such payments have been made only until the child's 18th birthday. Now, whether or not parents can obtain benefit for children until the end of their school days depends on the wholly arbitrary test of the child's date of birth. Two families whose circumstances are otherwise identical, who have children in the same class at the same school, can find that one of them is at least £36 a week worse of f because the first family's child is 19 while the other's is 18.
  The problems of families with 19 year-old children do not end there. The pupil will not be entitled to claim income support in his or her own right because he or she will be treated as a full-time student. Various other restrictions on benefits result from that. Families will thus be faced with a stark choice—to allow the child to continue to study without any financial assistance or to let him or her leave school without completing the course or obtaining the intended qualifications.
  We have been advised on the matter by the citizens advice bureaux, which have given us a host of examples of cases where the rules work considerably to the disadvantage of families. I do not propose to take the Committee's time to read out all those examples, but I hope that the Minister will explain why the regulations are drafted in that way. I beg to move.
  Baroness Blatch: Young people who are in full-time, non-advanced education are normally treated for social security purposes as dependent on their parents until they reach 19 years of age. Non-advanced education means education up to the standard of GCE A-level and its equivalents. Their parents can obtain child benefit and, if they receive income support or other social security benefits, they can obtain a dependency addition for their child up to that point.
  However, there clearly must come a stage at which dependency upon parents is no longer appropriate. For child benefit and most other social security benefits, the point at which dependency ceases has for a long time been the 19th birthday. By the age of 19 a person is well over the age of majority, and most have completed their secondary education and become independent of their parents. It was decided, when introducing the income support scheme, to bring it into line with child benefit and other social security benefits. The payment of income support dependency additions therefore now stops at the age of 19 for all young people in full-time education.
  I understand and sympathise with the anxiety which lies behind this amendment. The present rules leave some deserving cases on the wrong side of the eligibility line. However, that line is drawn in a way which is reasonably logical and coherent with the rest of the benefit structure and is reasonably easy to
  824
  administer. The change proposed by the amendment would not solve the problem of those cases but merely transfer the dividing line to a place which is much harder to defend and administer.
  More importantly, there is already alternative statutory provision to alleviate hardship. Local education authorities have power to make awards to help young people in non-advanced education to complete their studies. They have complete discretion as to the level of those awards. For example, local education authorities made education maintenance awards to 1, 663 pupils aged 19 or over in schools in 1987–88. Similar discretionary awards are paid to those continuing their non-advanced education at colleges of further education, and approximately 24,000 such awards were made to those aged 19 and over in 1987–88. From the autumn of this year colleges of further education will also have the discretion to use their access funds to support 19 year-olds in cases where education might be inhibited by financial constraints.
  The Government consider that the present point at which dependency for benefit purposes ceases is the most appropriate and that provision to alleviate hardship when benefit ceases already exists within the educational structure.
  I believe that there is little between the noble Lord, Lord Carter, and the Government on this issue. We are talking about how those needs should be met. On behalf of the Government, I am saying that they should be met through educational support grants and the noble Lord's suggestion is contained within the amendment. With that explanation, I hope that the noble Lord will feel able to withdraw his amendment.
  Lord Carter: I am grateful to the Minister. That was the explanation which I expected. As the noble Baroness said, dependency must cease somewhere and this seems to be the result of a tidying up more than anything else. In the nature of things, the number of hardship cases would be less if the amendment were accepted. I am rather doubtful, in view of the great pressure on financial resources of local education authorities, whether they will be able to help in the way suggested. I shall read with care what the Minister said, and in the meantime I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 11 [Annual increase of certain occupational pensions]:
  The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 75:
  Page 15, line 34, after ("scheme") insert ("or personal pension scheme").
  The noble Earl said: I shall speak also to Amendments Nos. 76, 79, 80 and 86. The situation of the amendments is to ensure that money purchase schemes or personal pensions are placed in the same position as final salary schemes; namely, to compel pensions from those sources to increase in line with rises in inflation.
  I welcome the desirability of an annual increase for pensions paid from occupational and personal pension schemes. I only wish to question the method which the Government have used to achieve that. When I spoke on Second Reading, I expressed my anxiety that the Government were proposing to force extra costs on those final salary occupational schemes which did not guarantee annual increases to pensions in payment in line with the retail prices index up to a maximum of 5 per cent. a year or a limited price indexation.
  I was and still am worried that such proposals might have completely the opposite effect on the Government's intentions. The recent European Court's decision on the Guardian Royal Exchange v. Barber case, which will apply in equal terms to men and women, will continue to exacerbate the position on costs.
  Having said that, it seems quite 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 pension schemes should be treated the same. Either all should be compelled to provide increases in payment or none of them should. I understand that the DSS has stated that it will defer consideration of the extension of the LPI to money purchase occupational schemes and personal pension schemes until the terms for contracting out of the slate earnings related pension scheme are reviewed in 1993.
  I do not see the connection between the two matters. If the intention is for LPI to apply only to pension scheme benefits in excess of that portion which is contracted out, then we should consider the position of money purchase and personal pension schemes now. That is a general introduction to this amendment, and I beg to move.
  Baroness Turner of Camden: I rise to support the general intention of the amendment moved by the noble Earl. As I understand it, the intention of the Bill is to ensure that pensions maintain their purchasing power, at least to a limited extent. I did not understand the Bill to discriminate against final salary schemes or as providing an incentive for employers to switch or redefine their schemes as money purchase schemes.
  It is right and proper that all schemes, whether money purchase or final salary, should be required to apply the same criteria and to take steps to ensure that the pensions maintain purchasing power in payment. It would be a very retrograde step if this Bill went through unamended. The net result of that would be to discourage the growth of final salary schemes which I still believe is the best way of providing for employees in retirement in favour of money purchase schemes, even if those are what are now called COMPS—contracted out money purchase schemes. I support the amendment.
  Lord Henley: It is quite a relief to have reached Clause 11. It is nice to see the noble Baroness at the Dispatch Box. She has been kept waiting in the slips all afternoon, although I know that she had a brief warm-up earlier. I imagine that she and I will have much to discuss this evening, particularly after dinner.
  My noble friend and the noble Baroness have set out very clearly the terms of the amendment. As they have explained, the effect of their amendments would be that the clause would require that money purchase schemes provide for annual increases in the rate of pension. The current Section 58A(9) excludes such schemes. In addition, personal pension schemes would be required to provide for such increases in the same way.
  There are two main reasons for our decision to exclude money-purchase benefits at this time. First, members of money-purchase benefit schemes—and here I am including those in personal pension schemes—already have the opportunity to use the proceeds of the investment made on their behalf in order to choose a pension that increases after retirement. In other words, when the individual comes to the stage at which he will convert the accumulated sum into an annuity, he can either decide 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, or whatever is available.
  I appreciate that there might be arguments about whether or not that is the way choice should be offered; but in the Government's view this is not the time to reach any decision on that point. Secondly, therefore, we think there is a proper time to consider the whole question. It has only been possible to contract out of the state earnings related pension scheme by means of money purchase schemes since April 1988. Personal pensions, as a way of contracting out of SERPS, have been available only since July 1988. These are therefore very early days for both types of schemes, and individuals and employers have entered into them on the basis of the terms and rebates which relate to the quinquennium, 1988 to 1993.
  The question of pension increases in these schemes would, we believe, be best resolved as part of the review of the terms for contracting out of SERPS, which is due to start next year. That will be for the quinquennium beginning in April 1993. This review considers the reductions in the class 1 standard rates of contribution for those contracted out and the factors affecting the cost to occupational pension schemes of providing guaranteed minimum pensions.
  I hope that with those assurances the noble Earl will feel able to withdraw his amendment.
  The Earl of Buckinghamshire: I thank my noble friend the Minister for his comments. It is always a relief to hear that we have reached a situation where we can discuss pensions. Perhaps I can look forward to discussing this topic further with him in 1993. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 76 not moved.]
  Baroness Blatch: I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee does not meet again before half-past eight.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.

  London Docklands Development Corporation (Vesting of Land) (London Borough of Southwark) Order 1989
  7.32 p.m.
  Lord Reay Lord Reay rose to move, That the order laid before the House on 14th June 1989 be approved [14th Report from the Joint Committee].
  The noble Lord said: My Lords, the order we are considering this evening seeks to vest in the London Docklands Development Corporation two plots of land currently owned by the London borough of Southwark. Your Lordships may find it helpful if I explain very briefly some of the background.
  As your Lordships may know, the LDDC is an urban development corporation established under Part XVI of the Local Government, Planning and Land Act 1980. It is one of 10 UDCs in England. Its statutory objective is to secure the regeneration of London Docklands. To achieve this it has a wide range of powers to carry out projects, including powers to acquire, manage and dispose of land.
  Through land ownership the corporation can clear dereliction and assemble larger sites for development. On occasion key sites need to be acquired to ensure effective regeneration of adjoining private land. Acquisition is preferably carried out by negotiated agreement but sometimes, with the approval of my right honourable friend the Secretary of State, compulsory purchase procedures are necessary. Where the land is in public ownership, my right honourable friend may introduce a vesting order under Section 141 of the 1980 Act. It is one such order we are considering today.
  Your Lordships will be aware that the LDDC is discharging its regeneration remit with spectacular success. For example, almost 2, 000 acres of derelict land have been reclaimed. Some £7 billion in private investment in Docklands has been secured, bringing in 28, 000 new jobs and 17, 000 new homes. The LDDC has a large community programme too, including funding for social housing, education and training projects. Access to the area is being eased by new road and public transport links. Local people now have an improving quality of life and far more choice and opportunity in jobs and housing. In summary, therefore, the LDDC seeks a positive partnership with the private sector. It aims for balanced programmes extending the benefits of regeneration to the local communities. That is the general background.
  The two sites included in this vesting order are very small. They cover a total of just 0-17 acres between them. But they are key sites for Docklands regeneration. Both are needed by the LDDC to
  828
  ensure effective and comprehensive development of the surrounding private land.
  The first plot is the stub end of a disused piece of road. The council has not objected to it being vested in the LDDC. The second plot is a riverside site known as Odessa Wharf. The owner of the surrounding land—the Jacob's Island Company—proposes that it should be laid out as public open space so as to provide a window to the river from the area behind. The Jacob's Island scheme is designed accordingly and offers the prospect of high quality comprehensive development. The LDDC agrees with the developers' proposals and has given appropriate planning consent. But during seven years of negotiations between Jacob's Island and the London borough of Southwark, the council has constantly refused to sell the land for use as public open space.
  As recently as September 1989 the council refused an offer worth the equivalent of £4 million an acre for the site for use as public open space. The council had instead its own proposals for housing on the site and it chose to take those through planning appeal to public inquiry, which it lost.
  The council still refuses to sell Odessa Wharf, but is now willing to grant a licence to the developer to use it as open space. That proposal is not acceptable to the LDDC as the statutory regeneration authority for the area. The LDDC's legal advisers doubt whether the licence would be enforceable should there be changes in the ownership of the surrounding land. The LDDC is not a party to the agreement, and cannot enforce it, and the licence would lapse after 10 years should the existing development proposals fail to materialise. For these reasons the corporation seeks ownership to ensure with absolute certainty that the Odessa Wharf will be used as public open space and that the wider site can be developed comprehensively. My right honourable friend the Secretary of State is promoting this vesting order to achieve that purpose. I commend this order to the House.
  Moved, That the order laid before the House on 14th June 1989 be approved [14th Report from the Joint Committee].— (Lord Reay.)
  Lord Mcintosh of Haringey: My Lords, this is a most bizarre story—much more bizarre than will appear even from the fact that the order is dated 1989 and is signed by Nicholas Ridley as Secretary of State for the Environment.
  The history which has been so clearly explained by the noble Lord, Lord Reay, in introducing the order is a much better version than that given by Mr. Colin Moynihan in the Second Standing Committee on Statutory Instruments in another place last week, which was quite rightly shot down for a host of inaccuracies and other difficulties. Even so, we have a very strange story taking place over a period of years. If the parties involved were of different political complexions it would call down the thunder of many noble Lords who are crowding the Government benches—as indeed noble Lords are crowding these Benches.
  As the noble Lord rightly said, the history started in 1983 when the Jacob's Island Company, which

  829
  owns the surrounding land, went to Southwark Council to buy land for open space. As the noble Lord again rightly said, Southwark Council had other ideas and sought between 1983 and December 1989—when the final decision was taken—to build housing on the site. It is now agreed between Southwark Council and the Jacob's Island Company that the land should be kept as open space. What they are not agreed on is that there should be a sale of the freehold, and therefore they are not agreed that there should be a vesting order. It is not only Southwark Council which objects to the vesting order; it is the Jacob's Island Company also, which takes the view that the vesting order is not necessary.
  If the lawyers of the London Docklands Development Corporation are indeed dissatisfied with the conditions of the licence, as it is the planning authority it has the power to ensure that the land is never used for anything other than open space. I suggest to the House that the fact that this has gone on for so long and that we are using the vesting of land procedure when both the ultimate user and the owner of the land are agreed that it is not necessary is an extraordinary state of affairs.
  If the London borough of Southwark were trying to intervene between a developer and the owner of land, many noble Lords on the Government Benches would say that that was a gross intrusion by a wicked socialist council. But here it is the Government and the London Docklands Development Corporation, as the planning authority, who are seeking to intervene and overturn an agreement between the owners of the land and developers of the surrounding land. If there are any difficulties about the security of the licence, let them go to it and put it right. The LDDC is not short of powers to see that its planning wishes are fulfilled. After all, the whole of the urban development corporation procedure was set up to give the development corporations virtually authoritarian powers.
  I do not conceal my feeling that right from the very beginning the boundaries of the LDDC were set for political rather than for rational planning reasons. None of this part of Southwark is part of Docklands in the real sense. It is part of the area on the side of the Thames which has a large number of warehouses giving access to the river. But it is not part of Docklands and was never considered to be part of Docklands when the Docklands regeneration was first envisaged. It was included in the Docklands right up to Tower Bridge in order to make it easier for the LDDC to make a pr of it out of the development of the land for commercial purposes. It comes ill of the Government to seek to close of f the last little loophole available to the London borough of Southwark to achieve financial benefit for itself and for its hard-pressed community charge payers from the use of this land.
  It is not as if there were any financial benefits to the Government as a result of the vesting order. There has not been a district valuer's valuation of the Odessa Wharf site. But the Jacob's Island Company offered £625, 000. Under the vesting order taxpayers will have to pay £125, 000 to Southwark for the site, which is far below what it would otherwise have received. Presumably, the land,
  830
  having been acquired under the vesting order, will then be sold to the Jacob's Island Company for less than it would otherwise have paid.
  In his introduction the noble Lord said that the land was needed by the London Docklands Development Corporation. I challenge that. The idea that a planning authority for the whole of Docklands should need the complicated bureaucratic procedure of a vesting order to acquire 0-17 of an acre of land is frankly ridiculous. It does not make sense. There are perfectly good compulsory power procedures which could have been adopted. There was no need for the vesting order procedure. We now have a conflict between the Government and the London Docklands Development Corporation on one side and the London borough of Southwark and the Jacob's Island Company on the other.
  It is an abuse of parliamentary procedures that we face an order of this nature. It is an abuse that it should have taken so long—and I do not go into any of the hybrid instrument arguments—to reach this House. There has been substantial bureaucratic delay and the result should not be accepted by this House.
  Needless to say, in line with the conventions of the House I shall not challenge an order which I understand last night went through the other place on the nod. However, I cannot refrain from saying that we are deeply dissatisfied with the way in which; the matter has been handled by the Government and by the London Docklands Development Corporation.
  On Question, Motion agreed to.

  Drug Trafficking of fences Act 1986 (Designated Countries and Territories) Order 1990
  7.44 p.m.
  Viscount Ullswater Viscount Ullswater rose to move, That the draft order laid before the House on 3rd May be approved [18th Report from the Joint Committee].
  The noble Viscount said: My Lords, we are all saddened by the suffering and destruction that drug misuse inflicts on the individual and on society. The causes of drug misuse are complex. At the root of its evil is the financial motive. This draft order, which has been considered by the Joint Committee on Statutory Instruments, will help us to deprive the drug trafficker of the vast pr of its by which he is motivated. Drug traffickers are developing ever more sophisticated ways to conceal their illicit earnings and escape detection. The draft order will be a significant addition to the range of counter-measures at our disposal.
  We are all becoming more internationalist in outlook. The trafficker is no exception. For him, the aim is to exploit modern international banking methods and to make the most of differences in national laws and procedures. Weaknesses will be turned to his advantage. We must seek to unite with our partners in the civilised world to drive the trafficker from our doors and to make sure there are no safe havens for him to hide his funds.
  The United Kingdom has taken a lead in striking at the financial base of drug trafficking. The Drug Trafficking of fences Act 1986 gave our enforcement agencies strong powers to trace, freeze and confiscate the proceeds of drug trafficking. These powers have been used to good effect. We have made it known abroad that we are ready and willing to offer these powers on a reciprocal basis to other countries. Indeed, under a similar Order in Council which this House approved last year, we have already restrained more than £5 million on behalf of the United States authorities.
  We have had some considerable success in securing agreements on international co-operation in depriving drug traffickers of their proceeds. Agreements or arrangements have been concluded with 12 further countries and territories. These are Australia, Anguilla, the Bahamas, Bermuda, Canada, Gibraltar, Malaysia, Mexico, Nigeria, Spain, Sweden and Switzerland. A further agreement with Italy was signed by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs in Rome on Wednesday. An agreement with Saudi Arabia, which my right honourable friend the Prime Minister recently announced, will be signed in the near future. And earlier this week my right honourable friend the Home Secretary and the Bahraini interior Minister signed a declaration of intent to complete a similar agreement at the earliest possible date.
  This draft Order in Council, if approved and made, will enable us to fulfil the obligations placed on us by the agreements we have made. It will fulfil a simple legal requirement—that the countries to which we wish to offer reciprocal judicial co-operation be designated under the Drug Trafficking of fences Act 1986. This procedure was contemplated and established under Section 26 of the 1986 Act which provides for the making of an Order in Council to apply the Act on behalf of other countries. In other words, this order brings to fruition Parliament's intentions in regard to international co-operation in this field.
  Although the order may at first consideration seem a formidable document, its aims are straightforward. The order will enable the High Court to order the restraint in England and Wales of property which may be required to enforce a confiscation order made in another country or territory. At the same time it will permit the High Court to register and enforce the confiscation orders of a court in another jurisdiction. Applications for restraint and for the registration of confiscation orders will be made by our own enforcement authorities on behalf of the government of the country or territory concerned. This will ensure that the appropriate procedures are observed. In addition, a central authority which has been established with the Home office will oversee requests and co-ordinate activity under the Order in Council.
  Tough measures are called for in dealing with the drugs trade. But it is equally important that they are balanced by checks and safeguards. The Order in Council incorporates a number of such safeguards. Before registering and enforcing a confiscation
  832
  order, the High Court must be satisfied that it is in force, that it is not subject to appeal, and that the person against whom it was made has either appeared in the proceedings or been given the opportunity to contest the order. In the case of restraint orders the High Court will want to be sure that proceedings have been or are to be instituted in the foreign jurisdiction. The point at which proceedings are instituted in the countries to be designated is set out at Section 38(11) of the Act as modified on page 18 and in the appendix to the order on page 19.
  A restraint or charging order must be notified to any person affected by it, and all those affected have a right to apply at any time for the order to be varied or discharged. No property may be realised in satisfaction of a confiscation order unless people with an interest in it have had an opportunity to make representations to the court. The High Court and any receiver it appoints must exercise their powers strictly with a view to recovering property which is liable to be recovered under order and so as to enable other parties who may become caught up in the proceedings to retain their interest.
  Our agreements with other countries and territories are designed to harmonise their different legal systems with our own. There are a number of subtle differences in the confiscation procedures followed by other countries and flexibility is needed. Schedule 3 of the Order in Council, on pages 8 and following, sets out a modified version of the Drug Trafficking of fences Act which will apply in our dealings with the countries and territories affected by the Order in Council. The modifications do not change the substance of the Act. They merely reflect the different ways in which the restraint and confiscation orders are sought and made in the various countries and territories. For example, provision will be made to allow for the making of confiscation orders in terms of specified items of property, rather than sums of money, which is the practice in some countries.
  I am sure that your Lordships will welcome this important contribution to the international effort against drug trafficking. It demonstrates the United Kingdom's determination to stamp out the sickening drugs trade. It will be the beginning of a network of partnerships which we hope to build on. We expect to bring before your Lordships further orders in coming months through which we can add to the list of countries with which we are able to co-operate on this practical level. I beg to move that the order be approved.
  Moved, That the draft order laid before the House on 3rd May be approved [18th report from the Joint Committee].— (Viscount Ullswater.)
  Lord Graham of Edmonton: My Lords, the House will be grateful to the noble Viscount for the clarity with which he has explained the raison d'≖ tre of the order. I say at once that not only Labour Members of this House but noble Lords throughout the House will be behind what the Government intend to achieve through this order. To that extent I want the noble Viscount and his colleagues to understand that there can be very few issues on which there is

  833
  complete unanimity not just in British politics but in British life and in the international sphere where the international enforcement agencies collaborate to do what the order seeks to do; that is to say, to punish as far as possible whose who seek to pr of it from this filthy habit. Therefore, the Minister can rest assured that we wish him well.
  There are one or two questions which I am sure that the noble Viscount will be able to answer. I refer to the list of countries, the international aspect of enforcement and the arrangement of agreements with other countries. Can the Minister say how these countries were selected? Is it because there are ongoing attempts to reach the kinds of agreements which are contained in the order? I refer to pages 18 and 19 of the order and to the appendix.
  Can the Minister confirm that we are being presented with the first tranche of about a dozen countries which are involved? There will be dozens and dozens of other countries concerned as well. Can the Minister tell us the raison d'≖ tre for this list? We have: no objection to it. We understand that the Government and their officers will not be able to reach agreement on procedures and other matters with every country at the same time. I shall be interested to know that these countries have made agreements.
  Can the Minister say if there are any countries where, according to the experience of the officers, it will be exceedingly difficult to reach agreement? Perhaps the Minister and his advisers can tell us what the problems are. Some countries may not be as energetic as we want to be but that is no reason why we should not seek to reach agreement.
  As the Minister well knows, loopholes, gaps and spaces will be used by the drug traffickers to find means of access for travel and trafficking. Therefore, the more comprehensive and all-embracing the arrangements the better it will be. Will the Minister say something about the list that we have and why there are not other countries included? Can he say what the prospects are for making the list all-embracing?
  Can the noble Viscount also say something concerning the resources the Government are devoting to catching drug traffickers in this country? Obviously, we wish to stop drugs coming into this country and that is the purpose of the order. The Minister knows, because he follows these matters, that the re are terrible circumstances in many of our major cities which are due to the misuse of drugs. For example, as the House knows—and I declare my interest again—I represent the interests of prison officers in this place.
  The Minister speaks as the Home office spokesman and therefore he does not need telling that drug taking is rife in Her Majesty's prisons. I do not make that statement lightly. I recently visited a certain prison. I shall not mention its name, though the Minister can have it. The governor and the men were very depressed at the growth of drug taking in their prison.
  Later this week I shall attend the prison officers' annual conference. I know that when I speak to
  834
  people there drug taking will be a major cause of concern. I hope that the Minister will say something about the successes which have been flagged up against drug traffickers, or drug barons as they are called, in places such as prisons but also in other walks of life. One has only to be involved in the community to realise that one sees in pubs, in clubs and on concourses evidence that drugs are being taken.
  The statistics published by the noble Viscount and his colleagues at the Home office make one realise that drug taking is on the increase. I hope that the Minister can tell us more about the success that the Government can claim in dealing with drug trafficking in our prisons. However, I know that he has not received notice of this inquiry and it may not be possible for him to give an answer. I know that he will take on board the desire not only to stop drugs coming into the country but the fact that we are very concerned about the people who are making fat pr of its from circulating drugs in this country.
  I know that the Minister will be on my side over that matter. I am asking him, in the best sense of the word, to be helpful and to take this opportunity of parading what he and his colleagues are doing in this field. We on these Benches give a very warm welcome to the order and wish it a speedy passage. We wish for an extension of it by the inclusion of other countries.
  Viscount Ullswater: My Lords, I take this opportunity to thank the noble Lord, Lord Graham of Edmonton, for his welcome for the order. I am glad that he views it in the same light as do we on this side of the House. It will form a very effective part of our armoury for the confiscation of the property of drug traders.
  He asked me two questions. He asked why the list of countries is as it is and what we are doing about further countries. I sought to indicate that we are able to conclude agreements only with countries which have legislation comparable to our own. A number of European partners have not advanced as quickly as we have in respect of confiscation legislation. I have already mentioned the position in Italy and Saudi Arabia. Further agreements are being pursued with a number of countries, including the main financial centres on the drug transit routes. If the noble Lord cares to look at the list of countries with which agreements have so far been made, he will see that the intention is to try to block those financial routes.
  We are equally active in encouraging other nations to co-operate with each other more generally. We have played a leading part in drawing up the 1988 United Nations convention against illicit trafficking in narcotic drugs and psychotrophic substances. We have taken early action through the Criminal Justice (International Co-operation) Act 1990, which has just gone through your Lordships' House, to enable us to ratify the convention.
  I appreciate the noble Lord's deep concern about the misuse of drugs in society. He mentioned in particular the use of drugs in prison. It appears that drugs are available in prison. I know that the enforcement agencies in this country—the Customs

  835
  and Excise and the police—take very seriously the tracking down and bringing to justice of all those involved in the drugs trade. Customs officials seek to prevent the importation of drugs and the police authorities are extremely keen to make certain that the passing of drugs between individuals does not take place. It is a worry that drugs find their way into prison. I know that the Home office is deeply concerned by the fact that they are passed from visitors to prisoners.
  8 p.m.
  Lord Graham of Edmonton: My Lords, the Minister said that we are able to conclude agreements only with countries which have legislation comparable to our own. Can he say with which countries the Government would like to make arrangements but cannot because of the problem? Where there is a will, there is a way. I can understand that there are inhibitions, barriers, problems and difficulties. Are there countries which are as anxious as we are to try to deal with these evil men and women but which find that incompatibility of legislation inhibits an agreement? Are we working on ways to make amendments to each other's legislation to enable it to happen? I am not asking the Minister to rise again to make further points. Perhaps he will write to me on that matter.
  In regard to prisons, sometimes the Customs and Excise authorities are unable to stop drugs coming in, and the police face difficulties in dealing with drug dealers outside prisons. Our greatest concern must be to stop them circulating inside prisons. Resources of men, sniffer dogs and other equipment are in short supply. We need to have a closer look at the shortfalls of resources in the prison estate. The prison service has a sniffer dog section. When I visit a prison I ask when last the sniffer dogs came in. On one occasion I was told, "It was last September and they caught nothing. But we know that drugs are there because we saw all the evidence". Are the Government serious about stopping drugs? Some people have said to me that sometimes governors and others are not too unhappy because the drugs help to sedate many of the prisoners who otherwise could be a nuisance. That should not be tolerated. The Minister can do a service by re-examining the extent to which government resources are directed to dealing with drug trafficking inside our prisons.
  That is all I wish to say. I am grateful to the Minister. If he cares to write to me, I shall be happy to have his letter. I repeat that we are fully behind the Government's intention in this order.
  On Question, Motion agreed to.
  Lord Reay: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
  Moved accordingly, and, on Question, Motion agreed to.
  [The Sitting was suspended from 8.6 to 8.30 p.m.]

  Social Security Bill
  House again in Committee on Clause 11
  Lord Henley Lord Henley moved Amendment No. 77:
  Page 15, line 43, leave out from (" of) to end of line 45 and insert ("requiring the provision by schemes to which this section applies of annual increases in the annual rates of pensions under those schemes.").
  The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 85, 87, 88, 90 to 97 and 99 to 101. These are minor drafting, consequential and technical amendments aimed at clarifying the wording of Clause 11 and Schedule 2.
  Amendment No. 85 will clarify the term "pension" as used in Schedule 2 to make it clear that it covers both pensions which have already commenced, and those which will commence in future. Amendments Nos. 88 and 93 will redraft paragraph 2(2) of the schedule to enable the first increase under Section 58A(1)(b) to take effect on the anniversary of the date the pension started, if convenient to those involved. Paragraph 2(2) will require the first increase to be given no more than 12 months after the pension starts and each subsequent increase to be given no more than 12 months after the previous one. I invite the Committee to agree to the amendments.
  Baroness Turner of Camden: Is the Minister speaking to all the amendments in this grouping? If so, I have one small point to make as regards Amendment No. 97.
  Lord Henley: It will be in order for the noble Baroness to make her point at this stage.
  Baroness Turner of Camden: The point I have to make is a very small one. The amendment proposes to leave out "months, rounded to the nearest whole month" and insert "complete months". As I understand it, that formula results in a slight reduction. It is, in fact, a very small reduction, being one-twelfth of 5 per cent., if 5 per cent. was the amount in question. I wonder why it has been felt necessary to introduce a reduction into the Bill even though a slight one. I hope that my reading of what is proposed is correct.
  Lord Henley: The noble Baroness is correct in her reading of what is proposed. I think that it is preferable to insert "complete months" in place of the wording,
  "months, rounded to the nearest whole month".
  However, I think that it would be better if I were to write to the noble Baroness with a greater explanation as to why we have phrased the proposal in this kind of terminology. With that assurance I hope that she is able to accept the amendment at present.
  On Question, amendment agreed to.
  Lord Mottistone Lord Mottistone moved Amendment No. 78:
  Page 16, line 14, at end insert ("or 3 per cent., whichever be the lower figure.").
  The noble Lord said: In moving this amendment, I should like to speak also to Amendment No. 84. I

  837
  believe that Amendment No. 81 tabled in the name of the noble Baroness, Lady Turner of Camden, is also grouped with these two amendments. Clause 11 and Schedule 2 require all final salary pension schemes to pay annual increases in line with inflation (up to a limit) on pension rights built up after an appointed day. This risks reinforcing inflationary expectations.
  My amendment would put a ceiling of 3 per cent. on such increases, which is indeed the maximum percentage at which my own occupational pension is put. However, the majority of occupational pension schemes do not promise inflation pro of ing. Many are small schemes, averaging 100 members using an insurance policy as the investment vehicle, as indeed is the case with my pension. The CBI tells me that about 40 per cent. of schemes provide some limited inflation pro of ing. However, only 10 per cent. would presently match the Government's proposed requirement which I understand calls for an annual increase of up to 5 per cent.
  The impact of the Bill as drafted is threefold—one might even say fourfold, as Members of the Committee will find. First, there will be a significant rise in the unit labour costs of those companies which decide to provide indexation. I am reliably advised that to provide a 5 per cent. annual increase in pensions, an extra contribution of 5 per cent. of pensionable pay would be required. It is highly likely that such increases in employers' unit labour costs would further fuel inflation in the economy as a whole. I cannot believe that that would be the Government's wish, especially at the present time.
  Secondly, companies unable to afford increased labour costs could be forced to consider reductions in pension benefits. For example, instead of promising a pension of two-thirds final salary, companies may only be able to offer a pension of one-half final salary. Alternatively, they may move to money purchase arrangements. Either move would undoubtedly cause industrial relations problems but—and I emphasise this point—not of the employers' making.
  Thirdly, the Bill without my amendment may lead to a long-term shift in the nature of occupational pension provision. There is likely to be a move away from final salary schemes by companies which already provide pensions, while companies setting up new arrangements would be unlikely to choose this option. It may not be the Government's aim to discourage final salary schemes—and I rather felt from something said by my noble friend earlier that it was net—but that could certainly be the effect of the Bill as drafted.
  Finally, the parts of the Bill we are discussing were added at a very late stage of the proceedings in another place and have not been subject to consultation with those most directly affected. By this I mean the majority of small and medium-sized companies which do not already provide index-linked pensions.
  A further new factor of great importance is the recent decision of the European Court of Justice in Barber v Guardian Royal Exchange. The decision
  838
  by that court, which was announced on 17th May and which concerned equal pension ages, reinforces and renders overwhelmingly the case for moving back from the 5 per cent. proposal. While its precise impact remains worryingly unclear, it is certain to have a major cost implication for the vast majority of occupational schemes.
  The Government's judgment that employers with occupational pension schemes can afford to find the resources to meet the indexation of 5 per cent., as opposed to 3 per cent. which we propose, must have been based upon the assumption that in all other respects pension arrangements, and therefore costs, would remain substantially unchanged; in other words, that the status quo would continue. I suggest to my noble friend that the decision of the European Court of Justice has changed the situation and that perhaps the Government should reconsider the indexation proposals in the light of the substantial and unanticipated new burdens facing occupational schemes.
  In conclusion, the Government's 5 per cent. indexation is certainly better than the unlimited price indexation required by some interested parties. That could unleash a stampede away from final salary schemes. A level of 3 per cent. such as I propose would be more in keeping with the level of inflation that the UK could successfully sustain. It would also reduce the additional costs; hence the undesirable move away from final salary provision.
  I suggest that this will be a reasonable minimum level of increase which the CBI believes could be attainable by most, if not all, final salary schemes. Many may choose to do more, as they do now, but in response to what is affordable and what the labour market suggests is appropriate rather than in obedience to a government decree that comes dangerously close to institutionalising an intolerable underlying rate of inflation.
  In these amendments I have suggested points to which the Government might give careful thought. I hope that my noble friend is able to give a reply which will at least show that he has understood the various factors that I have pointed out, including the recent finding of the European Court of Justice. I hope that he will be able to agree to the amendment or come back with something more satisfactory at a later stage. I beg to move.
  Baroness Turner of Camden: I shall reserve what I have to say about uprating until I come to my own amendment. I cannot agree with the amendment of the noble Lord, Lord Mottistone, and he would not expect me to, since I do not agree with the 5 per cent. limit proposed by the Government. I am surprised that in these days when inflation is running at around 9 per cent. the noble Lord should think it enough to provide pensioners with only 3 per cent. I cannot think that he believes that all pension funds genuinely cannot afford to pay more. Many have substantial surpluses and contribution holidays have become quite an established rule in many companies.
  I am glad that the Secretary of State has dealt with the whole issue of uprating in the way that he has, even though the limit is unacceptable. It is after all, as I understand it, a requirement for future

  839
  prospects. The funds and pension schemes have been given adequate time by the Minister under the proposals of the Government to make the necessary funding arrangements for uprating.
  We can now expect to live about 20 years longer than our parents; therefore people can expect to spend 25 years in retirement. We must face up to the issue of protecting pensions payments in the years to come, perhaps in the next century. Otherwise it seems to me that we shall simply look forward to a situation in which people in extreme old age suffer real penury because their pensions are not adequate to keep them at a reasonable level. They will fall back on social provisions once again. I hope that the Government are not inclined—I am sure they are not—to accept the 3 per cent. figure instead of 5 per cent. I should like to debate the whole issue of RPI uprating when I come to move my amendment.
  Lord Vinson: The Government, having willed the end by suggesting 5 per cent., should try to help industry provide the means. One form of inflation pro of ing would be for them to issue more tranches of index-linked gilt stock which would effectively allow the private sector to have the same base and security of funding as the public sector now has.
  I accept that a sudden leap to 5 per cent. might be difficult although, judging by the performance of most pension funds over the past 10 years, many have the reserves to do so. In order to help industry implement this and to budget for the future I suggest that the Government take on board the concept of issuing further tranches of suitably dated and priced index-linked stocks. That would enable the theory, the concept, to be turned into reality.
  8.45 p.m.
  The Earl of Buckinghamshire: This is a difficult area. The Committee, I am sure, agrees with the concept of increasing pensions and payments. We should all like to have as much provided as possible. However, there must be a limit because of the cost. My noble friend Lord Mottistone has referred to the costs of the exercise and the ruling of the European Court. That will add perhaps another 3 to 5 per cent. to the pension costs if the worst, or rather the greatest, liability is caused by that decision.
  I have seen annualised costing figures quoted in the press of something like £3 billion per annum for the uprating and indexation of 5 per cent. I have seen the figure quoted of another £3 billion for the decision by the European Court of Justice. I have no way of checking that figure. A good friend of mine who is an actuary tells me that that is the position.
  As I listened to the comments of noble Lords, it struck me—and my noble friend the Minister will correct me if I am wrong—that since 1988 the guaranteed minimum pension must be increased by the employer by 3 per cent. I am concerned that we are entering another level of increases on top of administrative duplication. It could be that a compromise would be to revert to the 3 per cent. I say that with some concern: we are all worried about the fate of pensioners and their payments. However,
  840
  I am also concerned about the ability to pay in future years. Perhaps that could be taken into account when my noble friend replies.
  Lord Henley: I understood that we were to debate my noble friend's amendments with that of the noble Baroness. I thought that at this stage I should be in a happy position somewhere in the middle. Obviously that is not so because the noble Baroness has decided to deal with her amendment separately.
  My noble friend urges me to require schemes to provide statutory increases of 3 per cent. He is quite rightly concerned about the impact that there could be on employers. Much depends on the extent to which schemes currently make increases. A leading firm of actuaries, R. Watson and Sons, has suggested that the average additional cost for all schemes might be between 0.25 and 0.75 per cent. of the payroll. This takes account of the statistics that about 80 per cent. of members' schemes are receiving annual increases, mostly in the range of 3 to 5 per cent.
  Some schemes currently make no pension increases. These could be faced by extra contributions. However, as my noble friend points out, they would have the option of reducing the accrual rate or looking to higher contributions from employees if they wish to contain their costs.
  It is worth recalling how far we have come in a few short years. Up to 1985 there was no statutory requirement for schemes to revalue pensions for early leavers at all. The current position is that an early leaver from a pension scheme with a membership of two years or more must be provided with a preserved pension in respect of pensionable service from 1st January 1985. This statutory requirement for revaluation in respect of service after 1st January 1985 was brought in by the Social Security Act 1985. Paragraph 4 of Schedule 4 to the Bill extends that requirement to service before 1985 so that early leavers will in future have all their preserved benefits above the guaranteed minimum pension level increased by prices up to 5 per cent.
  This by itself is a substantial step forward. It has been taken further in the Bill with, I hope, little controversy, largely because many schemes saw it as nonsense to limit the revaluation to the post-1985 period. They voluntarily extended it to the whole of the member's pensionable service. When we came to consider what level of pension increases should apply for rights accrued from future service, it was necessary to balance the question of the cost of provision with that of protection for the member. This is why we concluded that 5 per cent. was about right. The Government's position is to have regard to the concerns expressed by all those who have an interest in this matter and to try to strike a balance which is reasonable for all parties concerned. I believe that the figure of 5 per cent. or the RPI, whichever is the lower, strikes just such a balance. I believe our proposal is a sensible and balanced measure. I also believe it is a great advance and that it will make occupational schemes both attractive to their members and an asset to employers in recruiting good quality staff.
  My noble friend said there was likely to be a move away from final salary schemes. It is not the

  841
  Government's aim to favour final salary as opposed to money purchase schemes. We would hope that there is both a balance and choice between the two. I remind my noble friend of future demographic trends and the possible future tightness of the labour market. It will be up to employers to offer to their employees the best package that they feel is necessary to obtain appropriate employees. If they feel that the best package will include a final salary scheme that is a matter for them to decide. Similarly if they feel they can attract the right staff by offering personal pensions or money purchase schemes that is a matter for them.
  My noble friend also raised the matter of the recent judgment of the European Court. He believed that, following that judgment, there could be additional costs for schemes and employers. Many schemes have already equalised the age at which occupational pensions start to be paid. I see no reason why, when doing so, schemes should not take account of the requirement in this Bill to provide for limited indexation of pensions in the future. There is nothing in the Bill to prevent reducing the rate at which pensions accrue. Schemes can therefore alter the benefit structure if they cannot meet these costs in the future. We are studying the judgment and its implications. I would prefer to leave the matter at that stage until we have completed our study of the implications of the judgment. I hope therefore that my noble friend will feel able to withdraw his amendment.
  Lord Mottistone: I thank my noble friend for his full reply. I had a slight feeling while he was giving his reply—I suspect this may affect the noble Baroness, Lady Turner, also—that the kinds of people he had consulted for his advice represented the 10 per cent. of the companies which could match the Government's proposed requirement. In the nature of things the kinds of companies the noble Baroness, Lady Turner, may consult will be the big companies rather than the small ones. However, the companies I am worried about are the medium and small companies which have introduced pension schemes relatively recently and are struggling to organise them.
  I rather suspect that all the senior people in the major political parties and in the Government tend to talk to the top people and not to the bottom people. I really think that small companies need special consideration. However, this is not the time to press this point in any way, apart from the fact that I would not gain support from the Benches opposite. I shall read carefully what everyone has said. I thank my noble friends very much for their contributions. At this stage I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 79 and 80 not moved.]
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 81:
  Page 16, line 25, at end insert:
  ("(3) In section 52A of the Pensions Act (Duty of the Secretary of State to specify a revaluation percentage)—
  842
  (i) in subsection (3) leave out "Subject to subsection (8) below, "; and
  (ii) leave out subsections (8) and (9)").
  The noble Baroness said: I said earlier that I wanted to reserve what I had to say about index linking until I came to move my own amendment. It has a tw of old effect in that it removes the 5 per cent. a year limit on both the new provisions to require increases to be made on pensions in payment and from the existing provisions for increases to be made on deferred pensions. As regards the 5 per cent. limit to revalue pensions, as I said earlier I think that in current circumstances this is not enough. As I also said earlier, the average employee can now expect to live 20 or more years in retirement. The Minister has already made reference to demographic changes in that connection. If someone who retired in 1970 had only obtained increases on the basis provided in the Bill—that is the 5 per cent. increase—his benefit would now be worth only about 40 per cent. of its initial value.
  We all hope, of course, that the higher rates of inflation will not continue to be part of our environment for the future. If we knew that governments could contain inflation within the 5 per cent. figure, what the Government propose would seem wholly acceptable. However, with inflation climbing up again, a measure that purports to protect scheme members' future interests but allows the benefits to fall to half their real value looks rather unsatisfactory. It costs more money and not less to look after the very old and the Government's proposal could well result in real poverty for such people in future years, and of course in a greater burden on social security benefits.
  We therefore feel that schemes should be required to increase pensions in line with the RPI. That is not such a big deal. For most of this century the wages index has outstripped the retail prices index. It looks as if this trend will continue into the next century. Even with full RPI indexation, pensioners will still be worse of f than those in employment, irrespective of the fact that there will undoubtedly still continue to be inland revenue limits on the level of final salary pension that can be paid. The question of cost is of ten raised. The argument is always advanced that this measure would be just too expensive and too much of an open-ended commitment. It is argued that an insistence upon it would frighten away employers from providing pension schemes at all. The noble Lord, Lord Mottistone, has already made that point.
  We reject that argument. Employers provide pension schemes because it is in their interests to do so. They need to attract and retain staff. They also need their staff to retire as they get older so that they may be easily replaced by younger people. It is therefore in their interests to provide attractive schemes. Moreover, in recent years there has been increasing union pressure for good schemes. Clearly the question of cost is relevant, but I am advised that what we propose will not require significant increases in employers' contributions over and above what the Government are already proposing.
  The big increase in the current cost of providing a pension scheme arises when a scheme makes no

  843
  provision for increases at all and is then improved to provide RPI increases limited to 5 per cent. It has been estimated that this could substantially increase the cost of a scheme. However, most schemes do not start from that position. Most employees belong to schemes which already guarantee or make provision for increases at or near the level of the Government's proposal. It is important to appreciate that the move from limited increases to full RPI is much less significant than the move from no increases at all to 5 per cent. That is because in most cases the assumptions made by the actuary which determine the contributions to be paid are in practice similar, whether or not there is any limit. I must say that I am indebted to a practising actuary for this information.
  The key factor here is the difference between the assumption made about future investment returns and the assumption about future pension increases. Broadly speaking, this difference will be very similar for schemes that guarantee pension increases, whether or not they have a 5 per cent. limit. We therefore consider it quite reasonable to require schemes to provide full inflation pro of ing. We understand that the increase in contributions required to achieve this will only be about 1 per cent. of payroll over and above any increase in cost already proposed by the Government. In practice many schemes, particularly larger ones, are already providing for increases in line with what we propose and so for those the current cost will be smaller or even nil. As for past service benefits accrued before the appointed day, those pensions should also be increased in line with the RPI as far as surpluses permit. So long as there is a surplus in a scheme we see no reason why it should be used for employer refunds or contribution holidays before it is used to protect the real value of members' benefits.
  Again, we do not believe that the cost of our proposal should be a deterrent to good pension provision. If we look at what schemes have done over the past five years, we find that the schemes to which people already belong are doing what we suggest to quite an extent. The Watson index of pension increases produced by Watsons, the consulting actuaries, whose name has already been mentioned in the debates this evening, shows that the average pension increase, allowing for a lag in implementation, has been more or less in line with the RPI.
  I trust that the Government will come to see the sense in what we say. The whole basis of their legislation is that members are entitled to adequate protection against inflation and that that should be the first call on any surplus. It therefore makes no sense to impose a limit of 5 per cent. while allowing employers to benefit from the surplus. I hope that the Government will consider what could be the eventual results of not doing what we suggest. Do we really want to see in the next century large numbers of very old people dependent upon pensions that have become inadequate for their maintenance and relying on state benefits? We do not want that, I suggest, after all the trouble taken to persuade companies, unions and employees to co-operate in the establishment of good pension schemes. I beg to move.
  9 p.m.
  Lord Henley: As I said earlier, I thought that the amendments were to be taken together and that I should find myself in the happy position of being in the middle. Obviously that is not to be the case.
  The proposal of the noble Baroness, Lady Turner, goes rather wider than our proposals and considerably wider than those of my noble friend. Her amendment would not only require pension increases in Schedule 2 to be in line with the RPI, with no maximum limit, but would also amend existing legislation so that that applied also to the revaluation requirement for early leavers.
  I accept that the noble Baroness speaks for individuals who are concerned about the level of their occupational pensions. As the Committee will know, between 1979 and 1987 the average value of occupational pensions received by people over pension age increased by 77 per cent. in real terms. That means that for many pensioners their occupational pension is now their most important source of income. We believe, as the OPB suggested in its report, that it is of the greatest importance to introduce a degree of certainty of regular pension increases.
  The Government have tried to strike a balance which is reasonable for all parties concerned. We believe that we have struck such a balance. The noble Baroness asked for full price linking of pensions. The point of the government proposal is a guaranteed rate of increase. To guarantee full price linking would be a substantial commitment for employers, as we have already heard from my noble friend Lord Mottistone. That is why we have tried to strike a balance between the two amendments. I believe that it would be unfair and unjust to place such a burden on employers as the noble Baroness has suggested. Many employers could be deterred by that.
  I know that the noble Baroness is fully committed to final salary schemes, and on occasion she has expressed a degree of hostility to personal pensions and money purchase schemes. However, I suggest that what the noble Baroness proposes might further deter employers from adopting final salary schemes. Despite what I said earlier in answer to my noble friend Lord Mottistone—that employers will have to look to the much tighter labour market in the coming years and consider what they offer in order to attract employees—I believe that what the noble Baroness suggests would increase the cost of final salary schemes considerably and could have a significant deterrent effect on final salary schemes.
  The noble Baroness made her point in favour of an increase in line with an unlimited RPI. However, I do not believe that this is the time to go that far. I believe that the half-way house of RPI or 5 per cent., whichever is the lower, represents a good balance between the two. I hope that the noble Baroness will accept that we have struck more or less the right balance and will be prepared to withdraw her amendment, just as my noble friend withdrew his amendment proposing a limit of 3 per cent.
  Lord Vinson: I share the noble Baroness's desire to see those in retirement receive the maximum

  845
  pension possible. However, she rightly raised the question of demographic changes occurring in this country and the fact that people are living 20 years longer than their parents. The fact is that the economically active people will increasingly have to support more and more economically inactive people. However we talk about the funding of pensions;, they are funded in name alone. All pensions, are a transfer from the rice bowl of the working to the non-working. There is no escaping that fact.
  Therefore, while on the face of it the amendment would appear to be irresistible and it would appear to be impossible to disagree with it, in practice full indexation of pensions will place a substantial burden on the ever-diminishing number of the economically active. It will mean less rice in the rice bowl for them.
  Those of us who are interested in pension provision for the future will have to have a long, hard look at what will be the correct level of support for those in retirement. We keep dodging the issue. However, I believe that the Government have come fairly close to the issue in saying that the appropriate burden to place on the economically active is to index pensions at about 5 per cent. If the proposal of the noble Baroness, Lady Turner, of full indexation were to be adopted, I fear that that would place far too severe a burden on the economically active. I fear that, as was suggested earlier, we might have to index pensions, but at a level of 50 per cent. of the final three years' salary rather than the goal of two-thirds—which, incidentally, is very seldom reached.
  We are talking of a limited amount of money and a decreasing number of people producing the wherewithal. That factor must come into our consideration. Therefore, I believe that at this moment the Government have probably got the balance about right.
  Baroness Turner of Camden: I should like to thank the Minister for his explanation. I do not intend to press the amendment tonight. I wanted to put on record the view from these Benches that we think that eventually full indexation will have to be adopted. I accept that the government proposal is a substantial step forward. I have never disagreed with that fact.. It marks a step forward because there is a statutory obligation to index link to the 5 per cent. limit. However, I maintain that that will not be enough for the future, as has been pointed out by the noble Lord, Lord Vinson. He rightly makes the point that whether pension provision comes from private or public sources, it has to be paid for by the people who are economically active. That is absolutely right. On the other hand, we may be looking at different patterns of retirement for the future. These are matters that may arise in the future and they will affect the way we look at future pension provision.
  My noble friend Lord Carter has reminded me that public sector schemes have been indexing pensions in payment for a very long time. The Civil Service has had an index linked scheme for 20 or
  846
  30 years, as have a number of other public sector schemes. I am also reminded that some years ago there was an investigation into whether or not indexation should continue. The report of that committee was overwhelming; it stated that indexation should continue. It has continued ever since that time.
  If people working in the public sector have that kind of protection, it should also be extended to those working in the private sector. One day we shall have to do so, perhaps when my party is in government. We should have to face up to the consequences of so doing. In the meantime, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Henley Lord Henley moved Amendment No. 82:
  Page 16, line 27, at end insert:
  ("(3) In the case of an occupational pension scheme—
  (a) such as is mentioned in subsection (I) of section 58A of the Pensions Act, and
  (b) which is constituted by trust deed, no payment shall be made out of the resources of the scheme to or for a person who is or has been the employer of persons in the description or category of employment to which the scheme relates until such time as provision has been made by the scheme for every pension which commences or has commenced under it to be increased as mentioned in paragraph (b) of that subsection.
  (4) Nothing in subsection (3) above applies in relation to payments made to or for a person by virtue of his or any other person's membership of the scheme in question.
  (5) Expressions used in this section and the Pensions Act have the same meaning in this section as they have in that Act.
  (6) The provisions of subsection (3) above override any provisions of a scheme to the extent that it conflicts with them.").
  The noble Lord said: In moving this amendment I should like to speak also to the amendment in the name of my noble friend Lord Mottistone. I am grateful to my noble friend for the way in which he has presented his case. I do not think it will be any surprise to him or to the Committee if I make it clear at this point that I am unable to accept the amendment.
  The Occupational Pensions Board, in its report Protecting Pensions, referred to surpluses and said that some respondents to its consultative note had urged it to make general pronouncements on the ownership of surplus. The board concluded that that was not possible. The report goes on to say:
  "We have therefore sought to make specific recommendations on different issues in this report rather than to formulate a general directive of 'ownership' of surplus or deficiency".
  The Government accept this sensible approach. The underlying objective of our proposals in this Bill has been to improve the safeguards for the benefits which schemes are designed to provide. Our thinking was stimulated by the problems posed by takeovers and mergers, where in some cases members have lost out badly despite being in a scheme apparently well funded with a surplus of assets over liabilities.
  Our proposal in paragraph 3 of Schedule 2 is in line with that approach. It is not the Government's intention to decide who owns a surplus but we believe it is entirely reasonable that, where surpluses

  847
  exist, members should be guaranteed a limited measure of indexation. The decade during which this Government have held office has been a period of strong investment performance by pension funds, which have yielded large surpluses. Many schemes have used those surpluses to improve benefits for members, but a number could have done more.
  We are therefore going to require that, from an appointed day, schemes will have to use surpluses to pay increases to members for pension rights which they have already built up. The guaranteed rate of increase that each scheme will have to pay will depend on the surplus in the pension fund, but the target rate of increase for schemes will be the rise in the retail prices index up to 5 per cent. a year. Government Amendment No. 82 also clarifies the fact that employers will not be able to take a refund until such increases have been provided.
  The noble Lord has made a number of detailed points about how the surplus is to be calculated and the possible effect that it might have on some employers who have made arrangements for some years ahead on how they intend to use their surplus—perhaps by a contribution reduction or even a holiday. There must be some doubts, in any case, as to the wisdom of setting in concrete such financial planning for many years ahead. However the Government are not requiring that the whole of the surplus has necessarily to be used in providing pension increases. Many schemes already guarantee them at the required level and a number have been accustomed to giving increases, albeit on a discretionary basis. They will turn discretion into certainty.
  The Government believe that it is no longer acceptable for schemes generating surpluses to avoid their obligation to their members. of course surpluses cannot be guaranteed to be achieved at each and every valuation, and I think that the vast majority of members appreciate that fact. A number of letters that I have received have, however, expressed what they consider to be unfair treatment when surplus exists.
  There are a number of detailed issues still to sort out, and officials are already in discussion with the professional actuarial bodies in order to do so.
  We shall have regard to matters of detail during these discussions. We noted in particular points that had been made in the past about the use of discretion in the allocation of the surplus. I can see that that is probably what my noble friend will try to achieve. However, I should like to consider the matter further to see whether it can be accommodated within our overall objectives. I make no commitment but we have the necessary powers to consider these matters. I therefore invite the Committee to accept the amendment.
  9.15 p.m.
  Lord Mottistone: I speak to Amendment No. 89, which, in a sense, goes down a slightly different route from that taken by my noble friend the Minister. At the outset I should say, just in case there is any doubt, that not only myself but companies all recognise that a reasonable pension which keeps reasonably in
  848
  touch with the cost of living is terribly important for all employees. There is no doubt about that. We are arguing about what companies, particularly the smaller companies, can presumably afford and what it is reasonable for the Government to direct them to do.
  In Schedule 2 there is a very strong element of central direction which would have appealed to Mr. Stalin but probably not to Mr. Gorbachev. It would certainly appeal to the noble Lords opposite. With that in mind, I feel that although the object of this schedule is attractive, some of the means have ugly aspects. In effect the schedule provides that the first charge on any surplus disclosed should be the indexation of pensions accruing before the appointed day.
  That position is strengthened by Amendment No. 82, against which I would not argue in particular; in general it just means that Auntie Government is telling us even more firmly what to do. Surpluses generally arise because the outturn proves less costly than the actuarial assumptions had anticipated. Sometimes cautious actuaries warn of a potential deficit and the employer responds by injecting more money into the fund. That is the responsible and appropriate response. But sometimes in the event the assumptions prove over-cautious and the injection of cash proves unnecessary to meet the specified commitments.
  I ask whether in those circumstances the employer should lose all rights over the money injected. Surely in equity he should not. But that would be the effect of paragraph 3 of Schedule 2 in all cases in which limited price indexation is not already promised to existing pensioners. That is bad policy. We want pension funds to be backed up to and beyond the extent of their potential liabilities. That is in everybody's interests. But if the cost of putting in money to guard against a potential shortfall may be not only the permanent loss of that money but also the triggering of new and costly obligations in respect of pensions accruing before the appointed date, many will look long and hard before putting extra resources into the fund to guard against contingencies.
  Those are the facts of life that we must take well to heart in making sure that the legislation that is before us in fact does not put too much of a burden on people who provide the money which enables us all to live and the country to survive. So paragraph 3 of Schedule 2 is neither equitable nor prudent.
  Furthermore, the measure would require that any surplus identified, however small, must go entirely toward the provision of limited price indexation until all the pensions accruing before the appointed day are given the same protection as those accruing thereafter. But that will not necessarily be the best use of the surplus. Implementing the rule could mean providing very little to a large number spread over many years, when it could have been used with discretion to provide a real and immediate uplift for a few hard cases.
  Measurement of surpluses other than by the properly cautious approach adopted by the Inland Revenue is an uncertain business, closer in some respects to astrology than to accountancy. I do not

  849
  suppose that the actuaries will be pleased to hear me say that, but certainly that is the experience of the member companies of the CBI.
  The only true pension fund surplus is that revealed when a fund is wound up. All the rest are estimates. I look to my noble friend for help on that point. Do the Government recognise the uncertainties of surplus measurement? Will they err on the side of caution in considering what amounts to a surplus, remembering the expectations cost to fund members fuelled not least by legislation of this kind?
  Some funds have achieved remarkable surpluses during the past decade, sometimes because the sharp redundancies of the 1980s meant that they were left over-providing for future calls from pensioners, more of ten because investment income outstripped prices and earnings. That is not the prospect facing many pension funds today. I look for reassurance that the Government also recognise that in the climate now prevailing, not least with the additional burdens imposed on final salary schemes in this and other legislation in recent years, we are much less likely to see substantial surpluses being thrown up than in the turbulent conditions of the 1980s. It is important that the Government state that so that unreasonable and unfulfillable anticipation is not generated among pensioners.
  I could continue but I believe that I have made my point firmly enough. I wished to show the other side of the coin which I believe everyone—not only the Government—needs to consider with care. However, I thank my noble friend for stating—I think—that the officials of the Government have been discussing matters with experts to try to ensure that the resultant orders that come before us are the best that can be provided.
  That principle is fine, but I hope that they cast the net wide to find the people to consult. As I said when moving another amendment, I am fearful that large trade unions, large companies and government talk to the top people but do not know what goes on in small companies.
  Lord Carter: Perhaps I may ask the noble Lord a question. He referred to discretion in the use of the surplus. Would the trustees have the discretion to award extra increases in pensions payments to certain groups of employees such as senior executives or directors?
  Lord Mottistone: If the terms of the trust said so, yes, they would be able to do so; or even to give a lump sum to someone. But the trust in which the pension fund is set up has to give them that authority, and a lot of them do so.
  The Earl of Buckinghamshire: I was interested in that last comment. Presumably certain highly paid people are more likely to receive increases than others. I can understand that being a problem. I can also understand some of the merits of saying that the surplus should be spread straight across the board so that everyone has a slice. In the real world if one provides it right across the board, it will be spread very thinly.
  850
  My noble friend Lord Mottistone has raised the anxiety on what I referred to at Second Reading as using a sledgehammer to solve this problem. The problem is providing for the pensioners of the day in this instance. It is not about providing for the pensioners of tomorrow.
  There has been much discussion about what should be done for employees by a good employer, and such concepts. We may have forgotten that it is a partnership between the state, the employing company and the employee. Those people with, hopefully employed, working lives ahead of them will have the opportunity to make provision for their retirement. Those people who have retired do not have the same opportunities. I fully understand the comments of the Minister about trying to prevent the pension asset stripper continuing into the 1990s. However, I am concerned about the allocation of a scarce resource to the most needy. I believe that the provision is a fairly unfocused attempt to solve the problem. We should be targeting the pensioners. The issue should be considered very thoroughly by the Minister. I am sure that he will do so, and will reflect on the concerns of all in this Chamber. The use of the surplus for both active people and pensioners needs to be very carefully considered.
  Lord Mottistone: Perhaps I misinterpreted the query of the noble Lord, Lord Carter. When he asked me whether the money could be disbursed to individuals, I was thinking of the poor individuals who do not have enough money. When my noble friend Lord Buckinghamshire was speaking, I had the impression that the noble Lord, Lord Carter, was perhaps thinking that the chairman would give himself a great benefit. When I gave my answer, I did not think that any chairman would be so wicked or so stupid. Pension funds can be diverted to the good of the needy—by whom I mean the really needy—but I do not think that they can be distributed to the non-needy.
  Baroness Turner of Camden: I have little quarrel with this part of the Bill because one of the issues with which I of ten had to deal as a trade union official was the concern of members as to who owned the surplus. I was constantly asked, "Who owns the surplus? Does the company have the right to take a contribution holiday? Can it do what it likes with the surplus? Is it not our money anyway?"
  The ownership of the surplus is a difficult and tricky question. The Occupational Pensions Board decided not to pronounce on it because there are arrangements, particularly in a balance of costs arrangement, under which the employer is bound to pay into the scheme sufficient money to meet pension promises. If he receives cautious actuarial advice, he may overpay into the scheme and may therefore feel with some justification that he has perhaps paid too much into the scheme. That is why there is a surplus.
  However, in making the proposition the Government have clearly said that the first call on a surplus must be the pensioners—the people whom it is intended to cover. That must be right. I can assure the Minister and the noble Lord, Lord

  851
  Mottistone, that from an industrial relations point of view the business of who owns the surplus if of ten a vexed question. People become terribly worked up about contribution holidays. Given the Government's proposition in the Bill, that question is to some extent settled and I welcome the way in which it is done.
  Lord Vinson: Although I welcome the move along the right road down which the clause takes us, it may be overtaken to some degree by an EC derogation. However, in this instance I would go much further than the other side of the Committee. The Government should state unequivocally that the money in pension funds belongs to those in receipt of pension, those with a deferred pension and those likely to receive a pension—the present contributors. Although this is a major step forward, we are all appalled at the way in which so many pension funds are gratuitously used as a slush fund for senior directors to prepare for their retirement. That behaviour is reprehensible. I should have liked a clearer and a more positive statement that the money in pension funds belongs to the pensioners and no one else. However, I welcome the measure as a first step and give full marks to the Government.
  Lord Henley: We are becoming a little bogged down in this government amendment on which we have now spent 18 minutes. I have come under fire from my noble friend before, but I do not think that he has ever gone so far as to accuse me and my noble friends of being like Stalin and—even worse—of being much the same as noble Lords opposite.
  As I have already said, there are problems with the definition of the word "surplus". There are a number of detailed issues, in addition to the definition of "surplus", to be sorted out. officials are S already in discussion with the professional actuarial bodies in order to sort out those problems. We shall have regard to my noble friend's views on the matters during those discussions. We have particularly noted his remarks. I can see what he is trying to achieve and I should like to consider that further in order to see whether that can be accommodated within our overall objectives. I make no commitment on that, and I stress that we already have the necessary powers. I commend the amendment to the Committee.
  On Question, amendment agreed to.
  Clause 11, as amended, agreed to.
  9.30 p.m.
  Baroness Seear Baroness Seear moved Amendment No. 83:
  After Clause 11, insert the following new clause:
  ("Equal treatment of women in occupational and personal pension schemes.
  In paragraph 2 of Schedule 5 to the Social Security Act 1989, sub-paragraphs (4)(d), (4)(e), and (4)(f) shall cease to have effect.").
  The noble Baroness said: This amendment was tabled before the seminal judgment of the European Court in the case of the Guardian Royal Exchange v. Barber. It seems to me, very largely if not entirely, that that judgment has shot my fox. I have no objection to that if, at the same time, it has winged the Government, which it seems to me to have done.
  This is a very unusual circumstance. Perhaps the Minister will give me some idea of the Government's
  852
  reaction and what they propose to do in response to that judgment. It may save time if we do not debate the issue now but return to the matter on Report when we have a clearer statement from the Government.
  As Sir Anthony Lester said in The Times today, sex equality has been won for pensioners and the major issues which we were going to consider here of pension ages, survivors' benefits and optional provisions all seem to be covered by the judgment, although as the judgment is so recent I should not like to claim that I understand all its implications. Perhaps the Minister will comment on that matter before we proceed on this amendment.
  Lord Henley: I hope that the noble Baroness does not go round committing the culpable crime of vulpicide with great frequency. As the noble Baroness said, it is not of ten that an amendment tabled in advance to a social security Bill achieves the topicality which the noble Baroness has achieved on this occasion.
  The noble Baroness quite rightly pointed out that last Thursday the European Court of Justice gave its judgment in the case of the Guardian Royal Exchange v. Barber. I cannot help the noble Baroness very much further at this stage. We are very carefully considering the judgment and we are aware that the Government's response may be significant in influencing the way in which schemes react to the court's judgment. As the noble Baroness admitted, this is a very complex matter and we are seeking legal advice on the judgment before deciding what action, if any, is necessary or appropriate.
  Of course we shall make a statement, and, with that in mind, I hope that the noble Baroness will withdraw this amendment. of course, we may return to this matter at a later stage.
  Baroness Seear: That is the sensible course to take in the circumstances. I hope that before the Report stage—and there is a brief Recess—the Government can give rapid and deep thought to the implications of the judgment. In innocence, the implications seem to be clear; but I agree that they are both extensive and expensive. However, if there is a reasonable expectation that we shall have a statement from the Government before Report stage, then I am happy at this juncture to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Schedule 2 [Schedule to be inserted as Schedule 3A to the Pensions Act]:
  [Amendment No. 84 not moved.]
  Lord Henley Lord Henley moved Amendment No. 85:
  Page 32, line 36, after (" "pension" ") insert ("in relation to a scheme, means any pension which commences or has commenced under the scheme but").
  On Question, amendment agreed to.
  [Amendment No. 86 not moved.]
  Lord Henley Lord Henley moved Amendments Nos. 87 and 88:
  Page 33, line 5, after ("by") insert ("at least").
  Page 33, line 8, leave out ("before the expiration of the period of twelve months beginning with") and insert ("not later than the first anniversary of).
  On Question, amendments agreed to.
  [Amendment No. 89 not moved.]
  Lord Henley Lord Henley moved Amendments Nos. 90 to 97:
  Page 33, line 26, at beginning insert ("Except in a case where regulations otherwise provide").
  Page 33, line 28, leave out ("except in a case where regulations otherwise provide").
  Page 33, line 31, after ("are") insert ("actuarially").
  Page 33, line 34, leave out from ("effect") to second ("the") in line 35 and insert ("not later than the first anniversary of).
  Page 34, line 1, after ("percentage") insert ("as determined in accordance with regulations").
  Page 34, line 5, leave out paragraph (a) and insert—
  ("(a) provision has already been made by the scheme for the annual rate of the earlier service component of every such pension as is mentioned in sub-paragraph (1) above to be increased annually in the aggregate by at least the appropriate percentage of that rate, or").
  Page 34, leave out lines 15 to 17 and insert:
  ("(7) The powers conferred by sub-paragraphs (1) and (5) above to make regulations include, respectively, power to provide that the valuation of the scheme's assets or liabilities is to be calculated and verified, or the percentage in question is to be determined,—").
  Page 34, line 36, leave out ("months, rounded to the nearest whole month") and insert ("complete months").
  The noble Lord said: I spoke to these amendments with Amendment No. 77. I beg to move.
  On Question, amendments agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 98:
  Page 34, leave out from beginning of line 44 to end of line 23 on page 35.
  The noble Baroness said: This amendment is a probing amendment. I do not understand the reasons for the Government's provision. There is a restriction in the Bill on increases for pensioners under the age of 55. I should have thought that that was likely to be a very small number of people. I cannot see any logical reason for excluding them. They are likely to be a vulnerable group; they probably do not receive state benefits, and if they are drawing their pension they are probably unable to find work.
  Inflation hits those people just as badly as anybody else; they may even be more badly hit, because, if they are younger, they may have dependent children and mortgages. Early retirements at this age are very few, I should have thought, but a pension is a pension. If it is paid it should be protected in the same way as pensions for other people. Perhaps the Government would kindly explain why they have felt it necessary to impose that restriction.
  Lord Mottistone: I should like to explain the provision, although I am sure that my noble friend will have a good answer. It is exactly what happened to me when I was in the navy. When they increased our pensions we did not manage to draw the new increased pension until we were 55. It is a straight copy of that situation. I expect it saves a lot of money.
  Lord Henley: I shall try to be brief in response to this particular amendment.
  Paragraph 5 of Schedule 2 is included simply because it is our intention to provide that schemes should be statutorily obliged to provide pension increases for those individuals who might be considered to have retired. There are a number of different employments where the normal retirement
  854
  age is quite young—for instance, professional footballers. A pension may be paid but it is more than likely that the individual will not consider himself retired and will look for other employment. It would not be reasonable to expect occupational schemes to have to pay increases of pensions in those circumstances.
  There are, of course, exceptions to the age 55 rule. The first is if the individual is under 55 and is out of the full-time employment field by reason of mental or physical infirmity which is considered to be of a permanent nature. The second is if he has retired by reason of mental or physical infirmity from the particular job from which he is receiving a pension. In both of those instances it is clear that the individual can be said to have retired.
  As my noble friend pointed out, there is an anology with the public service pension schemes in this provision. We think it fair to keep the public and private sectors on an even keel in this respect. I hope that the noble Baroness will be reassured by this explanation.
  Baroness Turner: I am grateful for the explanation given by the Minister. As I said earlier, it was not my intention to press the amendment. I wanted to know the reasons for treating a pension paid at a younger age differently from other sorts of pension. The Minister has explained and I will look at his reply in Hansard. For the time being, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Henley Lord Henley moved Amendments Nos. 99 to 101:
  Page 35, line 10, leave out ("subsection") and insert ("sub-paragraph").
  Page 35, line 17, leave out ("being").
  Page 35, line 18, after ("member") insert ("or are not paid in full").
  The noble Lord said: I spoke to these amendments when speaking to Amendment No. 77. I beg to move.
  On Question, amendments agreed to.
  Lord Henley Lord Henley moved Amendment No. 102:
  Page 35, line 23, at end insert:
  ("Application of Schedule to pensions not attributable to pensionable service
  5A. Regulations may provide that this Schedule (other than this paragraph) shall apply in relation to any pension under a qualifying scheme as if so much of the annual rate of the pension as would not otherwise be attributable to pensionable service were attributable in accordance with the regulations—
  (a) to pensionable service before the appointed day;
  (b) to pensionable service on or after that day; or
  (c) partly to pensionable service before, and partly to pensionable service on or after, that day;
  and any reference to the earlier or later service component of the pension shall be construed accordingly.").
  The noble Lord said: This amendment will enable the Secretary of State to require that any part of the annual rate of a pension that would not otherwise be increased be treated as either earlier service component or later service component for the purposes of this schedule.
  Our intention with this amendment is to enable the Secretary of State to deal with pensions that are not attributable to pensionable service. Pension which is derived from notional service and supplemental credits awarded to the member after

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  the appointed day will form part of the later service component. Any remaining pension based on these will form part of the earlier service component. We would not wish to see these elements of a member's pension excluded from the provisions requiring increases, and are taking steps to include them in this way. I beg to move.
  On Question, amendment agreed to.
  Schedule 2, as amended, agreed to.
  Clause 12 [The Pensions Ombudsman]:
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 103:
  Page 16, line 31, leave out ("commissioner to be known as the Pensions Ombudsman.") and insert ("commission to be known as the Pensions Tribunal.").
  The noble Baroness said: In moving this amendment I speak also to Amendments Nos. 104 to 115, 117 to 133, 138 to 156, 158 and 159.
  In this series of amendments I propose that the ombudsman, proposed as the appropriate official to hear pension complaints, be replaced by a tribunal. The Occupational Pensions Board, of which I am a member, in preparing its report entitled Protecting Pensions: Safeguarding Benefits in a Changing Environment, considered the relative advantages of a tribunal compared with a single ombudsman. The board decided that while an ombudsman was suitable for disputes between a large bureaucracy and an individual, there was a need for a body which could decide large, complicated issues, perhaps when two sets of trustees or trustees and other organisations—possibly unions representing employees—were involved.
  I am very keen on the concept of a tribunal. In fact, when we debated this matter within the OPB I and several others pushed hard for a tribunal against the proposal, also considered, for an ombudsman. I know from my own experience just how costly it can be if the only way of resolving a dispute about pensions is to take the dispute to the High Court, because that is a long-winded procedure. A specialist tribunal plainly appeared to be the best way of dealing with such disputes. of course, access to the courts would already exist as a backdrop on a point of law and that continues with the proposals I now put forward. All I have done in the amendments is to replace the ombudsman with a tribunal where reference to that office appears in the Bill.
  I envisage a relatively informal tribunal with two independent persons, with a lawyer in the chair who is experienced in pension matters. The independent persons would themselves have had pension fund experience or training but would represent the interests of employers and employees in the broadest possible way. Many of the issues would have some connection with employment. The industrial tribunal concept has been found useful in dealing with employment issues even if, over the years, the atmosphere at such tribunal hearings has become more legalistic and formal than originally intended.
  It is still unclear to me why the Government rejected these arguments and decided on an ombudsman even though the proposed powers of the ombudsman are much more akin to those held by a court than those possessed by other ombudsmen. I
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  should be interested if the Minister could say why the very detailed report of the OPB and the recommendations for a tribunal were rejected in favour of this single office. I beg to move.
  9.45 p.m.
  Lord Coleraine: I should explain to the Committee, perhaps with a note of apology, that I speak to this amendment on the pensions ombudsman, and the subsequent amendments, not out of concern for occupational pension schemes or personal pension schemes but because I am concerned at the proliferation of ombudsmen in recent years which seems now to be turning into a flood. A number of ombudsmen have been created. They have been created in various ways and they have various functions with one seldom resembling another. Until now they have tended to have in common an interest in the investigation of maladministration.
  In the schedule that we are now discussing it is quite clear that there are two functions to be put into the hands of the person who is to be called the Pensions Ombudsman. Under Section 59C(1) proposed for the Pensions Act, he is clearly going to investigate maladministration. I should have thought that was the clear remit of the ombudsman as the term is now understood by most people.
  When one turns to the proposed Section 59C(2), one sees that he is also being asked to determine disputes which have arisen in relation to matters of fact and law. What he is being asked to do is to act himself as a poor man's court. The logical way to deal with the matter is to create two schedules; one to create a pensions ombudsman to deal with maladministration; and the other to put matters into the hands of a tribunal which would be a better body to deal with matters of fact and law. That was a matter which was canvassed at some length in Standing Committee in another place and it is not the amendment which is before us this evening.
  When one looks at the functions of this new person, the maladministration function is of less significance than the function of determining disputes as to matters of fact and law. It is on that basis that I express considerable sympathy with the amendment moved by the noble Baroness, Lady Turner, this evening. There is a great deal to be said for leaving this matter in the hands of a tribunal and not an ombudsperson.
  Lord Henley: It is with some foreboding that I respond to the noble Baroness on this issue. Not only has she presented her case, as she always does, very clearly, but as I believe I said at Second Reading, she brings a wealth of experience as a member of the Occupational Pensions Board. It was the OPB which produced the report commending a tribunal. My noble friend has also intervened and stated that ombudspersons—I think he said—were proliferating like a flood. Some might say the same is true of tribunals. However, everyone will agree that one or the other is necessary on this occasion.
  The OPB reported that a substantial majority of those who responded to their consultation note expressed the view that there was a need for an ombudsman or a body to adjudicate in disputes. There is, I am sure, general agreement that there is a need for a quicker, cheaper and more effective alternative to the High Court for pension scheme

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  members. The High Court is not a realistic possibility for most members of schemes. The OPB looked very carefully at the relative merits of an ombudsman and a tribunal and, in the words of the report, came down on balance in favour of a pensions tribunal.
  When this was discussed in Committee stage in another place, the Opposition tabled amendments that there should be both a pensions tribunal and a pensions ombudsman. They argued that there would be a hard core of cases where the expertise and legal standing of a tribunal was required, but that the ombudsman would be able to deal with most cases expeditiously and informally.
  This latter point of expedition and informality was a major factor in the Government's thinking. It is recognised that a tribunal should not have both advisory and adjudicatory duties, in order to avoid conflicts of interest. The tribunal would only be able to listen to arguments put to it, whereas an ombudsman is able to take the initiative and investigate the complaints. That is of great benefit to the individual. Legal expertise will be available to the ombudsman not only in the staff he may appoint but also in the legal experience of outsiders whose services he will be able to buy in as required. A single ombudsman will be able to cover the whole of the United Kingdom, including both Scotland and Northern Ireland, whereas it seems quite possible that separate tribunals might be needed for Scotland and for Northern Ireland.
  The OPS recommended, and the Government accepted, that the "consumer package" should be financed from fees paid by pension schemes and providers. The package consists of the tracing services based on a register of schemes, the grant by the OPB to the Occupational Pensions Advisory Service and the ombudsman, or tribunal as the OPB recommended. We agree that it is right that the industry should meet such costs, but whereas this is a practicable proposition in dealing with a pensions ombudsman, it would not be possible with a tribunal.
  In the Government's view, an ombudsman scheme is a more appropriate way to deal with the types of problems that individuals can face. The ombudsman has quite extensive powers in any case so that he, or for that matter she, can fulfil some of the functions which a tribunal might undertake. For example, he has power to seek a High Court ruling on a point of law in the public interest.
  One of the strengths of an ombudsman system, and in particular the power we are proposing to give to the pensions ombudsman, is that it is simple, clear-cut and comprehensible to members of the public and, even more important, to members of pension schemes. I have listened carefully to what the noble Baroness has said, and I do not think there is a great deal between us in what we are both trying to achieve. The Committee will have noticed that government No. 136 will ensure that any oral hearing that the ombudsman decides to have will, unless there are exceptional circumstances, be held in public. This is akin to what would occur in a tribunal system, but there is the added advantage of the flexibility inherent in the ombudsman system.
  Among the plethora of amendments about a tribunal, there is tucked in an amendment the effect
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  of which would be that, in certain circumstances, the pensions ombudsman would feel it necessary to consider the balance of interest between members and non-members of a pension scheme and then automatically come down on the side of the members. I cannot accept that proposition. The ombudsman is expected to act fairly and impartially. It cannot be right for him to have a predisposition to come down on the side of the members; he is not their advocate. The point of an ombudsman is that he investigates, weighs the evidence and then comes to a determination.
  I invite the noble Baroness not to press her amendment which at this hour I am sure she will not do. I accept that we are not far apart on this point. The noble Baroness would prefer a tribunal. For the reasons that I have given, the Government would prefer an ombudsman. Bearing that in mind, I hope that the noble Baroness will feel able to withdraw her amendment.
  Baroness Turner of Camden: I thank the noble Lord for his explanation. He is quite right; I have no intention to press the amendment at this hour. I know that in another place it was proposed that there should be both an ombudsman and a tribunal. I deliberately did not do that because it seemed to me that my case would be strengthened if I stayed with the recommendation of the OPB as I was a member of it and supported its recommendations.
  I still believe that in practice a tribunal would be the best means of handling these issues. We shall have to see how the ombudsman system works out in practice. When I was drawing up the amendments, I took the view that the ombudsman should clearly be seen as protecting the interests of scheme members. That should be the main function. Scheme members would be the ones most likely to complain if they felt that their interests were not being properly looked after, and it would be scheme members, or those who represented them, who would be most likely to utilise either the services of the tribunal or of the ombudsman. Therefore it seemed quite reasonable to lay down that it should be the function of the ombudsman to look after the interests of members of the scheme.
  However, I note what the noble Lord has said. We shall watch carefully to see how the scheme operates in practice. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 104 and 105 not moved.]
  Clause 12 agreed to.
  Schedule 3 [The Pensions Ombudsman]:
  [Amendments Nos. 106 to 115 not moved.]
  Lord Henley Lord Henley moved Amendment No. 116:
  Page 36, line 15, after ("remuneration") insert ("compensation for loss of office").
  The noble Lord said: In moving this amendment I shall speak also to Amendment No. 160. These amendments would provide for the registrar and the ombudsman to be paid compensation in the event of loss of office. It has always been our intention that the registrar and the ombudsman should receive compensation for loss of office, as well as remuneration, pensions and so on. The purpose of the amendment is to make that absolutely clear in

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  the Bill. I commend the amendments to the Committee. I beg to move.
  On Question, amendment agreed to.
  [Amendments Nos. 117 to 133 not moved.]
  Lord Henley Lord Henley moved Amendment No. 134:
  Page 39, line 46, leave out ("after consultation with the Council on Tribunals").
  The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 135, 136 and 137. Amendments Nos. 134 and 135 would delete the unnecessary reference to consultation with the Council on Tribunals and clarify the role that the council will play in the operation of the ombudsman scheme. It has always been our intention to enable the ombudsman to consult the Council on Tribunals with regard to the procedural rules which will govern how he considers disputes of fact or law. We introduced amendments to this effect at Report stage in another place, and these two amendments will clarify the wording of Section 59F(2).
  Amendment No. 136 will make clear that the procedural rules which govern the ombudsman's duties will include power to require any oral hearings held in connection with the investigation of a complaint or dispute to be heard in public, except in specified types of cases. In addition to this, the rules will be able to make provision as to the persons who shall be entitled to act as representatives on behalf of the parties to the investigation. The fourth amendment is consequential upon this. I commend the amendment to the Committee. I beg to move.
  Lord Coleraine: I welcome the clarification provided by my noble friend's amendments. I wish to refer especially to Amendment No. 136 which gives some clarification as to what should be included in the rules. I have two points to make. First, it seems to me that the rule as regards,
  "requiring any oral hearing held in connection with an investigation",
  really only applies to the "poor man's court" side of the ombudsman's function and not to the maladministration. Does my noble friend envisage that the same rule would apply to both investigations under Section 59C(1), as proposed, and Section 59C(2)?
  My second query arises out of the same possible rule. It requires,
  "any oral hearing held in connection with an investigation … to take place in public".
  That seems to carry the clear presumption that whether such a hearing—and I am thinking of a hearing under proposed Section 59C(2)—will be held in public is a matter for the sole discretion of the ombudsman. I should have thought that the amendment which my noble friend has put before the Committee ought to have continued to enshrine the proposition in the form of a rule that any hearing shall be held in public, except in such cases as may be specified by the rules. I should be grateful if my noble friend would consider these points if he cannot answer them now.
  Lord Henley: I shall certainly consider my noble friend's points. I can answer his first question by
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  simply saying, yes. I commend the amendment to the Committee.
  On Question, amendment agreed to.
  10 p.m.
  Lord Henley Lord Henley moved Amendments Nos. 135 to 137:
  Page 39, line 49, leave out ("and investigation of complaints") and insert (" of complaints, the reference of disputes, and the investigation of complaints made and disputes referred, ").
  Page 40, leave out lines 1 to 5 and insert:
  ("(3) The rules may include provision—
  (a) requiring any oral hearing held in connection with an investigation under this Part of this Act to take place in public, except in such cases as may be specified in the rules; and
  (b) as to the persons entitled to appear and be heard on behalf of parties to an investigation, as defined in section 59E(5) above.").
  Page 40, line 6, leave out ("referred to in subsection (2) and (3) above").
  The noble Lord said: I have already spoken to these amendments. I beg to move.
  On Question, amendments agreed to.
  [Amendments Nos. 138 to 156 not moved.]
  Lord Coleraine Lord Coleraine moved Amendment No. 157:
  Page 41, leave out lines 30 to 36.
  The noble Lord said: When I spoke to the noble Baroness's amendment I tried to explain to the Committee why I considered that a tribunal was the appropriate forum for dealing with the provisions covered by the third schedule to the Bill. In moving this amendment I wish to put forward my view that it is inappropriate for an official masquerading under the title of ombudsman to deal with these matters.
  My amendment provides that the determination of the pensions ombudsman shall not be enforceable in the courts. I seek to probe to the heart of the schedule. I have chosen this means because so far as I am aware it is altogether without precedent for a statutory or any other ombudsman scheme to provide that the determination of the ombudsman shall be rubber stamped for enforcement purposes by a court.
  I am conscious that my amendment will not find favour with my noble friend, nor with anyone who cherishes "Mom and apple pie". I do not propose to press the amendment, but someone must point out that Schedule 3 does not create an ombudsman scheme at all except in relation to the maladministration proposals. Maladministration is the smaller part of the whole. The larger part of the scheme deals with the resolution of disputes arising in contract and the law of trusts. It is a clear effort to oust the courts, whether the High Court or tribunals. I refer to them equally here as courts.
  It seems to me that it is clearly a corporative idea that justice should be administered by a functionary acting as inquisitor, prosecutor, judge and jury and by someone who can then hand over his decision to be enforced by courts, which have had nothing to do with the matter at all until then. All this is said to be in the interests of a straightforward method of redress for consumers' problems. It is said to be a

  861
  cheaper and more effective alternative to the High Court and quicker and more effective than a tribunal.
  However, does not this all mean little more than that legal aid costs in the High Court would be saved? Does it not reflect the absence of the availability of legal aid before tribunals? I consider that the principle here is wrong and the precedent which the scheme establishes leads in the wrong direction—towards further private justice administered by a civil servant in secret. I submit that it is not appropriate for all these matters to be dealt with by a tribunal. It is certainly not right to hand them over to someone called an ombudsman. I beg to move.
  Baroness Seear: I was much impressed by the arguments put forward by the noble Lord, Lord Coleraine. He said that he would not press the amendment so I do not suppose that this is of great interest to him, but the case he made seems to me to be unanswerable. We are moving all the time towards executive interference in matters which ought to be in the hands of some form of judiciary. This is much to be deplored.
  Lord Henley: Earlier I was accused of being Stalin. Now I am accused by different noble friends of being a corporatist. As my noble friend quite rightly said, the effect of his amendment would be to remove the provisions whereby the determinations or directions of the pensions ombudsman could be enforceable in the courts. In other words, the proposal is that it should be entirely voluntary whether or not the trustees, or manager of the scheme concerned choose to comply with the pensions ombudsman's ruling.
  Perhaps I may briefly explain how the procedure is intended to operate. An individual will apply to the pensions ombudsman with a complaint. That complaint may be an allegation that he has been unfairly treated because of maladministration on the part of the trustees or manager of an occupational or personal pension scheme, or it may be a request to determine a dispute of fact or law which has arisen.
  If the ombudsman decides to accept the application, he will conduct an investigation into the complaint, and of course will allow all parties concerned the opportunity to comment on the issues raised. The ombudsman may refer any question of law to the High Court or, in Scotland, the Court of Session, if he thinks it necessary. In due course he will send a written determination to the parties concerned. This determination is final and binding on the parties, except that on a point of law an appeal may be made to the High Court or Court of Session.
  It only really makes sense for the determination to be final and binding if it can be enforceable in the courts. Unlike some other ombudsman schemes
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  where individual firms or companies decide to join, the pensions ombudsman will make decisions which will apply to all occupational and personal pension schemes. There are hundreds of thousands of such schemes, the vast majority of which could be relied upon to implement a decision of the ombudsman. But the very nature of the scheme is that he will deal with cases where there are problems and where there is a dispute between the trustees and an individual. of ten the conciliation bodies such as OPAS are unable to make an impact because of intransigence.
  It must, therefore, be right that the courts should be able to enforce the ombudsman's decisions. One of the current problems, as the OPB report pointed out, is that there is a need for an easier way for scheme members to resolve grievances. The expensive and time-consuming option of the High Court would continue to be the only one open to individuals if schemes decided to ignore the ombudsman's decision.
  Having said that and before asking my noble friend to withdraw his amendment, I should point out that it is always open to a scheme member to go to the High Court before he approaches the ombudsman. That right is not lost. It is only when one uses the ombudsman's services that his decision is then binding, except on a point of law, in which case the High Court can be brought into the matter. My noble friend said that he would not press his amendment. Nevertheless I hope I have satisfied his questions on this matter.
  Lord Coleraine: As I have said, I have no intention of pressing the amendment. I have only one comment to make on what my noble friend has said, which is that it seemed to me that in a sense he conceded the case when he said—I hope I understood him correctly—that the ombudsman would make determinations which would affect all pension schemes. It seems to me that there could be no clearer case for these matters to be decided in the open before a court or a tribunal. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 158 and 159 not moved.]
  Schedule 3, as amended, agreed to.
  Clause 13 [Registration of occupational and personal pension schemes]:
  Lord Henley Lord Henley moved Amendment No. 160:
  Page 17, line 19, after ("gratuities") insert ("or compensation for loss of office")'.
  The noble Lord said: I have already spoken to this amendment. I beg to move.
  On Question, amendment agreed to.
  Clause 13, as amended, agreed to.
  Lord Vinson Lord Vinson moved Amendment No 161:
  After Clause 13, insert the following new clause:
  ("Entitlement to opt annually for a PPP at full transfer value of accrued rights including pre-1988 rights.
  Notwithstanding any provision of the Social Security Act 1982 or of the Income and Corporation Taxes Act 1988, as amended, any member of an occupational pension scheme (not yet in receipt of pension) shall have the right annually to elect to transfer the full value of his accrued rights to a Personal Portable Pension at the same actuarial valuation of transfer entitlement as he would have enjoyed had he left the employment of that company.").
  The noble Lord said: I am grateful for the support of other Members of the Committee for the amendment. Its purpose is fourfold: first, to correct an anomaly in existing law governing the transfer of pensions; secondly, to give more freedom of choice in pension provision; thirdly, to encourage higher personal savings; and, fourthly, to develop the spread of the ownership of the assets of the United Kingdom more widely among its citizenry.
  Since the concept of personal portable pensions was introduced, over 4 million citizens have taken advantage of the new provision. It has proved more popular and been taken up on a greater scale than anyone anticipated. The take-up is still very substantial.
  Currently, if one leaves the employ of a company one is entitled to the full transfer value of one's accrued pension rights. These can be transferred by the individual either into his new company's pension scheme or as the foundation for a new personal portable pension that he can set up at that point. Thereafter his pension follows him, literally on his back, from company to company. Because it is his own personal pension he naturally takes more interest in it, and he is also more likely to save by way of additional voluntary contributions because he is adding to his own personal pot. Last but not least, he becomes a citizen with a discernible stake in the wealth of the country.
  However, a technical obstacle remains. By an anomaly in the law as it presently stands, if an existing employee elects to have a personal portable pension, he only has the right to take the accrued value since 1988, which is obviously very small. The pre-1988 values cannot transfer until he leaves. I believe that that restriction was inserted at the time when personal portable pensions were introduced so as to inhibit members of existing schemes from transferring to personal schemes and thereby simultaneously putting a double strain on the administrators of those schemes while the new systems were being introduced. However, that was some time ago.
  I have consulted with leading actuaries. One in particular said to me that the original denial of pe-1988 rights was due to the fear of a mass walk-out. That is and was a chimera. It is not a problem and he and others do not believe that an undue strain would now be placed on the administration of pension funds. I believe that I am right in saying that the NAPF is agnostic towards this proposal.
  The industry could now cope. All the arrangements are in place to give an actuarial valuation of a
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  member's rights when he leaves. As the law currently stands, members are entitled to ask for that valuation.
  Apart from the very small additional administrative burden, the arrangements which I propose are costless to the company because the actuarial valuation of a pensioner's entitlement equals precisely the liability that that fund has accumulated in order to meet his pension obligations to date. Thus the solvency of the fund is neither enhanced nor diminished by the withdrawal so long as the actuarial calculation is a correct assessment of the pensioner's entitlement, which it would be.
  It has been put to me that companies should have some time to raise the necessary cash in order to effect a transfer. While I believe that the number of employees asking for these arrangements will be relatively small, it would be quite reasonable for the company to have six months to execute the transfer and to be able to do so at the valuation calculated at the precise point of sale.
  Also, if an individual opts for a transfer to a personal portable pension, it would be perfectly reasonable that that employee should not have the right of re-entry, as hopping in and out of a company pension scheme would place an unreasonable burden on its administration. The clause that I have put down does not make that point particularly clear. No doubt it could be tidied up subsequently.
  I believe that the clause that I propose has an inevitable logic about it. It is an extension of the present rights currently given to those who leave a company. It would in future allow any existing employees of a company an opportunity annually to elect to have a full personal portable pension if they desire it and to do so while in the employ of that company. In practice, most employees would probably be quite happy to leave arrangements as they are. I do not anticipate a rush of existing employees asking for personal pensions.
  However, we live in a world where labour mobility is increasing, where "cradle to the grave" jobs are abnormal and where job changing, particularly and perhaps inevitably by female employees, is at a much higher level than hitherto. Personal and portable pensions fit that pattern much better, apart from severing the somewhat anachronistic ties between an employee and a company for which he or she may have worked for 15, 20, 30 or umpteen years.
  We can expect to see the demand for personal portable pensions grow. It is right that existing employees should have the freedom to choose a personal pr of itable pension, should they wish to exercise that choice. I beg to move.
  Lord Joseph: I hope that my noble friend's speech, which contains assurances that the amendment could do no harm and will do good, will be seriously considered by my noble friend the Minister. I support my noble friend.
  10.15 p.m.
  Baroness Turner of Camden: I am sure that the Committee will not be surprised to learn that I am not in favour of anything which encourages personal portable pensions. The noble Lord, Lord Vinson, stated that 4 million citizens had opted to take personal private pensions. Most have opted against SERPS and not against occupational pensions. They have been encouraged to do so largely by the Government providing a bribe in the shape of a national insurance rebate which runs for a certain period. That situation has enabled those who purvey personal private pensions to encourage many people to opt againt SERPS. We have seen advertisements which state,
  "Why be a SERPS? Join a personal private pension".
  I am pleased to say that that does not apply very much to occupational pensions. I asked for the figures in relation to those at a meeting of the Occupational Pensions Board. It appears that relatively few people have opted against occupational pensions.
  An amendment to the legislation agreed when it was before your Lordship's House means that it is not possible to opt if one has not been a member of an occupational pension scheme for a reasonable period of time. I am pleased to say that one of the reasons why members of occupational schemes have not opted for private personal pensions is that a good side effect of the Government's legislation has been that providers of schemes have had to popularise what they have on offer with their members. Increasingly, a great deal of information has been made available that sets out very clearly to their members exactly what is on offer and how much better that is than anything they could get outside.
  From the point of view of most employees an occupational pension scheme to which they pay a contribution and which the employers have to fund on a balance of cost basis is a very good investment. I should hate to see that scheme further weakened by possible incentives for people to join personal private pensions in opposition to the occupational schemes which, generally speaking, offer a very good deal to members. I hope that the Minister, when he replies, will say that the Government are satisfied with matters as they are and see no reason to give further incentive or encouragement to the growth of private personal pensions.
  Baroness Seear: I, on the other hand, very much hope that the option will be made available. If the occupational pension schemes have to compete with personal private schemes, they will be more attractive. That is a very good thing. Occupational schemes have become more flexible. But there is no doubt that in the past they tied people to employers. They increased immobility and operated heavily against people who had the enterprise to get out and do something else.
  When I sat on the Top Salaries Review Body we had reason to go into this matter in considerable detail. We found that people who had had the enterprise to move out—perhaps to move several
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  times in the course of their career—were very heavily penalised when it came to drawing their pension at the end of their career. I know that that situation is not as serious as it was; but I still think that it is a very important point. It is also, as the noble Lord, Lord Vinson, said, extremely important in connection with women, although not only with women. However, women more than men are inclined to move in and out of employment and to go from one employer to another. If they can build up a personal pension and continue to pay into it in some scheme while they are not working full time, that must be an advantage. At the end of the day many women find themselves with totally inadequate pension provision. Many of them have to look after themselves when they are old—because of the increased incidence of divorce and so on—and the desirability of women being able to build up resources to enable them to look after themselves when they finally retire seems very strong indeed.
  If the occupational pension scheme is good and it suits that person because he or she is planning to have that kind of career, that is fine. But a lot of people do not have that intention. I think that that should be an option.
  Lord Henley: I am not surprised at the opposition of the noble Baroness, Lady Turner, to this amendment. I am surprised and have been surprised in the past by her repeated opposition to personal pensions and the whole success of the personal pensions initiative. I feel that she should welcome the success of the Government.
  As my noble friend Lord Vinson appreciates, the introduction of the pensions reform package in 1986 was aimed particularly at enabling employees not covered by an occupational pension scheme to take out a personal pension in order to make better provision for their retirement. The first of his two proposed amendments, in which I assume he means to refer to the 1986 Act, concerns a restriction that currently exists whereby the rights that have to be transferred from an employer's pension are limited to those built up since 1988, when personal pensions started. That contrasts with the position for people who change jobs. They can transfer all their pension rights from their previous employer's scheme (with no 1988 limit) to any scheme which they are eligible to join provided that they left on or after 1st January 1986. If they left before that date such transfers are at the scheme's discretion.
  As the Committee no doubt will recall, there was considerable discussion at the time about whether the transfer of rights from an occupational scheme to a personal pension or other scheme should cover all the accrued rights or whether there should be some sort of restriction on the period for which rights could be transferred. It was concluded at the time that without some sort of restriction the financial viability of schemes could be put at considerable risk because schemes would not have made provision for an increase in early withdrawals. The resulting depletion of assets could adversely affect their funding arrangements. We felt then that a balance was needed between the interests of the member who leaves and of the member who stays

  867
  in the scheme and who may want to exercise his or her right to leave at some future point.
  The Committee will be well aware of the very significant part played by my noble friend Lord Vinson in getting personal pensions on the political agenda. As I said in my opening remarks, the Government are certainly extremely pleased with the way in which this new form of pension provision has taken of f. However, we are firmly committed to the development of all forms of pension provision, including final salary schemes. That is why we attach such importance to the measures that we are introducing in the Bill currently before this Chamber.
  We have been monitoring all aspects of the social security reforms that we introduced in the 1986 Act and their impact on the interests of all concerned; ! that is, the members of occupational schemes, those providing them, the holders of personal pensions, and the financial institutions. We shall certainly look carefully at what my noble friend Lord Vinson suggests. But we should need to consult fully before we could see our way to introduce the change that he seeks in his first amendment. We know from experience that some schemes will take some considerable convincing of the need for change. I appreciate that my noble friend has canvassed views and I am grateful for that. I feel confident, however, that he, in his turn, will recognise that we need to consult formally all the various interests involved.
  I turn now to my noble friend's second amendment. It would require trustees of all schemes with more than 100 members to tell all their members every year the value of the pension rights that they could transfer into a personal pension scheme if they chose to leave their occupational scheme. My noble friend will no doubt know that the present disclosure requirements give members the statutory right to ask for this information, and if they do ask for it then the trustees are obliged to give it. To make the issue of such a statement compulsory could put an extra administrative burden on schemes although I appreciate that my noble friend is proposing to exempt very small schemes from this added burden and to give the rest four years to make the necessary arrangements. Many members receiving statements would not want to leave anyway. However, I can understand my noble friend's point in wanting to make people aware of the possibilities that are open to them. The Government have done much to make sure that scheme members are provided with adequate information when they need it, and we would in any case need to look at this aspect if the transfer provisions were altered on the lines that my noble friend proposes in his first amendment.
  We shall look carefully at the suggestion in my noble friend's first amendment, but again we would need to consult before changing the present rules. I am most grateful to my noble friend for raising those issues. However, I hope that in the light of what I have said, he will feel able to withdraw the amendment.
  Lord Carter: Before the noble Lord decides what to do with the amendment, perhaps I may first
  868
  comment on the Minister's reference to the success of the personal portable pensions. He referred to the success in terms of the uptake of those pensions. The success of a pension fund should be measured in its performance, not in its uptake, in particular when there has been a four figure inducement to the taxpayer to persuade people to take up these PPPs.
  Perhaps I may ask the noble Lord, Lord Vinson, this question. With the transfer or portability of these pensions, what is the effect on the cost and eventual outturn in performance? We all know that when one takes up a new pension scheme commissions have to be paid. There is the question of a front-end loading and a recovery of cost. Is he not concerned that with the portability of the pensions the pensioner will be worse of f at the end of the day because of the cost incurred and the pr of its that would be taken at each of the moves?
  Lord Vinson: Perhaps I may deal with some of the points raised. The Minister has slightly overtaken my second amendment by giving his reply before I had made the point. Perhaps I may catch up.
  With her background, I would naturally expect the noble Baroness, Lady Turner, to favour collective forms of investment. She said that the demand for personal pensions had been relatively small, and non-existent from those in occupation schemes. She then realised that she had tripped herself up because that is precisely the point of my amendment: that such employees in occupational pension schemes are locked in and do not have the option of personal portable pension schemes. The amendment corrects that. If we were to meet in a few years' time, we could test which of us has the correct prognostication.
  Unlike the noble Baroness, I am not against occupational pension schemes. I am relatively neutral. I am anxious that the potential pensioners of this country should have the freedom of choice. All pension schemes are money purchase schemes. People sometimes talk in derogatory terms about personal pensions being money purchase schemes. All pensions are money purchase schemes. Pension fund managers spend their time buying and selling shares and purchasing money. The difference is that personal pensions are disaggregated money purchase schemes; and occupational schemes are aggregated money purchase schemes.
  At the end of the day the situation will be neutral. There is only so much rice in the rice bowl. How it is distributed will very much depend on the growth and wealth creation of this country over the next 20 or 30 years. We want schemes that stimulate and help that process. When more widely spread, the ownership of the assets of this country will bring about a wider shareholding base which will take a much more active and participative part in the wealth creation process.
  The noble Lord, Lord Carter, raised the question of costs. The costs of administration will be fairly neutral. Nothing could be more expensive than the existing costs of occupational schemes where the managers of those schemes have to keep tabs on and records of potential pensioners for 20, 30 or 40 years and then send them a snippet of a pension—£1·20 a week—for the few years for which they worked for

  869
  that company some 30 years before. That is an anachronistic form of administration which the gradual transfer to personal and portable pensions would overcome. It would more clearly fit the labour market patterns of the future.
  The object of my second amendment is to try to relate the people of this country more closely with the enormous wealth—the £250 billion of assets—that currently lie in occupational pension funds. That money is no one's money. It cannnot be satisfactory to have it owned anonymously. The amendment seeks to encourage people to take a closer interest in that and to encourage company employees to participate more actively in the management of those pension funds—an objective which I am sure I share with the noble Baroness, Lady Turner. We must begin the process of turning what is no one's money into someone's money and the optional development of personal and portable pensions begins to work towards those ends.
  I am partly reassured by the Minister's comments. I am sure that he will read carefully what has been said tonight. I have no doubt that he will consult throughout the industry, but I hope that at the same time he will have a mind of his own and that the Government will have a mind of their own. The job of government is to lead in these matters, not necessarily to follow. I hope that, having taken soundings, he will then feel that there is much merit in the two proposals.
  I am grateful to noble Lords for their support and for the most valuable comments that they have made. In view of the Minister's reassurance, I shall not press the amendment. I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  [Amendment No. 162 not moved.]
  Clause 14 agreed to.
  10.30 p.m.
  Schedule 4 [Occupational and personal pension schemes]:
  Lord Henley Lord Henley moved Amendment No. 163:
  Page 45, line 38, leave out from ("employer") to end of line 39.
  The noble Lord said: In moving this amendment, I wish to speak also to Amendments Nos. 164, 166 and 168.
  These are minor drafting and technical amendments intended to clarify or correct the words of Schedule 4. I therefore invite the Committee to accept the amendment.
  On Question, amendment agreed to.
  Lord Henley Lord Henley moved Amendment No. 164:
  Page 45, line 6, leave out paragraph (b) and insert—
  ("(b) any power—
  (i) which the scheme confers on the employer (otherwise than as trustee or manager of the scheme), and
  870
  (ii) which is exercisable by him at his discretion but only as trustee of the power, shall be exercisable only by the independent trustee; ").
  On Question, amendment agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 165:
  Page 45, line 46, at end insert—
  ("57CC. If and so long as section 57C above applies in relation to a scheme, the trustees of the scheme shall exercise their functions in such manner as shall best promote the welfare of members of the scheme.").
  The noble Baroness said: This amendment makes clear that the job of the trustees, when a scheme is being wound up, is to look after the interests of scheme members. We consider that, although having an independent trustee when an employer goes into liquidation is welcome, it could well be limited in its impact. The power of the independent trustee is largely limited to the exercise of a blocking veto on any discretionary power vested in the trustees. That is inadequate as employers usually gain from the winding up of a fund if discretionary powers are not exercised.
  We therefore believe that the independent trustee must be positively charged with the responsibility to look after members' interests. The recommendation of the Occupational Pensions Board report upon which the Clause is based was to safeguard the position of scheme members. That is definitely what the board had in mind. The Secretary of State said, in moving the Second Reading, that the intention was to give greater protection to members of schemes. Therefore we consider that the Bill is deficient because it fails to make clear that that is the job of the trustees and in particular, of the independent trustees. I hope that the Minister will regard this as a useful and constructive addition to the Bill. I beg to move.
  Lord Henley: This amendment would require that when a company becomes insolvent and an independent trustee is appointed to the pension scheme, all the trustees would have to consider the welfare of scheme members only.
  At first sight, this amendment might appear quite benign, as it appears to amount to a simple restatement of the current position in trust law. As the Committee will know, it is a general requirement of trust law that trustees exercise their powers in good faith and in the interests of all the beneficiaries under the scheme. Indeed this amendment might be viewed as unnecessary, in so far as it does restate that basic principle.
  I am concerned, however, that if this amendment were to become law, it would cause confusion among both trustees and beneficiaries. If the employer is not insolvent, and there is therefore no independent trustee, this overriding duty would not apply. The amendment seems to suggest that the duties of trustees are different depending upon the circumstances of the employer. This is clearly not the case.
  A more important point is that this amendment actually contradicts a basic principle of trust law. This amendment would require the trustees of a scheme to consider the welfare of scheme members

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  only in certain circumstances. I am sure the noble Baroness does not wish the trustees to disregard the welfare of widows, widowers and dependants, but this is what the amendment would achieve.
  I would remind the Committee of the OPB's view that trust law should remain the basis for occupational pension schemes. The Government firmly support that approach. Having said that, I hope the noble Baroness will feel able to withdraw the amendment.
  Baroness Turner of Camden: I am grateful for the Minister's explanation. I did not intend to press the amendment. I merely tabled it to probe the matter of the independent trustee and the need to ensure that the welfare of members was given a very high priority in situations of wind up or other difficulty. However, in view of the Minister's reply, I do not propose to press the amendment and I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  Lord Henley Lord Henley moved Amendment No. 166:
  Page 46, line 6, leave out ("insolvency") and insert ("winding up, bankruptcy or sequestration").
  On Question, amendment agreed to.
  Lord Mottistone Lord Mottistone moved Amendment No. 167:
  Page 47, line 30, at end insert:
  ("() Where an occupational pension scheme exceeds the restrictions as to the proportion of its resources which may be invested in employer-related investments, the scheme shall not be required to sell or otherwise dispose of any employer-related investments, but the scheme shall not add to such investments until such time as the level of employer-related investment falls below the permitted maximum proportion.").
  The noble Lord said: This amendment is grouped with Amendment No. 167A in the name of the noble Lord, Lord Stallard. It seems from Schedule 4(3) that the Government have taken a stand against the investment of pension fund monies in parent enterprise. They are quite understandably anxious the people should not have all their eggs in one basket and should not face the risk in extreme cases of losing not only their employment and associated earnings should the firm go under but also their pension prospects and, therefore, their provision for comfort in later years.
  Since first indicating their plans in this area the Government have made it plain that they will exempt from fresh regulation small self-administered pension schemes where all members are 20 per cent. directors, all members are trustees and all investment decisions are unanimous. That is a welcome recognition that the case against self investment is not absolute and, secondly, that the practical effect of requiring some funds to move within a limit of, for example, 5 per cent., would be to force a sale of assets, which is likely to depress their value and could mean loss of ownership or even closure, as several firms have warned.
  In small, self-administered schemes, substantially higher investment is quite common. Where those are director-only schemes, the participants knowingly choose to use their pension fund in this way as an
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  available source of finance and they recognise the risks. Some larger funds which have sound outside investments covering all probable liabilities would argue as follows. First, that self-investment may justify itself as a source of suitably high returns for the more speculative element of investment appropriate with some of the surplus; secondly, as an investment in their own sector, it is appropriate for the balance of the fund and it would clearly be a nonsense for the pension fund to have split loyalties through investments in a competitor.
  I summarise by saying that self-investment is not necessarily a bad thing. Though there are significant differences between the German situation and our own, and we do not know how insurance companies would react to the idea, perhaps the Government would consider allowing self-investment to continue on an insured basis. That would overcome the "all the eggs in one basket" objection without losing the advantages which some enterprises find in the self-investment process.
  Whether or not the Government accept that self-investment can ever be beneficial, they must surely accept that any element of a forced sale is always thoroughly undesirable. That is the purpose of my amendment. It is the only way to achieve a movement away from self-investment without the risk of a forced sale. I beg to move.
  Lord Stallard: When speaking to Amendment No. 167, I also speak to Amendment No. 167A. Perhaps I may begin by saying that I understand and appreciate the objectives behind the proposals. I can readily accept those proposals. However, in so far as the objectives seek to safeguard the interests and provide greater protection for members of occupational pension schemes, I hope that the Minister will share my concern. There is a real possibility that the proposals as they stand could operate adversely on some schemes; they may even threaten the existence of some schemes.
  A number of schemes and a number of Members are not very happy about the operation of this particular provision. Perhaps the quickest way is to illustrate by way of example. I have no personal or financial interest whatever in the scheme that I speak of; I am familiar with it purely because it operates in the constituency which I once represented in the other place. That particular scheme was set up around 60 years ago by a gift of company shares. The income from those shares was used in part to buy further shares, and eventually the whole of the share capital of the business. That was strictly in accordance with the terms of the benefactor's wishes, which specified that the shares would be used for the benefit of the company employees.
  The pension scheme therefore owns the company; it is the other way round to the situation that we normally consider. The product of that unusual arrangement—I am aware of this—is a non-contributory pension scheme with a record beyond comparison with any other schemes of which we know. That might not be a unique situation. I understand that there are others. However, it is certainly one which is seldom catered for in pensions legislation.

  873
  I am sure that the Minister will appreciate how difficult the question of self-investment becomes in such an instance; in the previous amendment the question was similar. Any requirement imposed upon the trustees to sell their investment in the company, as well as causing a breach of the original terms of the trust, could also lead to great practical difficulties. It could wind the company up, and we know the consequences which flow from that. The employees of the company of which I spoke are very well served. They are content with the situation, and any blanket legislation binding or restricting self-investment would clearly militate against the best interests of those people whom the scheme exists to serve.
  On the basis that the interests of beneficiaries are of mutual concern, I hope that the Minister will accept Amendment No. 167A. It gives the Secretary of State powers, on the advice of the occupational pensions board, to exempt or partially exempt individual schemes from compliance with such restrictions for such period as seems to him to be appropriate. That seems to be fairly mild, constructive and of assistance to not only this scheme but many others. I therefore hope that the Minister will accept the amendment.
  From reading the proceedings of another place it appears that the Government intend to conduct a survey. I do not know the details of that survey and I should be grateful if the Minister could say what form it will take, how long it is expected to last and whether its findings will be reported to Parliament. Some general information on the survey is necessary. I commend my amendment.
  Lord Vinson: Briefly, I support these amendments. They are eminently sensible and I hope that the Government will take them on board.
  10.45 p.m.
  Lord Henley: I cannot accept these amendments. The noble Lord, Lord Stallard, and possibly my noble friend, are aware that the amendments are unnecessary. There are sufficient powers in the Bill to do in regulations what they wish to do.
  There is general agreement, I believe, that self-investment can be a harmful practice. The National Association of Pension Funds issued a report in June 1988 entitled Self-Investment by Pension Funds and concluded that:
  "The potential for conflicts of interest, irresolvable pressures and arguments is so great that self-investment is an unhelpful and undesirable practice".
  On the basis of that conclusion, the report set out a code of best practice, aimed at stopping new self-investment but also at running it down where it already existed.
  The Occupational Pensions Board then looked carefully at all the arguments when considering its report and agreed that it was desirable to settle a level of self-investment; though it saw the argument for that to be temporarily exceeded in special cases.
  The Government agree that there is a potential for conflicts of interest. If pension scheme trustees decide to invest in the company to which the scheme
  874
  relates failure of the company places a double jeopardy on scheme members. Both their job prospects and their pension benefits are put at risk. That is clearly not desirable.
  My honourable friend the Parliamentary Under-Secretary announced in the Committee stage of the Bill in another place that we have decided to arrange for a survey to be carried out which will provide up-to-date information on the extent of self-investment, in which sectors it is concentrated and what the problems will be in restricting it. This survey will begin very shortly and we shall be receiving the report during the summer so that we can consider it before introducing the appropriate regulations. The noble Lord, Lord Stallard, specifically asked about that.
  This report will guide us as to what is the appropriate action to take, both in considering what limits to self-investment there should be and in considering what time scale it is reasonable to adopt. Our regulation-making powers are wide and flexible, so there will be scope to take whatever action we believe is necessary.
  I have noted the points made by my noble friend Lord Mottistone, and we shall have regard to them in framing regulations. Clearly it would not be right for me to express a view on the amendment the noble Lord has spoken to as that would imply that we had already made up our minds without waiting for the survey to be conducted. We want to look at the results, examine the evidence and then bring forward specific proposals. I was interested in my noble friend's proposal that some form of insurance might provide the necessary safeguards and we shall look at that suggestion carefully. I therefore hope my noble friend will feel able to withdraw his amendment.
  I have also listened to the points made by the noble Lord, Lord Stallard, and I know that he has concern for the scheme he mentioned. He may like to know that officials from my department met the trustees of that scheme only last week and had a useful discussion on the problems that it might face. I can assure the noble Lord that we have taken note of it and that we shall take it into account.
  Lord Carter: The Minister referred to the requirement for existing schemes to run down their self-investment. Am I correct in thinking that when this was first proposed it applied to self-administered schemes; that now it has been decided that self-administered pension schemes will not have to act retrospectively, so to speak; and that the limitation on self-investment will only apply to their investments in future? The decision caused considerable anxiety at the time among the self-administered pension schemes.
  Lord Henley: I think that the noble Lord slightly misunderstood me. I referred to a report by the National Association of Pension Funds. It then issued a code of practice aimed at stopping new self-investment, but also aimed at running it down where it already existed. We agree with that body and with the OPB that, in the main, self-investment is an undesirable practice. As I have said, we want

  875
  to look further at this matter before we come to any conclusions; hence the survey that I announced. There are considerable problems, as the noble Lord, Lord Stallard, has mentioned. Before we come forward with any firm proposals we must have an up-to-date survey of the position.
  Lord Mottistone: I thank my noble friend for his very full reply and for some of the points that he made. I am glad that he has taken up the idea of insurance on the German lines. My noble friend mentioned the report which has been made on the survey. Is that report to be publicly available or will it be seen by the Government alone?
  Lord Henley: I am not sure what the answer is. I shall let my noble friend know as soon as I can.
  Lord Mottistone: I shall read carefully what my noble friend said before deciding whether to pursue this matter further. At this stage I beg leave to withdraw the amendment.
  Lord Stallard: I am grateful for what the Minister said. I shall welcome a copy of the reply that he sends to his noble friend on the question which I also asked concerning what happens to the report.
  Amendment, by leave, withdrawn.
  [Amendment No. 167A not moved.]
  Lord Henley Lord Henley moved Amendment No. 168:
  Page 48, line 23, at end insert—
  ("(2) In paragraph 3 of that Schedule (average salary benefits) in sub-paragraph (5) (definition of "salaries") for the words from "means" to "terminated" there shall be substituted the words "means, subject to sub-paragraph (5A) below, the member's salaries for the period between the date when his pensionable service commenced and the date when it terminated".
  (3) After that sub-paragraph there shall be inserted—
  "(5A) Where the member's pensionable service terminated before the coming into force of this sub-paragraph, sub-paragraph (5) above shall have effect with the substitution for the words from "means" to "terminated" of the words "means the member's salaries for the period between 1st January 1985 and the date when his pensionable service terminated".").
  The noble Lord said: I spoke to this amendment with Amendment No. 163. I beg to move.
  On Question, amendment agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 169:
  Page 48, line 25, at end insert—
  ("Contributions to scheme in deficit. The following section shall be inserted after section 58 of the Pensions Act—
  "58A. If the liabilities of an occupational scheme exceed its assets, both valued in accordance with prescribed principles, the employer shall be liable to make such additional contributions to the scheme as may be prescribed.".").
  The noble Baroness said: What is being proposed here is that occupational pension schemes should be funded on a statutory basis so that all reasonable steps are taken to ensure that there is enough money in the schemes to pay for the pension benefits.
  It seems that such a requirement is particularly necessary now that schemes are to have an obligation to pay pension increases as well as the obligation to revalue deferred benefits. That places an obligation on the Government to ensure that schemes are adequately funded to meet these new obligations.
  Perhaps the Minister will tell me if I am wrong, but it is my impression that the Government were considering some kind of special funding requirement. If there are to be these obligations then quite clearly there is a necessity to lay down certain requirements in order that the members of schemes can be quite certain that the money is going to be there to meet the obligations promised in statute and in the schemes themselves. I beg to move.
  Lord Henley: Certain of the provisions in this Bill will ensure that, if a scheme winds up, employers will have to ensure that members receive pension increases at the prices—5 per cent. rate for rights built up after an appointed day. For pension rights built up before then, increases will depend on what has already been guaranteed as a result of these provisions and on any additional surplus emerging when the scheme winds up. Any deficiency in the scheme's assets will count as a debt on the employer. Our aim is to see that, if an employer winds up a pension scheme, the members receive the benefits to which they are entitled.
  This amendment would go much further than our proposals and would lead to an unnecessary extension of interference in the operation of pension schemes where there is no question of the employer wishing to avoid responsibilities or of the scheme being wound up. The amendment would take away from the trustees of the scheme the flexibility which they now have to agree a contribution rate with the employer.
  As I have said, we are all concerned to ensure that members receive the benefits to which they are entitled under the scheme. But I cannot accept that this will be achieved by taking away from scheme trustees and employers the right to decide the funding level of the scheme. The trustees can take account of many factors, such as the employer's business prospects, in deciding whether there is adequate security for members' benefits, and this can benefit employees as well as employers. I therefore invite the noble Baroness to withdraw the amendment.
  Baroness Turner of Camden: I thank the Minister for that explanation. I shall study it carefully in Hansard tomorrow. When I put down the amendment it seemed to me that there was a need, in view of the new obligations to be imposed, to have some kind of funding standards. However, in view of what the noble Lord has said I shall withdraw the amendment. It had certainly not been my intention to press it at this hour. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 170:
  Page 48, line 25, at end insert—
  ("Consultation on Takeovers and Mergers
  The following section shall be inserted after section 56N of the Pensions Act—
  "56P. Power to make regulations requiring consultations on takeovers and mergers affecting occupational pension schemes
  (1) The Secretary of State may by regulations require an employer—

  (a) to give notice of his intention to make any change to an employee's conditions of service relating to an occupational pension scheme which will arise or have arisen on that employer being taken over by or merged with another employer; and

  (b) in connection with any such notice, to furnish such information as may be prescribed and to undertake such consultations as may be prescribed with any organisation representative of the employees concerned.

  (2) Until such time as the employer has met his requirements under sub-section (1) any amendments to the provisions of the scheme to give effect to such changes shall have no effect.".").
  The noble Baroness said: This amendment requires employers to give prior notice of any changes in pension arrangements that arise when a company is merged or taken over. It also requires an employer to consult representative organisations about such changes on the basis of adequate information. The problem is that employees are usually the last in line when takeovers are considered. Sweeping changes can be made with little or no notice, let alone any consultation. Employees in this country have fewer rights in takeovers and mergers than many employees elsewhere in Europe. This issue is wider than just pensions, but in the context of the present Bill and the Government's declared intention of strengthening pension protection it seems appropriate that some such legislative provision is made as is contained in the amendment.
  Although there is little evidence of takeovers happening just so that a predator can exploit a surplus, employees have genuine fears about their pension rights in such circumstances. The report of the Occupational Pensions Board was much concerned to try to deal with such fears and to provide some further protection. This it sought to do, and I am glad that the Secretary of State has followed to quite an extent the board's recommendations.
  However, we think that when takeovers and mergers are contemplated employees affected should be given notice of when any changes in their pension arrangements are to take place and their representative organisations should be consulted. We are not suggesting that advance notice of the actual takeover should be given as in many cases that would be quite impracticable. Until such time, however, as the notice has expired employees should be entitled to whatever benefits they were entitled to receive prior to the takeover. I beg to move.
  Lord Vinson: It gives me great pleasure to support the noble Baroness. I see exactly eye to eye with her on it.
  Lord Henley: The speech by the noble Baroness reminds us of some of the reasons why the Occupational Pensions Board was asked by the then Secretary of State for Social Services to provide a report on various issues relating to occupational pensions. One of the issues was the involvement of pension schemes in company mergers and takeovers. As the board's report makes clear:
  "There is a need to ensure that occupational pension schemes serve their purpose of providing security amidst the risks and uncertainties of commercial and industrial life when company takeovers are frequent".
  The object of this amendment is to require notice to be given about changes to an employee's pension arrangements following the change in control or sale of a business. As I understand it, it is not usually these events which trigger of f the changes to the pension arrangements; rather, they result from a change in the exercise of discretion or a transfer to a completely different scheme.
  These points were raised in the OPB report, and the Government have accepted the board's recommendations. At present, on the disposal of a business a bulk transfer may be made from a group scheme of the previous owner to a scheme of the new employer, of ten without the consent of members. We have agreed that there should be a broad equivalence of rights and expectations acquired in the new scheme to those given up in the old. The intention is therefore that bulk transfers, without the consent of the members, should be permitted only if the actuary to the transferring scheme certifies that the rights and expectations to be provided in the new scheme to the transferring member in respect of their past service are equivalent, on an overall basis, to their rights and expectations in respect of past pensionable service in their original scheme. If the actuary cannot give such a certificate, then the transfers would proceed on the basis of individual consents.
  The Government have also decided to review the disclosure of information regulations relating to occupational schemes. Regulation 5(6) of the Occupational Pension Schemes (Disclosure of Information) Regulations 1986 already requires trustees to provide information about changes to the scheme. We intend also to require that persons concerned in a bulk transfer should be entitled to receive, at least one month before the date of the proposed transfer, full information about its terms, including details of the basis on which past service rights are being allotted. I hope that the noble Baroness will accept that we are going some way to meeting her concerns, even if we cannot go along with her amendment entirely. I invite the noble Baroness to withdraw her amendment.
  Baroness Turner of Camden: I thank the Minister for that reply. I welcome the assurances he has given about the Government's intentions to try to tighten up on the arrangements both in regard to notice and in regard to the disclosure of information by trustees. I believe that these are steps forward. We are dealing with pensions in the context of a Bill and although we have put down many amendments, generally speaking the main thrust of the legislation supports the policies which we advocate on this side of the

  879
  Chamber. In the light of the undertakings given, I am happy to withdraw the amendment.
  Amendment, by leave, withdrawn.
  11 p.m.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 171:
  Page 48, line 25, at end insert:
  ("Appointment of Members as Trustees
  The following section shall be inserted after section 56N of the Pensions Act—
  "56P. Power to make regulations requiring the appointment of members as trustees etc.—
  (1) The Secretary of State may by regulations specify requirements to be complied with by occupational pension schemes with respect to the appointment of persons representative of scheme members as scheme trustees such that those persons exercise voting rights in excess of 50 per cent.
  (2) Regulations made under this section override any provision of an occupational pension scheme to the extent that that provision conflicts with them.".").
  The noble Baroness said: This is, I believe, the last of my pension amendments. The proposal would enable the Secretary of State to make regulations giving members control over their pension schemes. We believe that this is necessary because the money paid into pension funds represents the earnings of the workers concerned. We had some discussion earlier about surpluses. I welcome the statement of the noble Lord, Lord Vinson, on that issue. Even in schemes funded on a balance of cost basis, the employer perceives provision of pension via a fund as part of a general employment package. It is quite normal for the costs of salary increases in response to salary claims to contain an element for pension provision.
  We realise that not all employers support the view expressed in the amendment. Some believe that they should control the money until such time as the benefits are actually paid. However, many of the large schemes have for a very long time provided for employee-trustees. Such arrangements have of ten been highly successful. The employee-trustees become deeply interested in the performance of the pension fund and very much committed to its success. In practice, the rate of return earned on the investments held by a pension fund is as important to the members of the fund as to the employer. While it may not directly affect the benefits provided under the rules, except in those schemes which are funded on a money purchase basis, it will affect those matters on which trustees have discretion. It is also easier to negotiate improvements in a scheme when it is in a healthy financial position.
  Perhaps I may say here that, in practice, it has been seen that employee-trustees are quite well aware of the difference in function between those who are trustees and those whose job it is to negotiate terms and conditions of employment. In addition, members have a justified concern about the security of their benefits and this is given mainly by the size of the fund. All we suggest here is that the good practice that exists in many schemes should become general practice as a result of the power to make regulations which the amendment gives to the Secretary of State. I beg to move.
  Lord Henley: The noble Baroness said that she had come to the end of her list of amendments on pensions, but there is one more for myself, following hers. This amendment seeks to give the Secretary of State power to appoint member representatives as trustees of pension schemes, and to give these member representatives a majority of voting rights among scheme trustees. To do so, it would have to override the rules already laid down in pension schemes for appointing trustees.
  The idea of appointing member representatives as trustees is not a new one. The OPB, for example, commended this as good practice but argued that arrangements to this end could best be developed naturally as part of good industrial relations. There is much to be said for involving members in this way in the running of pension schemes. Trustees' decisions have the benefit of members' views and members are made aware of the responsibilities involved in being a trustee and taking decisions which affect an individual's retirement income.
  It is, however, altogether another matter to give the state the power to require schemes to have member trustees. I am sure that the Committee needs no reminding of the origins of occupational pension schemes. They have been set up, voluntarily, by employers as a means of rewarding and motivating their employees.
  However, it is important to remember that employers are in business and have to consider their own interests. They will only set up and continue pension schemes so long as they think it is to their advantage to do so. Giving the state power to impose member representatives on schemes will discourage occupational provision. To give these member trustees a majority of voting rights among scheme trustees would only exacerbate the situation.
  The policy review of the noble Baroness's party came down in favour of trade union representatives having a majority of the voting rights among pension scheme trustees. This amendment would allow that policy to be put into effect by regulation. I can think of no better way of choking of f the continued healthy development of occupational pension provision that has done so much to increase the incomes of pensioners since we came to power in 1979. I trust that the noble Baroness will feel able to withdraw her amendment.
  Baroness Turner of Camden: I am not at all surprised by the Minister's response to the suggestion in the amendment. However, I felt that I had to put it down because on this side of the Committee we feel strongly that there is a case for insisting that there should be a statutory requirement to have employee trustees on the boards of pension schemes. I well remember that in 1979 a White Paper was issued which provided for one-half of the scheme trustees to be drawn from the employees. Unfortunately, that proposal never saw the light of day as legislation because the government of the day were not re-elected in 1979. However, we hope for better things in 1992. When that happens, I am sure that we shall move towards a situation in which employee trustees are involved under the statute.

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  I do not take the view that this will choke of f many pension schemes and that employers will feel less inclined to make pension provision. Many of the large and successful schemes already do as is suggested. Almost all the big public sector schemes have employee trustees, and that is the case in a number of large schemes of which I have knowledge. It is true of many schemes in the big banks and finance houses: they have had employee trustees for a long time. I do not think that they would be at all scared of f by the notion that other people who are not yet complying with this good practice would be expected to do so under the statute.
  Lord Harmar-Nicholls: The noble Baroness contradicts herself: she says that what she wants is happening under the voluntary system; it is desired and voluntary on both sides. However, her amendment indicates that she thinks that the trade union wishes should have statutory backing. Why is that? If this is being done voluntarily, the case for it will be weakened by being made compulsory.
  Baroness Turner of Camden: On the contrary, the objective of legislation is to bring the people who are lagging behind up to the standard of best practice. I do not see any contradiction at all in what I am saying. Unfortunately, not everyone does the right thing. One of the reasons why we have legislation is to ensure that people do the right thing so far as possible. I do not see any contradiction at all in what I am saying. I shall not press the amendment at this hour, and I had not intended to do so. The amendment is an exploratory, probing amendment as I wanted to know what the Government's attitude was on this matter. Nevertheless, I still hold the view that, sooner or later, we shall have employee trustees and they will be there as a result of a statutory obligation. However, at this stage, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Henley Lord Henley moved Amendment No. 172:
  Page 52, leave out lines 10 to 35 and insert:
  ("(a) the insurance company with which it is or was taken out or entered into—
  (i) is, or was at the relevant time, carrying on ordinary long-term insurance business in the United Kingdom or any other member State; and
  (ii) satisfies, or satisfied at the relevant time, prescribed requirements; and").
  The noble Lord said: This amendment makes a fairly technical change to the provision in paragraph 9 of Schedule 4 to the Bill. Currently Section 52C of the Social Security Pensions Act 1975 permits the trustees or managers of an occupational pension scheme to be discharged from their liability to provide a guaranteed minimum pension under a contracted out scheme or the deferred pension of an early leaver, provided that the members' rights in a scheme have been used for the purchase of an insurance policy or an annuity contract. The discharge is permitted only if the insurance company is one that is authorised to carry on ordinary long-term insurance business in the United Kingdom
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  under Sections 3 or 4 of the Insurance Companies Act. Paragraph 9 of Schedule 4 was intended to extend the sections' provisions to apply to friendly societies. The amendment would remove the statutory specification of the friendly societies which are covered, but permits them to be specified in regulations. The Government's intention is that those who satisfy the criteria currently specified in the Bill would be prescribed. The amendment goes further, however, by permitting insurance companies carrying on business only in another European Community member state to be prescribed. We do not propose to exercise the regulation making power in respect of non-UK based insurance companies unless those companies are authorised by the appropriate regulatory bodies in the relevant member state. I beg to move.
  On Question, amendment agreed to.
  Schedule 4, as amended, agreed to.
  Clause 15 [Grants for the improvement of energy efficiency in certain dwellings etc.]
  Lord Carter Lord Carter moved Amendment No. 173:
  Page 19, line 21, leave out ("where any such work is, or is to be, carried out").
  The noble Lord said: This amendment re-emerged from the thickets of pensions to return to the sunlit uplands of social security benefits. Clause 15 gives the Secretary of State power to make grants for the improvement of energy efficiency in certain dwellings. This is a probing amendment.
  The effect of this amendment will be to remove the necessity for practical insulation measures to be carried out before energy advice can be grant-aided. As it stands at the moment, the clause only allows the Secretary of State to grant-aid energy advice when other measures are being provided. Work by the Building Research Establishment has indicated the value of energy advice. A number of studies have shown that savings on fuel bills following the provision of energy advice can equal those achieved by practical insulation measures.
  It is also important to note that the energy efficiency measures to be grant-aided initially are fairly limited. Although the legislation permits the Secretary of State to grant-aid any measure which improves the thermal efficiency of dwellings and improvements to heating systems, the consultation document on the scheme produced by the Department of Energy suggests that initially the only practical measures to be grant-aided will be draughtproofing, l of t insulation and tank and pipe lagging. There are of course many other ways in which one can improve energy efficiency. I should like the Minister to confirm that the Secretary of State has the power to widen the Bill's scope when he feels it is the time to do so.
  The other question I should like to put to the Minister on the subject of advice, which at present has to be linked to the carrying out of work, is to ask who would have to pay for advice which did not result in practical improvements. Network installers may provide advice to clients who intend to have one or more of the practical measures carried out,

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  and the most appropriate time to offer energy advice is at the initial survey stage before any other work is carried out. If there is then a change of mind and the advice is not taken, who would have to pay for it? I beg to move.
  11.15 p.m.
  Baroness Blatch: It is increasingly important that all of us, but particularly those on low incomes, understand the most efficient ways of using energy. To do so may not only save individuals money, but will also make life more comfortable, as well as making a contribution to the wider need to save energy. Those involved in this area have long called for a provision such as now appears in the Bill.
  The Committee will know that the Department of Energy has been consulting on the nature of the scheme of grants to be introduced under this legislation. The consultation period closed only yesterday. While it is clear that there has been considerable interest in the nature of the advice to be made available under this scheme, it is too early for a view to have been taken on the basis of comments received.
  However, the ideal time to provide such advice is when other energy efficiency measures are being installed. My ministerial colleagues in the Department of Energy do not believe that having a separate grant for advice under this scheme would be an effective use of resources. There are many other sources of advice on energy efficiency. The gas and electricity boards, citizens' advice bureaux and local authorities all provide energy advice. So, too, do more specialised organisations such as a number of the community installation projects, advice centres such as the Bristol Energy Centre, trade associations which form part of the Building Energy Efficiency Confederation and, of course, the Department of Energy's Energy Efficiency office.
  If grant-aid was to be considered necessary for advice on energy efficiency measures more generally—and this is the point which was raised by the noble Lord, Lord Carter—statutory powers to introduce grants exist under Section 15 of the Energy Conservation Act 1981.
  I hope that, in the light of that reply, the noble Lord will feel able to withdraw his amendment.
  Lord Carter: I thank the Minister for that most helpful reply and beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clauses 15 to 17 agreed to.
  Schedule 5 agreed to.
  Clause 18 [General financial provisions]:
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 173A:
  Page 25, line 21, leave out ("Schedules 1 and 5") and insert ("Schedule 5").
  The noble Baroness said: The amendment is consequential upon the amendment which was
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  carried in Committee yesterday. It removes Schedule 1, which was not adopted by the Committee, from the Bill. I beg to move.
  Lord Henley: We accept these entirely technical amendments while we consider the implications of the decision on Clause 7 and Schedule to the Bill.
  On Question, amendment agreed to.
  Clause 18, as amended, agreed to.
  Clause 19 [Regulations and Orders]:
  Earl Russell Earl Russell moved Amendment No. 174:
  Page 25, line 43, leave out subsection (3).
  The noble Earl said: Members of the Government probably realised when they saw the amendment that I had been listening to the noble and learned Lord, Lord Simon of Glaisdale. The most economical way in which I can make the point that I wish to make is to read the words that I propose to delete:
  "A power conferred by this Act to make any regulations or an order, where the power is not expressed to be exercisable with the consent of the Treasury, shall if the Treasury so direct be exercisable only in conjunction with them".
  It is a rather Humpty-Dumpty form of words—even if it does not need the consent of the Treasury, nevertheless it still does. It provides a rather painful contrast with the resistance to the proposal that the Minister's powers of direction in regard to the social fund should be exercisable with the consent of Parliament. I hope that we shall be told why the Government are so much more careful to secure the consent of the Treasury than they are to secure the consent of Parliament. I beg to move.
  Lord Henley: The amendment seeks to overturn a long-standing practice that the Treasury should always be formally involved in the approval of secondary legislation when it chooses to do so. The reason for that is simple. As the guardian of public expenditure, the Treasury must always be able to concern itself when Ministers' authority to make regulations brings with it the power to introduce new spending commitments. The Bill therefore allows the Treasury to insist that its consent is sought and given on any issue. In practice, it is a right not of ten exercised, but it is clearly one which the Treasury should have. It is, moreover, a power that is not restricted to social security legislation, but which applies across government.
  On a more technical note, I understand that the passage of the amendment would render the future consolidation of social security legislation more difficult. I am sure that my noble kinsman will feel able to withdraw his amendment.
  Earl Russell: I am sorry not to be told why the consent of the Treasury is more essential than the consent of Parliament, but I did not expect to be told. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 19 agreed to.
  Clauses 20 and 21 agreed to.
  Schedule 6 [Minor and consequential amendments]:
  The Deputy Chairman of Committees (Lord Cocks of Hartcliffe): I should inform the Committee that if this amendment is agreed to, Amendments Nos. 176 to 169 are pre-empted.
  Earl Russell Earl Russell moved Amendment No. 175:
  Page 59, line 9, leave out paragraph 7.
  The noble Earl said: I cannot promise to be quite as speedy when speaking to this amendment as I was in regard to the last one. This is a technical matter and I am not certain that I have understood it correctly. I would be delighted to be told that I have got it wrong.
  If I understand the situation correctly, this is another part of the Government's long-running tangle with the courts relating to Amendment No. 176, which we debated yesterday. The amendment would minimise the effect of rulings made by the social security commissioners, the Court of Appeal, the House of Lords and the European Court of Justice. The Government are concerned with entitlement. They seem to be trying to nullify the effect of a test case as far as any time in the past is concerned. They are trying to make an entitlement that flows from a test case relate only to the time of the test case onwards.
  There seems to be a confusion between legislation and judgment. It is perfectly proper that the law should change from the moment of legislation, but I have always understood that the effect of a court judgment was not to change the law but to assert what the law was. Therefore, if the Department of Social Security loses a test case in court, that does not mean that the law has changed; it means that the law is not what the department supposed it was. As far as I can see, that does not entitle the department to deprive claimants of entitlement simply because it has misinterpreted the law.
  I should like to remind my noble kinsman of what I said yesterday when debating Amendment No. 176. An entitlement is a right. It is to be treated as a form of property. It is not to be taken away except by due process of law. This passage in the Bill shows a distinctly limited respect for the courts. I shall be very glad if my noble kinsman can convince me that I am wrong. I beg to move.
  Lord Carter: I wish to say very briefly that so far as one can see the Government appear to be seeking to minimise the effect of rulings by the social security commissioners and appeals to the House of Lords acting in its judicial capacity and the European Court of Justice. I am just surprised by the Government's lack of ambition in this matter.
  Lord Henley: I am not sure how to respond to that remark. As I explained last evening when I spoke to various government amendments on this provision, in moving Amendment No. 20, to which my amendments after Amendment No. 175 were
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  attached, we merely seek to introduce a degree of equity into existing arrangements so as to provide that where there is a reinterpretation of the law by a higher appellate authority all beneficiaries from that reinterpretation—whether they be applicants for review of previously disallowed claims or new claimants following the date of the reinterpretation—will have arrears backdated to a common date, the date of the reinterpretation.
  As I explained last evening, the Parliamentary Commissioner for Administration has criticised the present arrangements in relation to review of previously disallowed claims as being inequitable. These provide that where arrears become payable following a reinterpretation of the law they are restricted to up to 12 months before the application for review. This means that for every week of delay in identifying and having reviewed an affected case, the claimant will effectively lose one week's arrears for each week of the delay before a review decision is given.
  Our new proposal provides an equity of treatment that the existing backdating provisions lack and provides that all gainers from a reinterpretation of the law will have their benefit arrears paid from a common date. This means that if a claim previously disallowed comes to light many years after the date of the reinterpretation the beneficiary will have his arrears backdated to this common start date. As I explained, this is not so under the current arrangements where arrears are restricted to a maximum of 52 weeks only.
  Perhaps I may now turn specifically to a point raised by my noble kinsman yesterday evening. This concerns the effect of our provisions on test cases. As he may know, the department already has procedures which allow that where a question of entitlement to benefit involving a situation common to a number of persons arises, a test claim may with the agreement of these persons' representatives—for example, a trade union—be taken through the appeals system, with the ultimate decision on this one case providing the basis for the decisions on all others hanging on the result of the test claim. This means that all claimants will get the same benefit as if they themselves had been the test claimant. The Committee will wish to know that my officials will be developing arrangements to ensure that these procedures—which are mutually beneficial to both claimants and department alike—continue to ensure that all persons agreeing to have their claims await the result of a test claim will, if that claim is successful, not be caught by these new provisions so as to restrict their benefit arrears.
  In the light of this explanation, I hope that my noble kinsman will feel able to withdraw his amendment.
  Earl Russell: I cannot say that I am entirely satisfied with that reply but it is not quite so bad as the matter arising in Amendment No. 176. In those circumstances I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Henley Lord Henley moved Amendment No. 176:
  Page 59, line 11, leave out subsection (7) and insert—("(7) Subsection (8) below applies in any case where—
  (a) on the determination, whenever made, of a Commissioner or the court (the "relevant determination"), a decision made by an adjudicating authority is or was found to have been erroneous in point of law, and
  (b) in consequence of that determination, any other decision—
  (i) which was made before the date of that determination, and
  (ii) which is referable to a claim made or treated as made by any person for any benefit,
  falls (or would, apart from subsection (8) below, fall) to be revised on a review carried out under subsection (1A) above after the coming into force of this subsection.
  (8) Where this subsection applies, any question arising on the review referred to in subsection (7)(b) above, or on any subsequent review of a decision which is referable to the same claim, as to any person's entitlement to, or right to payment of, any benefit—
  (a) in respect of any period before the date of the relevant determination, or
  (b) in the case of widow's payment, in respect of a death occurring before that date,
  shall be determined as if the decision referred to in subsection (7)(a) above had been found by the Commissioner or court in question not to have been erroneous in point of law.
  (9) In determining whether a person is entitled to benefit in a case where his entitlement depends on his having been entitled to the same or some other benefit before attaining a particular age, subsection (8) above shall be disregarded for the purpose only of determining the question whether he was so entitled before attaining that age.
  (10) For the purposes of subsections (7) to (9) above—
  (a) "adjudicating authority" and "the court" have the same meaning as they have in section 165D below;
  (b) any reference to—
  (i) a person's entitlement to benefit, or (ii) a decision which is referable to a claim,
  shall be construed in accordance with subsection (4) of that section; and
  (c) the date of the relevant determination shall, in prescribed cases, be determined in accordance with any regulations made under subsection (5) of that section.").
  The noble Lord said: I spoke to Amendment No. 176 with Amendment No. 20 yesterday. I beg to move.
  11.29 p.m.
  On Question, Whether the said amendment (No. 176) shall be agreed to?
  Their Lordships divided: Contents, 15; Not-Contents, 8.

  DIVISION NO. 3

  CONTENTS

  Belstead, L.

  Kimball, L.

  Blatch, B.

  Long, V. [Teller.]

  Craigmyle, L.

  Reay, L.

  Davidson, V. [Teller.]

  Saltoun of Abernethy, Ly.

  Ferrers, E.

  Strathclyde, L.

  Harmar-Nicholls, L.

  Strathmore and Kinghorne, E.

  Henley, L.

  Hooper, B.

  Ullswater, V.

  NOT-CONTENTS

  Carter, L.

  Mackie of Benshie, L.

  Cocks of Hartcliffe, L.

  Russell, E. [Teller.]

  Grey, E.

  Seear, B. [Teller.]

  Hacking, L.

  Turner of Camden, B.

  11.37 p.m.
  The Deputy Chairman of Committees: As it appears that fewer than 30 noble Lords have voted, in accordance with Standing Order No. 55 I declare the Question not decided and that further proceedings on the Bill stand adjourned.
  House resumed.
  House adjourned at twenty-two minutes before midnight.