Lords Sitting of 12 November 1992

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Worcester.): The LORD CHANCELLOR on the Woolsack.
The Marquess of Exeter The Marquess of Exeter—Took the Oath.
The Marquess of Tweeddale The Marquess of Tweeddale—Took the Oath.

Royal Assent
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Boundary Commissions Act,

Maintenance Orders (Reciprocal Enforcement) Act,

London Regional Transport (Penalty Fares) Act,

Price's Patent Candle Company Limited Act,

Greater Manchester (Light Rapid Transit System) Act.

Tributes to Lord Cledwyn of Penrhos
3.3 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, I am sure that the House would not wish the retirement of the noble Lord, Lord Cledwyn of Penrhos, to pass without paying tribute to his many years as Leader of the Opposition. Of course, when the noble Lord was elected Leader in 1982 he already had decades of experience as a parliamentarian and a Minister. That depth of experience has been invaluable in helping this House to run smoothly over the past 10 years as the noble Lord has drawn on his typically Welsh virtues of charm and common sense. The work of the party leaders in the Lords, both in expressing the sense of the House and in serving the domestic committees of the House, is in a very real sense a partnership.
The noble Lord has proved himself both a generous and pragmatic partner as well as a challenging adversary across the Floor. The whole House will be very grateful for his years of service and will, I am sure, join me in hoping that we will continue to benefit from his contributions to our debates. Perhaps I could also use the opportunity to welcome to the Dispatch Box the noble Lord, Lord Richard, as Leader of the Opposition.
Lord Jenkins of Hillhead: My Lords, I join the noble Lord the Leader of the House in extending congratulations to the noble Lord, Lord Richard, and I add my tribute to the noble Lord, Lord Cledwyn of Penrhos. It is nearly 27 years since the noble Lord, Lord Cledwyn, and I first sat in a Cabinet together. Since then, I have regarded him as a friend and, on nearly every issue, an ally. I hope that I shall not be introducing too controversial a note if I say that my
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mind goes back to the referendum campaign of 1975 when, as vice-president of Britain in Europe, he secured the notable and almost amazing result of a 72 per cent. affirmative vote in Gwynedd. That was a great tribute to his local influence.
In your Lordships' House for the past 10 years, the noble Lord has exercised great national influence. While reading something totally separate this morning, it so happened that I came across a tribute which John Morley had drafted—not to Gladstone, whom one might think, but to a nearly equally notable leader—in which he referred to a leader's,
"strong sense in council, power in debate and consummate mastery of all the habit and practice of public business".
I thought that those words were by no means inappropriate to the noble Lord, Lord Penrhos—I mean, the noble Lord, Lord Cledwyn of Penrhos.
On a more personal note, I must say that I shall greatly miss the noble Lord, Lord Cledwyn, among the leaders. Apart from anything else, with the thrusting presence of the noble Lord the Lord Privy Seal and the noble Lord, Lord Richard, his absence from the Front Bench will make me feel something of the loneliness of age. However, the noble and splendid Baroness, Lady Hylton-Foster will keep me company in that respect. Nonetheless, I shall greatly miss the noble Lord, Lord Cledwyn of Penrhos. I pay tribute to the notable contribution which he has made to the standing and effectiveness of your Lordships' House over the past 10 years.
Baroness Hylton-Foster: My Lords, we on the Cross Benches are very sad that the noble Lord, Lord Cledwyn, wishes to retire as Leader of the Opposition in the House of Lords. We shall miss his knowledgeable, wide experience, his wise and balanced advice and his unfailing good manners. We thank him for being so approachable to all of us. We wish him every happiness in whatever he decides to do now.
The Lord Bishop of Worcester: My Lords, those who sit on these Benches sometimes have a detached view of the proceedings of your Lordships' House, but we do have a particularly advantageous view of those who sit on the opposite Benches. So often we have seen the noble Lord, Lord Penrhos—I am sorry, I mean the noble Lord, Lord Cledwyn; I do not think that I should follow the Liberal Democrats so slavishly—climb up to his eyrie at the Dispatch Box and always oppose firmly but without a contentious tenor. It has been a great study to see the way in which a Leader of the Opposition does his duty without, as I said, introducing a contentious tenor.
The noble Lord has shown enormous friendship and kindliness towards bishops in a way that only the son of a Free Church minister of Wales could do, for at no time has he ever been under any bishop's jurisdiction. Therefore, from these Benches, I wish him every happiness and repeat our thanks to him for his friendliness and encouragement to us.
Lord Cledwyn of Penrhos: My Lords, I am deeply grateful to the noble Lord the Leader of the House, the noble Lord, Lord Jenkins of Hillhead, the noble Baroness, Lady Hylton-Foster, and the right reverend Prelate for the generous words that they have

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expressed about me. It has been a great privilege to occupy this office for 10 years. I was reminded this morning that I was elected to the position exactly 10 years ago yesterday. The time has passed by very quickly.
I am particularly grateful, as the House will understand, to my noble friends on these Benches for the consistently loyal support that they have given me throughout that period. I remember with affection the many friends who worked with us here and who have passed away since 1982. I am also conscious of the kindness and friendship that I have received from noble Lords and Ladies in every part of the House. That is part of the character of this House: we can argue and we can disagree, as we should. The chief objective of a Leader of the Opposition is that he should oppose. That I have sought to do but I have at the same time valued the friendship which I have enjoyed with Members of all parties and those on the Cross Benches.
I can only say that I do not feel I have deserved the kind things that have been said, but I value them, and I look forward to the companionship of my friends here over the years that remain to us. Finally, perhaps I may congratulate my noble friend Lord Richard upon his election as my successor and wish him equal happiness during his tenure of office.

Inland Revenue Staff: Pay Arrangements
3.11 p.m.
Lord Mackie of Benshie Lord Mackie of Benshie asked Her Majesty's Government:
Whether the pay of staff of the Inland Revenue is now dependent on the amounts they extract from the taxpayer.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, no.
Lord Mackie of Benshie: My Lords, is the Minister aware that I am relieved to hear that Answer, because his right honourable friend the Financial Secretary to the Treasury in a speech on 2nd October said that the performance of every member of staff of the Inland Revenue would be measured against clear objectives and that they would have their pay adjusted to reflect that? Further, Mr. Lamont, the Chancellor, decided in July to delegate responsibility for Inland Revenue pay to its management, reducing the Treasury's role to setting standards of service. Is the Minister aware that that looks like the start of a move towards the privatisation of the collection of taxes? When we have a government who can introduce a medieval tax such as the poll tax—admittedly they repealed it—that raises the great terror in the minds of thinking people that the Inland Revenue will be encouraged to harry this country's valuable businessmen and other individuals more than it, of necessity, does now. I should like a categorical denial from the Minister that there is any intention so to privatise.
The Earl of Caithness: My Lords, I am grateful that the noble Lord is relieved. I wonder whether his
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anxiety was generated by the remarks he read out or by speculation in the press, which, as usual, was erroneous. Yes, there will be a link of pay to individual performance, but that does not involve targets of tax yield.
Lord Peston: My Lords, I am a trifle puzzled by the Minister's Answer. I had assumed that he was going to say, "Yes, in part". Am I to understand that in determining the performance of the Inland Revenue collecting tax will not be defined as part of that performance? I should have thought that at the very least one of its tasks would be to collect Her Majesty's revenue. The answer "No" just seems a little strong to me. Will he clarify that Answer?
The Earl of Caithness: My Lords, the noble Lord missed out the vital words, "tax yield".
Lord Peston: My Lords, I do not want to pursue the matter, but will the Minister confirm that getting in the taxes will remain one of the Inland Revenue's tasks?
The Earl of Caithness: My Lords, the correct amount due: no more and no less.
Lord Barnett: My Lords, will the Minister concede that his original Answer was incorrect in the sense that many of us are dependent upon the Inland Revenue collecting taxes?
The Earl of Caithness: My Lords, I must say that on this occasion the noble Lord has fooled me.

Immigration
3.15 p.m.
Lord Renton Lord Renton asked Her Majesty's Government:
Whether they are aware that 53,900 immigrants were accepted for settlement in 1991; and what steps they will take to limit immigration in future.
The Minister of State, Home Office (Earl Ferrers): My Lords, yes. The immigration rules already severely restrict the numbers who can come from outside the European Community to work and to settle in the United Kingdom. The Asylum and Immigration Appeals Bill which is now before Parliament will lessen the exploitation of the asylum procedures by applicants whose claims are unfounded.
Lord Renton: My Lords, I thank my noble friend for that Answer. Is he aware that the Commonwealth Immigrants Act came into force over 30 years ago, that ever since increasing numbers of people have been accepted for permanent settlement and that last year's number of nearly 54,000 was one of the smallest? Is he also aware that all immigration adds to our unemployment, housing, education and health problems and to the increase in the amount of social security that has to be paid out? Does he therefore realise that it is in the national interest and in the interests of all the people already here that those annual increases should be reduced?
Earl Ferrers: My Lords, my noble friend has listed some of the problems which result from immigration.

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Obviously immigration produces disadvantages as well as advantages. My noble friend is not entirely correct in so far as the figure for this year, which was 53,900, is 700 higher than that for last year, and 8,000 higher than the figure for 1987, which was 45,900, but considerably lower than for 1975 when it was 82,000. I believe that my noble friend will accept that there has been an overall decrease in immigration. To return to the first point he mentioned about disadvantages, I point out to him that two-thirds of those accepted for settlement in 1991 were made up of spouses and children of people who were already settled here.
Lord Ennals: My Lords, does the Minister accept that some of us are deeply worried about the Government's negative attitude towards refugees? Is he aware that over 100 women and children, who it is hoped are on their way from Bosnia as refugees to Britain, are held up because they cannot obtain their visas? How can genuine refugees obtain visas? What provision is his department making to ensure that genuine applicants can obtain visas if they are fleeing from oppression?
Earl Ferrers: My Lords, the forms have already gone to those people to whom the noble Lord, Lord Ennals, refers, but he will understand that under any system there must be a form of regulation. We have tried to ensure that the people who come to this country have visas so that they do not suffer from the disadvantage of coming here only to find that they cannot be taken in.
Lord Sudeley: My Lords, does the Minister know, first, how many illegal immigrants entered this country in the past year; secondly, the number of schools where parents may have voted or suggested that they should become all Moslem; and, thirdly, how many cases of shigella flexneri have been brought into this country?
Earl Ferrers: My Lords, perhaps I may take those questions in reverse order. The answer to the last one is no. The answer to the middle one is no, and, oddly enough, the answer to the first one is no. By the very nature of things, one does not know how many people are in this country illegally.
Lord Bonham-Carter: My Lords, does the Minister agree that of those immigrants who came to this country in the year in question, 74 per cent. were people joining their families—husbands joining their wives, wives joining their husbands, or children joining their families? Is not that something of which we should be glad rather than deplore? Does he also agree, as the membership of your Lordships' House testifies, that this country has benefited enormously from immigration over the centuries, and is benefiting from the immigration which has occurred over the past 40 years?
Earl Ferrers: My Lords, the noble Lord, Lord Bonham-Carter, is perfectly correct; 74 per cent. of those who came in during the past year were spouses and close relatives of those who were already settled here. In that respect, we adhere to Article 8 of the European Convention on Human Rights which
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guarantees a respect for family life. The noble Lord is also right to say that the country has benefited greatly from those people who have come here.
Lord Stoddart of Swindon: My Lords, does the noble Earl agree that, irrespective of numbers, it is essential that we should keep control over immigra-tion policy? Will he confirm that from 1996, under Article 101c of the Treaty of Maastricht, immigration will be decided not by this country but by a qualified majority of the European Council of Ministers?
Earl Ferrers: My Lords, I am glad that the noble Lord, Lord Stoddart, says that it is important that we should keep control of our immigration and those who come to these shores. I therefore hope that he will not hesitate to support the Government in their immigration and asylum Bill when it comes forward. As regards the future, we intend to ensure that immigration remains the province of the United Kingdom.
Lord Hylton: My Lords, can the noble Earl confirm that emigration exceeded immigration in every year between 1946 and 1978 and that in the following 12 years the net inward flow was 26,000? Is it not also unwise to pay too much attention to the figures for any one year?
Earl Ferrers: My Lords, the noble Lord, Lord Hylton, seeks to compare emigration with immigra-tion. I do not think that the two are comparable; it is rather like comparing Piccadilly Circus with Tuesday afternoon.
Lord Clinton-Davis: My Lords, will the noble Earl accept that we on this side of the House reject the underlying philosophy which was contained in the Statement which he made last Thursday, particularly in relation to Bosnian refugees? Will he inform the House how many asylum-seekers have sought refuge in this country over the course of the past year, compared with Holland, Austria and Germany? How many asylum applications are current this year compared with the comparable period in 1991?
Earl Ferrers: My Lords, I cannot give the noble Lord that information, particularly about other countries. But I shall see what information is available and let him know.
Lord Clinton-Davis: My Lords, in that case will the noble Earl accept that the number of current applications has virtually halved compared with last year?
Earl Ferrers: My Lords, if the noble Lord, Lord Clinton-Davis, knew the answer to the question, I cannot think why he asked it in the first place.
Lord Swinfen: My Lords, can my noble friend tell the House how the Government propose to limit immigration when immigrants to any of the EC states will have the right to move to and work and live in any other EC state? That includes the United Kingdom.
Earl Ferrers: My Lords, that is one of the matters over which Her Majesty's Government have been

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concerned to retain control—that those who come to and through this country should have the approval of the United Kingdom so far as is necessary.
Earl Russell: My Lords, speaking as a descendant of immigrants myself, even though they happen to have come here 600 years ago, I must declare an interest in the Question. May I therefore tempt the noble Earl to go a little further in dissociating himself from the assumption in the Question that immigrants are always bad? May I ask him, even if he has to declare an interest himself, whether he will agree with the statement once made by my noble friend Lord Jenkins of Hillhead that we should acknowledge our debt to all those of us who cannot claim to be Ancient Britons?
Earl Ferrers: My Lords, it is bad luck when some of your Lordships cannot claim to be Ancient Britons and I sympathise with the noble Earl. I do not think that the Question which my noble friend Lord Renton put down—though of course he will have to answer this himself—inferred that all immigrants were bad. I think that the purpose behind it was to ensure that this country is able to contain those immigrants who are here.
Lord Kennet: My Lords, may I take the noble Earl a little further on his comparison between Piccadilly Circus and Tuesday afternoon? In what way is emigration not comparable with immigration? Is it not the reverse process with people leaving the country for good and people coming to the country for good?
Earl Ferrers: I do not think so, my Lords, because those who come to this country, and where they come from, have a marked impact on this country's ability to take them when they may possibly form a large proportion of a section of the community. Those who emigrate leave this country and although they may be sorry to leave it, they do not cause the country the same kind of problems as immigration may cause.
Lord Monson: My Lords, will the noble Earl agree that the Question of the noble Lord, Lord Renton, was particularly pertinent in the light of a well researched article in The Times on Monday by Mr. Bernard Levin? In it he forecast that within the next few years many tens of millions of people from the former Soviet Union, from Eastern Europe and from every part of the African continent will be trying to get into Western Europe, legally or illegally.
Earl Ferrers: My Lords, the noble Lord, Lord Monson, is perfectly correct to draw attention to that. That is why it is necessary to have a proper immigration policy. Much as one may feel sympathy for many people, we cannot allow the country to open its arms without any form of control. Regrettable and sad though it may be for some people, control is necessary.
Lord Stallard: My Lords, perhaps I may refer the noble Earl back to the reply he gave my noble friend Lord Stoddart who asked about the Maastricht Treaty, Article 101c. In order that Britain should
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retain control over immigration policy, as the noble Earl said, will he now be advocating that that part of the Maastricht Treaty be renegotiated or deleted?
Earl Ferrers: My Lords, the Question has nothing to do with the Maastricht Treaty; it concerns how many people have come into the United Kingdom in the past year. I think that the noble Lord, Lord Stallard, knows perfectly well the United Kingdom's attitude to it.
Lord Jenkins of Putney: My Lords, although the Question has nothing to do with the matter, the answers of the noble Earl have everything to do with it. Is he not entirely incorrect in refusing to compare immigration with emigration? Do we not have a balance of trade? Do we not compare our exports with our imports? It is exactly the same and I believe that the noble Earl's refusal to accept the comparison is quite wrong.
Earl Ferrers: My Lords, it is perfectly simple to compare numbers, but it is not so easy to compare individuals, where they come from and the ability of a country to absorb them, as opposed to the ability of a country to adjust when people leave.

Vehicle Clamping
3.28 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway asked Her Majesty's Government:
Whether the remuneration of contractors (and those employed by contractors) to clamp vehicles in public places as agents for police authorities is in any way linked to the number of clamps attached by them to such vehicles.
Earl Ferrers: My Lords, private companies, which are employed by the Metropolitan Police to carry out the physical task of clamping illegally parked vehicles, are paid a fixed sum for each clamp which is applied. Individual employees of those companies are not. The authority to clamp a vehicle can only be given by a police officer who is attached to a clamping unit. Police officers do not have any quota of vehicles which they are expected to clamp.
Lord Campbell of Alloway: My Lords, I thank my noble friend for that reply, which could well be reassuring if the procedure which he has described operates in practice. However, does it? No doubt the clampers stalk the prey and then seek permission to trap it. Are instructions issued by the Home Office or by the police authorities as to the implementation of the procedure which my noble friend the Minister has described? If so, could copies of these instructions be put in the Library unless, of course, they are in statutory instrument form? Furthermore, do these instructions require the name, rank and service identity number of the authorising officer who authorises the clamping to appear on the document left by the clampers on the vehicle after fitting the clamp? There is an element of supervision, there is an

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element of instruction and there is an element of concern because the public are not fully aware of the true position here.
Earl Ferrers: My Lords, my noble friend Lord Campbell of Alloway has said that these people prey on and then trap motorists. That is a slightly exaggerated point of view. The enforcement of parking restrictions is an operational matter for the Commissioner. Enforcement policy is determined by the Metropolitan Police and is set out in the form of operational guidelines which are issued to all police officers and traffic wardens who are engaged on these duties. The police officers are instructed not to clamp vehicles indiscriminately, for example where clamping might exacerbate an obstruction.
My noble friend asked me whether I would place the operational guidelines in the Library. I refuse to give way to that temptation because, as soon as my noble friend knew who or what was going to be clamped where, he would obtain an unnecessary advantage. However, I can assure my noble friend that if he abides by the law and does not park illegally he need have no fear of clamping. If he were not to abide by the law and find himself clamped, he would find that the information card which is fixed to the vehicle when it is clamped gives details of the identity number or the warrant card number of the authorising officer.
Lord Clinton-Davis: My Lords, as the important question here is the fact that a large number of complaints have arisen and have been echoed by noble Lords throughout the House on numerous occasions when we have raised these issues, can the Minister indicate what monitoring is being undertaken by his department to ensure that the number of complaints is mitigated, if not altogether eliminated?
Earl Ferrers: My Lords, if the noble Lord can tell me of a method of preventing the public from complaining about something I would be delighted to hear about it. However, I can assure him that the Metropolitan Police consider objections. In fact 4,000 wheel-clamping fees were refunded by the Metropolitan Police in the year ending April 1992.
Lord Orr-Ewing: My Lords, will my noble friend consider whether the police are always thoughtful in their clamping duties? I am thinking particularly of overseas visitors, who are amazed to find when they leave theatres and other places of entertainment in our cities, particularly in London, that their cars have disappeared altogether. Those cars have been put into a pound or they have been clamped and if it is the visitors' first time in this country they do not know how to deal with the situation. Is it really necessary to clamp vehicles very late at night when the traffic flow is not in any way affected? Is it also necessary to clamp vehicles situated in cul-de-sacs and other such places where clamping has no beneficial effect whatsoever? Such a practice is highly irritating to the poor motorist whose car is clamped, who is divested of his means of transport and who cannot reach his hotel or other accommodation. I believe this practice of clamping
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could be undertaken in a more humane fashion. I hope my noble friend will take that factor into consideration.
Earl Ferrers: My Lords, it is for the Commissioner of the Metropolitan Police to decide where and when clamping should be done. I can only repeat that clamping is carried out only where a vehicle is parked illegally. As regards whether it is unfortunate to clamp the vehicles of foreign tourists, I sympathise with such tourists, but of course the police officer who authorises the clamping is not to know whether the driver of the clamped vehicle is from this country or not.

Indonesia: Human Rights
3.34 p.m.
Lord Rea Lord Rea asked Her Majesty's Government:
On the first anniversary of the Santa Cruz cemetery massacre in Dili, East Timor, whether they have made representations to the Indonesian Government about continuing human rights abuses in East Timor and Aceh, Sumatra; and if so, what form the representations have taken.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): No, my Lords. the Indonesian Government are fully aware of our concerns about human rights. These concerns were most recently expressed to Foreign Minister Alatas during the visits of my right honourable friend the Foreign Secretary to Manila and of my right honourable friend the Minister of State to Jakarta last month.
Lord Rea: My Lords, I thank the noble Baroness for that Answer, but I must admit it was a little disappointing. Is she not aware of the reports from Amnesty International and Tapol, the Indonesian opposition group, that there are widespread deten-tions without trial in East Timor and disappearances and extra-judicial killings in Aceh? In view of that is it right that we should continue to sell weapons—as far as I am aware that is done openly in this case—to Indonesia, when the only enemy of the military government in Indonesia is their own people?
Baroness Chalker of Wallasey: My Lords, we are aware indeed of reports that Indonesians continue to detain Acehnese without trial. However, it is difficult to substantiate the reports of ill-treatment, let alone of condemning people to death, as the noble Lord indicated. The International Committee of the Red Cross has been able to visit Aceh. I gather the committee intends to continue doing so. We have made representations to the Indonesians on human rights related not only to Aceh but to the whole of Indonesia. We believe that that must continue to be done. However, as regards the other question of the noble Lord, the problem that exists in Aceh and the problems generally that exist with regard to human rights in Indonesia are not in any way related to Indonesia's determination to buy arms—not neces-sarily from this country—in order to have its own defence force.
The Earl of Onslow: My Lords, remembering what my noble friend Lady Chalker said last night on the subject of aid and the fact that it was to be linked to human rights performance, and given the fact that Indonesia receives in excess of £10 million a year from our own aid budget, will my noble friend withdraw that aid as the Indonesians are renowned for not having great respect for human rights?
Baroness Chalker of Wallasey: My Lords, we have considered this matter carefully. Indonesia is a developing country with a well-deserved reputation for good economic management and for making effective use of aid. If I thought that cutting aid would improve the human rights situation in Indonesia I would take that step. However, it is far more likely that cutting aid to Indonesia would harm the very island communities that it is intended to help. Many of our Community partners, as well as other aid donors, share that view. We have to continue to persuade the Indonesian government to improve their record on human rights, but I do not believe that that would be achieved by cutting off necessary aid.
The Earl of Selkirk: My Lords, is it not the case that the Indonesians are extremely sensitive about this matter? Would it not be practical to persuade them, as a mark of regret for the events that have occurred, to place a memorial to show that they regret those events?
Baroness Chalker of Wallasey: My Lords, we certainly know that they very much regret the incident. The incident in Dili occurred 12 months ago today. I cannot say whether the Indonesians will erect a memorial to those who died in that incident. However, I would say to my noble friend that the Indonesian response was unprecedented. The con-cerns which we share with other donors are put to the Indonesians on a regular basis and we are seeking to improve the situation and prevent anything even minutely like the terrible incident of last year from ever happening again.
Lord Jenkins of Putney: My Lords, is it not the case that the Government have said they will not only be discriminating as regards aid but they will be equally, if not more, discriminating about the arms trade? In the latter case does it not appear that the practice does not follow the principle? The Government may in principle be against aiding repressive regimes but in practice they do not appear to follow the principles they express.
Baroness Chalker of Wallasey: My Lords, the noble Lord, to whom I should apologise for not seeing earlier, will know that my right honourable friend the Prime Minister advocated at the United Nations more than a year ago now the register of arms sales. This was done in an attempt to reduce all arms sales. However, all sovereign states enjoy the right under Article 51 of the UN Charter to defend themselves. That is why applications to export any British defence equipment are carefully scrutinised. We will not allow the export of arms and equipment that are likely to be used primarily for repressive purposes against civil
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populations. In the case of Indonesia this also extends to the possible use of such equipment against the civilian population in East Timor. However, I do not believe that an embargo on defence sales to Indonesia would be appropriate or effective in influencing the Indonesians.
Lord Monson: My Lords, can the noble Baroness confirm estimates, which have come from normally responsible sources, that since the Indonesians invaded East Timor its armed forces have killed approximately one third of the population, that is to say, 200,000 people?
Baroness Chalker of Wallasey: My Lords, we do not believe that Indonesia has practised genocide, but we are profoundly concerned about the reports of large numbers of deaths over the years. Some of the quoted figures are definitely exaggerated, but it is a matter which we are still following up. We are also asking the Indonesian Government to investigate every such report, to take appropriate action against offenders and, indeed, to ensure that the world knows what is happening and that extra-judicial killing, if it is continuing, stops. It is totally unacceptable wherever it occurs.
Lord Judd: My Lords, will the noble Baroness accept that there is now genuine confusion? She has stated that the aid programme will be linked to human rights. This is one of the most brutal regimes in the third world. Will the noble Baroness now explain to the House what she means by saying that the aid programme will be linked to human rights? Are we using the threat of withdrawing aid as a means of leverage or are we just making polite diplomatic representations to the Indonesian Government?
Baroness Chalker of Wallasey: My Lords, indeed we are.
Lord Mayhew: My Lords, can the noble Baroness say what types of armament we are sending to Indonesia and whether the Government consider that Indonesia's expenditure on military affairs is justifiable?
Baroness Chalker of Wallasey: My Lords, we wish that all defence spending which is not truly defence spending—I believe that that is what the noble Lord, Lord Mayhew, is getting at—would cease. That is one of the reasons why my right honourable friend the Prime Minister made it clear that there should be a register of arms sales: so that the whole matter could be monitored. However, one cannot interfere with the sovereign right of a government. I explained that in answer to an earlier question. What one can do is to ensure that that government knows what the donor world, in terms of the earlier question of the noble Lord, Lord Judd, expects. We shall do all we can to decrease arms sales. That is why my right honourable friend the Prime Minister made his proposal to the United Nations.

Business
3.42 p.m.
Lord Hesketh: My Lords, at a convenient moment after 4 p.m. my noble friend Lord Caithness will, with the leave of the House, repeat the Autumn Statement that is to be made in another place. At a convenient time thereafter my noble friend Lord Henley will, again with the leave of the House, repeat a Statement on social security.
It may be for the convenience of the House to know that the Unstarred Question in the name of my noble friend Lord Kinnoull has been postponed. It is expected that the Question will be tabled for next Thursday, 19th November.
Lastly, it may be for the convenience of the House to know that, subject to the progress of business, proceedings after the Third Reading of the Judicial Pensions and Retirement Bill will be adjourned at about 7 p.m. for about one hour. In that event the two European Communities (Definition of Treaties) Orders will be taken during the adjournment. The Legal Advice and Assistance (Scope) (Amendment) Regulations 1992 will be postponed, with the leave of the House, until the conclusion of the proceedings after Third Reading of the Judicial Pensions and Retirement Bill.
Dinner will be available as usual in the Barry Room.

Agriculture Bill [H.L.]
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, I beg to introduce a Bill to make provision about milk marketing; to make provision about potato marketing; to provide for the payment of grants in connection with the marketing of certain commodities; to terminate national price support arrangements for wool and potatoes; to amend the Industrial Organisation and Development Act 1947 in relation to agriculture; and for connected purposes. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Earl Howe).
On Question, Bill read a first time, and to be printed.

Midland Metro Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Civil Rights (Disabled Persons) Bill [H.L.]
3.45 p.m.
Baroness Lockwood Baroness Lockwood rose to move, That the proceedings of Wednesday 4th November be vacated.
The noble Baroness said: My Lords, when the Bill received its Third Reading I omitted to move the usual privilege amendment before the Bill was sent to the
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Commons. Such an amendment is necessary because of the financial implications of the Bill. The purpose of the Motion, therefore, is to enable the error to be corrected by giving the Bill another Third Reading and including the privilege amendment before the Bill is finally sent to the Commons. I beg to move.
Moved, That the proceedings of Wednesday 4th November be vacated.—(Baroness Lockwood.)
On Question, Motion agreed to.
Bill read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Judicial Pensions and Retirement Bill [H.L.]
3.47 p.m.
Read a third time.
Clause 1 [Persons to whom this Part applies]:
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 1:
Page 2, line 42, at end insert:
("() An order made under this section shall be subject to the affirmative resolution of both Houses of Parliament.").
The noble and learned Lord said: My Lords, the amendment concerns the parliamentary control of delegated legislation. It is a matter with which your Lordships have frequently been preoccupied in your role, in a very real sense now, of watchdog of the constitution.
There has been an agelong and perfectly understandable tension between the Executive and Parliament. Naturally the Executive wants to minimise as far as possible the interference and control of Parliament, and also of the judiciary although to a lesser extent, but that does not concern us in the context of this amendment though it does in the Bill itself.
If possible the Executive very naturally wishes to enact legislation by regulation rather than by statute, and if by regulation, to minimise the parliamentary control; in other words, where possible to have negative resolution procedures rather than the affirmative. The advantage to Parliament of the affirmative resolution procedure has again to be stated in the context of this amendment.
Under the affirmative resolution procedure the Minister has to introduce and explain what the regulation means and what it does. Under the negative resolution procedure he has merely to reply to such points as can be raised in the preceding debate. There is another extremely important advantage to Parliament in the affirmative resolution procedure: the Government have to find time for the discussion of the regulation. On the other hand, under the negative procedure the debate frequently never takes place, particularly in the other place, because time has expired for praying against the regulation before an opportunity can be found for the resolution to be tabled.
The Bill gives a blanket negative resolution procedure for all the regulations under the Bill, whether they are important, trivial or consequential. Unfortunately, that is by no means unique. In another Bill currently before Parliament—the Criminal Justice

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Bill—there is again a blanket negative resolution procedure, notwithstanding that the Bill gives the Minister power to create new criminal offences or to remove criminal offences from the ambit of the Bill. Naturally that aroused considerable consternation and there was a promise to reconsider it. So the provision in this Bill must be regarded in the wider context of a continual, executive, bureaucratic aggrandizement at the expense of parliamentary control.
At Report stage an amendment was tabled to make all the provisions subject to affirmative resolution procedure. That was a probing amendment because my noble and learned friend the Lord Chancellor was offered the opportunity, as is usual on such occasions, to discuss which should be affirmative and which negative. Unfortunately he did not respond to that opportunity. Not only that, he did not deal at all with the argument that had been put forward in support of the amendment. There was quoted in summary form the perfectly clear criteria laid down by the Joint Select Committee on Delegated Legislation of 1971–72. My noble and learned friend did not even advert to that in the brief that he read out. I can only assume that those criteria had been entirely lost sight of by those advising him.
All that my noble and learned friend said was that the similar provisions in the 1981 consolidation Act were subject to the negative resolution procedure. In view of that, after the debate I wrote on 30th October to my noble and learned friend, setting out in full the criteria that the Joint Select Committee had laid down. I ought to add that the report was considered in both Houses of Parliament without a word of demur to those criteria. In each House a Minister, in fact the Leader of the House, replied to the debate.
My noble and learned friend replied to my letter on 9th November, so that I received it two days ago. He accepted that the Joint Select Committee laid down criteria, but so far as concerns the one that is material to this amendment, he said that what the Joint Select Committee was referring to was what is now known as the Henry VIII provision. In view of that reply, I feel that I must read out to your Lordships the short passage in the Joint Select Committee's report. It said that the first thing that should be subject to the affirmative procedure is:
"powers substantially affecting the provisions of Acts of Parliament".
The report goes on to say that:
"Everything turns on the word 'substantially'. The view of your Committee is that when important issues are involved, whether because of the nature of the enactments which are the subject of the power or the extent of the power to operate them, it is likely to be obvious that the affirmative procedure should be used, if indeed it is appropriate for the amendment to be made by order at all, and not by the Bill. Conversely, there will be cases where the amendment is of a trivial or tidying-up character, or is consequential on provisions expressly agreed by Parliament: in such cases the affirmative procedure need not be adopted".
Your Lordships will note, first, that there is not a word in that passage about Henry VIII provisions. The nearest that it comes to it is a reference to whether the regulation should be made at all or whether the provision should not be made in the Bill.
My noble and learned friend's letter further implied that the Henry VIII provision had been current usage in 1971–72. The Joint Select Committee would have used that; it was then current. It had been current before and was repeatedly used in the Donoughmore Committee report of 1932. It had been current ever since. As I said, the nearest thing to it is the reference to whether indeed the provision ought to be made at all by regulation and not in the Bill.
But such provisions go far beyond Henry VIII clauses. Indeed, if the Joint Select Committee had wished to restrict its recommendations to Henry VIII provisions, it would not have had the slightest difficulty in making plain what was intended. Indeed, as your Lordships will recollect from what I have read out, it was made quite plain that "substantially" stood in contradistinction to trivial, tidying up or consequential. So the question is this: is the provision trivial, is it tidying up or is it consequential? If so, the negative procedure is appropriate; if not, it should be the affirmative procedure.
The provision in the Bill to which this amendment is primarily directed appears in Clause 1(8):
"The appropriate Minister may by order amend ‖ Part of Schedule 1 to this Act by adding offices to those for the time being there specified".
In other words, the Minister is given power to amend the schedule.
What is astonishing is that that is quite plainly a Henry VIII provision and my noble and learned friend's letter did not refer to it at all. It referred to Clause 26(4), which is indeed a Henry VIII provision but quite an innocuous one. This provision is a very serious one. It adds to the schedule judicial offices to which the Bill applies. The provision allows a Minister to operate by regulation. It was pointed out on Report that it was quite unnecessary to do that by a Henry VIII provision. On the analogy of parliamentary disqualification, the Bills creating the office could have amended the schedule. It seems a piece of gratuitous bureaucratic aggrandisement. In those circumstances, in my respectful submission, the case is perfectly clear for affirmative resolution. I beg to move.
4 p.m.
Lord Boyd-Carpenter: My Lords, this is the first of a series of amendments in the name of the noble and learned Lord, Lord Simon of Glaisdale, to introduce the affirmative procedure throughout the Bill. Whether that is a particularly suitable subject matter for debate on amendment on Third Reading is perhaps a matter of opinion. It certainly goes against the view often expressed in this House that amendments on Third Reading should relate only to matters of substance. With great respect, that provision is not a matter of substance.
It is in fact a very sensible provision in the Bill. For example, if a new authority, tribunal or other body is set up, the Minister would be able by order to have those who served on that body treated as existing members of other judicial bodies are treated. That seems perfectly sensible. It is not a dramatic Henry VIII type of clause. It is simply a sensible and practical provision.

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My noble and learned friend entirely ignores the fact that no one proposes to deprive Parliament of concern with those matters. If such addition is done by regulation subject to the negative procedure, it is perfectly possible to put down what in another place we used to call a prayer, a Motion to annul the regulation. I know enough of the character of your Lordships' House to be aware that if any silly or oppressive regulation is made, it is certain that at least one noble Lord will put down a Motion to annul the regulation. On the other hand, if we are to have every one of those orders taken by affirmative procedure, with all the expenditure of the time of the House involved, dealing very often with matters, such as this, of no very earth-shaking importance, we shall clog the parliamentary machine with unnecessary procedure and thereby diminish its effectiveness over things that matter.
I hope very much that your Lordships will reject the amendment and its successors.
Lord Renton: My Lords, although I so often agree with the noble and learned Lord, Lord Simon of Glaisdale, in what he says about Henry VIII clauses and his desire for greater parliamentary control through affirmative resolutions rather than the negative procedure, I believe that in this case we are dealing with a relatively minor matter, as my noble friend Lord Boyd-Carpenter pointed out. We have to bear in mind that any order made under Clause 1(8) would have to be within the terms of the Long Title of the Bill. That relates specifically to "judicial, and related, offices". It is right that the Lord Chancellor should have the opportunity, without troubling Parliament too much, of adding, for example, the chairman of any newly-created statutory tribunal.
Lord Campbell of Alloway: My Lords, I am forced briefly to oppose the amendment. It serves as a convenient vehicle for the noble and learned Lord, Lord Simon, to deal with his preoccupation with Henry VIII clauses, to which we have listened with great patience on many occasions in your Lordships' House. However, in this particular context your Lordships may feel that it really is making the proverbial mountain out of the proverbial molehill. It is proposed by virtue of an order to add to a schedule in an Act. With respect to the noble and learned Lord, that is not a Henry VIII situation. He may say that it is; I say, with great respect, that it is not. It makes a nonsense of the argument to require the amendment to be accepted.
The Lord Chancellor: My Lords, I am grateful to my noble friends Lord Boyd-Carpenter, Lord Renton and Lord Campbell of Alloway for their view that the amendment should not be supported. Since we are to have a number of such amendments, I should set out in a little detail what I believe the position to be. The Joint Committee, to which my noble and learned friend Lord Simon of Glaisdale referred, concluded that the affirmative resolution would normally be appropriate, first, for powers substantially affecting the provisions of Acts of Parliament; secondly, for powers to impose or increase taxation or other
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financial burdens on the subject or to raise statutory limits on the amounts which may be borrowed by, or lent or granted to, public bodies; and, thirdly, for powers involving considerations of special importance not falling under either of the two preceding heads. That is paragraph 78 of the report.
The provision to which the amendment is directed, which my noble and learned friend has read out, is a power not to take things out of the schedule but to add offices to the schedule. It does not seem to me therefore that it comes under the first heading. As my noble and learned friend pointed out, the Joint Committee concluded that the affirmative procedure was unnecessary if the amendments that could be made were of a trivial or tidying up character or consequential upon provisions expressly agreed to by Parliament. None of the powers in the Bill, in particular, this one, seems to fall under the second heading.
That leaves the third heading. The minutes of the evidence heard by the Joint Committee contain a reference to "Judicial Rules and regulations" as being a class of instrument not usually subject to affirmative or negative control although it is not clear what might be the limits of such rules and regulations.
The Joint Committee itself recognised that it was not desirable to formulate precise rules for determining the level of parliamentary scrutiny. That aspect was picked up in the government response to the First Special Report from the Joint Committee, 1977–78. The Joint Committee has been critical of the lack of criteria for deciding whether certain instruments made under the European Communities Act 1972 should be subjected to the affirmative or negative procedure. The government response was that it was not practicable to lay down precise criteria for determining the choice between the various procedures. The procedure needs to be determined in the light of the wishes of Parliament and the circumstances of the particular case.
It seems therefore that one has to consider the particular power in question and take account of general considerations. One of those considerations undoubtedly must be, as the Joint Committee warned, the needless consumption of parliamentary time. It seems to me to be an utterly unnecessary consumption of parliamentary time if an office is added to the schedule in respect of which there is no real dispute. As my noble friend Lord Boyd-Carpenter pointed out, the negative procedure would enable a dispute to be aired and considered if it arose.
In my submission, it is not a power which should be subject to the affirmative resolution procedure. I therefore invite your Lordships not to accept the amendment. In the light of the discussion, my noble and learned friend may feel able to withdraw the amendment.
Lord Simon of Glaisdale: My Lords, one is bound to ask where we are going constitutionally. We are concerned here with a power given to the Minister to enact a provision which could perfectly well be in a Bill creating the judicial office. But this goes out of its way to allow the Minister to do it by regulation. Moreover, my noble and learned friend appears to be

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suggesting that a schedule is substantially affected if it is derogated from; if something is taken out of it. Of course that is not the case at all. It is substantially affected—in other words, it has a different operation —if something is added to it.
My noble and learned friend did not deal with the point—nor, with great respect, did the noble Lord, Lord Boyd-Carpenter, in saying that there were powers to deal with the negative resolution procedure—that in the other place the negative motion is more frequently than not never reached at all. I regard it as particularly serious that it should be the Lord Chancellor's Department which is taking this line. One cannot altogether divorce it from the provision which was in Clause 25 and which aroused such constitutional protests. It remained in the Bill until the week before the Report stage; that is the power given to the Lord Chancellor to prolong the position in office of a particular judge thereby enabling him to earn his full pension.
I do not suggest for one moment that the Lord Chancellor's Department is particularly malign. It is merely a repository of power and, like all repositories of power, the power tends to corrupt. The first way in which power corrupts is by creating an avidity for more power. Therefore, the provisions in the Bill demand particular constitutional scrutiny.
However, after some 35 years in Parliament I would be unrealistic to believe that I should get anywhere by pressing the amendment to a Division. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Autumn Statement
4.13 p.m.
The Earl of Caithness: My Lords, with the leave of the House I shall now repeat the Autumn Statement which is being made in another place by my right honourable friend the Chancellor of the Exchequer. The Statement is as follows:
"With permission, Madam Speaker, I should like to make my Autumn Statement. As usual, the main public expenditure figures and the full text of the Industry Act Forecast will be available from the Vote Office as soon as I sit down. The printed Autumn Statement will be published next Wednesday, after which there will be a full debate in this House.
"Following the announcement I made in my Budget, next year the Autumn Statement will be brought together with our proposals for taxation in one annual Budget Statement. This is a long overdue reform. For one final year, however, I shall bow to tradition and leave my Budget proposals until the spring.
"But this Autumn Statement will also be the first occasion on which the Treasury's economic forecast will be presented alongside others. Two weeks ago I announced my intention to establish a new panel of independent forecasters. That will be in operation for next year's Budget. But in the
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meantime the forecast I am publishing today will include some details of how the Government's own economic forecast compares with the view that other organisations have taken. I am sure this change will be widely welcomed.
"This year's Autumn Statement has been drawn up against a background of continuing recession at home and renewed weakness abroad. Despite exceptionally low interest rates, confidence in the United States remains depressed. Industrial production has fallen sharply in Japan. And the countries of continental Europe face the prospect of continuing high interest rates and a marked slowdown in Germany. It is not surprising, therefore, that here in Britain the recovery that nearly all forecasters expected at the time of the Budget has still not become established.
"There has been an encouraging increase in retail sales. But the housing market remains depressed and confidence has taken a severe blow from the turmoil in the foreign exchange markets that led to sterling's suspension from the ERM.
"Against this difficult background a strategy that brings renewed confidence and a return to growth is more essential than ever. But the Government have no intention of engineering a short-lived boom that would lead swiftly to higher inflation and higher interest rates. Our objective is sustainable, long-term growth. And our strategy to achieve that is based on three principles.
"First, with the pound floating, a completely new framework is required for monetary policy. Interest rates are now set according to British monetary conditions—to meet the target I have established for inflation. Underlying inflation will be kept within the range of 1 to 4 per cent; and our aim is to get it down to the lower half of that range by the end of this Parliament. Low inflation is the key to sustainable growth and a lasting reduction in unemployment.
"I have set out clearly the indicators that will guide my assessment of how far we are on track to meet our inflation objectives. The exchange rate, asset prices and the growth of MO are all taken into account. And today I can announce the monitoring range I intend to use for the broad measure of money, M4. For the second half of this financial year that range will be 4 to 8 per cent.
"As I have explained to the House before, in the last few months of our ERM membership monetary policy was tighter than was needed to deliver our inflation objectives. It is crucial that monetary policy should not be so lax that the private sector faces higher inflation. But nor should it be so tight that money demand is inadequate.
"Outside the ERM I have been able to rebalance policy by cutting two percentage points off interest rates. This in itself will provide a significant boost to the economy without re-igniting inflation. Despite the fall in the exchange rate I expect underlying inflation to be below 4 per cent. by the end of next year. And in common with most

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economic forecasters I expect GDP to rise next year by about 1 per cent. following a fall of a similar magnitude in 1992.
"My second principle is that there must be an appropriate balance between fiscal and monetary policy. Above all, public spending must be kept under firm control. The Government therefore put in place last July a clear medium-term strategy for the control of public spending designed to ensure that public expenditure declines as a share of GDP over time. The new system is based on a top-down approach. Clear and affordable limits are set for the total level of public expenditure and the Government can then settle their priorities through a process of collective discussion involving first a new Cabinet Committee and then the full Cabinet itself.
"The third key principle of the Government's strategy is that the best way to increase the long run growth rate in the economy is to make markets work better. So we will be pressing ahead with our policies on privatisation, deregulation, cutting out waste and keeping the tax burden on companies and individuals as low as we can. We must also fight for the interests of British business in world markets and provide them with the best environ-ment in which they can compete and succeed. And in the short term that means securing a successful outcome to the GATT round.
"Low inflation, tight control of public spending, open markets, competition and a vigorous supply side policy—these are the principles of the Government's strategy and they provide the right framework for economic growth. I do not believe that governments can spend their way out of recession. It is individuals and companies in the private sector that are the engine of economic growth.
"But, that does not mean that once the right economic framework is in place, the Government's task is complete. The Government too are investing for the future, in the nation's infrastructure and the development of human capital. And, as I said in my Mansion House speech, the Government have also been looking at specific policies to ease the path to recovery. I shall be announcing later in my Statement, a series of measures to rebuild confidence, to help industry and strengthen the economy.
"Taking account of these measures, I expect the PSBR in the current year to rise to around £37 billion. Of course that is high, but borrowing is bound to rise in a recession; and it would be damaging to seek to prevent it from doing so. As the economy recovers it is absolutely vital that borrowing is brought back towards balance. We have made an excellent start today with a tight overall settlement for public spending.
"Much of the recent increase in the PSBR reflects the rapid growth in expenditure on social security benefits, and this has also damaged the financial position of the National Insurance Fund.
"In normal circumstances, it would have been necessary to raise national insurance contributions,
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to reduce that shortfall. But, given the current weakness of the economy, I do not believe this would have been appropriate.
"Accordingly, while the upper and lower earnings limits and the thresholds of the bands for the employers' contribution will be indexed as usual, the rates for national insurance contributions will remain unchanged. And I have agreed with my right honourable friend the Secretary of State for Social Security that the fund should receive a Treasury grant to make up the shortfall.
"Madam Speaker, let me now turn to the Government's public spending plans.
"In this Survey, the priority was clear. It was vital to put the needs of the economy first. So within a tight overall settlement, we have sought, wherever possible, to protect programmes, especially capital programmes, that will promote recovery and Britain's longer-term prospects.
"At current levels of borrowing, the amount we have to pay in debt interest is rising rapidly, diverting billions of pounds a year away from spending on services. Against that background, the Cabinet decided in July to set a remit for the public spending round which would keep expenditure under firm control.
"That remit had two elements. For next year, we set ourselves the objective of sticking to existing cash plans. And, for the three survey years as a whole, our aim was to hold the growth of the New Control Total down to 1½ per cent. or less, to keep the overall growth in public spending to a rate below that of the economy as a whole.
"Although our target for next year of £244.5 billion allowed a real increase of 4½ per cent., the pressures for more spending have been intense. And we have had to consider carefully whether the original targets were achievable.
"But I can now announce to the House that we have indeed hit our target. The planning total for next year will be £244.5 billion. As a result of certain definitional changes, I should warn the House that the number which actually appears in the printed document will be slightly different. It will, in fact, be £2 billion lower.
"I can also announce that the new totals for 1994–95 and 1995–96 are fully consistent with the remit agreed in July. Despite the pressures that have emerged since the summer, the real growth in the NCT over the next three years will average just under l½per cent. a year, half the rate of growth over the last three years.
"I am sure that honourable and right honourable Members on this side of the House will welcome the meeting of the remit; and let me at once pay tribute to my right honourable friend the Chief Secretary for his skill, perseverance and hard work in making this possible.
"Madam Speaker, to meet our objectives we have had to look very carefully at every single programme and particularly at current spending. The biggest single budget is of course social security. Indexing the social security benefits in the coming year would cost £2½ billion. And if we are

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to protect capital spending it is to areas of current spending such as social security that we must look first. But, I can now tell the House that despite the many claims on the available resources the Government have been able to meet in full their commitment to index pensions and other benefits.
"The other major claim on current public spending is public sector pay.
"The earnings of public sector staff have risen on average by 20 per cent. over the last two years—compared with just 13 per cent. in the private sector. But if the gains in competitiveness from the recent fall in the exchange rate are not to be lost it is vital that all employers keep tight control over their paybills. The public sector cannot be sheltered from the difficulties faced by the private sector, where pay awards are now the lowest in a generation.
"I have therefore decided that in the coming year pay settlements in the public sector should be restricted to a maximum of 1½ per cent. This is of course consistent with a lower growth in paybills. The aim must be to keep the growth in paybills in each area of the public sector as low as possible.
"The restriction will apply to the whole of the public sector and related bodies without exception, regardless of whether pay is negotiated, recom-mended by the review bodies or subject to formula calculations. It will apply to all offers made from today, though formal offers already made will be honoured. The Government will in due course bring forward a resolution on MPs' pay, consistent with this policy. Ministers will receive no increase at all.
"Given the overall objective of restraining the growth in public spending, this Survey has involved some difficult decisions. If some items are to be increased, it means that others must be cut back.
"Our tough decisions about public sector pay will lead to savings of £1.5 billion a year. That will permit higher levels of service to the public and higher capital programmes.
"Nonetheless, in some programmes we have made reductions in the baselines set out last year. But in many cases, expenditure still remains on a rising trend.
"What is more, the progress we have made on inflation will help to ensure that reductions in baselines are consistent with continuing improve-ments in public services.
"Even so, individual programmes have faced searching scrutiny and hard choices have been made.
"Over the next few years, defence expenditure will continue to fall in real terms. The benefits of the Options for Change Review will be secured and some further savings, consistent with the policies which underlie it, will be made.
"The legal aid budget is a demand-led programme that has been putting immense pressure on the public finances. The Lord Chancellor is announcing changes to restrict its growth, and they are fully reflected in the Survey.
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"And at a time when tight control over public expenditure is needed at the national level, the same discipline should be applied locally. Central government support for local authority revenue expenditure in England will therefore rise by 3.7 per cent. next year, and total standard spending by 3.1 per cent. In addition, there will be a special grant of £539 million in England to help local authorities meet their new responsibilities for community care.
"This settlement should be fully adequate to meet local authorities' requirements. The proposals assume that local authorities implement in full our policy of pay restraint. Provided that they do this, the savings made will enable them to ensure proper provision of services without exerting upward pressure on the council tax. The Government will not hesitate to use their capping powers as necessary. My right honourable friend the Secretary of State for the Environment will be making a full announcement later this month.
"Full details of the new plans for local authorities in Scotland and Wales and for other programmes are being made available separately.
"The population-related formulae, which largely determine changes to expenditure provision more generally in Scotland, Wales and Northern Ireland, have been updated. Expenditure plans for the territories will be announced by their respective Secretaries of State at a later date.
"Madam Speaker, at the time of the General Election, the Government made clear that education and health would be amongst their key priorities for the longer-term. Rising spending in these areas is fully justified, not just in terms of immediate needs, but as a contribution to the country's human capital.
"The education programme is therefore planned to rise to a level £1½ billion higher in 1995–96 than the equivalent spending this year. There will be some important changes over this period. The proportion of children staying on at school beyond 16 is expected to go on rising. The Government are providing for a higher proportion of school leavers to take up YT places. And we shall finance a sharp increase in the number of students attending further education or sixth form colleges—25 per cent. up over the Survey period.
"At the same time we have earmarked enough finance to maintain the present record level of participation of young people in higher education. All this is an important investment in our young people which will improve the quality of the country's human capital and benefit the economy in the longer run.
"There will also be increases in the level of real resources provided to the National Health Service in each of the next three years. Spending in the NHS will rise by nearly 3 per cent. in real terms next year compared with this year's plans. That means an increase of over £1.9 billion.
"This is a very tight settlement overall. At the beginning of the spending round, there was widespread speculation that the Government would take the easy way out by letting current

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spending rise and cutting capital spending instead. But what we have done is take the tough, but necessary, decisions to put the needs of the British economy first.
"Restraint on current expenditure has made it feasible to provide more protection to capital. We have done so across a whole range of programmes. Next year there will be a significant increase in the volume of road building. We have maintained the national roads programme at a time when construction prices have fallen.
"Our new plans will ensure that in real terms, compared with 1979, we will have a doubling next year of the combined capital spending of British Rail and London Transport. Next year health capital spending in England alone will be at the record level of nearly £2.1 billion. The new plans should more than deliver our election commitment to provide, through the Housing Corporation, 153,000 homes over three years.
"One major project for which we have expressly reserved provision is the Jubilee Line extension. Subject to satisfactory completion of negotiations, the line will be able to go ahead. This will create many thousands of jobs and give an important boost to the construction industry.
"The Government have taken seriously their pledge to do what they can for capital projects. But there is yet more that can be done. I said in my Mansion House speech that I was examining ways to increase the scope for private financing of capital projects. Obviously, we have to protect the taxpayer. But I also want to ensure that sensible investment decisions are taken whenever the opportunity arises. I am now able to announce three significant developments.
"In the past the Government have only been prepared to give the go-ahead to private projects after comparing them with a similar project in the public sector. This has applied whether or not there was any prospect of the project ever being carried out in the public sector. I have decided to scrap that rule. First, in future, any privately-financed project which can be operated profitably will be allowed to proceed. This should be widely welcomed, particularly by the construction industry.
"Secondly, the Government have too often in the past treated proposed projects as either wholly private or wholly public. In future the Government will actively encourage joint ventures with the private sector where these involve a sensible transfer of risk to the private sector. We may be prepared to consider such an approach, when the time arises, for projects such as the East-West Crossrail, the Central Scotland Fastlink, the Birmingham western orbital road and perhaps also the Channel Tunnel rail link.
"Thirdly, we will allow greater use of leasing where it offers good value for money. As long as it can be shown that the risk stays with the private sector, public organisations will be able to enter into operating lease agreements, with only the leasing payments counting as expenditure and without their capital budgets being cut. In addition,
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British Rail will be allowed to lease some £150 million of new rolling stock in the next three years. The new leases will be undertaken with a view to developing the leasing market for rolling stock which will facilitate privatisation.
"In addition, my right honourable friend the Secretary of State for Transport will publish a Green Paper early next year on the scope for motorway charging. If, in the light of consultation, the Government decided to proceed with charges for inter-urban roads, that would create significant new opportunities for private finance. As a possible transitional step, private contractors might be invited to design, build and operate roads for which they would receive payments from government relating to the use of their roads. Money contributed by the private sector under these arrangements will not contribute towards public spending. It will represent additional resources in the area concerned.
"These changes are only a beginning. I have asked my honourable friend the Financial Secretary to carry forward and develop our policy in this area, encouraging the private sector to bring forward proposals, and to help us identify any obstacles which frustrate its success.
"Many of the measures I have announced so far today will take time to have their full effect. I therefore propose to introduce a supplementary package of time-limited fiscal measures. These will be aimed at sectors of the economy which have been hardest hit by the recession, helping to rebuild confidence and so foster recovery.
"Housing and construction have faced par-ticular difficulties in the past two years. But home buyers now have some of the lowest mortgage rates since 1978. The Government have responded in a number of other ways, most recently with measures to help those with negative equity who wish to move. Today, I propose to go further.
"The overhang of empty properties in the owner-occupied sector is holding back activity in the housing market. I therefore propose to make available an extra £750 million to be used before the end of this financial year to buy up some of these properties. I hope that the Housing Corporation will be able to achieve a substantial contribution on top of this from private sector lenders. Scotland, Wales and Northern Ireland will introduce parallel measures. This measure should reduce the overhang of empty properties by over 20,000 over the next few months, so providing a helpful stimulus to activity. It will also increase the available stock of subsidised housing by a similar amount and make a real contribution towards housing families in need.
"Many honourable Members will be aware of the representations by many local authorities to persuade the Government to relax the rules on local authority capital receipts. Many local authorities have accumulated a stock of these receipts rather than use them to pay off debt as the Government

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wished. That remains the Government's wish, and I do not intend to reward those who have ignored it.
"I propose instead to allow a time-limited relaxation of the rules governing local authorities' use of their future capital receipts. The existing rules allow them to spend only 25 per cent. of housing receipts and 50 per cent. of other receipts. With certain exceptions, local authorities will now be entitled to spend all the capital receipts they realise between tomorrow and the end of December 1993.
"This measure is expected to stimulate extra capital spending by local authorities, of over £1.75 billion in the next three-and-a-half years. The Government hope that local authorities will make early and effective use of the additional spending power before the end of this financial year across the range of local authority capital programmes, including housing, education, schools and roads. Any receipts not spent this year or next will provide an ongoing stimulus to house building and construction in 1994–95 and 1995–96 as well.
"The availability of these extra receipts will be taken into account in distributing credit approvals between local authorities. In this way, virtually all local authorities should receive some benefit. There will be separate measures for Scotland, Wales and Northern Ireland.
"The reduction in the exchange rate has offered immense opportunities to exporters. But our exporters of project equipment and other supplies requiring medium or long-term finance rely heavily on the guarantees provided by the Export Credits Guarantee Department. I now intend to make available a further £700 million of ECGD cover and to ease some of the constraints on cover for individual countries. That will enable these exporters to compete more effectively in the increasingly difficult situation they now face.
"I have also considered the position on capital allowances. It remains my view that the reform of business tax by Lord Lawson in his 1984 Budget was the right one. Low tax rates and a broad tax base provide the best framework for the medium term. However, in present circumstances, I am prepared to allow some changes which should help to bring forward private sector investment.
"Accordingly, for a limited period of 12 months, I propose to raise from 25 per cent. to 40 per cent. the allowances available in the first year for investment in plant and machinery, excluding cars. I also propose to introduce an initial allowance of 20 per cent. for expenditure on new industrial and agricultural buildings for which contracts are placed before 31st October 1993 and which are brought into use before the end of 1994. I propose to legislate for these changes, with retrospective effect to 1st November, in the next Finance Bill.
"I have one final measure to announce. The motor industry lies at the heart of British manufacturing. In recent years, it has seen a renaissance, with large increases in inward
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investment. However, the recession has brought a more difficult climate. I have considered what might best be done to help. Any action in this area will, of course, have to be paid for in my next Budget by higher motoring taxes after 1992–93.
"I have decided nevertheless to continue with the tax reform begun in my last Budget and to abolish car tax altogether from midnight tonight. This will mean a saving of about £400 on a typical family car. This measure will require a simple Bill, which I shall bring forward shortly. It will provide a direct boost to the motor industry and will of course benefit business more widely. I am sure it will be warmly welcomed.
"The measures I have announced today should provide an immediate boost to confidence and welcome relief for some of the most hard-pressed sectors of the economy. Taken together they will add some £4 billion to borrowing over the next three years, but with no increase in the PSBR over the medium-term.
"And these measures come on top of the Government's new spending plans for the next three years and the proposals I have announced to liberalise the rules on private finance.
"Finally, there is the significant relaxation in monetary policy since Britain left the ERM just two months ago. Britain already has the lowest interest rates in the European Community; and the pound is trading at a level that gives British industry a sharp competitive edge in foreign markets.
"That relaxation of policy has been possible because of the dramatic progress we have made in getting inflation down; and it is precisely because our inflationary prospects remain excellent that today, Madam Speaker, I can go further.
"Alongside the tight public expenditure plans I have announced I believe it is appropriate now to make a further reduction in interest rates. The governor and I have agreed that the Bank will tomorrow set the minimum lending rate at 7 per cent. That reduction is, in my judgment, fully consistent with the Government's inflationary objectives.
"Today's reduction takes British interest rates down to their lowest level for nearly 15 years; it means that our interest rates have been cut by fully 8 per cent. over the last two years; it takes a further £1 billion off industry's costs on top of the £9 billion fall in interest payments we have already seen; and it will provide further help to all those with mortgages.
"British business now has the opportunity it has been looking for—to bring the country out of recession; to increase sales, expand production and invest for the future. And industry can now seize the new opportunities, safe in the knowledge that the Government will play their full part. We have a new monetary framework that will deliver low inflation over the medium-term. We have a new system for controlling public expenditure that will deliver annual spending increases which the country can afford. We have new spending plans, which protect the poorest in society and offer hope,

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help and opportunity by switching resources to programmes that support the long-term prosperity of the country. We have the lowest interest rates in the European Community. And we have a carefully targeted set of measures designed to lift confidence and get the country back to work.
"This is a clear and comprehensive strategy. It is a strategy for growth. I commend it to the House.
" My Lords, that concludes the Statement.
4.42 p.m.
Lord Peston: My Lords, I thank the noble Earl for reading the Statement of his right honourable friend. I particularly thank him because, as he well knows, I did not get to know anything about the Statement until he just read it. I appreciate there may be difficulties with this, but it does not seem to me to be an appropriate way to engage in the serious business of your Lordships' House if one actually has to come to respond to something like this with no forewarning. I understand that there are one or two commercially sensitive matters here; but, nonetheless, I should have thought that the main Opposition spokesmen could have been trusted with a sight of the document in order to help in its consideration.
That leads to me a second point. I have listened as closely as I can to the noble Earl, and I must say I find it very difficult to see how the figures add up. On the one hand, he tells us that a large number of things are going to increase; and, on the other hand, he tells us that the Chancellor is going to stay within his total budgetary framework. I am not foolhardy enough to try to do all the calculations in my head as I go along. I have to tell him that he may have said this is a simple Statement but I found it very difficult to follow. I assume that the reference to having a full debate about these matters will refer to the other place; but if we are to explore these issues fully we must have an opportunity to look at them in some detail. As noble Lords will be aware, my own view, although I shall have to be rather "broad brush" today, is that it is the detail that is interesting and that really matters.
This is the last Autumn Statement that we shall ever have, so one ought to say farewell to Autumn Statements as well as other things. As I understand it, the noble Earl is not backtracking, nor is his right honourable friend the Chancellor of the Exchequer, from the new budgetary position we are going to have. That is the sensible position of getting a statement of expenditure plan, then a statement of taxes to finance that and later a statement of how we are going to finance the difference if there is, as there is at the present time, a government deficit. That is the correct way of doing it, and I take it that from now on that is what we are going to have and that I am right in being reassured by the noble Earl's statement that there will be no backtracking by the Treasury, which might be fearful that people might wish to discuss taxation at the same time as they discuss expenditure. My view is that that is always the sensible way to do it, and then the people who want more expenditure should be asked to say how they are going to pay for it. That is
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something that I am willing to do, and I believe the Liberals also feel that this is the right way of doing things.
Is this the same Chancellor of the Exchequer that we had a few months ago? I have some difficulty sometimes on that matter. Is this the Chancellor of the Exchequer who told the Treasury and Civil Service Committee on 27th November, 1991, virtually a year ago:
"History, I think, shows that we have seen continuing depreciation of sterling, what you call a temporary fillip to exports, which has been bought at the price of continuing inflation".
He also said:
"It seems to me that the real challenge is that costs and prices have to adjust to the exchange rate rather than the other way round".
I would have thought that in his Autumn Statement the noble Earl's right honourable friend might have explained to us why he has said exactly the opposite today. A year ago he said that depreciation of the currency would lead to inflation. There is no suggestion that he believes that today: quite the contrary. I assume that this is the same Chancellor of the Exchequer who as recently as in the Budget said that GDP would grow by 2 per cent. per annum this year. For those of you who read these things, he actually said that GDP would grow by 3¼ per cent. next year. As it is, the Statement says that we shall get minus 1 per cent. this year, and the definition of recovery next year, as I understand it, is plus 1 per cent.
I have two problems here. The first is that I should have thought that the Chancellor might have wished to say, "I did get it wrong by an incredible order of magnitude". The other thing that one has to ask oneself is, given that he and his forecasters got it wrong last time, whether there is any reason to believe they will get it right this time. There is talk about bringing in these outside experts, and your Lordships will have heard my view last week on adding more outside experts to the failed experts that we currently have. It does not seem to me to be the right way of doing things at all.
Perhaps I may mention one of my puzzles about the figures adding up. This is a Statement regarding the total sum of 1 per cent. that the Government put forward much earlier, and they are now sticking to it. Presumably when this Statement was invented, the unemployment and social security benefit side of it would have been based on a forecast of the real economy, related then to a forecast of unemployment, which would be used to forecast unemployment benefit. But now that the real economy is depressed, unemployment is higher and so much more unemployment benefit must be forecast because more people are getting it. What I cannot see, again, is where the cuts come to finance that benefit in the Statement. It is a sort of magic trick—that somehow you will spend a lot more money here, but you are not going to reduce anything else there. Or perhaps I anticipate. Maybe unemployment benefit is going to be paid out of the reduction of legal aid, which I gather we are going to be told about later in the day.

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That is one of my puzzlements at what is happening. The second refers to public sector pay. I saw the 1½ per cent. figure. Can the noble Earl say whether that 11 per cent. is included in the calculation —meaning that what had been thought to be the public sector pay bill a year earlier will now be raised by 1¼ per cent.? Is the whole pay bill forecast to go up by 1½ per cent. or is there some other figure for the whole pay bill? I am a bit lost on that as well.
On the economics of it, the public sector pay side is the wrong area in which to operate. If one is concerned about expansion, efficiency and costs, what matters is the private sector pay bill. The public sector pay bill merely adds to aggregate demand. It does not impinge directly on cost matters at all. I think that the concentration on public sector pay is purely ad hoc. I suppose that it has just been thrown in because, in abandoning all their other policies, the Government think that they might as well have a public sector incomes policy as well as everything else.
The reduction of 1 per cent. in the interest rate, which I take it is the reason that I was not supposed to know about these things, is of course welcome. It will benefit industry by lowering the cost of borrowing and it will be of some benefit to consumers who have to borrow to spend. However, on the economics of interest rates, it is perhaps worth bearing in mind that interest income is an important part of quite a lot of people's income. As rates are cut, their income will be lowered and they will spend less. Therefore, the notion that, on the economics of it, a cut in interest rates is unequivocally expansionist simply is not the case.
What really staggers and intrigues me is the fact that we have seen the final demise of monetarism in what the Government have done today. This is as clear as can be from the supplementary package. Essentially, the Government have abandoned "monetarism" by which I mean, as I think serious monetarists also mean, two things. The first is to have a financial strategy that is stuck to while secondly, within that, one tries to control the money supply, however defined, and then let the economy get on with it. What one did not have if one was a monetarist—or what one did have if one was a Keynesian, like me —is what is called the supplementary package. "Supplementary package" are just two words for the one word "Keynesianism".
I do not object to many of these things, but I wish that the Government themselves would at least recognise that they have thrown away both the previous 12 years of their own history and the previous 12 years of their own arguments. I do not oppose the supplementary package, but I expect some noble Lord on the other side to get up and make the proper speech that a Conservative noble Lord should make and say that such supplementary packages distort and destabilise the economy, that they cannot work—the Chancellor himself has said that in the past —and that he cannot possibly support the Government on this.
Perhaps I may ask the noble Earl one or two detailed questions about the supplementary package. I take it that the relaxation of the rules on local
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authority housing is hypothetically forward-looking. If I understand the noble Earl correctly, it amounts to saying, "If you sell some more housing in the future, you will be able to use a larger share of the capital receipts. Therefore, despite the fact that you may have accumulated large sums in the past, you cannot spend them." I should like the noble Earl to clarify that so that I understand what he is saying.
The export bit is particularly disingenuous. Of course, devaluation offers a great opportunity to exporters, but we need to bear in mind the fact that it also offers a great opportunity to people who wish to push up prices and add to inflation.
On capital allowances, I agree with the Government entirely. They should have done this long ago. However, I hope that the noble Earl remembers on how many occasions capital allowances were rejected by spokesmen from the Government Front Bench, again as distorting and destabilising the economy and being essentially short term, with no long-run effect. Although I am not about to buy a new car, the same goes for the abolition of the car tax. I heartily approve of it, but I do not quite see how the Government find an intellectual underpinning for it.
All this is like shooting fish in a barrel—and I get tired of it. However, there is one other figure that I should like to ask about before I sit down. The Government often talk about the ratio of government expenditure to gross domestic product, which the Government are committed to reducing. Although it may well be in one of the government documents that I have not yet got and this is a difficult Statement to follow, I have not seen any specific statement about the ratio of government expenditure to GDP. Am I to assume that, at least for the moment, that has simply gone as an objective? Again, one could change Keynes's dictum of, "In the long run we're all dead", to a new dictum of "In the long run, all the figures come out right, but in the short run, they go all over the place." I should certainly like to know the Government's position on these matters.
To conclude, like every noble Lord I want to see the British economy recover. I want to see our people prosper. I want us all to get going again. I shall be interested to see the reaction of the markets, but my difficulty is that, given the speech that was made by the Chancellor of the Exchequer, which is so different from anything that he has said before, and given that we all agree that confidence is of the essence, why should anybody believe a word that he says this time, compared with last time?
Lord Ezra: My Lords, I, too, thank the noble Earl for reading out the Statement. I reiterate the concern expressed by the noble Lord, Lord Peston, that, contrary to normal practice, Front Bench spokesmen were not able to have a glimpse of the Statement beforehand. As it is such a lengthy and complex Statement, this has put us in some difficulty.
Rarely has an Autumn Statement been awaited with such interest as this one. I should like to start by saying that I welcome its contents relating to stimulating growth. However, like the noble Lord, Lord Peston, having heard the Statement I find it difficult to see how the figures can be precisely

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reconciled. There seems to be much more being expended on the growth side than is being saved in expenditure in other directions, but no doubt the noble Earl will explain that.
I wish to ask in particular about the new framework for monetary policy and the indicators that are to be pursued. How frequently are we going to be informed about the result of this monitoring? Will there be a monthly statement to tell us how things are going? Obviously, the big risk with the new policy for growth is a trend towards renewed inflation. We shall want to know whether that risk is serious or not, quite apart from the regular announcements about inflation.
I should like to refer to one or two matters in relation to the specific measures for growth. In the case of British Rail and London Transport, those of us who have always pressed for more infrastructure investment will be pleased to hear about additional resources. However, how do the additional sums which are being made available compare with the sums that have been requested by those two organisations? Are their additional requirements for investment being met by these figures, or is there still a gap?
On the question of private projects for the public sector, can we be clear about the regime to be followed in future? Hitherto, the Treasury has been very restrictive on any services rendered by the private sector to the public sector which contained a capital element. That capital element has hitherto been charged against the public sector, thus inhibiting this type of service even though it was financially advantageous. Am I to understand that from now on any capital project or any capital element in any service rendered by the private sector for the public sector will not count against the public sector's capital budgets?
Next, on export credits, we are all very pleased to hear about the additional amount being made available. However, there are also export services which, to judge by the accounts of the British Overseas Trade Board, have been progressively cut over the years. Is there now to be a review of those export services which finance visits abroad, provide information on export opportunities and so on? Are these now to be reviewed, as I believe the President of the Board of Trade hinted? We should like to hear clearly whether that is intended so as to take advantage of the new export opportunities.
The increase in capital allowances is certainly very welcome. But, as the noble Earl may be aware, we had a debate in the House yesterday on small firms. His noble friend Lady Denton may have informed him of its outcome. A number of suggestions were made about ways in which small firms in particular could be helped in the present difficulties. Do the Government intend bringing forward any measures specifically relating to small firms in addition to the measures that they have announced today?
The Earl of Caithness: My Lords, I listened with care to what the noble Lords, Lord Peston and Lord Ezra, said in reply to the Autumn Statement. I thought that the noble Lord, Lord Peston, was in particularly gloomy mood today. I expected him to
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receive the Statement with slightly more welcome than he managed to conjure up from the depths of his gloom. Like him, I should like to bid farewell to the Autumn Statement, but I would hate to bid farewell to the chance of discussing economic matters with him across the Floor of the House. I am sure that we shall have plenty of opportunity for that. On that particular point, he raised the request for a debate. As he will have noticed, my noble friends the Lord Privy Seal and the Chief Whip were listening to him at that time and I shall leave it to the usual channels in accordance with the tradition of this House.
Both noble Lords were right to say that it was difficult to pick up a Statement of this length and complexity just by listening to what I was repeating. I know that the whole House will want to study the figures in detail and I am sure that that would solve many of the questions that the noble Lord, Lord Peston, asked me. He again chided us about forecasts when, as an economist, he will know that forecasts are not always as accurate as he would himself sometimes have wished. However, I remind him that the Government's forecast was in line with the average of the independent forecasts at the time of the Budget.
Perhaps I may clarify the situation with regard to pay. There will be a limit of 1.5 per cent. for all public sector employees for the next year. With regard to capital receipts, that is for the future only. There will not be anything retrospective with regard to the receipts already received. It would be quite wrong to penalise those authorities that have done the right thing; namely, having got the receipts, to have removed the debt overhang and therefore to have benefited their chargepayers. The noble Lord will have heard me say that in the long term we wish to reduce expenditure as regards GDP. We got it down very successfully in the 1980s and we wish to get it down again.
The noble Lord, Lord Ezra, asked me whether the settlement that has been reached for British Rail and London Underground met their aspirations. It is impossible to meet everyone's aspirations. There is always a good case to spend more money. However, it is right that there should be a firm control over public expenditure. That is what my right honourable friend has announced today. He meets the target of £244.5 billion that was set in July and that is to be welcomed.
With regard to capital allowances, I note what the noble Lord said and I was grateful for his welcome on that point.
5.3 p.m.
Lord Clark of Kempston: My Lords, does my noble friend agree that the Autumn Statement will be warmly welcomed in commerce and industry generally and that my right honourable friend the Chief Secretary is to be congratulated on containing public expenditure within the target range, but at the same time protecting capital investment and particularly the Jubilee Line? Although capital allowances were changed under my noble friend Lord Lawson when he reduced corporation tax to the lowest in the world at the same time as changing capital allowances, I am sure that my noble friend will agree with me that it is

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right today to look at capital allowances. I am delighted at what the Chancellor has done there and in abolishing car tax.
As regards the reduction in interest rates, perhaps my noble friend will take this point on board. We have now reduced the base rate from 15 per cent. to 7 per cent., which is a great achievement, but in many cases the reduction in the interest rate has not immediately been passed on by the banks and building societies. Will my noble friend urge my right honourable friend the Chancellor of the Exchequer to impress on both the banks and the building societies that the reduction in the base rate should be passed on in its entirety to the borrower?
The Earl of Caithness: My Lords, I am grateful for what my noble friend, with his great experience, said. I am delighted that he believes this Statement will be welcomed by industry. That is exactly what it is designed to be, but I should also add that at the same time we have been able to look after those least able to look after themselves. That is also an important part of the Statement.
With regard to interest rates, we have no evidence that banks are not passing on interest rate cuts to their customers. As we all know, some banks have had a floor. NatWest had a floor of 8 per cent., but yesterday cut that to 6 per cent. However, if my noble friend has any specific point in mind, perhaps he will let me know.
Lord Stoddart of Swindon: My Lords, is the noble Earl aware that there will be great outrage among public sector employees that their pay increases will be restricted to 1.5 per cent? That means a wage cut of 2.1 per cent. for them and it is a wage cut imposed on some of the lowest paid people in the country. Irrespective of what the Statement said about public sector pay having risen by 20 per cent. while private sector pay has risen by only 13 per cent., I hope that he will recognise and accept that that 20 per cent. includes the catching up increases which were given to nurses and teachers, among others. The comparison is therefore unfair and public sector employees are being made to pay for the Government's mistakes. It is quite deplorable and will upset the people in the public sector no end. I do not know what their reaction will be. We may well have some trouble from them and we may be looking forward to a winter of discontent.
Perhaps I may also ask the noble Earl how this is to be enforced. It is not clear in my mind exactly how that will be done. If local authorities refuse to do it, will it fall upon their chargepayers because the government grant is restricted? How will it be done?
Finally, in relation to Scotland and Wales, the basis on which the grant is made has been updated. Will the noble Earl say exactly what that means? Does it mean that Scotland and Wales will receive more or less from central funds? I feel sure that that is what it is all about.
The Earl of Caithness: My Lords, I understand the sentiments behind the comments of the noble Lord, Lord Stoddart of Swindon. Nobody said that it would
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be very nice to limit public sector pay to 1.5 per cent. on a range of 0 to 1.5 per cent. It is not very nice not to have an increase. It is not very nice for many people in the private sector to have their pay reduced, but in the present economic circumstances I think that the action taken by my right honourable friend is very justifiable.
At the end of his comments the noble Lord asked me some detailed questions about Scotland and elsewhere. As I said when I repeated the Statement, further Statements will be made and it would be wrong for me to say anything without having the full benefit of that. I am sure that the noble Lord will also wish to see those Statements.
With regard to enforcement, I think that I should write to the noble Lord.
Lord Mayhew: My Lords, the noble Earl referred very briefly to defence expenditure. He indicated that there would be some reductions. Will he tell us what the new level of defence expenditure decided upon is?
The Earl of Caithness: My Lords, the estimated outturn for 1992–93 in defence will be £23.8 billion whereas the new plans will be £23.5 billion, £23.75 billion and £23.22 billion.
Lord Boardman: My Lords, like other noble Lords, I welcome the Statement. However, I was somewhat disturbed by the fact that the noble Lord, Lord Peston, appeared to be referring to the reduction in interest rates as being regrettable as regards the impact it would have on those who are in receipt of interest income. Does my noble friend believe, as I do, that those on the Benches opposite have been pressing for a reduction in interest rates for a long time past?
The Earl of Caithness: My Lords, I knew that it would not escape the notice of my noble friend that on this as on many other occasions the noble Lord and his noble friends opposite have been pressing for many measures, but that when such measures are announced by the Government they say that it is all terrible.
Lord Desai: My Lords, let me first say that the Autumn Statement is actually very disappointing. Much information had been passed on before claiming gloom and doom. What we now have is a claim that the spending limits have been observed and that public sector pay will be frozen. But, for all that, we are getting a miserable rate of growth predicted for the next year—minus 1 per cent. for this year and plus 1 per cent. for the next year. That "plus 1 per cent." has redeemed the margin of forecast error which is 1.5 per cent., so anything could happen.
When the ERM strategy was so ignominiously abandoned, we were promised after some delay that we were going to "dash for growth". Can the noble Earl say where is that dash for growth? Where is the growth supposed to be dashing? A one percentage point growth rate is not even a recovery; it is actually quite akin to stagflation. Although the inflation rate will not rise very much it will be higher next year than it was this year, therefore we are dashing from deep recession to, perhaps, low stagflation.

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So far as I can see, the balance of payments figures have worsened from £12 billion to £15 billion. The PSBR outcome this year is 6.25 per cent., but if you exclude privatisation proceedings it is 7.5 per cent. Therefore, from all viewpoints I say that the Government have done neither one thing nor the other. They have neither kept to their path of fiscal rectitude and monetary discipline, nor have they dashed for growth. They have dithered on one hand and on another and ended up with having neither rapid growth nor any prospect that inflation will be brought down as we were promised in past years.
The only welcome part of the Autumn Statement is the small consolation that overseas aid—a subject which was debated yesterday—has not been cut in nominal terms. But, obviously, given the devaluation and inflation, there is a cut in real terms in overseas aid and that I must deplore.
The Earl of Caithness: My Lords, I am sorry that the noble Lord, Lord Desai, does not like the Autumn Statement that I repeated and that he does not think that the growth was good enough. The words "dashing for growth" were not those of the Government; indeed, they may have been written by some people in the media. I explained very carefully on previous occasions—and repeated it in the Statement—that this is a very clear and comprehen-sive strategy for growth. It is the right strategy which takes account not only of the economic situation in the country but also, as the noble Lord will be aware, of the economic situation in the world which has declined markedly in recent months. I am grateful to the noble Lord for his kind words about the overseas budget. I can tell him that, compared with the 1992–93 plans, the new plan provides for cash increases in all years and a 2.5 per cent. real terms increase in 1993–94.
Lord Brabazon of Tara: My Lords, whatever noble Lords opposite may say, does my noble friend agree that the Autumn Statement will be widely welcomed by business and commerce in the country? In particular, I was delighted to hear the news about the Jubilee Line, which, as my noble friend will be aware, I was pressing for just the other day. My noble friend said that that would go ahead subject to successful negotiations with the administrators of Canary Wharf. Although I appreciate that my noble friend will perhaps not be able to tell me, I wonder whether he can say how close those negotiations are to reaching a conclusion.
Further, the industry will be delighted that the road building programme is to be maintained. It will also be delighted that private finance will now be able to enter more easily into such major capital projects and especially that British Rail will be allowed to lease provided, of course, that the risk is taken by the private sector.
As regards local authority capital receipts, does my noble friend agree that if local authorities wish to spend money on housing or building using their capital receipts, some of them are in an excellent position to raise capital by privatising their local authority airports? Does he also agree that they should keenly pursue that aim?
The Earl of Caithness: My Lords, I am most grateful for the words of my noble friend. I am glad that he, too, believes that the Statement will be welcomed by industry. So far as concerns the Jubilee Line extension, I know that he will agree with me that it is most important to pursue the negotiations with the administrators as quickly as possible. We have made it clear that if acceptable terms can be negotiated and agreed, then there is provision within the allocation for the extension to proceed now. As my noble friend knows only too well, if that project can be proceeded with quickly, it will benefit many thousands of people; indeed, it will create many jobs.
My noble friend also mentioned the good news on roads. That is most important as 90 per cent. of our goods in this country are transported on roads. It will benefit industry if we have a very good road system. It will also benefit the environment if we do not have traffic jams with cars and lorries causing much pollution. I thoroughly agree with my noble friend on the question of local authority airports. He will recall that we said in our manifesto that we would encourage local authorities to move their airports into the private sector which is the only place where the necessary money to maintain the airports is available. We have given exactly that encouragement today.
Lord Bruce of Donington: My Lords, without prejudice to anything that I may be permitted to say to your Lordships when I have examined the papers, possibly in a later debate, I should like immediately to congratulate the Government on becoming converted to a view that I have been pressing upon them for the past four years in relation to floating exchange rates. As the noble Earl has criticised me on many occasions for having advanced the view that he now holds, it would do him no harm to make some suitable amends for the rather terse observations that he has made in the past.
There is something about the Statement which puzzles me. As noble Lords would expect, I examined, albeit cursorily—and I reserve the right to come back to it later—the estimated expenditure of the United Kingdom out of the Consolidated Fund on the European Community. Over the past few weeks, the Treasury has provided us with figures concerning the net expenditure of the UK in the European Community which amount to about £2.5 billion. However, according to the papers that I have just seen, a billion seems to have been lopped off. I should like to find out where it is. But that will be a matter for a later stage.
As regards the expenditure estimates, can the noble Earl say whether an allowance has been made for the extra contribution that the United Kingdom will have to make to Community funds if the Maastricht Treaty is ratified? It seems to me that the expenditure totals will be about £2 billion to £3 billion short of what is actually required, should that unfortunate eventuality take place. The noble Earl paid tribute to the virtues of the floating exchange rate to which I referred. Perhaps he would care to examine Articles 109j(1) and 109m of the Maastricht Treaty in which he will find

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that, on ratifying the latter, he will be compelled to enter the ERM again. Of course, that is exactly contrary to the Government's present philosophy.
I trust that in due course the noble Earl will be able to explain such matters. But, in the meantime, the verdict from the country as a whole must be that the Autumn Statement has done nothing to remove the fears that lie over the United Kingdom; that is, the fear of unemployment and the fear of continued insecurity. Until the Government address themselves to the removal of such fear throughout the land, they will not have any success whatever.
The Earl of Caithness: My Lords, for 95 per cent. of what the noble Lord, Lord Bruce, was saying, I was sitting happily ready to reply; for the last 5 per cent., I thought that he was not quite his normal self. Of course he did not mention the important points like the provision of the Jubilee Line extension; the road projects that will go ahead; NHS capital spending; local authorities' spending; and capital allowances for businesses, which are the type of things that counteract what he said in the last 5 per cent. of his comments.
As regards the previous 95 per cent., it is good that he and I are on much more level terms. I am sure that we shall find reasons to diverge again in the future, but it is always on a harmonious basis. Perhaps we both need to look at the precise figures in detail. I hope that we shall have another opportunity to find his missing money.

Social Security
5.20 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, with the leave of the House, I should now like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:
"Madame Speaker, with permission I wish to make a Statement on social security following directly from my right honourable friend's Autumn Statement.
"As the Chancellor has announced, spending on social security in each of the next three years will be: £79.8 billion, £82.9 billion and £87 billion. That is a gauge of this Government's commitment to the needy, the sick, the elderly and to families.
"Despite the intense pressure on the social security budget, we will maintain support for those hit by the recession; we will focus additional support on the most needy; and we will keep our pledges to families, to the elderly, and to disabled people.
"I can today announce that all major benefits will be increased fully in line with inflation. Subject to parliamentary approval, benefit rates will therefore go up by 3.6 per cent. next April. The basic retirement pension for a single person will increase by £1.95 a week to £56.10. That for a couple will rise by £3.10 to £89.90. Unemployment
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benefit will increase by £1.55 for a single person and by £2.50 for a couple, and I propose to make no other changes to that benefit. Child benefit will be £10 for the first and £8.10 for each subsequent child. In addition, by uprating all benefits, we will keep our promises to focus increased support on those in greatest need.
"Last month the Government boosted the income support rates for pensioners by £2 for a single pensioner and £3 for a couple. From next April there will be an increase in the real value of income support. Thereafter nobody on income support will be required to contribute a minimum of 20 per cent. of the local government taxation charge, as they have up to now.
"But the increase in basic income support levels introduced to match that liability will be maintained. This is worth on average £1.40 a week for a single person under 25, £1.60 for a single person over 25, and £2.80 for a couple. That means: the disposable income of a single unemployed person over 25, on income support, will actually increase by an average of £3.15 next April, and the disposable income of an 80 year-old couple on income support will be £9.35 more, on average, than it was last April, taking their income support over £100 a week for the first time. The uprating itself will cost £2½ billion next year. And the real increase in disposable income for those on the income-related benefits is worth a further £1 billion.
"It has only been possible to meet these commitments, in full, as a result of a searching scrutiny for savings in all of my department's programmes. My first priority has been to find savings which do not involve curtailing entitlement to benefit. I have therefore subjected my department's running costs to rigorous examina-tion whilst maintaining my department's full commitment to the Citizen's Charter, and enhancing capital spending, which will rise by £159 million over the next three years, bringing total capital expenditure to over £1 billion in that period.
"A major component of running costs is the payment of benefits by order book or giro. That is markedly more costly than payment through the banking system. I therefore propose to encourage more customers to accept payment of benefits directly into their bank or building society accounts. In addition, my department will be working closely with the Post Office to improve efficiency and reduce theft and fraud involving order books and giros. This along with fraud elsewhere in the system can involve very substantial sums of money. I have already announced my determination to tackle fraud and abuse of benefits. Those who defraud the system have nothing in common with the vast majority of honest and genuine claimants. And every pound lost through fraud means less for those in real need. I therefore plan to step up the fight against fraud.
"I am increasing our investment in fraud work by £10 million a year. This, aided by better use of our existing resources and new techniques, will have an expected annual return of £100 million a

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year. I am today laying the regulations withdrawing income support from those—be they new age travellers or others—who are not even actively seeking work. And I will consult the local authority associations on a new initiative to encourage local authorities to stop fraudulent claims for housing and council tax benefits. By taking these measures I hope the total of fraud identified and stopped will increase to nearly £1 billion each year.
"But it is also necessary to look carefully at how well benefit spending is focused on those whom Parliament intended to help. There has been a significant increase in the numbers on invalidity benefit and in spending on it. There are now more than twice as many people drawing this benefit as in 1979 at a cost nearly two-and-a-half times as great. By 1996 invalidity benefit will cost well over £7 billion. Against that background, I intend to tighten up the administrative and medical procedures for controlling this benefit. This will ensure that medical examinations are better targeted and that more effective action will be taken when people fail to attend for their examination or are found to be capable of work. These changes are expected to reduce spending by £240 million over the survey period. A major research study into invalidity benefit was launched last year. Some results have been received, and others will be received during 1993. I will consider these results carefully as they become available.
"I have also looked at two aspects of war disablement pensions. Officers receive more compensation for a given disability than other ranks. In today's world there is no reason why they should. I therefore intend to abolish rank differentials for disablement pensions by moving everyone up to the rate for officers. This will benefit nearly 200,000 war disablement pensioners who will gain up to £5 per week. This will be made possible by the second change, which is to bring the rules for noise-induced hearing loss more into line with the industrial injuries scheme. As under that scheme, awards will no longer be made to those whose noise-induced hearing loss is assessed at less than 20 per cent. disablement. But I can assure the House that no existing war pensioner will suffer a reduction in the cash that he or she is currently receiving. These proposals will now be discussed with the Central Advisory Committee on War Pensions.
"I also intend to introduce two minor savings measures: I propose to increase the top rate non-dependant deduction in housing benefit and income support, but to freeze the three lower rates. I propose also to freeze the higher rate of statutory sick pay as most employees who benefit from it are covered by occupational sick pay schemes.
"These enable me to make a number of modest, but worthwhile, improvements. I plan to increase by £10 per week all but one of the income support limits for those with preserved rights in residential care and nursing homes. I plan to extend the severe disability premium to those sharing a household with a blind person. I am increasing the amount
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carers may earn without affecting their benefit. I am giving £1 million to help hospices, more money to help severely disabled drivers, and we are introducing improvements in the benefit arrange-ments for orphans.
"I now turn to the Social Fund. By using loans we can help far more people with a given amount of money than if it were given as grants. Improved repayments of these loans enabled me last week to announce an extra £8 million for the Social Fund discretionary budget for the current year. Together with a further small injection of cash it means I now expect next year's budget to be up 12 per cent. at £340 million. That is a 50 per cent. increase in two years.
"In accordance with my statutory duty, I have carried out a review of national insurance contributions. The National Insurance Fund is obviously affected by the state of the economy. However, the Government do not propose to make changes to national insurance contributions for next year other than normal adjustments for inflation. This reflects our determination to minimise the burdens on employers and employees. Instead, we intend to seek powers to keep the National Insurance Fund in balance by drawing as necessary on a new, limited Treasury grant. This grant will give us useful flexibility in managing the fund during a downturn in the economic cycle.
"I intend to introduce a Bill shortly to make provision for the grant. The Bill will also provide for the new age-related addition for personal pensions. Personal pensions have proved outstan-dingly popular. This addition will remove a potential distortion. It fulfils our manifesto commitment. It will ensure the continued success of personal pensions.
"Fuller details of the uprating, national insurance and other measures have been given in two written replies to my honourable friends the Members for Hertfordshire West and for Tiverton. These replies are available with the Autumn Statement briefing in the Vote Office and will be published in the Official Report. The Chancellor has set out a tough and realistic programme for public expenditure as a whole. Within that total I have sought to make savings, particularly by bearing down on operating costs and fraud. And I have sought to curb programmes which might otherwise pre-empt the resources needed to sustain recovery in the longer term.
"As a result we have been able to protect benefits for those hit by the chill wind of world recession; to channel increased support to the most needy; and to keep the pledges we made in April. I commend our plans to the House."
My Lords, that concludes the Statement.
5.32 p.m.
Baroness Hollis of Heigham: My Lords, we thank the noble Lord for repeating the Statement made in another place. We particularly thank him because the

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Statement is both shorter and less densely packed with statistics than was the experience of my noble friend Lord Carter, who occupied this slot this time last year.
Our first response is that we greet the Minister's Statement with relief—relief that all benefits will be up-rated in line with inflation. It is worth saying, however, that it might have been a little difficult perhaps to do otherwise, given that on the one hand both child benefit and pensions were protected by the Government's manifesto commitment just six months ago and on the other hand the national insurance benefits—unemployment benefit, widows' pensions, industrial injury, invalidity, maternity and sickness benefits—are all statute-based entitlements. They would therefore have required primary legislation to detach them from the rise in RPI. That legislation would have taken time and certainly would not have produced any immediate savings for the Government.
It is clear, therefore, that the Government, had they been seeking to make cuts in benefit, would effectively have been confined to the means-tested benefits of the very poorest; that is, those on income support, possibly family credit and the related housing benefit. It is with relief that we see that those benefits have not been cut but have been protected. It is clear that we may have the Minister opposite to thank for that rather than perhaps the Secretary of State if the reports in today's Independent are correct. It states that the Secretary of State, Mr. Lilley, was willing to offer more cuts in social security than his Cabinet colleagues thought decent, tolerable and acceptable.
I turn now to some detailed questions on the Statement. The first and obvious one is on the invalidity benefit, the only benefit signalled in the Statement as being subject to immediate and detailed review. The Minister proposes that reviewing invalidity benefit may raise £240 million. He suggests that the review will tighten up administrative and medical procedures. How, my Lords? Is the Minister seriously proposing to interfere with medical judgment as to the point at which someone on statutory sick pay may move on to invalidity benefit rather than be returned, say, to income support? Is he proposing to interfere with that medical judgment? Will he hound men and women who their doctors say should be on invalidity benefit on to income support? Does he plan to tax it in future? Will he come clean on this? May we have an assurance on the invalidity benefit that nothing will be done to tax it, freeze it or cut it until the DSS's own sponsored research due to be reported in April 1994 is before us so that we can debate it?
The second topic within the benefit range to which the noble Lord drew our attention was the Social Fund. He made much of the point that extra money —so far as I can see, about £25 million, or 12 per cent.—will come into the Social Fund. Will the noble Lord tell us how much of this is new money as opposed to recycled loans—that is, where people are simply repaying their loans faster?
We on this side of the House are not opposed to the principle of the loan option, in the sense that we accept it as a more favourable alternative to private loan
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sharks. What we are opposed to is the policy of loans rather than grants to the neediest, especially as the Government's own sponsored research at York University showed in July that those who receive loans are the people who are poorer, those who receive grants are the better off and those who receive nothing at all because they are not eligible under the income support rules are often the poorest of all. In other words, the Social Fund is not only poorly targeted; it does not meet need. When will the Government do what every academic adviser, every professional body and their own professional advice which they financed tell them to do; that is, to reform, restructure and reshape the Social Fund, even within its own budget, to meet people's needs more effectively?
Thirdly, we notice in the Statement that the Government believe that huge savings—£1 billion—are to come from ending fraud. Needless to say, we on this side accept that money should not go to the fraudulent because if it does it is at the cost of those who are entitled to the money. However, I think we could ask questions. Over what timescale is it proposed to claw back this £1 billion? Can we be sure, for example, that it will not lead to increased harassment and prurience in the lives, particularly, of women? May we ask about the passing reference to New Age travellers? While few of us would necessarily countenance their lifestyle, can we be sure that the Government's proposals will not end up bringing children into care and increasing public expenditure as well as family misery?
I am sure that we all genuinely welcome the modest improvements and protections offered in the Statement: for example, the increase to the protected payments to those currently in residential care; the increase in earnings ceilings for carers up from £40 to £50 for the invalidity care allowance; or the earnings disregard for carers under housing benefit. We all welcome the fact that if non-dependant deductions are to increase, then at least the poorest families get some degree of protection. These are small but worthwhile gains and we are happy to acknowledge them.
We are also pleased that the Minister has not reneged on his commitment to embed full relief for the council tax. However, before the Minister makes much of the implications of that for income support and for families on income support, it is worth reminding him and the House that much of it will be paid for by those also on benefit. They will see the taper worsened, instead of 15p in the pound, by 20p in the pound, so that those who continue to receive full benefit will have that benefit partly paid for by families only a little better off whose benefit is worsened. As ever, the poor are helping the very poor and the taxpayer is not making a proper contribution. Those are detailed points.
Finally, I think our response is yes, indeed, relief but not gratitude. Gratitude we would not offer. Why should the poorest not have their benefits fully protected? After all, under this Government they have failed to enjoy any trickle down of wealth. We have already pressed the Minister on this at Question Time.
The bottom one-tenth have, if they are a couple with two children, seen their after-housing income fall

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in real terms by 6 per cent., or £7. We have seen those on the second to bottom one-tenth of income have their income increased by only 2 per cent. at a time when the national average has increased by 30 per cent. All research shows that the absolute level of benefits remains inadequate, whether that is DSS research, Rowntree research, the research of the National Children's Home, that of the National Consumer Council or that of the National Audit Office. Every one of those bodies of research continues to emphasise that the absolute levels of benefit produce inadequate feeding and diet, inadequate clothing and inadequate warmth. That has happened because in the past 13 years we have seen some benefits cut. There have been 13 cuts to unemployment benefit since 1979.
We have seen some benefits frozen; for example, child benefit and pensions. We have seen other benefits abolished such as the right of students to vacation benefit and the right of 16 and 17 year-olds to benefit. We have seen the eating out allowance for families in bed-and-breakfast accommodation ab-olished. We have seen a social fund, following the 1988 reforms, that signally fails to meet emergency need. We are still left with the problems of a poverty trap in which members of our society will still find that for every £1 they earn they will lose 95p in benefit. That is a perverse incentive to work if ever there was one. We see a benefit system that remains complex, stigmatised and hazardous.
It is true that after today the poorest are no worse off in real terms than they were yesterday. For that we are relieved, but given the economic strategy of this Government as outlined in the previous Statement unemployment will continue to rise and therefore more and more people will continue to join the ranks of the very poor where they will find the benefits as outlined by the Minister to be inadequate, grudging, complex and stigmatised. They will find themselves worse off than they would have been just 10 years ago because poverty, like wealth, is unmerited, inherited and unearned. But what it is not is accidental. It has been engineered by this Government's policies on unemployment and their failure to trickle down wealth so that those at the bottom of our society can enjoy the prosperity to which they are entitled.
Earl Russell: My Lords, I thank my noble kinsman for repeating the Statement. I feel I should offer gratitude—it has been a difficult public spending round—but I will admit that it is for small mercies. However if one is not grateful for small mercies in Opposition, one does not get them.
Before I get down to the detail I wish to ask my noble kinsman a couple of questions of which I have given him notice. One is about the system of new constant totals for public spending beyond which it will not be allowed to rise. I wish to know whether it has been yet decided which social security benefits will be subject to the new constant totals and which will be exempt. That is, I think, a question of quite considerable importance when we consider where we are going to be next year.
My other question is a rather technical one. It is about monetary compensation amounts under EC
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rules. I understand those compensation amounts are to be abolished on 1st January. It has been suggested in the papers that that would mean that the effect of devaluation would feed through into food prices in one fell swoop. The noble Earl, Lord Howe, in a Written Answer which reached me only a few minutes ago, tells me that the rise will not be as great as that. I am very relieved to hear it. However, if there is this sudden one-off jump in food prices in January, even if it is less than 14 per cent., has that been taken into account in calculating benefit levels? Is this a question to which we may legitimately return when we find out how much that rise is, because it could cause a considerable problem in the future and 14 months is quite a long time to wait for something like that to be put right?
I thanked my noble kinsman for mercies. I said they were small ones. He knows my view that benefit levels are at present inadequate. I shall not go into a large body of material that I have with me on that subject. I will merely remind my noble kinsman that since we last exchanged views on this subject, on 29th October, two major reports have been published arguing that view. There is the National Consumer Council's report entitled Deep in Debt that was published a week ago today and the York Family Budget Unit report by Professor Jonathan Bradshaw published yesterday, of which so far I have seen only press reports and therefore I shall not say more about it. However, my understanding is that both of those reports argue the view that it is not possible to afford an adequate diet on present benefit levels.
However, I do not wish to give my noble kinsman an opportunity to repeat the memorable line once used by the noble Lord, Lord Healey, who said that offering defence cuts to the Left was like throwing herrings to a sea lion. Therefore, I shall defer my temptation to play Oliver Twist, but I shall give my noble kinsman notice now that unless there have been some very substantial changes within the coming year, when we return to this subject I shall be looking for an increase in real terms in benefit levels. I shall also be looking for a fairly careful review of the pressure of deductions on the incomes of social security beneficiaries.
My noble kinsman always says that how people spend their benefit is a matter of choice. That is fair enough, but when there are legally enforceable deductions for loans, gas and electricity, and other such charges, and where there is a legally enforceable debt, choice stops. I know my noble kinsman will repeat that he always monitors these things with great care. I hope that during the next year he will direct his monitoring to that point. I also hope that over the next year he will look again at the justification for the lower rates of benefit for people under 25. That is causing a great deal of hardship. With all respect, having heard explanations many times, I still cannot understand them.
As regards the search for savings, I shall not pretend that I welcome everything that has been done in that regard. I entirely see why, having achieved the victory it has on benefit levels, the department had to look in that direction. Some of those measures,

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however, I welcome quite warmly. The power to pay benefits into bank accounts is something which I have asked my noble kinsman to do in the past. I conveyed that request on behalf of a party member in a wheelchair who found getting to the bank extremely difficult. He will be very grateful for that measure and so am I.
On the question of fraud, of course all of us are against that. I would say to my noble kinsman that I hope the Government are as determined to combat fraud in other spheres as they are in this sphere. In other spheres fraud may cost the state rather more money. People are capable of fraud but I see no reason to believe that those on benefit are more capable of fraud than anyone else. Therefore, I have some hesitation in believing the investigations will yield quite as big a saving as has been suggested. Where fraud exists, it ought to be stamped out. I think we are all on common ground there.
On the question of invalidity benefit, will my noble kinsman say whether it is true that those who have been conducting Restart interviews have been asking people to see whether there is perhaps a more appropriate benefit for which they should apply rather than the one they are on? Has that led to a good deal of official encouragement to people to apply for invalidity benefit? Is it the case that the department has not let its left hand know what its right hand is doing?
I also wish to touch on the point made by the noble Baroness, Lady Hollis, about tightening up medical procedures. We all want a just result to be reached. However, we do not want a situation where the medical examiners are briefed to look for one result rather than another. We do not want them to be asked, in effect, to find that people are not eligible rather than that they are. I hope that a certain judicial caution will be applied to that tightening up of procedures. With that proviso, we share the desire to achieve an accurate result.
In respect of war pensions I welcome the decision to abolish the differential between officers and other ranks. The reference to today's world was well taken and I was very glad to hear it.
On the question of non-dependant deductions, before reaching judgment I should like to hear a little more of what my noble kinsman proposes.
On the subject of national insurance, I do not know whether my noble kinsman recalls the debates on the Social Security Bill in 1989. There used to be a Treasury supplement to national insurance. That was removed because the fund was then in surplus. The noble Baroness, Lady Jeger, and I both said that it might be a good thing for the Treasury to hang on to that in case of a rainy day. Here we have a rainy day and I am extremely glad that the Treasury has taken the point.
I welcome the increase in relation to the costs of residential homes. I welcome the increase in the earnings limit for carers, and I should be glad to know how much that is. In spite of the kind efforts of the department I only received the Written Answer five minutes ago so I have not managed to finish reading
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it, for which I apologise. I welcome warmly the £1 million for hospices. I also welcome the help for severely disabled drivers and should be glad to hear a little more about it.
On the subject of the Social Fund, like the noble Baroness, Lady Hollis, I should be glad of a clearer distinction between what is new money and what is recycled loans. I should like to ask my noble kinsman, when he is looking at the question of deductions, to look very carefully indeed at the repayment rates which are being requested from the Social Fund because that is one of the factors which has brought spending on food under unacceptably severe pressure. I should like him to look at the section in the National Children's Home report which we discussed two weeks ago and which argues that there is no adequate provision for capital needs among those on benefit.
Overall, this Statement could have been a great deal worse and I should like to thank my noble kinsman and, through him, to thank the department.
Lord Henley: My Lords, it is a somewhat unusual experience to receive quite so many thanks and quite so much gratitude, both from the noble Baroness and my noble kinsman. I join the noble Baroness in saying how grateful I am that the Statement was considerably shorter than it has been in the past. As the noble Baroness will know and as my noble kinsman complained, all the detail will be found in two Written Answers. I am sorry that my noble kinsman only received them five minutes ago. My understanding is that they were available in the Treasury briefing pack, which would have been available to all Members of the House from the moment my right honourable friend the Chancellor sat down. May I also say to the noble Baroness that I am grateful for her personal praise, however deserved or undeserved it may be.
Perhaps I may first turn to invalidity benefit and the various remarks made by both the noble Baroness and my noble kinsman. I have to say first of all on the question of taxation—the noble Baroness asked what our policy is—that it has long been our policy to bring invalidity benefit into taxation. If the noble Baroness looks at the claim forms for invalidity benefit, which have not been changed for some time, it says that quite clearly on those claim forms. In correspondence with Members of this House and another place, for some time we have made it quite clear that that has long been our intention and that we shall do so when the time is right. The other changes which I announced —and I shall come back to the medical and administrative changes shortly—will require consider-able research. Certainly that research will require consideration as and when it comes in. As to whether that report will be published, the noble Baroness will have to wait and see.
I should also like to deal with one point made by my noble kinsman about Restart interviewers actively encouraging people to claim invalidity benefit when they were not necessarily entitled to it. I have not heard allegations of that kind before but certainly I shall be prepared to take a look at them. The problem as it relates to invalidity benefit is that there has been, as we made clear in the Statement, a significant increase in the numbers on invalidity benefit and,

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therefore, significant increases in expenditure when one would have expected the general health of the nation to have been steadily increasing.
It is clear that some of the medical and administrative procedures are over-lax. That was made quite clear in the National Audit Office report of December 1989. I must say that the changes we are proposing certainly will not interfere in any way with medical judgment. Rather, we intend that medical resources are better applied by limiting the occasions on which claimants fail to attend for examination and by providing more useful reports for our adjudication officers to consider.
Turning now to the Social Fund, I welcome what I took to be —but perhaps the noble Baroness will deny it—a partial conversion to the concept of loans by the noble Baroness. The noble Baroness shakes her head: obviously I misunderstood. I repeat that we see considerable advantages in loans. They allow the money to be recycled and therefore to achieve a great deal more. As I have said, loans have allowed an increase in the budget of some 50 per cent. in the last two years. The noble Baroness asked how much new money was coming in. In the net budget, as opposed to the gross budget, an extra £5 million is coming in. But, as I have said, through greater recycling of the money we will see yet more money available to those who wish to make use of the Social Fund.
The noble Baroness also asked about the SPRU report and comments from other bodies. I can assure the noble Baroness that we are actively considering the SPRU report and we shall respond to it in due course.
I turn to the question of fraud and the savings that we propose to make in that area. Obviously Her Majesty's Government are dedicated to, as my noble kinsman put it, uncovering fraud wherever it exists, whether it is in the social security system or elsewhere. I accept that the targets we are setting ourselves, of nearly £1 billion, are very difficult. The noble Baroness asked what period that figure would cover. It will be nearly £1 billion over one year. I did not say that we would simply abolish fraud, but our aim is to recover as much as we possibly can. I accept that these are difficult targets, but we are proposing, as was made quite clear in the Statement, yet further investment in this field and further administrative changes. We also propose changes to the way in which housing benefit subsidy is paid to the local authorities in order actively to encourage local authorities to further pursue fraud in that the local authorities will be allowed to retain certain amounts as and when they recover them.
Turning to the question put by my noble kinsman about control totals, the simple answer to what he asked, so far as I understood him, is that unemployment benefit plus income support to non-pensioners will be excluded from those control totals. Again, I should prefer to write to him to explain why Her Majesty's Treasury consider that this provides a perfectly satisfactory picture and a perfectly satisfactory forecast. I suspect that if I tried to explain from the Dispatch Box I might find myself more confused than I was when I started.
Turning to the question of monetary compensa-tion, as my noble kinsman said, he has now received
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a reply from my noble friend Lord Howe which partly answers my noble kinsman's question. The point he is really getting at is that if there is a sudden increase in prices, of whatever kind, during the year, what remedy is there to compensate those in receipt of benefits of one sort or another? Our position is that we uprate by means of the historic figure provided by the September on September RPI. We shall continue to do that and, therefore, any increases in January, or at some other time in the year, will be taken into account by the RPI figure for September on September next year.
Turning to the new methods of payment and the further encouragement of ACT—automated credit transfer—again I am grateful for the encouragement given by my noble kinsman. Certainly we should like to see ACT extended to those benefits for which it is not yet available. But we should also like to see further encouragement given to a large number of people who have bank accounts to use ACT wherever possible. It has great advantages in terms of preventing fraud and reducing costs in paying benefits. My noble kinsman and others would be the first to agree that payment by means of order books is somewhat antiquated.
Turning to the question of non-dependant deductions, my noble kinsman asked for further explanations of our intentions there. We propose to freeze the three lower rates and only increase the rate for those earning over £135 a week. Where a non-dependant lives with someone on benefit earning over £135 a week, we propose that in future the benefit recipient would be assumed to be receiving from the non-dependant £21 a week rather than £18 a week —a £3 increase. I believe that £21 is not an unjustifiable sum, bearing in mind the average costs of rent and other matters.
Lastly, I turn briefly, because I do not think that now is the time to discuss it, to the interpretation put by the noble Baroness on the results of the HBAI figures. I believe that her interpretation is misguided. I do not accept her arguments or those of my noble kinsman about the inadequacy of benefits. I certainly do not accept that the recent Rowntree Report, which I regret I have not yet seen, provides any further proof of the inadequacy of the benefits. I look forward to examining that report in due course. However, merely from the press reports that I have read, I do not seriously believe that it can be quite as silly as is made out. After all, it seems to imply that on an income well above average income, an income which the Labour Party throughout the last election thought sufficiently high to increase tax on, one can only enjoy a modest if adequate lifestyle. That has to be the view of what one would call "champagne socialists".
6.2 p.m.
Lord Boyd-Carpenter: My Lords, like the noble Earl, Lord Russell, and unlike the noble Baroness, I should like to express my gratitude to my noble friend the Minister both for reporting the Statement and for his share in its admirable contents. So far not enough has been said of the very great achievement of the Government in maintaining our immensely expensive system of social security intact, developing and improving against the background of real economic

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difficulties. That has been a considerable achievement and one for which the Government are entitled to receive a great deal of credit.
I was particularly pleased to hear my noble friend's announcement on war pensions; namely, the equalising of officers' and other ranks' pensions in respect of the same injuries. Many years ago I was responsible for these matters and I always thought that it was utterly wrong and illogical that if an officer and an other rank sustained a similar wound or injury, the officer was given a larger pension. But in those days the number of war pensioners from both wars was very large and the cost of making the change, which has now been made, would have been very heavy indeed. It would not have been agreeable to some of my predecessors at the Treasury. So I am glad indeed that the Government have now taken that step.
It is absolutely right and will, I believe, be greatly pleasing both to the ex-service world and to those serving at present. It is just as bad to have a serious wound as a private as it is as a general and it is absolutely right that the quality and degree of the injury, not the rank of the man injured, should determine the pension.
With regard to the Statement as a whole, I am sure that the Government were right to maintain the general level of benefits with full allowance for inflation and seek to make the necessary economies on administration, details on the periphery and dealing with fraud. It is undoubtedly the case that a certain amount of fraud exists in respect of the immense sums of money which the national insurance fund and other social benefits involve. I am certain that quite considerable savings can be made by the determined action which I understand the Government intend to take.
It is a most interesting and important Statement. Obviously it is impossible within the limits of time to ask sufficient questions about it. I suggest to my noble friend, particularly as the Leader of the House is not present, to consider that this House could most usefully spend a day discussing it. There is no subject which matters more to the great bulk of our population and no subject on which this House could do a greater public service than to give it a full and detailed discussion, examining the arguments and criticism that have been made—for example, by the noble Baroness—and discovering whether there is any force or validity in them. To discuss all the issues that arise would be a most profitable use of the time of this House. I very much hope that my noble friend will convey that suggestion to the Minister, though he himself may have two views about it.
Lord Henley: My Lords, obviously I have two views about that, as my noble friend put it. I shall certainly convey his request or instruction to my noble friend the Leader of the House. He is certainly right that it would be useful to have at some stage a general debate on social security matters and policy. I am most grateful for the kind remarks of my noble friend and his praise for the general thrust of our Statement.
My noble friend was pleased, as I sense everyone in the House was pleased, about our announcement of
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equalisation of rank differentials in war pensions. They have been frozen for some time and it becomes easier as the years go by to dispense with them. People have argued for many years that their time has passed and I am pleased that we have now been able to find the means of removing them.
Secondly, I accept, as my noble friend said, that there is an immense amount of fraud taking place. We remain absolutely determined to tackle that fraud, recovering as much money as possible and preventing as much fraud as possible from taking place. It is difficult to know how much fraud there is. I do not believe that we shall ever find a means of adequately estimating the level of fraud suffered by social security or indeed any other body. Certainly we shall continue to examine the problem and seek to find improved methods of quantifying the level of fraud and tackling it both by prevention and cure.
Baroness Jeger: My Lords, perhaps I may start by briefly confessing a matter of personal interest which may be shared by many Members of this House. I did not hear whether the noble Lord referred to the 25p addition to the pensions of the over-80s. I am totally innumerate and could not work out what the 3.6 per cent. increase in April would mean on 25p a week. I should be very glad and I am sure many people would like to know what will happen to that 25p a week. In order that we might get this sum into perspective, perhaps the noble Lord could tell us how that 25p. plus 3.6 per cent. will relate to the value of the 25p when it was first introduced.
Is it not time, when we are having a very full Statement, which was most interesting to us all, to have what some might consider a very small matter looked at again? Some of us are approaching the final winter of our lives and will be looking forward to finding the difference between 25p a week now and 25p plus 3.6 per cent.
Lord Henley: My Lords, it is obviously with some embarrassment that one has to rise to defend the 25p age addition. It has been frozen ever since it was introduced when I believe the state pension was at a level of £6 a week and 25p represented a quite reasonable percentage.
Lord Desai: My Lords, it is 4 per cent.
Lord Henley: My Lords, I am advised that it is 4 per cent. It was a useful addition.
It costs very little administratively to pay it. We have never found good reason to uprate it—that has been true of both Conservative and Labour government administrations —since its introduction in, I believe (the noble Baroness might remember better) 1971. As I said, there is no intention to uprate it by 3.6 per cent. I am saved the embarrassment of calculating what 3.6 per cent. of 25p is. We can possibly work that out afterwards.
We have maintained our commitment to increase the retirement pension by the retail prices index. More importantly, for the less well off pensioners we have increased income support levels well above inflation. If one remembers, there was the RPI increase last April; there was the mid-year increase this October;

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and there will be a further increase in line with the RPI of the premiums paid to all pensioners on income support next April. That represents our commitment to the less well off pensioner. I do not know whether or not the noble Baroness considers herself to be one. But certainly she will continue to receive her 25p.
Lord Ashley of Stoke: My Lords, I preface my question by warmly welcoming the change in the payments of war disablement pensions. I am always delighted to cross swords with the noble Lord, Lord Boyd-Carpenter. However, on this one issue I am happy to agree with him.
Perhaps I may ask the noble Lord this question. Is it not the case that there is no reason for a fanfare of trumpets for uprating benefits merely in line with inflation? That takes no account of the fall in living standards of the poorest in our society of about 6 per cent. between 1979 and 1989 compared with an increase in living standards of the wealthiest of about 46 per cent.
Although the noble Lord said that there had been an £8 million increase in payments in respect of the Social Fund, he omitted to say whether that means that there is an uprating in payments from the Social Fund in line with inflation. Has there been an uprating?
Lord Henley: My Lords, I welcome the noble Lord's praise for the war disablement pension changes. I am grateful that he felt able to agree with my noble friend Lord Boyd-Carpenter. I am sorry that the noble Lord felt that no fanfare of trumpets was due merely for an uprating. I remind the noble Lord that this has been what has been termed a very difficult public expenditure round and therefore I think that just a little fanfare of trumpets might possibly be welcome from the noble Lord.
The noble Lord also asked about increases in the Social Fund. What I tried to make clear was that by pumping in a small amount of extra money—about £5 million—and by increased recycling of money (by getting more money back), we have been able to increase the budget of the Social Fund by over 50 per cent. over the past two years. I think that that is no bad increase.
Lord Henderson of Brompton: My Lords, perhaps I may express my gratitude from the Cross Benches as well as my relief. The expressions of relief from the Opposition Benches may have been slightly churlish. I remind the noble Baroness of a famous line in Hamlet that relief comes with thanks.
"For this relief, much thanks".
I feel that wholeheartedly.
I also agree with everything that the noble Lord, Lord Boyd-Carpenter, said, including his warm welcome for the war pensions provisions. Apart from anything else, it will relieve my sense of guilt or embarrassment which I have now felt for almost 50 years.
Finally, I welcome the wish of the noble Lord, Lord Boyd-Carpenter, for a full debate on the social services. I hope that it will be a full debate without a time limit because it is such an important problem. There are many aspects that need to be examined, not
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least the Social Fund. That has now been an experiment for about three years and needs examination. In particular perhaps the Government and the noble Lord might consider not being absolutely rigid about the loan bases of the fund. Could a system of loans and grants be devised which would indeed catch those in greatest need? Quite clearly in many cases at present the system does not.
Lord Henley: My Lords, I am most grateful for the relief of the noble Lord, which has been so kindly expressed. I am also most grateful for his remarks about the war pension changes that we propose.
I note what the noble Lord said about the Social Fund. Perhaps we could reserve discussion on that for a full debate if such can be arranged. However, I must point out that there are grants already available in the Social Fund structure. It is a system of both grants and loans. I shall certainly pass on the noble Lord's request—whether or not I like it to my noble friend the Leader of the House and the usual channels.

Judicial Pensions and Retirement Bill [H.L.]
6.17 p.m.
Proceedings after Third Reading resumed.
[The judicial officer's entitlement to a pension]:
Lord Ackner Lord Ackner moved Amendment No. 2:
Page 3, line 18, leave out from ("65") to ("and") in line 20.
The noble and learned Lord said: Bernard Shaw said:
"Indifference to our fellow creatures is the essence of inhumanity",
I shall endeavour to show how pertinent that observation is as regards the provision in the Bill relating to an incapacitating illness for a judge and the way in which his widow is treated should he die of such incapacity.
For 160 years—that is since the pension legislation started in 1799—a judge who fell ill during the course of his office at any time, whether it was in the first year, the 10th year or the 12th year, automatically qualified for his full pension. There was no question of any limit because he had only served one year or two.
In 1933 the Peel Royal Commission suggested among other things that there should be a graduation in the pension payable on sickness. It was apparently not accepted by the Government for many years, perhaps because there was a note of dissent entered by Mr. Clement Davies in these terms:
"There is no doubt that many men who have accepted judgeships in the past have been obliged to make substantial financial sacrifices in so doing. The difference between the salary of a judge and the earnings of a successful practitioner at the Bar has increased rather than diminished in recent years and it is inevitable that similar and possibly heroic sacrifices will have to be made in the future. I believe that one of the several good reasons why the ablest lawyers have in the past been willing to accept a substantial reduction in their income is that the acceptance of a judgeship is in a very real, if indirect, sense an insurance against unexpected illhealth. For this reason alone I feel that it would be wiser and indeed fairer that a judge who is obliged to retire on the grounds of illness should receive his full pension as at present".
That was in 1936.
It was not until 1959 that a graduation provision in pensioning was implemented. That provided for a judge immediately on appointment to qualify for one-half of his ultimate pension. His ultimate pension was one-half of his salary and therefore he qualified for one-quarter of his salary on appointment. Thereafter he achieved an increment of one-fortieth of his salary in regard to each year that he served.
Conveniently, the provisions which existed in 1959 and which exist today in relation to the High Court judge are set out in terms at the bottom of the Marshalled List of amendments. It is in fact Amendment No. 4. Perhaps I may give your Lordships an example of how the provision would work today. I take the income of a High Court judge and round it off at £80,000—it is, in fact, £87,000. I ask your Lordships to assume that the judge suffered a stroke in his first year. That is an experience which we know from the immediate past can happen and has happened on occasions. It is not surprising because the judge is appointed fairly late in middle age.
Under the present position the judge will immediately receive a pension of one-half of what his full pension would have been. His full pension would have been £40,000, which is half of £80,000. Therefore, he qualifies immediately for £20,000. If he dies during that year, as he well might, his widow will be entitled to one-half of the pension that he was enjoying; in other words, £10,000. Therefore, there is £20,000 to the disabled judge and £10,000 to his widow if he does not survive that year.
For reasons which have never been explained and which have nothing to do with conformity with tax law, the consultation paper which was issued by my noble and learned friend's department decided that that situation should be decimated. Instead of the fast accrual rate in the first five years, the accrual rate should operate on the basis of one-fortieth for each year or, in relation to the widow, one-eightieth for each year. So putting the clock forward into next year when no doubt the Bill will become an Act, the new judge becoming disabled by a stroke in his first year would achieve not £20,000 by way of a pension but £2,000. On his dying in that year his widow would achieve not £10,000 but £1,000.
That matter was immediately drawn to the attention of my noble and learned friend more than one year before the Bill was introduced in this House. It was drawn to his attention first by the Top Salaries Review Body, to which the reorganisation of the pensions was not entrusted—as was the case with Members of Parliament—but, in my respectful submission, should have been. The TSRB commented as follows:
"Pension benefits calculated on the basis of pensionable pay and past service but payable immediately in the event of retirement on the grounds of ill health could be more generous. An alternative approach would be to base ill health pensions on potential service to age 65".
In a letter to the Lord Chancellor's Department the Top Salaries Review Body advised it to retain the services of an independent consultant actuary, which
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it did. A few months later Mr. Alexander of the well-known firm of Watson and Sons wrote on this subject in these terms:
"On illhealth retirement an immediate pension is payable based on complete service. Where service is short the pension payable will be relatively small, whereas it can be urged that it is precisely such individuals who need the greatest support. This is one reason why it is more common to provide a more generous basis of calculation; in 59 per cent. of private sector schemes (see the survey of NAPF in 1990) whereby some or all of potential service to normal pension age is included, for example. A somewhat complex enhancement formula is common in public service schemes. We suggest that consideration is given to something simpler such as an inclusion of half the potential service".
That of course will be up to the age of 70.
There was no reaction to those suggestions and the Bill was published. The Second Reading drew specific attention to this case, in particular the speech of my noble and learned friend Lord Morton of Shuna. Again there was no reaction. We drew attention to the issue in our debates in Committee but there was no reaction. The Committee ended on 30th June. That gave the judges the opportunity, to which I am sorry they were ever obliged to resort, to obtain advice from an independent consultant actuary. He provided the advice by the end of the July. A copy was immediately sent to my noble and learned friend the Lord Chancellor by my noble and learned friend the Lord Chief Justice. Time passed, and by the end of September we learnt from my noble and learned friend the Lord Chancellor that he was contemplating the possibility of making some alteration. Shortly before the Report stage we were told that he hoped to introduce at Third Reading a mitigation of the present system.
What we have sought, quite simply, is that there should be deemed service to the age of 65. Therefore, if at 50 a person is disabled, albeit in his first year, he would be deemed to have served from 50 to 65. The response to that amendment, which has existed ever since the Committee stage, is that the Government were prepared and are prepared and have so found in the amendments to offer exactly half.
That is the extent to which we have extracted a little humanity from the Government, but it is to be compared with what has so recently happened in relation to Members of Parliament. Recently I obtained from the Top Salaries Review Body its report advising what should occur for Members of Parliament. It stated:
"We have examined other minor improvements in benefits for which there is a strong case on welfare grounds. The cost of these would be relatively small",
and I stress that. The report continues:
"We consider that for the calculation of ill-health retirement pensions and spouses' pensions in the event of the death of a member in service, years of potential pensionable employment to age 65 should be credited to replace the existing less favourable enhancement rules. The member would have had an expectation of pensionable employment to retirement age either in Parliament or elsewhere and there is a trend towards the adoption of the potential employment approach. The 1990 survey of the National Association of Pension Funds found that that basis had been adopted in 58 per cent. of pension schemes for spouses pensions and in 35 per cent. of schemes for ill-health retirement pension, with others having insurance schemes which supplement salary during prolonged periods of disability. The proposal would, at relatively low cost to the pension fund, correct the

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inadequacy of the existing low level of pensions for young MPs faced with retirement due to ill health or, if they die, for their surviving spouses; perhaps the group in greatest need of support for whom there is much concern in the House. In addition to improving the existing provisions greatly, the new basis of calculation would be simplified and MPs and their spouses would know in advance what their entitlement would be in the event of ill health, retirement or death. There would be consequential improvements for children".
The recommendation thus read:
"We recommend that the grant of full years of potential pensionable employment to age 65 to replace the existing complex enhancement rules for the calculation of (1) ill health retirement pensions and (2) spouses pensions when MPs die in service".
The result of that recommendation was a provision made in the Parliamentary Pensions (Amendment) Regulations 1992 made on 9th March 1992, laid before Parliament on 10th March 1992 and which came into force on 1st April 1992. I shall not read out the actual provisions. It is sufficient for me to read from the explanatory note which states:
"Regulation 5 replaces the existing enhancement rules in relation to ill health pensions by providing for an increase in the aggregate period of reckonable service equal to the full period"—
I stress that—
"of potential pensionable employment to the age of 65".
Therefore, not many months ago it was considered proper that Members of Parliament should have exactly what we have suggested in this amendment, with only one exception; that is, that their pensions are earned by the age of 65 and judges are to be expected to do 20 years to the age of 70. Therefore, what we have sought is not deemed service to the full pension but deemed service to the age of 65.
In view of the Autumn Statement which has so recently been repeated, perhaps it is pertinent to remind your Lordships of what was said quite recently on Report. It had been urged by my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice, in relation to the debate on whether the accrual period should be 15 or 20 years, that the sad financial stringencies of the moment were irrelevant to what was being debated because we were talking of a pension scheme which would not be operating currently but, in all likelihood, would be affecting pay-outs only 15 or 20 years hence. That point was made, and stressed, by both my noble and learned friends.
In the debate my noble and learned friend the Lord Chancellor said:
"I also agree with the view that what we are seeking to set here is the system for pension payments for the future; in other words, I shall not refer to any present aspect of the economy or anything of that sort in dealing with the matters which have been raised".—(Official Report, 27/10/92; col. 1064.)
The amendment has the enormous corroborative support of what has been so recently applied to Members of Parliament. In my submission with regard to the concession made by my noble and learned friend the Lord Chancellor, to which I have just referred, since we are talking of the distant future we need not have regard to the present financial stringencies. We must deal with this matter as a question of fairness. That was so well stressed by the report from the Top Salaries Review Body, parts of which I read. I beg to move.
6.30 p.m.
Lord Rawlinson of Ewell: My Lords, I have never been able to check the reference but when Dr. Samuel Johnson moved to the Temple where the lawyers live it is reported that he said, "I do not like frogs and I do not like lawyers, and I am not going to have either of them hopping about in my chambers". Many people do not like lawyers. I know that some Members of this House find it tiresome that time is taken up on salaries and pensions of persons who are not themselves interested but who may be thought to be interested on behalf of a trade union.
I have never been a judge. I never wanted to be a judge. About 30 years ago I was a part-time judge—a recorder—at Salisbury. I showed such little aptitude and talent for that that I spent my time in a more lucrative way practising before the Bench. When I was first a law officer 30 years ago—and only the noble and learned Lord, Lord Simon of Glaisdale, has been a law officer before my time—I remember that extraordinary dislike of the bureaucrats by the lawyers. This Bill is a culmination of the triumph of the bureaucrats over the lawyers—two classes of people who are not generally liked.
I remember at that time that the law officer's department wanted to move the Attorney General's chambers from the Law Courts because it was said to be more convenient to move them away from there; and it eventually succeeded. It was said that law officers should not be in court but should be available for Cabinet and for Cabinet Committees; again, there was success in that respect. They have now become tame lawyers of the Government and the old tradition of law officers has really disappeared.
Now there is this assault—and it is an assault—on the judiciary. I have never been a judge but I know how vitally important it is that we should have the very best people as judges. Many people say that this is an unimportant matter, but it is not. It is vitally important. If the Government go rough-shod over judges' pensions, which are part of the pay and conditions, then they will not get the best judges. When Disraeli was here and asked what he thought about the place he said, "Dead but in the Elysian fields". We shall probably all be dead when the provisions of this Bill take effect. It may be said that we are sitting here going on and on about pay and conditions, and so on, but it is a more important matter than that.
I am glad that the retirement age for judges has been reduced. I gave up practising at the Bar eight years ago when I was 65 and I had to ask the judges to speak up. I thought that it was time to retire. I am glad that the provision has been introduced that judges should retire earlier than they used to; that is sensible and right. However, let us not forget that most good judges are old judges. It is important that proper pension provision should be made.
If a young man is to be asked to give up practising at the Bar to take a seat on the circuit Bench he may ask himself what will happen to him or his wife if he is ill. He may ask himself what will happen in those circumstances. Let us not be penny pinching as regards this matter.

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When one is dealing with a Minister whom one likes very much personally and admires, I have always found it very difficult to oppose those things which he is doing, but I do oppose this measure. There was one bulwark who used to stand up for the judges. In my time they were called streetwise and by that I mean politically wise. I refer to Lords Kilmuir, Elwyn-Jones and also my noble and learned friends Lord Dilhorne and Lord Hailsham who is not here. With all the respect and affection which I have for my noble and learned friend, I beg him to stand up for the judges.
I know that the Treasury is saying to him, "Look, this is your department. This is the amount of money you have. You can only have this amount of money. The money for judges has to be reduced. You have to do something about it". I ask and beg my noble and learned friend to wag his finger and, if not, throw off his wig. I very much support the amendment.
Lord Benson: My Lords, at Report stage of this Bill the noble and learned Lord the Lord Chief Justice asked for some tables to be issued so that the House could appreciate the effect of its own decision. Those tables were eventually provided on Tuesday of this week. They included the proposals to be made by the noble and learned Lord the Lord Chancellor at Third Reading in the amendments now before the House.
On this particular issue the tables show that as regards a High Court judge, the pension payable in the event of retirement due to illhealth, and the pension payable to the spouse if death supervenes, are less than the pensions payable to judges and spouses under the existing scheme which was settled 11 years ago. The cuts are substantial. Sometimes they are as much as £3,000, £4,000 and £5,000 per annum. There are of course some upward adjustments of the lump sum. Those upward adjustments in no way compensate for the heavy cuts to which I have just referred in the annual pension. The position as regards the circuit judges is that under certain conditions similar cutbacks take place, but they are much less serious than in the case of the High Court judges.
Perhaps I may suggest that on retirement due to illhealth and in the event of subsequent death of the spouse, there can be no possible grounds for paying lower pensions to future judges than were thought to be fair 11 years ago. Even that comparison is unjust because the scheme settled 11 years ago is now long out of date. It is very ungenerous by modern standards. So the comparisons which I have put before the House are even more savage than outwardly appears.
The situation seems even more unfair than I have described because this Bill applies to two other classes of the judiciary; the district judges and the stipendiary magistrates. In both cases, except in one curious case which is a pure anomaly, the district judges and the stipendiary magistrates receive substantial increases in pension and in the lump sum. What is the justification for discriminating against the High Court judges and to a lesser extent the circuit judges? Why should the position of those judges be debased in this way?
Amendment No. 3 would help to correct the situation as the noble and learned Lord, Lord Ackner,
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has pointed out. It would be transparently unfair to let this Bill go forward in its present form unamended by Amendment No. 3.
6.45 p.m.
Lord Taylor of Gosforth: My Lords, I do not propose to speak at length on this matter, but on behalf of the judiciary I wish to support the amendment. The proposal contained in the original version of this clause was nothing short of shameful. The idea that the wife of a High Court judge who dies of a stroke in his first year should receive the princely sum of £1,000 is nothing short of shameful. The amendment or improvement which has been belatedly —and one has to say grudgingly—granted by the Government may not be shameful, but it is still mean in the extreme.
My noble and learned friend Lord Ackner has drawn a comparison between the proposal for judges and that for Members of Parliament. I seek briefly to give a different analogy. Let us compare like with like—that is to say, judges in this country and judges in other jurisdictions. I take Canada as the only example. I am informed that in Canada a judge becomes entitled on appointment to his full pension should he have to retire through sickness even in his first year. Moreover, perhaps I may add that in Canada that full pension is earned in good health in 10 years and not 15 years or 20 years.
I go further. It is a pension of full salary; not half salary. It is also index linked. Why should we be so mean to our judges when Canada, which has inherited our common law jurisdiction and seeks to follow the example which we have set in matters judicial and in the administration of justice, adopts a more reasonable and humane approach? Why should the mother country be the example of meanness in this matter? I strongly urge that this amendment be supported.
Lord Simon of Glaisdale: My Lords, your Lordships have heard my noble and learned friend Lord Ackner introduce this amendment with exemplary clarity, lucidity and force. He has since been supported by great expertise and experience. I hope that my noble and learned friend will not take it amiss if I earnestly hope that he will deal with each of the arguments put forward, especially that of my noble and learned friend Lord Ackner, and his comparison with the pension treatment of Members of Parliament, and that of my noble and learned friend Lord Taylor of Gosforth who dealt with the treatment of Canadian judges.
I intervene only in order to draw the comparison between the way it appears to the Government, particularly the Treasury, and the Chancellor of the Exchequer and the Lord Chancellor, in 1958–59. The Lord Chancellor was Lord Kilmuir, a stalwart defender of the judiciary both individually and collectively. The Chancellor of the Exchequer was Mr. Heathcoat-Amory whose background was agricul-ture, industry and banking. In addition to that wide experience he had an instinctive feeling for the constitution. He saw at once that if a judge suffered a

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disablement in his first year it was intolerable that he should be relegated to one-thirtieth of his salary and that if he died his widow should be relegated to one-sixtieth.
That compares rather favourably with the one-eightieth proposed in the Bill. Mr. Heathcoat-Amory saw at once that a society which treated its judges and its judges' widows in that way did not deserve a judiciary worth the name. That was a little beginning.
The way it worked out very quickly is illuminating, because two greatly loved and much respected judges were both stricken early in their careers: Mr. Justice Pritchard by a stroke and Mr. Justice Gerard by a heart attack. They were not ever to resume their places on the Bench but at any rate enjoyed a modest pension which enabled them to live in London and give very valuable service on the Council of Legal Education. They did not spare themselves. They were able to do that and, although they never spoke of it, I do not doubt that one of the reasons they never spared themselves was the reflection that if their exertions caused premature death, at least their widows would not be reduced to penury. I ask your Lordships to look on that picture and on this.
Lord Campbell of Alloway: My Lords, on the last occasion I supported the noble and learned Lords on the Cross Benches in their amendment but today I have considerable difficulty in supporting Amendments Nos. 2 and 3, to which I may speak under Clause 2 of the Bill. Basically, I waited to hear all that was said, but I remain unconvinced, having seen the actuarial tables and tried to assimilate them —I am not very good at figures but I tried—and having seen the effect of the amendments proposed by my noble and learned friend the Lord Chancellor. At the moment, subject to what else may be said in your Lordships' House, I would find it difficult to support Amendments Nos. 2 and 3 today. Those are under Clause 2 of the Bill concerned with entitlement to a pension.
I would speak also to Amendment No. 25 to Clause 5 of the Bill, the surviving spouse's pension. Also, inevitably, in taking the stance that I am taking, one has to speak to Amendments Nos. 7, 8, 9 and 10 to Clause 3 concerned with the appropriate annual rate. All those amendments, in one form or another, are designed to retain the existing accrual period for pension of 15 years—
Lord Ackner: My Lords, would my noble friend allow me to intervene?
Lord Campbell of Alloway: My Lords, of course: at any time.
Lord Ackner: My Lords, the accrual period has absolutely nothing to do with the amendment which I am proposing. The amendment I am proposing relates purely to sickness and to death resulting from sickness. The age of 65 has been put there on the basis that the accrual period remains as this Committee decided—20 years—and the retiring age too. That is why the grouping in no way touches on that clause.
Lord Campbell of Alloway: My Lords, I hear what my noble and learned friend says and I am grateful for his intervention. But in any event, irrespective of the point on which he seeks to correct me, one has to consider this matter, on any showing, in the light of the amendments which have been tabled in the name of my noble and learned friend the Lord Chancellor and which have affected, if I may say so quite quietly from these Back Benches, my mind. They give the reason why I am perhaps changing my stance, not that I always support the Government —noble Lords in this House know that I do not invariably do so—but that I think it is fair and reasonable on this occasion to do so.
Amendment No. 5 refers to enhancement for ill health: that is Clause 2. That is all part of this group. There is Amendment No. 21, death after retirement—for surviving spouses the enhancement. That is on Clause 4 in a subsequent grouping. I am not going into detail but just outlining the position which has led me to the conclusions that I am tentatively putting forward. There are Amendments Nos. 26 to 32 to Clause 6: the special widening of scope for the children. That is a subsequent grouping. There is the question of the pension, irrespective of remarriage and irrespective of the marital status of the children: a very substantial concession, as I see it.
Finally, there is the group on Clause 10: Amendments Nos. 35 to 44, 46, 53 and 54 relating to additional voluntary contributions up to the revenue limit. As all your Lordships know, and particularly noble and learned Lords, I know nothing whatever about tax affairs. However, I have made inquiries and I am told that, since the Report stage, the Lord Chancellor's Department has made a very satisfactory arrangement with the Revenue which did not exist before to cover the basis of these amendments. If I am wrong, perhaps the noble and learned Lord the Lord Chancellor will say so. I find these matters confusing and it is possible that I may have got this wrong. But I have to balance those advantages against what has been said, and indeed against what any other noble Lord will say, because inevitably I shall have an open mind until the end of this debate.
At the moment it seems that there is absolutely no point—I think the noble and learned Lord, Lord Ackner, is with me on this—in discussing further the question of the extension of the accrual period and there is absolutely no point in discussing the reduction of the retiring age. These matters have been decided by your Lordships whether we like the result or whether we do not. That is all spate water under the bridge. Without reopening the debate, therefore, I seek to look again at the aspects of the public interest—the very same aspects which were debated at Report stage when there was a Division and I supported the amendment—but without repetition of any of those aspects. I merely noted and read again in Hansard at cols. 1066 and 1067 that my noble and learned friend the Lord Chancellor referred to certain proposals that he would introduce, and those are the proposals which appear in the amendments which he has tabled today.
I have sought to assimilate the paper which has been placed in the Library by my noble and learned

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friend the Lord Chancellor, with its tables and comparative figures as between the new scheme under the Bill and the existing scheme which has been prepared with the assistance of the Government Actuary. I find it a very difficult document. However, doing my best and searching the tables with some care, I have found that it shows both advantages and disadvantages to the proposed new scheme as compared with the existing pension scheme.
Having studied these comparisons and having had the opportunity to consider the tables produced by the Government Actuary, I am no longer able to feel, as I did feel on Report, about the proposed new scheme as now put before your Lordships' House. I no longer feel that it is assuredly so that persons suitable to serve on the High Court or circuit bench may be discouraged. This may be established. I can no longer accept that the quality of justice will be substantially reduced. I can no longer accept—I am open to correction on any suggestion from any noble Lord if I am wrong—that these proposals will operate in any way contrary to the public interest, which is the only interest with which all noble Lords are concerned today. In these circumstances I find it difficult to support these amendments because I am not convinced that they will have this serious disadvantageous effect upon the public interest.
I always welcome the delightful way in which my noble and learned friend Lord Rawlinson of Ewell puts any case, and I totally understand the charming way in which he put the case against lawyers. We cannot dismiss that. After Report stage it was said to me, "You are one of these lawyers. What are you all doing pay bargaining in the House? The nurses and the doctors cannot pay bargain. What are all you lawyers doing conducting pay negotiations on the Floor of the House, taking up so much time when we have so much else to do? It is all lawyers speaking in lawyers' interests." I can say until I am blue in the face that we are not debating in our own interests—we are debating in the public interest, but nobody believes it. I must simply accept that that is so. It is very unfortunate, but one just accepts life as it is. It is very difficult because, once formed, the impressions made in your Lordships' House are very often not so easy to dispel.
As we enter a period of measures of financial constraint, although these matters will take root effectively some 15 years ahead, surely what really matters is what my noble and learned friend Lord Rawlinson said—that there should be fair pension provision for the judges. As far as I can see at the moment, it would be difficult to contend that the proposed new pension scheme, with the amendments that have been tabled by the noble and learned Lord the Lord Chancellor, could be said to be unfair or unreasonable if one takes into account the balance of advantage and disadvantage in the actuarial tables as compared with the existing scheme. If I have done my sums wrong, perhaps noble Lords will forgive me, but I have at least done them in good faith.
I would find it difficult to contend that the public interest would be substantially affected one way or
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another. For those reasons, therefore, although I accept that the noble and learned Lords' amendments are sincerely motivated and have been properly put forward in the interests of that which they feel that it is totally right to support, as presently advised I cannot support them in your Lordships' House tonight.
7 p.m.
Viscount Bledisloe: My Lords, in the light of the various things which the noble Lord, Lord Campbell of Alloway, finds himself unable to accept, I venture to suggest that it may be useful to your Lordships to hear a voice from the practising Bar where real life is really lived. In my humble belief, this House is being asked to consider this matter without real regard to the true position.
In Committee, I suggested that people were becoming increasingly reluctant to accept judicial appointment and that the various changes for the worse contained in the Bill would enhance that reluctance. At that time, that seemed to be dismissed as being unreal, alarmist and lacking evidence. Since then, we have had dramatic proof that what I said about the increasing reluctance to accept judicial appointment is, in fact, so. Since 1st October this year, there have been two vacancies in the complement of six judges required for the commercial court. In short, that has caused chaos and has moved the learned judge in charge of that list to say that the very basis of the listing system of the commercial court has been seriously undermined. That is not a matter to be lightly dismissed.
The commercial court—its success and proper operation—is a vital part of the commercial life of this country and of the invisible earnings of the City. I am reliably informed that one of the reasons why those two vacancies remain unfilled is that the highly qualified persons who have been approached about accepting the vacancies have declined to do so. I am not saying that that reluctance is merely because they now have to start serving younger and to serve for longer in order to get their pensions, nor am I saying that it is merely because if they die young in office their dependants will receive only the miserable pittance that the noble and learned Lord is offering.
However, what I do say—and say with some force and from a real knowledge of how the potential candidates whom the noble and learned Lord or his successor will be approaching in the next few years really feel—is that each step which is taken or allowed by the noble and learned Lord which renders the Bench less attractive will make people more and more reluctant to accept appointment. The gloomy prognosis that I gave last time, has, in my view, been proved conclusively by the noble and learned Lord's inability to fill those vital places in the commercial court.
Lord Thomas of Gwydir: My Lords, I intend to restrict myself to the amendment that was moved by the noble and learned Lord, Lord Ackner, and to say that I entirely agree with the proposal and shall support it. I should like to point to the time, which is

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10 past seven on a Thursday night. We have been restricted in time as a result of two very good Statements and we are therefore dealing with only the first of the major amendments tonight. It is important that we should consider these. I therefore intend to be very brief.
The proposal concerns the question of disability and death and the pension that is acquired on disability and death. I agree with the noble and learned Lord the Lord Chief Justice when he said that in the present situation, if a High Court judge were to have a stroke in his first year and was unable to carry on, he would be entitled today to half his pension. In other words, he would be entitled to about £20,000 pension. If he died shortly afterwards as a result of that stroke in his first year, his widow today would receive a pension of approximately £10,000. If the Bill is enacted, a High Court judge who has a stroke in his first year, would be entitled to a pension of £4,000 and his widow, if he died thereafter, to a pension of £1,000. The Lord Chief Justice said that that was shameful and I agree with him. I cannot follow my noble friend who said that, having gone into the matter, he thought that it was fair. I think it is most unfair and I support the proposal.
7.15 p.m.
The Lord Chancellor: My Lords, perhaps I should begin by saying that I propose to move Amendment No. 5, the result of which will be to make considerably different and better provisions than my noble friend Lord Thomas of Gwydir has in mind. In his earlier remarks my noble and learned friend the Lord Chief Justice referred to the situation under the Bill as unamended. I have recognised that and have made a change. The change that I propose in my amendment is to allow half of the service up to the age of 65 as an increment which will be the basis of the lump sum and pension. The result of that is a considerable improvement on what was previously in the Bill and it leads to a variety of situations which are shown in the tables to which attention has been drawn.
I must say, first of all—this has a particular bearing on what the noble Lord, Lord Benson, said—that the Bill endeavours to propose a pension scheme for the whole of the judiciary. In the present situation there are a number of different schemes for different parts of the judiciary. One of the consequences of that, of which I am sure my noble and learned friends who have spoken are aware, is that when a circuit judge, for example, is promoted to the High Court he is at a disadvantage in respect of the service which he gave on the Circuit Bench. One of my objectives in putting forward the Bill is to produce a scheme of judicial pensions that operate at all levels on the same principles; namely, by reference to the salary that the judge earns in the last year of his or her service. One of the reasons to which the noble Lord, Lord Benson, referred for querying this scheme was the fact that it produces some improvements as regards the district judges and so on. One must take account of all of those together in the arrangements.
As I said, I have recognised the need to improve the scheme in the way that I have just described and,
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assuming that the amendment were to fail, I shall move Amendment No. 5 to put in place that provision. As the scheme was prepared, it allowed a uniform accrual over the period of 20 years. The primary reason for that, as I have often explained, is in order that the scheme should have the benefit of being tax approved and therefore that tax benefit would accrue in respect of both the contributions and the lump sum.
I have therefore proposed that the scheme should be changed to provide for enhancement in respect of benefits which arise as a result of ill health or death. The figures to which reference has been made include some improvements over the present scheme in respect of the High Court Bench, for example, in relation to the lump sum. However, I do not believe that it is fair to look at the matter purely from the point of view of one part of the judiciary. One must look at the scheme as a whole.
As my noble and learned friend Lord Ackner said, it is true that Members of Parliament have a scheme under which, if they fall ill, they receive benefits on the basis of service up to the age of 65. However, on the other hand, Members of Parliament have an annual accrual rate which is less than the judges' annual accrual rate. If one looks at this matter overall, the judges receive better benefit on ill health than do Members of Parliament.
My noble and learned friend the Lord Chief Justice referred to Canada. The system here is very different from that in Canada and the amendment does not seek to emulate the situation in Canada. I believe that to make effective accrual up to 65 and divide it by 50 per cent.—that is to say, to take 50 per cent. of the service that would be credited up to 65—is an appropriate way of dealing with the matter and, in particular, it considerably enhances the benefits for the people who take up appointments young. The younger the person is appointed and the earlier the ill health falls, the greater is the effect of the enhancement. I believe that that is a fair method of proceeding.
The noble Viscount, Lord Bledisloe, indicated that he thought it was a difficulty as regards remuneration that prevented appointments being intimated in the commercial court. I am not sure of the precise basis of that information, but I certainly believe that I shall have distinguished appointments to the commercial court in early course. In the nature of things, those who have a busy practice in the commercial court often have substantial commitments. It is therefore difficult for them to be available as quickly as practitioners with less lengthy cases to handle. However, I can assure the noble Viscount that I certainly have the interests of the commercial court clearly in mind and that I expect to be in a position to advise on the appointment of distinguished members of the Bar who will fill those vacancies when commitments enable that to happen.
Viscount Bledisloe: My Lords, before the noble and learned Lord leaves the subject, can he please tell me, "yea or nay", whether or not it is correct that certain persons whom he has approached to accept that office have in fact declined to do so?
The Lord Chancellor: My Lords, it is correct that, from time to time, I have approached people who have had particular circumstances in a situation which have made it impossible for them to accept appointment at the time. However, in my experience, the number of such people is very small. Moreover, in none of the cases that I have in mind was the question of remuneration, pension or anything of that kind the reason for the refusal. The reasons were described to me in detail and they related to the particular situation. Therefore, I do not think that I should go into any great detail on the matter. I am certainly quite clear in my own mind that the only reasons that have ever been advanced to me for anyone not accepting a proffered appointment to the High Court Bench have been personal circumstances relating to a present situation. In quite a number of those cases the personal circumstances have changed in relatively early course.
Lord Ackner: My Lords, I have four distinct and different points to make in reply which I shall make very quickly. The noble Lord, Lord Benson, indicated that if the amendment of my noble and learned friend (Amendment No. 5, in regard to which we have tables) is put into effect, there will be certain cases where High Court judges and circuit judges will be worse off than they are at present. It may be interesting for your Lordships to listen to what was said 33 years ago when the Judicial Pensions Bill 1959 was moved in Committee in another place by the right honourable Sir Harry Hylton-Foster. While talking about the proposal which now exists, he said:
"The figure of one quarter"—
which is one quarter of the salary or one half of the pension—
"was arrived at because it was felt that, in the case of a judge of the High Court retiring in a period under five years owing to infirmity, which is the circumstance this subsection envisages, it would be wrong to cast him off, in effect, with a pension of less than one quarter of his last annual salary … It was felt that to treat high officers of our judiciary who were stricken and forced to retire in these circumstances, through no fault of their own less generously than that would seem to show we put altogether too low a value on our judiciary generally".—[Official Report, Commons, 3/12/59; cols. 1457–8].
That is precisely what my noble and learned friend The Lord Chancellor proposes to do under his amendment in regard to those cases focused upon by the noble Lord, Lord Benson.
I turn now to my second point. I can assist the noble Lord in regard to Canada by adding several examples. The first is in Australia. In Queensland, the judge who goes sick in the first five years receives 75 per cent. of his pension with 5 per cent. per annum for the next five years. The figure of 60 per cent. applies elsewhere in Australia. In the United States the percentage is 100 per cent., while in New Zealand it is 50 per cent. of the salary. All of them are substantially higher.
My third point relates to the intervention of the noble Lord, Lord Campbell of Alloway, who sought to stress the generous provisions that we shall debate at a later stage. Perhaps I may remind him of the statement on page iii of the Explanatory and Financial
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Memorandum concerning the financial effects of the Bill which has not been updated in any way. It reads as follows:
"The difference in cost between the existing arrangements and the new arrangements will take some years to emerge, but the effect on public expenditure is expected to be broadly neutral".
I think that the noble Lord, Lord Campbell has also overlooked the reference made in past debates to Table 7 on page 60 of the latest report of the TSRB which indicates that the cost to the Treasury per year for the pension of a High Court judge is about £25,000. If the judge has now to work five years longer, then, in regard to a judge who would have retired after 15 years, the Treasury is saving a little over £30,000 in respect of those years.
Finally, I do not understand—and I am sure, with great humility, that it is my fault—the answer which my noble and learned friend the Lord Chancellor gave in relation to the comparison with Members of Parliament. Of course, the accrual period is different for Members of Parliament. They do not arrive as MPs with an average minimum age of 50-plus. That is why the accrual period is different. It has been common ground throughout our debates that judges are sui generis: unlike their opposite numbers in Europe, they do not arrive on the judicial scene in their early 20s; indeed, it is almost at the end of the average person's working life that they take up the judicial position.
Perseverance keeps honour bright. I do not intend to withdraw the amendment.
7.27 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
*Their Lordships divided: Contents, 35; Not-Contents, 60.

Division No. 1

CONTENTS

Ackner, L.

Mallalieu, B.

Annan, L.

Meston, L.

Archer of Sandwell, L.

Perry of Walton, L.

Avebury, L.

Pitt of Hampstead, L.

Benson, L. [Teller.]

Rawlinson of Ewell, L.

Bledisloe, V.

Rea, L.

Brandon of Oakbrook, L.[Teller.]

Redesdale, L.

Richard, L.

Brightman, L.

Russell, E.

Carter, L.

Seear, B.

Clinton-Davis, L.

Simon of Glaisdale, L.

Darcy (de Knayth), B.

Taylor of Blackburn, L.

Dormand of Easington, L.

Taylor of Gosforth, L.

Graham of Edmonton, L.

Thomas of Gwydir, L.

Harris of Greenwich, L.

Turner of Camden, B.

Hylton-Foster, B.

Wigoder, L.

Jeger, B.

Wilberforce, L.

Lockwood, B.

Williams of Mostyn, L.

NOT-CONTENTS

Archer of Weston-Super-Mare, L.

Chalker, B.

Chilver, L.

Arran, E.

Clanwilliam, E.

Blyth, L.

Clark of Kempston, L

Boyd-Carpenter, L.

Cochrane of Cults, L.

Brougham and Vaux, L.

Coleraine, L.

Cadman, L.

Colwyn, L.

Caithness, E.

Cranborne, V.

Campbell of Alloway, L.

Cumberlege, B.

Carnegy of Lour, B.

Denton of Wakefield, B.

Carnock, L.

Elton, L.

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Ferrers, E.

Mountevans, L.

Fraser of Carmyllie, L.

Moyne, L.

Glenarthur, L.

Northbrook, L.

Goschen, V.

Orkney, E.

Hacking, L.

Parkinson, L.

Haslam, L.

Peyton of Yeovil, L.

Hayhoe, L.

Reay, L.

Henderson of Brompton, L.

Rodger of EarlsFerry, L.

Henley, L.

St. Davids, V.

Hesketh, L. [Teller.]

Shrewsbury, E.

HolmPatrick, L.

Skelmersdale, L.

Howe, E.

Strathclyde, L.

Lane of Horsell, L.

Strathmore and Kinghorne, E.[Teller.]

Long, V.

Lucas of Chilworth, L.

Swinfen, L.

Mackay of Clashfern, L.

Tonypandy, V.

Merrivale, L.

Trumpington, B.

Mersey, V.

Ullswater, V.

Monk Bretton, L.

Vaux of Harrowden, L.

Moore of Lower Marsh, L.

Wade of Chorlton, L.

Resolved in the negative and amendment disagreed to accordingly.
[Amendments Nos. 3 and 4 not moved.]
7.35 p.m.
The Lord Chancellor The Lord Chancellor moved Amendment No. 5:
Page 4, line 27, at end insert:
("() in any case falling within subsection (3) above where, at the date of the retirement, the person has not attained the age of 65, the aggregate length of his period of service shall be increased by the addition of a period equal in length to one half of that which—

(i) begins immediately after the date of the retirement; and

(ii) ends with the day on which he would attain the age of 65;").

The noble and learned Lord said: My Lords, I explained the effect of this amendment in response to Amendment No. 2, and I have no need to detain your Lordships. I beg to move.
On Question, amendment agreed to.
[Amendment No. 6 not moved.]
Lord Ackner: My Lords, before I move Amendment No. 7, I should like to ask for clarification. I understood that we were adjourning for one hour, and that that was to be at 7 o'clock. We have of course passed 7 o'clock. I merely want elucidation as to whether this is a non-stop event or whether we shall have one hour for some form of nourishment. Can someone tell us that, because if the programme has been changed, it has not been announced.
Viscount St. Davids: My Lords, we are going straight through.
Lord Ackner: My Lords, it is nice to know. I thank the noble Viscount.
Clause 3 [The appropriate annual rate]:
Lord Ackner Lord Ackner moved Amendment No. 7:
Page 4, line 43, at beginning insert ("Subject to subsection (1A) below")
The noble and learned Lord said: My Lords, the amendment arises in these circumstances: the first judicial pensions Act in 1799 provided that the period which the senior judges had to serve before earning their pensions was 15 years. That accrual period has remained the same since, and was applied to county court and circuit judges when their judicial offices were created. After 200 years, that provision has been set
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aside as a result of the failure of the amendment which was urged and divided upon on Report. Thus, hitherto, unlike our counterparts on the Continent, we have been treated as sui generis, but now it is said that that should no longer be the case.
As your Lordships will remember, it was on 27th October that the attempt was made to reinstate the 15-year period, and the House was specifically invited to support the amendment not in the interests of future judges, but in the public interest, because it was considered by those who moved the amendment that the quality of justice resulting from the calibre of judges who administer it would be diminished by the requirement that they should work on for 20 years.
The amendment, which was lost as I indicated, was of an unusual character. It was supported by the former Lord Chancellor; the former Lord Chief Justice; the present Lord Chief Justice; the former Master of the Rolls; 10 Law Lords, and two former Law Officers.
In his reply, my noble and learned friend the Lord Chancellor took as the first important point to be borne in mind that the judiciary have an opportunity when in practice,
"so far as concerns the tax law, to make provision for their retirement with tax advantage".—[Official Report, 27/10/92; cols. 1065–1066.]
That is what is known as the retained benefits argument which earlier in the debate had been described as a red herring for four specific reasons particularised in Hansard at cols. 1059–1060.
Those four reasons could be summarised as follows. First, that the retained benefits rule (which is not in primary legislation, as I understand it, but is Inland Revenue practice) is applied to employees who, throughout their career, are in pensionable employ-ment. As they go up in the world in their employment or if they change their employment, their pension benefits have to be taken into account. That is contrary to the position of the self-employed lawyer who may or may not make pensions provision, may or may not invest any surplus he has in realty or somewhere else, or may not have the wherewithal to make any provision at all.
A further matter was pointed out that for years—certainly for the past about 40 years—where there have been tax advantages in making pension provisions, the retained benefits have never been sought by the Inland Revenue to be the subject matter of what should be taken into account.
It was suggested in the debate that there was a good reason in reality for that because if one said to the high flyers who had been able to save substantial pension benefits, "These must be taken into account in relation to any benefit which you earn as a judge", they would say, no doubt politely, but in substance, "Thank you for nothing. I shall remain at the Bar where my pension benefit will be better anyhow than I can obtain from becoming a judge". On the other hand, there would be those who have no retained benefits, and the Inland Revenue practice which it is now sought to apply to them would be quite irrelevant.
Those, in substance, were the reasons given for saying that retained benefits as an argument for supporting the rather mean treatment afforded to the judge were irrelevant.
During the debate on this amendment, particular anxiety was expressed by my noble and learned friend the Lord Chief Justice for the position of circuit judges who in future were likely to be appointed at under 50 years of age. Because of school fees, mortgages and other expenses, they were unlikely to have made any or any adequate pension provision before retirement. Your Lordships may remember that I specifically asked my noble and learned friend the Lord Chancellor, at an early stage in the debate on Report, whether, under the new system, with the obligation to work 20 years and to retire at 70, it was likely that judges would in future be appointed earlier. He indicated that it could well be the case.
That is particularly relevant to the circuit judge because, as I have indicated to your Lordships, he is far less likely to be able to afford any retained benefits with the ordinary expenses of education and mortgages with which he has to cope. It is particularly the case when the House bears in mind that a high proportion of the income of those barristers who accept the appointment as a circuit judge emanates from legal aid, where we all know that fees are being kept heavily down, or from publicly funded work, prosecutions work, where again the difference between fees earned from that source and fees earned from the privately funded part of the Bar are quite different.
The importance of the circuit Bench was recognised specifically by my noble and learned friend the Lord Chancellor in the reference which is to be found in the penultimate report of the Top Salaries Review Body's last report at page 15. My noble and learned friend the Lord Chancellor expressed himself in these terms:
"The circuit Bench is the mainstay of the judiciary into which it is vital to attract enough lawyers of the right calibre".
Your Lordships may have seen a letter in The Times today signed by the president of Her Majesty's Council of Circuit Judges and the treasurer of that organisation. I was sent a photostat copy of the letter as sent to The Times by the council some days ago. The letter which was published is a much bowdlerized version of what was sent. I wish to quote the last paragraph of the letter as sent but which was not published, because it is particularly relevant to what we are now debating. This is how the letter ended, as sent to The Times for publication but not published:
"Circuit judges preside over the majority of both criminal and civil trials and their jurisdiction has been very substantially extended in the recent past. If, as we expect, there is a decline in the quality of the circuit Bench, its effects will be slow and insidious and difficult to measure. But when the effects upon which the quality of the administration of justice are felt, it will take many years to remedy the situation".
I stress the position of the circuit Bench because it is to them that this amendment is directed in essence.
What the amendment seeks to do is this: we lost the debate on the application of the 20-year new accrual rule. We lost it certainly for the reason first put forward by my noble and learned friend the Lord Chancellor because of the retained benefits advantage
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which he stressed that he had triumphantly achieved. That justification for the 20-year rule disappears if the option is given to a judge to say, "I will give up the pensionable equivalent of my retained benefit, provided I can return to the status quo. The suggestion that I must conform to the general tax law is really, in my respectful submission, the lightest of weight." The requirement for that conformity has not been made over the past 200 years.
My noble and learned friend the Lord Chancellor has on a number of occasions accepted that the judges are sui generis. The 15 year rule which has lasted over that time is not an idiosyncratic English rule. In America it is 50 per cent. less at 10 years. It is the same in Australia and in Canada. However, to be frank, I must admit that in New Zealand it is, at 16 years, one year more than our current 15 years. But the judges achieve the advantage which I am sure we all wish to achieve today; that is, a New Zealand judge receives as a pension not one-half of his salary but two-thirds, and it is tax free.
Therefore, the suggestion that there is a need for conformity is essentially a revenue-driven concept, which has no justification in history or in reality. The only justification provided is the retained benefits, and that is why I urge that those who have no retained benefits or no significant retained benefits should have the option to say, "I will give credit for the pensionable equivalent of any retained benefit that I have achieved but in exchange I should be entitled to return to the status quo and serve out 15 years, and not be obliged to serve out 20 years to gain my pension". I beg to move.
Lord Williams of Mostyn: My Lords, I speak to support this amendment. I support the thrust of the subsequent amendments which stand in the name of the noble and learned Lord, Lord Ackner, although I do not intend to speak to them. I begin with the simple proposition that the quality of the higher judiciary in this country is extremely high in terms of intellectual quality and rigour, political independence and financial incorruptibility. Those are not benefits that many countries enjoy.
I hope I may cast a few brief thoughts about recent history, although not the years 1933, 1953 or even 1963. I shall mention half a dozen instances that seem to me to matter. At Hillsborough there was a dreadful disaster. There was public concern. The present Lord Chief Justice was invited to report on that disaster. A large bank, BCCI, collapsed amid allegations of fraud, significant wrongdoing and inaction or negligence in high places in this country. Lord Justice Bingham was required to investigate that matter.
Further, the prisons exploded. Who was chosen to conduct an inquiry? That was Lord Justice Woolf. This week there have been suggestions of profound wrongdoing and Lord Justice Scott is to investigate that matter. Those matters are all being investigated or have been investigated at the request of the Government. The judge who quashed the certificates of public interest immunity was a circuit judge, Judge Smedley. Finally, when it was proposed to close down most of the mining industry in this country without five minutes' consultation, the National Union of

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Mineworkers and the Union of Democratic Mineworkers—each of which detests the other with a vigour rarely encountered—both curiously found themselves at the same destination: the Royal Courts of Justice. I give those recent illustrations because they demonstrate a significant point—that the quality of the judiciary in this country is extraordinarily high. It is brought to that state of quality by an infinite variety of subtle mechanisms.
The noble Lord, Lord Campbell of Alloway, spoke of lawyers and pay bargaining. This matter has nothing to do with pay bargaining of any kind. I must declare a pure disinterest in judicial pensions. The matter we are discussing is not pay bargaining and it is not a form of esoteric outdoor relief for elderly judges. We are discussing why judges become judges and why the quality of judges in this country is so high.
I suggest the reason the quality of judges in this country is high and the reason why our judges are not corrupt in any way, politically or financially, is because they regard judicial office as honourable, fulfilling and wanted by them. If we want the best, we ought to attend to that. I believe I am the junior of your Lordships present here this evening. In that position of juniority and innocence I listened to what the noble and learned Lord the Lord Chief Justice said on Report. I also listened to what was said by the former Master of the Rolls, the noble and learned Lord, Lord Donaldson of Lymington. Those were powerful speeches and they won the argument. The noble and learned Lord, Lord Ackner, said he had lost the debate on that occasion. The debate was not lost but the vote may have been.
I am not here as part of any lawyers' benevolent fund or to support the judges in all they do, but it is not in the public interest to have someone who has served as a first instance judge for 15 years clinging on to judicial office with whitened knuckles just for the pension. I hope noble Lords will forgive my levity at this time of night but we should fire judges when we see the whiteness of their knuckles. There is no useful purpose in making a judge sit on after 15 years simply for the pension. This amendment offers an alternative. After 15 years of lonely, highly stressed work, one ought to have the opportunity to say, "I have given of my best. It is time for me to go". That is the true public interest aspect of this matter, not whether or not high earning lawyers can be seduced from the Bar or from the City firms of solicitors in due time.
A judge's job is lonely, not in terms of social isolation although that is true in part, but the true loneliness lies in the absolute nature of the power that is wielded, often subject to no appeal. If a judge says in his conscience and in his heart, "15 years has been enough for me", then it has been enough for the public whose interest he serves.
Lord Taylor of Gosforth: My Lords, throughout the debates we have had on the various clauses at the various stages of this Bill my noble and learned friend the Lord Chancellor has prayed in aid in each instance the retained benefits as the balancing factor for all the disadvantages to the judges that are contained in this Bill. They have been his panacea for all the
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unfairnesses and meannesses to which attention has been drawn, clause by clause. In particular, the retained benefits have been the answer, and the only answer, to extending the accrual period from 15 to 20 years.
I and almost every other speaker, judicial and non-judicial, in your Lordships' House, have consistently argued that there are likely to be many judges, especially circuit judges, who will not have been able to store up any significant provision for retirement while practising in the legal profession. This is because they may not have been high flyers with huge earnings and because the years immediately prior to their appointment to the Bench are expensive years as they have to educate their children and meet mortgage payments and other family expenses.
This proposed option puts the argument of my noble and learned friend about the retained benefits to the test. In cases where he is right in assuming that there will be significant retained benefits, the judge in question will not wish to forgo them and will fall in with the Government's proposed scheme and its 20-year accrual period and take that option. However, where there are no significant retained benefits, and since they are the only answer given to our criticism of the government scheme, it would only be just to allow the judge to opt for 15 years and no retained benefits.
If the amendment is opposed by my noble and learned friend on the Woolsack it can only be because he fears that retained benefits may not be the panacea that his argument has assumed. I support the amendment.
8 p.m.
Lord Coleraine: My Lords, I was glad to hear the noble Lord, Lord Williams of Mostyn, say that he disagreed with the noble and learned Lord, Lord Ackner, and that the noble and learned Lord had not lost the debate on the accrual period when the matter was before us on Report. Against the advice of my noble and learned friend I supported the noble and learned Lords on the Cross-Benches on that occasion. We were defeated by five votes. I thought then, as I think now, that that should have been the end of the matter, but the noble and learned Lord, Lord Ackner, I am sure quite rightly, has brought before us an ingenious variation on the accrual amendment. It is that variation which worries me.
It seems to me that the arguments which the noble and learned Lord put forward work very well when one considers the case of a hardworking barrister considering preferment to the Bench who has mortgage and education expenses to bear. There are other cases where they work less well. The hardworking barrister who earns less but who has managed to scrape funds together to make proper provision for his retirement will be relatively disadvantaged if the amendment is agreed. On the other hand, no doubt there will be barristers with very high earnings who have wasted their substance and who will not have put money aside for their pensions. It is they who will achieve relative advantage under the amendment. That is the first point on which I feel the amendment fails.

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The second point is a simple one of economics. Barristers aspiring to the Bench would be presented with financial distortions which would influence their decisions as to how they invested their money. That also goes against the amendment. I hope that when he has considered all the arguments the noble and learned Lord will not see fit to press the amendment to a Division.
Lord Wigoder: My Lords, when I first read the amendment tabled by the noble and learned Lord, Lord Ackner, I took the view that it was an ingenious device to circumvent the rules of procedure of your Lordships' House to allow us to have a re-run of the debate on the 15 or 20-year accrual period. Having listened to the speeches this evening I am now convinced that that view was entirely wrong and that what the noble and learned Lord, Lord Ackner, has put forward this evening is a substantially new proposition. It seems to me to have a great deal in its favour and to be an honourable compromise between the positions that have been taken up so far. I hope that the noble and learned Lord on the Woolsack will consider it in that spirit.
Lord Elton: My Lords, as a fascinated interloper I intervene on a very narrow point. If my noble friend Lord Coleraine is right and this is an ingenious device to address an issue already decided by this House, that is surely not something which this House would readily do because, having decided an issue, we leave it behind us. If it is, on the other hand, an entirely new departure introduced to the House for the first time at Third Reading I should have thought that equally that was something that we do not do. I merely make that remark from the touchline, and we shall see how matters develop in the next debate and whether it will be the same.
Lord Benson: My Lords, I am a little reluctant to speak because I get the impression that your Lordships are getting a little tired. However, the noble Lord, Lord Campbell of Alloway, made a long and penetrating analysis of tables which had come into his possession and arrived at conclusions so astonishing that I ought to put the facts before the House so that your Lordships know what the facts are.
On this issue the tables show that if a High Court judge or a circuit judge is appointed at 46 years of age, or after, and retires at 65, or if a High Court or circuit judge is appointed at 51 years of age or after and retires at 70, he will receive a materially smaller pension than he would under the existing scheme which was settled 11 years ago and was at that time thought to be fair. I do not know why it is now thought to be unfair. That materially smaller pension affects not only the judge himself; it affects in an equally unattractive way the spouse's pension and the children's pension. The reductions are substantial.
I take the tables which I have seen, which may be different from those which were used by the noble Lord, Lord Campbell of Alloway. The very first item on the schedule relates to a High Court judge who is appointed at the age of 40 and retires on pension.
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Under the existing scheme, settled 11 years ago and which is already out of date, he would receive £87,620 as a lump sum and a pension of £43,810. Under the scheme now proposed in the Bill before the House, the lump sum is reduced by £14,000 to £73,000. The annual pension is reduced by £11,000 from £43,000 to £32,000.
That cannot be right. The decision to reduce the pensions payable to judges in 20 years' time to a figure significantly lower than pensions fixed 11 years ago by a scheme which is now out of date seems to me totally inexcusable. I cannot see any argument in favour. I have not heard any argument in favour. I did not think that the noble Lord, Lord Campbell of Alloway, made a convincing case.
That reduction is in no way compensated for by increased lump sums. The contrary is the case. The lump sums to be paid out are lower. I have just given an example. It would be shameful for Parliament to pass a Bill which is so transparently unfair.
I again draw attention to the position of district judges and stipendiary magistrates. Those two classes of the judiciary are treated quite differently. In their case the pensions on retirement are not reduced at all. Moreover, some of the risk benefits payable to them are substantially increased whereas some of the risk payments payable to High Court and circuit judges are reduced. It is very difficult to understand why the High Court judges are discriminated against, particularly as they carry higher responsibility. Why have they been subjected to that humiliating position?
The noble and learned Lord the Lord Chancellor made the point that we must look at the judiciary as a whole. I agree. That is exactly what I am doing. I am pointing out to him that looking at the judiciary as a whole the High Court Judges and the Circuit judges are always discriminated against. That is what happens when one considers all of the members of the judiciary covered by the Bill.
I ask also that we should look at the common sense of the situation. The judges affected by the Bill have not yet been appointed, but when they are, it will have to be explained to them that in probably around the year 2010 they will be paid a pension which will be substantially lower than a pension scheme settled in 1981, which is already out of date. It means inevitably that the best candidates are unlikely to accept those conditions, particularly in view of the other unattractive situation which arises for judges, certainly for High Court judges, who have to go out on circuit for large parts of the year and who are locked into their position and cannot change. I draw attention again to the fact that the 1981 scheme is out of date.
We have looked at those figures, which are plain for the eye to see. They have not been seen by the House as a whole and not exposed to the public. When their deficiencies are exposed to the public, as I have attempted to do, they will be ashamed of the proposals on this subject made in the Bill.
Lord Ackner: My Lords, before my noble friend sits down, perhaps I may correct one point that he made. The 1981 Act was a consolidating Act. The present

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situation has been in force for 33 years and not 11 years, which I think somewhat strengthens the point he made.
8.15 p.m.
The Lord Chancellor: My Lords, I must start from what I believe is the fundamental proposition that the general tax law was changed in the provisions which were introduced in 1987 to allow tax approval only to those pension schemes which had a minimum 20-year accrual period. That means that tax alone would provide a disadvantage as regards more rapidly accruing schemes.
It is true that the Circuit Bench and the High Court Bench and above had a 15-year accrual period in the past. The lower judiciary did not. When looking for a scheme for the whole judiciary which is in conformity with the general tax law, it is inevitable that if people do not serve for the full accrual period there will be a disadvantage. But the fact is that the basic law having been changed in respect of taxation in 1987, the benefits of tax approval can only be received if there is a 20-year accrual period.
My noble and learned friend the Lord Chief Justice said that this tests out what I was saying about the retained benefits. But the retained benefits are by no means the whole story. There are two aspects to the matter. First, the general tax law requires that a tax approved scheme will not have an accrual period faster than 20 years as the general rule. That is fundamental. So far as concerns my noble and learned friend's amendment, if a judge opts for a 15-year accrual period, he will not have the benefit of tax relief in respect of that. It will not be an advantage to him. I submit that it will be much better for him to have the benefit of a tax approved scheme.
The general tax law is fundamental to that. I have said that the retained benefits have to be taken into account when considering other aspects of the scheme. It is in respect of those other aspects of the scheme that I have referred to the retained benefits, because the allowances of the retained benefits are in my view an important aspect of the scheme.
For example, the district judges in their response to the consultation paper that we put out said:
"We accept that continuing to leave retained benefits out of account confers an advantage on those joining a judicial pension scheme which may be of significant value to those who have actually made personal pension contributions before appointment to judicial office. We consider that any alteration in the current treatment of retained benefits could have a seriously adverse effect upon recruitment. We therefore welcome the proposal not to alter the existing position".
Those are even more junior levels of the judiciary than the circuit judges. In their response to the consultation, they attach considerable value to the retained benefit provision.
The fundamental point in this amendment is that the 15-year accrual period for which my noble and learned friend asks will have to be subject to taxation. Perhaps I ought to point out what the absence of tax privileges would mean. There would be no tax relief on contributions to the scheme and the lump sum payable on retirement would be taxable. I believe that on that basis the amendment does not produce any benefit at all to the judiciary.
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The scheme which is before your Lordships is a tax efficient scheme which enables any money put into it to be used in the most tax efficient way. Looking at particular aspects of the scheme over and above the accrual period, there is the additional fact that retained benefits have to be taken into account in a scheme that accrues as fast as this generally. Therefore, the particular situation of the judiciary, and the fact that beforehand they have an earlier career usually in private practice, is catered for by the allowance of the retained benefits, so that in their earlier employment and in respect of what they earned there, the tax benefit is available to them.
My noble friend Lord Coleraine explained how distorting it would be that those who had not taken advantage of that available tax relief would be in a position to get out of their public service a faster accrual than would others. After all, as regards remuneration for the public sector, surely one must give equal attention to all those who are in the same situation.
According to my information, the accrual rate in the new judicial scheme, which applies to all the judiciary, is about double the level applicable to most public service employees and, as I said earlier, about 50 per cent. more favourable than the provision applicable to Members of Parliament. Two-thirds of private sector employees who are members of occupational pension schemes are subject to an accrual rate of one-sixtieth; only 10 per cent. of private sector employees enjoy accrual rates higher than one-sixtieth and only a tiny minority have an accrual rate as high as one-thirty-fourth. In broad terms, the judicial pension arrangements are worth about twice the typical provision made for either public service or private sector schemes.
I should also mention—because it is important to deal with people who have not, for one reason or another, been able to take advantage of the arrangements for self-employed pension schemes—that by my amendments to Clause 10 and Schedule 3 there is the possibility of additional tax free contributions to increase their pension entitlement within revenue limits. That is a considerable improvement on what has been available so far. I believe that it covers the situation and enables another route to be taken by those who may not have taken full advantage of the tax benefits available on pension provisions when they were in private practice. Accordingly I cannot commend the amendment to your Lordships.
Viscount Bledisloe: My Lords, before the noble and learned Lord sits down, perhaps I may ask him to explain one matter which mystifies me. If this general tax rule of 20 years' accrual must apply to the judges, however curious it may be, and the noble and learned Lord said that it must apply to the whole of the judiciary, why is there one member of the judiciary to whom the rule does not apply? I refer to the noble and learned Lord himself and his successors. Why does the Lord Chancellor not have to serve for 20 years or else bring into account his retained benefits? Is it the noble and learned Lord's intention in due course to amend the legislation to produce that result?
The Lord Chancellor: My Lords, the Lord Chancellor, the Speaker of the House of Commons and the Prime Minister have arrangements under their particular Act for no accrual period. There is no rate of accrual. A day's service in the Lord Chancellor's Office entitles the Lord Chancellor to the Lord Chancellor's pension under the Lord Chancellor's Pension Act. Of course if the Lord Chancellor seeks to make use of service in other capacities as a judge to enhance that pension, then he is subject to the same rules as the remainder of the judiciary in respect of that. However, so far as concerns the Lord Chancellor, the provision is for that particular office. There is no accrual rate.
Viscount Bledisloe: My Lords, I am fully aware of that. If the general rule is appropriate for the whole judiciary, why is there one member of the judiciary for which it is not appropriate?
The Lord Chancellor: My Lords, it is hard to understand how one could apply a 20-year accrual. I do not believe that it is possible to apply the accrual rates to a system under which there is no accrual provision. I can understand that the general accrual rate provisions should apply to cases in which there is a rate of accrual. But I cannot see how such a rule can apply to special provisions in which there is no accrual.
Lord Ackner: My Lords, this may be a very ambitious beginning to my reply since, compared with the noble Lord, Lord Elton, I am a child in matters of procedure, if not in other matters too. However, I understand that he must have in mind the Companion to the Standing Orders 1989. Under the heading "Amendments on Third Reading" the penultimate paragraph states:
"It is considered undesirable that an issue which has been fully debated and decided upon at a previous stage of a Bill should be reopened by an amendment on Third Reading".
As I understand it, in this case the procedure was that it was considered by the Public Bill Office as to whether or not the amendment raised a new issue. That office decided that it was certainly arguable. Accordingly, the Leader of the House was not asked for his view and the amendment was put down. I therefore believe that I am standing in a white sheet in that regard.
Quite apart from procedure, I should have thought that it follows as night follows day that when one puts up what is really a compromise, the compromise is the new issue. One is not re-litigating the same matter. One is trying to reach an agreement. In order that the noble Lord follows the point, the result of our amendment, if carried, would simply be this. Those who have retained benefits of any significance would have to work the 20 years. That is what my noble and learned friend the Lord Chancellor wishes to achieve. The amendment seeks to make an exception in regard to those who have no retained benefits. They should be entitled to the status quo. That seems to me to be the clearest possible new issue. That is no doubt why those in charge of those matters raised no final objection to the amendment being put down.
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I understand the point raised by the noble Lord, Lord Coleraine. I say that with humility because I made the point myself.
Lord Elton: My Lords, since the noble and learned Lord has referred to me, perhaps I may make clear that I am familiar with the Standing Order to which he referred and the procedure through which I assumed that he had gone. I did not refer to Standing Orders but to the customs of the House, which on some occasions are a little narrower than Standing Orders. I stated that we shall see what happens in the next debate. It seems to me that one can have one debate on a compromise between, as it were, a ping and a pong, but if that is to be the procedure for the remainder of the lengthy Marshalled List your Lordships may find it a little tedious.
Lord Ackner: My Lords, perhaps my friend could rely on the maxim that hope springs eternal; and when we come to that which he already anticipates—without applying the usual principle of hearing the other side first—I hope to put his mind equally at rest.
I accept the point raised by the noble Lord, Lord Coleraine. I made it myself on Report, when I pointed out that it was quite inequitable to apply what occurs in regard to retained benefits in the employed sector. In the employed sector as a general rule everyone receives a pension. Therefore the pension that they have achieved at an earlier employment can obviously be had regard to. The self-employed person may make no arrangement either because he is idle, he cannot afford it or he believes that he can invest his money better in other resources. That is why it is irrelevant to seek to apply a retained rule—which is only a rule of the Revenue and is not embodied in primary legislation—to a situation for which it was never intended: the self-employed person who arrives on the judicial scene aged 50 or thereabouts.
Lord Coleraine: My Lords, when the noble Lord reads the Official Report tomorrow he will find that he has not understood the point I made, for which I am sure I am responsible.
Lord Ackner: My Lords, I turn then to the other matters which were raised by my noble and learned friend the Lord Chancellor. When we debated the 15-year, 20-year accrual situation, we dealt with the retained benefits as essentially the first and principal argument in relation to their retention. Perhaps I may remind the House what was said. In Hansard of 27th October at col. 1065 it states:
"My noble and learned friend Lord Simon of Glaisdale mentioned the previous system and my noble and learned friend Lord Ackner pointed out that for certain judges from 1799 there was a 15-year accrual.
One has to look at the position from the point of view of the present general tax law. First, people working in a profession on a self-employed basis have opportunities for laying aside money for pensions out of their earnings, with tax relief. That started off in a very modest way and has gradually improved as regards the way in which tax relief is allowed. Fortunately, we are in a tax regime which is a little more benign than it was some years ago. The basic allowances have been considerably improved over what they were when the allowance started. Therefore, the tax system of this country allows people at the cost of the Exchequer to make provision for a pension while they are working as self-employed people.

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I submit to your Lordships that that is the first important point to be borne in mind when considering the special position of the judiciary: that they have worked in the profession with an opportunity, so far as concerns the tax law, to make provision for their retirement with tax advantage".
It was for that principal reason that this alternative suggestion was put forward. Despite the arguments that have been put forward as an answer for rejecting the option which has been put forward—which I find, with respect, quite unsatisfying—I shall not press the amendment. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 8 to 10 not moved.]
8.30 p.m.
Lord Ackner Lord Ackner moved Amendment No. 11:
Page 5, leave out lines 7 to 18 and insert:
("(a) a person's "pensionable pay" is the greater of the following amounts, that is to say—

(i) the highest pension-capped salary payable to him in respect of his service in qualifying judicial office in any one of the five years ending with the day on which he retires from such office, and

(ii) the highest annual average of his pension capped salary in any three consecutive years out of the ten years immediately preceding the day on which he retires from such office,

provided that where pension-capped salary is calculated by reference to any year other than the last complete year ending on the day on which he retires from such office, pension-capped salary shall be increased in proportion to any increase in the retail price index (being the index of retail prices compiled by the Department of Employment) from the last day of that year up to the said day.").
The noble and learned Lord said: My Lords, on previous occasions my noble and learned friend the Lord Chancellor has said that he has managed to achieve a scheme which is as tax efficient and as tax effective as possible. As a result of that I raised in Committee the aspect of pension practice which is known rather dramatically as "dynamisation". The system is not as impressive as the word sounds. It means that the Revenue allows the pension to be calculated on earlier years than your last year if you believe that thereby, through the advantage of applying the variations in the retail price index, you gain a larger figure. That is all well established in the Inland Revenue practice; reference IR9/91.
The amendment seeks to provide that possibility for a judge who can point to the indexing system thus working to his advantage. It was thought appropriate in particular because the Top Salaries Review Body in its last report, which although not treated with much enthusiasm by the Government never had any of its detail contradicted, pointed out that during the past seven or eight years the private sector had risen in real terms some 40 per cent. and the senior members of the top salary earners within its remit had gone down in real terms by 3 per cent.
I therefore put the matter before my noble and learned friend the Lord Chancellor on 27th October. Basically, his answer was, "I don't think this will do you any good". I bridled somewhat because I would not have put it forward unless I were confident that from the point of view of the mathematics it was to that advantage. I so informed my noble and learned
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friend that I should be able to establish that in relation to the High Court judges and above it would make a difference of several thousand pounds a year. I offered to send my noble and learned friend the figures and he was kind enough to say that he would be prepared to consider any material that I put before him. He also said that he was willing to look at any information that I was able to provide.
I provided that information by letter dated 5th November. Your Lordships may be interested to know that it made the following difference. As at 1st November the final basic earnings of the High Court judge was £86,095. If the dynamisation system were operated as the Revenue allow it to be operated within the private sector that figure would rise to £90,332. The salary of a Lord Justice at that date was £95,037. The dynamised figure is £99,650. The salary of a Lord of Appeal in ordinary as at that date was £99,109 and the dynamised figure is £103,854. Therefore, I have made out the case that there is a significant difference.
My noble and learned friend was kind enough to write to me acknowledging my letter in the following terms:
"Dynamisation is permitted by the Revenue and I accept that there can be circumstances where the measure of guaranteed uplift it provides could be advantageous; for instance, where pay increases are staged. Revenue rules are not, however, the only consideration"—
I interpose to say that they always appear to have been throughout our debates. My noble and learned friend continued:
"Dynamisation is a cumbersome mechanism which is not available in other public sector schemes. Furthermore, it carries a cost with it for which the Government has not budgeted and which would need to be offset by reducing other benefits in the new pensions scheme".
The rest of the letter deals with other matters.
I wish to deal with the two points that my noble and learned friend made. First, he stated:
"Dynamisation is a cumbersome mechanism".
I inquired of the reactions of our consultant actuary who had produced the figures which I sent to my noble and learned friend the Lord Chancellor. He said, "True, it was cumbersome when clerks used quill pens but now that we have the benefit of computers it is a matter of pressing two or three of the right buttons, which is exactly what I did for you and produced the figures you wanted". So much for that.
The other observation I found astonishing was:
"Furthermore, it carries a cost with it for which the Government has not budgeted and which would need to be offset by reducing the benefits in the new pensions scheme".
Not long ago I quoted what my noble and learned friend the Lord Chancellor had said in approving the observations made by my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice in the debate on Report relating to the 15 to 20-year accrual issue. He confirmed that he had accepted that we are not concerned with present cost problems of the current recession because we are dealing with a scheme which will not operate for 15 or more years and that, therefore, the present unfortunate situation is not one that has any relevance. I do not, therefore, understand the point:
"This will carry a cost with it for which the Government has not budgeted and which would need to be offset by reducing other benefits in the new scheme".

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I believe that I have dealt adequately with the two suggestions put forward in the letter as to why judges should not obtain the advantages open to them were they still in the private sector. I beg to move.
The Earl of Clanwilliam: My Lords, would the noble and learned Lord, Lord Ackner, advise me whether his actuary took the dynamisation figure over the best three previous years of the judge's previous 10 years, which is the usual system for dynamisation in the occupational pensions schemes, or whether he referred only to the final year?
Lord Ackner: My Lords, there are a number of methods of dynamisation. I am not an expert on this subject. I think that you can take a three year period or you can go back for five years, but you must not go back more than 10 years. I cannot tell the noble Earl which method the actuary adopted; but knowing his competence, I assume that he adopted the permissible method which produced the most favourable result.
The Earl of Clanwilliam: My Lords, in that case, does not the noble and learned Lord agree with me that as judges' salaries are constantly increasing, it is unlikely that any previous three years will be better than the latest three years which the judge has before he retires?
Lord Ackner: My Lords, I cannot argue the toss. We have a consultant actuary who has been in agreement with the actuaries employed by my noble and learned friend the Lord Chancellor and the Top Salaries Review Body's expert on all the contentious matters. The figures which we provided by letter to my noble and learned friend the Lord Chancellor came back uncriticised. Therefore, I assume that the government actuary or one of his minions worked on the figures, because they were easy to work upon. As I understand it there was no issue as regards the mathematics. We are concerned here with the principle.
The Earl of Clanwilliam: My Lords, I was not referring to the mathematics but to the simple facts. Judges' salaries are increasing all the time. Therefore, to a simple human being like me, it seems unlikely that any dynamisation could improve matters.
The Lord Chancellor: My Lords, I should say at once to my noble friend that the calculations which my noble and learned friend Lord Ackner sent to me show that there are some circumstances in which up-rating by reference to the retail price index can produce a higher figure for the dynamised salary than for the actual salary and payment at the end. However, those circumstances do not necessarily occur; it depends somewhat upon the situation.
As I said in my letter, this method is somewhat cumbersome. It may be that an actuary's computer system may be able to deal with it. However, dealing with the ordinary pension calculations of the whole judiciary creates a certain amount of difficulty and a certain degree of haphazardness about the result.
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I must say that the figures which my noble and learned friend have produced are for the salary. The difference to be made in pension would be half of that.
The reference to cost is a reference to the cost of the scheme as a whole, trying to balance out the various changes that have been made in respect of the judiciary. My own feeling about that is that there are some other aspects of the scheme which we have sought to improve which are more meritorious than this method, principally because of the slightly haphazardous way in which it may operate, depending on previous histories and on which three years were chosen.
Therefore, I am not in a position to agree to this amendment. I am extremely grateful to my noble and learned friend for sending me the figures because they illustrate the extent to which dynamisation could help. My earlier view was that the amount was likely to be rather small in comparison with the whole matter in issue. My noble and learned friend has shown that the amounts may be somewhat larger than I thought when I spoke previously. However, they are not of an order which would make it right to opt for this variation on other public schemes. I accept, as the letter says, that the Revenue allows this but here we have a public scheme. I believe that the benefits that I have sought to provide in the other amendments which I have proposed are more appropriate.
Lord Ackner: My Lords, I am bound to say that the oft repeated refrain of my noble and learned friend the Lord Chancellor, "I have achieved for the judiciary a scheme which is as tax efficient as is obtainable under the existing law", has a hollow, if not mocking, ring about it.
This is permitted by the Revenue. Initially it was resisted by the Lord Chancellor essentially on the basis that it was a waste of time because it did not produce anything. When we show that it is not a waste of time, that it produces something and that it should be allowed to the judge, we are told that it is too expensive. With disappointment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
Lord Simon of Glaisdale: My Lords, I beg to move, That the House do now adjourn the business for one hour.
Those of us who are interested in Questions have been here since three o'clock. We had to sit through two long Statements, in which those who are interested in the Autumn Statement certainly retained their seats.
It is perfectly intolerable that your Lordships' House should be treated as though it were a sausage machine, churning through government legislation. We are now only half way through the list of groupings. I see that the noble Lord the Chief Whip and the Deputy Leader of the House are present. I give them an opportunity to justify the way in which we have been treated, particularly bearing in mind that

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they must have known that there were two long Statements to be interposed so that we only reached the second amendment at six o'clock this evening.
Moved, That the House do now adjourn the business for one hour.
Lord Hesketh: My Lords, the first point that I should make as the Chief Whip is that in the usual way the usual channels discussed the best way forward. As we intend to finish the business on the Order Paper this evening, it was felt that we should continue through with the business as it stood. It is fair to say that a number of the amendments have taken a considerable period of time to be dealt with which is very much at odds with the traditions of this House on Third Reading.
Lord Graham of Edmonton: My Lords, perhaps I may say from these Benches that a dilemma was posed by the slow pace of business. On the basis that we wish to finish our discussions on this Bill at a reasonable hour—that is, before midnight—one had to balance that with taking out an hour within which there was very little business to be done. Had there been an hour's business to be conducted during the adjournment for pleasure, it may have been useful to take an hour for it. However, the remaining business, which must be dealt with at the end of our discussions on this Bill, is very short. When I was consulted, I agreed that we should make better progress with the Bill, albeit to the discomfort of noble Lords, if we forwent the time to have a meal break. It is not a happy situation but it is designed so that we make the best progress possible with the Bill.
Lord Simon of Glaisdale: My Lords, I am grateful to the noble Lord the Chief Whip and to the Opposition Chief Whip. However, I am bound to point out that the Chief Whip made no mention of the two long Statements, which he must have known would take a considerable time, interrupting the business on the Bill so that we did not reach the second amendment until six o'clock.
This Bill is of great constitutional importance. Anybody who heard the speeches on Report of my noble and learned friends the Lord Chief Justice, Lord Donaldson of Lymington and Lord Hailsham of Saint Marylebone can be in no doubt as to its constitutional importance. A substantial number of noble Lords who listened to those three speeches from the government Benches voted for the amendment.
Naturally, the noble Lord the Chief Whip has his masses in reserve outside the Chamber who did not listen to the debate. I ask him to realise the importance and controversial nature of this Bill and not simply to drive us on hour after hour without any opportunity for refreshment. As I say, it is not treating your Lordships' House in the proper way.
Lord Hesketh: My Lords, perhaps I may make an observation on the basis that it is my habit to be in your Lordships' House every day. I have had the privilege of serving on the Front Bench for several years. On many previous occasions, both recently and in the past, we have sat during a regime which was
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considerably more testing than the one which has been in existence this afternoon and this evening in your Lordships' House.
Lord Simon of Glaisdale: My Lords, I certainly do not accuse the noble Lord the Chief Whip of being innovative in the burdens which he places on your Lordships' House. He is right that many times in the past we have had to suffer. There is no reason why we should go on doing so. He has not answered the main point as to how intolerable it is to keep those who are interested in this Bill waiting hour after hour without opportunity for refreshment. However, I have no doubt that the noble Lord has his troops massed in reserve on the reverse side of the hill. In those circumstances, I beg leave to withdraw my Motion.
Motion, by leave, withdrawn.
[Amendment No. 12 not moved.]
Clause 4 [Lump sum on the judicial officer's retirement or death]:
Lord Ackner Lord Ackner moved Amendment No. 13:
Page 6, line 20, after ("him") insert ("at his election").
The noble and learned Lord said: My Lords, I am sorry that the noble Lord, Lord Elton, is not here because I had prepared myself for him to pounce on me on the basis that this amendment was out of order because it had already been argued previously. I must put up with that disappointment as best I can.
Perhaps I may explain the situation. This amendment is a great deal stronger in its context than the option which I moved unsuccessfully a short while ago. The position is quite simple. In all pension schemes there is an entitlement to commute a portion of one's pension. In the private scheme it is usual for the pension to be two-thirds of the final salary, but the person who has that pension almost invariably commutes a portion of it so that he gets a half of his final salary, but three times his pension as a lump sum tax free as his pension.
Perhaps I may give an example. Assuming that his final salary was £100,000, he would take as a lump sum £150,000 and a pension of £50,000. Generally speaking, in the public sector the position is that the person does not commute. The pension provides in terms for a pension of half the last year's salary and a lump sum of three times. As regards the judges, they have been lagging behind on this particular aspect of pension provisions.
In moving this amendment we are in the unhappy position that when the scheme came forward in which the lump sum was increased (from 2 to 2.25 times, but capped—which means that anything it produced over£75,000 was taxed and in all probability at 40 per cent.) one was therefore back where one started—when the matter was put out for consultation by the Lord Chancellor's department, the Top Salaries Review Body, which is a wholly independent organisation, wrote advising the Lord Chancellor's Department that the lump sum should be three times and that 2.25 was the wrong multiplier.
My noble and learned friend the Lord Chancellor got in substance the same advice from the consultant actuary whom the Lord Chancellor's Department retained to advise it. The consultant actuary to whom

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we went, produced the same answer. This is important: the same answer is that both in the public and private sector the right multiplier is three times. So for once we were not faced with the argument, "You are relying on the private sector and its approach; you are now in the public sector and you must conform"—a favourite word of the Government—"with what is in the public sector". Here there is unanimity between both the public and private sectors.
It could not be said that there is some quirk of the tax law that obliges the Government to accept a lesser figure than three times. The only justification put forward by my noble and learned friend the Lord Chancellor is to be found in the debate on this subject in which he said:
"the reason for this system is the retained benefits arrangements which I have described and which I believe is extremely appropriate in the case of the judges".—[official Report, 27/10/92; col. 1104.]
The retained benefits system is not "extremely appropriate" if you have not got any retained benefits. What is being suggested as regards this amendment is that if the retained benefits is the only argument—it is the only one put forward by my noble and learned friend the Lord Chancellor —for not allowing the judges to have the same multiplier as everybody else is entitled to have, then the option makes the situation exactly as he would have wished. Those who want the advantage of the retained benefits are to accept the smaller multiplier of 2.25 and those who cheerfully say "I will give credit for the pension equivalent of my retained benefits, if any" should be placed in the same position as the other persons either in the public or the private sector, who have no retained benefits to take into account and who are entitled to the multiplier of three.
That is not the same issue as was debated previously. It is not an issue to which the answer is, as with the 15-year or 20-year periods, "You, the judges, must now, after 200 years, conform with the ordinary tax law because you are not sufficiently sui generis to be differentiated". This is purely a question of retained benefits or no retained benefits. I beg to move.
9 p.m.
Lord Renton: My Lords, my noble and learned friend the Lord Chancellor has told us throughout that the main purpose of the Bill is to bring judicial pensions more into line with other pensions, especially those in the public service. If the noble and learned Lord, Lord Ackner, is right that his amendment would achieve similarity not only between judicial pensions and other pensions in the national service, but also with those in the private sector as well, then I should have thought that his amendment deserves great support. Of course one would be interested to hear what my noble and learned friend the Lord Chancellor has to say, but so far it seems to me that the noble and learned Lord, Lord Ackner, has had logic on his side.
The Lord Chancellor: My Lords, I think I should explain just a little bit more the situation about the
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cap. Some reference was made to it on the last occasion and I am not sure that it was made absolutely clear as to how it operates.
The cap bites on benefits under Part I of the Bill by virtue of the concept of pensionable pay. The pension payable to a scheme member who completes 20 years' service is one-half his pensionable pay. Pensionable pay is determined by reference to pension-capped salary, so the pension under Part I has already been subject to the effects of the cap before we come to calculate any derivative benefits.
The lump sum under this provision is 2.25 times the annual rate of the pension and is entirely tax free, even if it exceeds the level of the cap, which is at present £75,000. This is because the cap operates on the salary by means of the definition of pensionable pay, not on the lump sum. A judge whose final salary exceeds the cap, however, will also receive a pension payment in respect of that part of his or her salary—that is the later provision. A lump sum payment which will be 2.25 times the annual rate of that part of the pension derived from above the cap will also be payable. This part of the lump sum will be taxable at the rate of 40 per cent. It would not be correct to say, therefore, that if the lump sum derived under Part I of the scheme were to exceed £75,000 it would be taxed; it would not. Only that part of the lump sum derived from the salary earned above the cap of £75,000 would be liable to tax.
The 2.25 formulation already contained in the Bill exceeds by about 50 per cent. the normal Inland Revenue maximum for lump sums where the accrual rate is such that retained benefits are not taken into account. The situation is that so far as two people in the scheme are concerned they should be treated in the same way. It cannot be right that you get more in respect of your work in the public sector if you have not taken advantage of the tax scheme for self-employed pensions when you were in the private sector than you would otherwise. That seems to be an utterly unfair comparison.
But of course if my noble and learned friend is seeking to say that he would like retained benefits to be taken into account and in that way get the three times, that is certainly a possible modification of the scheme. However, I do not believe it can be right or fair as between two members of the scheme to say, "You get a bigger pension, Judge X, or a bigger lump sum, than Judge Y", the only reason being that Judge X did not put any money away under the tax arrangements, which he could have done when he was in private practice, whereas Judge Y took advantage of those arrangements. That cannot be fair as between them. It must be one thing or the other.
So far as I am concerned, if the retained benefits are taken into account, the figure could be three, but that would have to apply to the whole scheme. If retained benefits are not to be taken into account, then 2.25 appears to be the appropriate figure.
Lord Ackner: My Lords, I have had the greatest difficulty in following what my noble and learned friend has said. It is not my fault, I assure him, because I have had behind me in support of my contention the expert report to my noble and learned friend the Lord Chancellor from the Top Salaries Review Body, the

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report from Mr. Alexander of Watsons, retained by my noble and learned friend, and the report of Mr. Wynne-Griffiths, the expert actuary retained by us. All three have stressed that it is wrong to limit the judges to 2.25. They are experts on tax legislation and they are experts on the present situation, generally speaking.
The only answer my noble and learned friend the Lord Chancellor gave in Committee—and it was one which did not take us totally by surprise because we had heard it before —was, "You, the judges, have the advantage of not having your retained benefits taken into account and that is why you are being kept down to 2.25". There was nothing about this capping complication; nor could there be, because our experts, one would have assumed, would have got the point straight away.
What is happening is a gross unfairness. Let me explain why. The persons who become judges who have large retained benefits are the commercial silks, the silks specialising in patent work, in intellectual property work, who earn, as we all know, very large figures and whom one would assume would put in large sums for a pension. What is the result? They have large retained benefits and they suffer the disadvantage, on the philosophy of my noble and learned friend the Lord Chancellor, of being kept down in their lump sum to 2.25. But the wretched junior practitioner, who is usually the backbone of the Circuit Bench and who has no real retained benefits, is being sacrificed so that they can have the advantage of their retained benefits which he has not. He is thereby deprived of what he would get in the public sector and in the private sector, three times. That cannot be just. It cannot attract the argument, "You are seeking not to conform with general tax law". That is exactly what we are seeking to conform with, as requested and required by my noble and learned friend the Lord Chancellor.
At this stage in the evening I will make no friends—although that perhaps in itself is not a total inhibition—and I shall achieve no success in dividing the House. However, I invite my noble and learned friend the Lord Chancellor, who has emphasised how anxious he is to be fair, to take this into account because all the experts, including the department's own expert, have advised that this is what should occur. The only answer provided is the retained benefits. They rejected that by implication because they knew the retained benefits were being allowed to be kept. We have now met what we thought was a spurious point and we are told there is some other and, as I find, unintelligible resistance to justice being done.
I shall beg leave to withdraw the amendment with great reluctance largely because we have been thwarted by the two lengthy Statements from bringing this amendment on at a time when a Division would, I think, have been attended by the reasonable prospect of success, but that prospect now no longer exists. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 14 and 15 not moved.]
Lord Ackner Lord Ackner moved Amendment No. 16:
Page 6, line 22, leave out subsection (2) and insert:
("(2) Where a person dies within five years of retirement his personal representative shall be granted a lump sum equal to five times the annual rate of pension less any annual sums paid to him by way of pension.").
The noble and learned Lord said: My Lords, this amendment is concerned with the payment which a widow should be entitled to receive if her husband dies within a very few years of retirement. I believe that it is now accepted by my noble and learned friend the Lord Chancellor that the Bill as drafted provided a provision which, in reality, was quite useless. By the time the various deductions were made as provided in the clause as drawn, the widow who experienced the disadvantage of the early death of her husband would have achieved absolutely nothing of any significance.
My noble and learned friend the Lord Chancellor appreciated this and hinted in Committee that he would think about it. By the time we came to Report he had thought about it and had decided that he would produce something which could provide the widow with a benefit of a more attractive kind. Your Lordships will see from Amendment No. 21, that that is what is now on offer. My noble and learned friend is taking out the words,
"one and a half times his pensionable pay"
and inserting,
"five times the annual rate in force in respect of that pension immediately before his death".
The difference between that and Amendment No. 16, which I am moving, which would insert the words,
"Where a person dies within five years of retirement his personal representative shall be granted a lump sum equal to five times the annual rate of pension less any annual sums paid to him by way of pension",
is that the only deductions which fall to be made from the sum which represents five times the annual rate of pension are, in my amendment, only annual sums which had been paid to him by way of pension prior to his death. We are advised that this is the modern way of dealing with this sad situation where the judge dies within five years of his retirement, leaving a widow.
What is provided in my noble and learned friend's Amendment No. 21 involves deducting not only the annual sums which have been paid to the deceased judge before his death by way of pension, but also the lump sum that he received. The result, so I understand, is this: figures have been taken on the basis that future increases under the Pensions (Increase) Act 1971, which deals with increasing the pension for inflation factors, have been taken on the basis of assumed increases under that Act of 4 per cent. per year compound. It further assumes that a High Court judge retires on 1st November with a pension of one-half of his pensionable pay. It ignores the cap and incidence of tax on the lump sum and therefore this is the most favourable approach that can be adopted.
The consequences for illustrative purposes are these: if the judge died within one year after retirement, the lump sum that the widow would receive under the provision of my noble and learned friend, which requires this extra deduction of the lump sum to which I have referred, is, in round terms, £75,000. That may be said to be some significant

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compensation. However, if he dies two years after retirement, the lump sum which the widow receives goes down to £39,000 in round terms and, if he dies three years after retirement, the lump sum goes down to £1,500 in round terms and thereafter it disappears into thin air. So, although we have managed to persuade my noble and learned friend the Lord Chancellor by our amendment, first put down in Committee and repeated on Report, to make some gesture which is of real value, he has produced a formula which is of significant assistance only to the widow if the judge dies one year after retirement, of not much advantage if he dies two years after retirement and thereafter one can almost forget about the value of the provision.
Perhaps I may outline the support for my amendment. It is modern in terms. It provides an effective sum for the widow because it deducts only the annual pension sums that the judge has received after retirement and while he survives. It therefore produces, as is to be expected it being an ordinary term in a modern scheme, some reasonable compensation for her loss and not one which is almost a fictional one unless he dies within two years after retirement. I beg to move.
9.15 p.m.
The Lord Chancellor: My Lords, the purpose of both this amendment and of my Amendments Nos. 17, 19 and 21 is to alter the basis on which the additional lump sum under Clause 4(2) is calculated. This lump sum is paid to the personal representatives of a retired scheme member who dies shortly after retirement and is intended to act as a form of diminishing life cover so that the estate of a judge receives additional benefit if he dies so soon after retirement that he has received little by way of pension benefits from the pension scheme. The purpose of the proposal is to compensate for loss of pension as a result of early death.
As drafted, the Bill guarantees that, leaving aside spouses' and children's pensions, the pension scheme will pay in respect of a member at least an amount equal to one and one half times his pensionable pay following his retirement, notwithstanding the fact of his death. My amendments replace that guarantee with a better one: that the scheme will pay out at least five times the annual rate of a scheme member's pension following his retirement even if he dies shortly after it. So, if a scheme member dies before a time when the aggregate of the sums paid to him in respect of his annual pension and the lump sum paid on retirement equal five times the rate of his annual pension, his personal representatives will be paid an additional lump sum to make up the difference.
This is where my amendments differ from those of my noble and learned friend Lord Ackner. Amendment No. 16, which my noble and learned friend has just moved, does not require the lump sum on retirement to be taken into account in assessing the value of the benefits already paid to a retired officer
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before his death and therefore requires the scheme to pay out a greatly increased additional lump sum in the circumstances covered by this provision.
Those of your Lordships who have seen the examples that I have circulated comparing the new scheme with the existing arrangements will have realised that the provisions I now propose constitute a significant improvement on the present scheme. High Court judges, for example, will in every case do better under this scheme as modified by my amendments than under the present arrangements. The personal representatives of a High Court judge who is appointed at or before the age of 55, retires at age 70 and dies a year later would receive an additional lump sum under the new scheme of between £57,000 and £76,000 where at present they would receive nothing.
The benefit offered by my amendments could not, therefore, be said by any stretch of the imagination to be niggardly. In the same circumstances, but if my noble and learned friend's amendment were passed, the sum would be between £131,000 and £175,000 which they would not receive under the existing arrangements, and this in addition to the lump sum on retirement of between £73,000 and £98,000 that they had received but a year earlier. I do not believe that there is any justification for this and, in any case, the arrangements that I propose are a reasonable solution to this problem, designed to cover the situation of death soon after retirement. The inclusion of the references to the Pensions (Increase) Act 1971 in my amendments is to clarify that it is the annual rate of the pension received by the deceased at the time of death which is at the centre of the provision, not the annual rate of the pension at the time of his retirement; in other words, if the pension has been improved by the uprating provision, it is that pension which will be used for the calculation.
I submit to your Lordships that Amendments Nos. 17, 19 and 21, which are tabled in my name, are a very reasonable improvement on the proposals in the present Bill and also on the present schemes. I hope, therefore, that your Lordships will agree to incorporate them in the Bill and that, in the light of my explanation, my noble and learned friend Lord Ackner will feel able to withdraw his amendment.
Lord Cocks of Hartcliffe: My Lords, I should like briefly to express my support for the amendments to which the noble and learned Lord the Lord Chancellor has just spoken. I had not intended to speak this evening but, rather like my contribution in Committee, I really think that someone should place on record the fact that some Members of your Lordships' House wonder whether we should perhaps be going into such detail about the conditions of service of a particular group of public servants, especially on a day when the Chancellor of the Exchequer in another place has announced that pay settlements in the public sector should be restricted to a maximum of 1.5 per cent. in the coming year.
I bow to no one in my respect for an independent judiciary. I have long said that members of the judiciary should be well rewarded. We all know the historical reasons why judges should be above any sort

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of financial consideration. I have always supported that view throughout my political life, such as it has been. However, as a layman, I find it distressing to see the noble and learned Lord the Lord Chancellor, who is the head of our entire legal edifice, constantly being besieged in these proceedings by his Praetorian guard.
There is a certain unreality when examples are given of lump sums; indeed, the figure of £100,000 has been mentioned and the question of a tax rate of about 40 per cent. has been raised. My former constituents in Bristol would have been delighted to pay a 40 per cent. tax rate. It was something beyond their wildest dreams to move into that sort of tax bracket. I appeal to noble Lords who are pushing forward these amendments to consider whether it is entirely seemly to pursue such matters at this time. I made the point previously that if the mining community had had the opportunity of discussing their pay and conditions, moving amend-ments and speaking to them in Parliament, then perhaps things might have been different in recent months.
As I said, I support the noble and learned Lord the Lord Chancellor. I shall bring to bear any influence that I may have in that respect. I hope that his amendments are successful. As a former manager of business in another place, I must say that to suggest that the timing of particular votes has an effect on the result is not really in keeping with the dignity of Parliament.
Lord Ackner: My Lords, I do not think that the noble Lord was present earlier in the debate when I read out your Lordships' specific agreement with my noble and learned friends Lord Donaldson of Lymington and the Lord Chief Justice who stressed that the present difficult financial situation of the country had no relevance to a scheme which will not be operating for 15 to 20 years. My noble and learned friend the Lord Chancellor replied in words which I read out earlier today. He said:
"I also agree with the view that what we are seeking to set here is the system for pension payments for the future; in other words, I shall not refer to any present aspect of the economy or anything of that sort in dealing with the matters which have been raised".
I shall merely say this in regard to the figure of £100,000 mentioned by the noble Lord. He is perhaps unaware that the salary of the Lord Chief Justice of England and Wales is 50 per cent. lower than that paid to the senior newscaster employed by the BBC. The Lord Chief Justice, the head of the administration of law in this country, who makes vital decisions, receives £50,000 less. If one reads out the news, one receives £50,000 more.
The only other matter to which I wish to refer is that I sought to point out how the formula that my noble and learned friend has put up dwindles away to virtually nothing after the third, fourth and fifth years. The formula is meant to make provision for what should happen where death occurs within five years. To point out that it produces nothing over half the period that it is meant to cover, I should have thought called for an answer; but none was available. At this time of night, at this stage in the debate, I have to content myself, which of course I do with the deepest respect, by quoting from Troilus and Cressida:
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"Words, words, mere words, no matter from the heart".
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Lord Chancellor The Lord Chancellor moved Amendment No. 17:
Page 6, line 24, after ("pension,") insert ("including any increases under the Pensions (Increase) Act 1971,").
The noble and learned Lord said: My Lords, I already explained Amendment No. 17 when I answered Amendment No. 16. I beg to move.
Lord Wilberforce: My Lords, the amendment is entirely to be welcomed and is very necessary. It is surprising that it has arisen only on Third Reading. It draws attention to a problem which is fairly pervasive in the Bill in relation to what are called derivative benefits. That is where one has a derivative benefit which has to be calculated by reference to the pension of a judge and which has to take account of the situation that arises when death takes place after retirement. It is necessary in such a case that the calculation should be made by reference not to the initial pension which the judge draws on his retirement but to the indexed pension which is payable at date of death. Amendments Nos. 17 and 21 deal with that point, as does Amendment No. 24 which I shall be proposing with my noble and learned friend.
One has only to state the problem to see that the amendment is necessary. The derivative benefit must be calculated in relation to the indexed pension as it actually is when the calculation has to he made. For that reason, I very much welcome Amendments Nos. 17 and 21. I hope that, in the same spirit, the noble and learned Lord will be able to accept Amendment No. 24.
It seems unsatisfactory that we should include these piecemeal references to the Pensions (Increase) Act 1971, here, there and elsewhere, instead of having some general provision. In the 1981 Act that situation did not arise because Section 30 contained a general reference to the Pensions (Increase) Act 1971. We have nothing similar in the Bill and therefore we have to insert it in relation to each situation. The noble and learned Lord has done so in relation to Clause 4, and I shall seek to do so in relation to Clause 5. It would be better and more economic drafting if, with his advisers, the noble and learned Lord could find some general formula which could be put in at the end and which would cover every case. Clause 22 contains a general power but it does not happen to fit this provision. I am happy to welcome Amendment No. 17.
On Question, amendment agreed to.
Lord Ackner Lord Ackner moved Amendment No. 18:
Page 6, line 24, after ("pension") insert ("increased by any pension paid under section 19").
The noble and learned Lord said: My Lords, this amendment is designed to achieve what my noble and learned friend the Lord Chancellor said he had achieved; namely, a scheme which is the most tax efficient attainable. What it is sought to do is this. At present the death benefit which is paid to the widow is capped. I apologise to the noble Lord, Lord Cocks of Hartcliffe (who has just left the Chamber) for using

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such extravagant figures; but that means that any sum over £75,000 is capped in the sense that it has to bear tax, presumably at 40 per cent.
That immediately occurred to those expert in pension provisions. It resulted in this advice being given in the following terms to my noble and learned friend the Lord Chancellor a year before the Bill was introduced. When I read it, I shall insert the correct figure which has gone up from 1½ to 2, otherwise I shall be interrupting myself. Paragraph 3.12 of the Top Salaries Review Body's observations on the consultative paper states, with my alteration:
"A death-in-service benefit of twice the pensionable pay capped is low. There is therefore no need for the cap to restrict benefits. The cap on death-in-service comes into play only when the tax-free lump sum exceeds four times the capped salary at the date of death. The cap applies to the benefit and not to the pensionable pay".
Mr. Alexander, the expert and consultant actuary from Watson's, retained by my noble and learned friend the Lord Chancellor said:
"We further note that if pay exceeds the cap, the gratuity in excess of"—
and he puts 1½ times—
"shortly to become—"
I interpose "two"—
"the cap would be paid from the unapproved scheme and would therefore be taxed. We recommend that, instead, all of the death gratuity is paid from the approved scheme, thereby ensuring that no tax would be payable. This is possible because in all cases 1½ times full pay—"
I interpose "twice times full pay" because I think it applies equally—
"will be less than the Inland Revenue maximum gratuity payable from the approved scheme of four times capped pay".
Our own expert says in his report:
"The part of the lump sum death benefit that relates to salary in excess of the cap will be taxed, as pointed out by the independent actuary".
That is Mr. Alexander.
"It is possible to enhance the benefit up to four times the lesser of the salary or the cap and so avoid the tax. This is common practice in the private sector. It seems peculiar that judges shall have such a low level of benefits and still be exposed to tax on some of it when, as in the private sector, the whole of the larger benefit is paid free of tax".
I interpose merely to say that he refers to the lower level of benefits. Mr. Alexander had suggested that the figure should be three times; we put that up at the Report stage but the amendment of my noble and learned friend the Lord Chancellor that it should be twice was carried.
Thus, on all sides, the TSRB, the Government's own independent consultant actuary and the independent consultant actuary to whom the judges have been obliged to have recourse make the same observation. There is no need for tax to be paid once the death benefit exceeds the capped sum.
What is happening is that the judges or their widows are being required—quite contrary to the position which would occur if they were in the private sector—to pay tax on a death benefit above the capped figure. The answer given by my noble and learned friend to this proposition on Report was quite simply, "Ah, but you have the advantage of the retained benefits". That startling piece of information would not have escaped the TSRB who were commenting on the scheme a year before the Bill was introduced. Nor
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would it have escaped the attention of Mr. Alexander of Watsons who commented on the same scheme and nor would it have escaped the attention of the independent consultant whom we retained. All three of them knew that the retained benefits were not going to be taken into account. They merely pointed out that the way in which the scheme was being structured involved a quite unnecessary obligation to pay tax. In those circumstances if the refrain, "I have achieved for the judges the most tax efficient scheme obtainable", is not to be a hollow one, the advice given by all three experts should be applied. I beg to move.
The Lord Chancellor: My Lords, I explained in answer to an earlier amendment that the cap is applied to the pensionable pay and if the lump sum is more than £75,000 as a result of the calculation, that does not mean that tax is applied above the £75,000. The Revenue's rules provide for a death in service lump sum benefit before any retirement benefits have been paid, not exceeding either four times the deceased employee's final remuneration less any retained benefits, or a maximum of twice final remuneration where retained benefits need not be taken into account. The scheme as drafted is therefore at the Revenue limits unless retained benefits are taken into account. These amendments do not, of course, seek to increase the multiple of pension used to calculate the tax free lump sum obtainable under Part I of the Bill, but increase the figure for remuneration so that it includes salary earned above the cap. This means of providing an increased tax free lump sum is, so far as I am aware, not permitted in any pension scheme, whether or not retained benefits are taken into consideration. The present draft of the Bill is, therefore on my understanding at the limits the Revenue will allow.
In respect of the death in early retirement benefit, the amendments seek to increase the level of the lump sum so that the additional lump sum will be paid to the personal representatives of a judge who dies following retirement if the aggregate of the payments of his annual pension plus any pension paid under the top-up scheme, and the lump sum paid on retirement plus any lump sum paid under the top-up scheme is less than one-and-a-half times his pensionable pay increased by any part of his salary which exceeds the pensions cap. Here too, this means of circumventing the operation of the pensions cap which applies to all other people is not acceptable. I have already explained that it is one of the purposes of the Bill to bring the judicial pension schemes into line with modern pension and tax law, and the scheme as drafted, following my own amendments to this provision, will, I believe, comply with what the Revenue allows in a modern pension scheme.
Accordingly, I must say that I am not in a position to support this amendment. However, I invite your Lordships in due course to support my Amendments Nos. 19 and 21.
Lord Ackner: My Lords, even I by now have achieved a settled, hopeless expectation that if I have even three experts on my side—and one of those is retained by my noble and learned friend the Lord

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Chancellor—who point out that the scheme is not tax efficient but can be made so, I will not have my submissions accepted. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Lord Chancellor The Lord Chancellor moved Amendment No. 19:
Page 6, line 25, leave out paragraph (b) and insert:
("(b) the lump sum paid or payable to him under subsection (1) above,").
The noble and learned Lord said: My Lords, I spoke to the amendment with Amendment No. 16. I beg to move.
On Question, amendment agreed to.
[Amendment No. 20 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendment No. 21:
Page 6, line 27, leave out ("one and a half times his pensionable pay") and insert ("five times the annual rate in force in respect of that pension immediately before his death, including any increases under the Pensions (Increase) Act 1971,").
The noble and learned Lord said: My Lords, I spoke to the amendment with Amendment No. 16. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 22 and 23 not moved.]
Clause 5 [Surviving spouse's pension]:
Lord Ackner Lord Ackner moved Amendment No. 24:
Page 7, line 6, at end insert:("including any increases under the Pensions (Increase) Act 1971.").
The noble and learned Lord said: My Lords, I am happy to say that this amendment relies on no experts at all, and perhaps therefore I may have some limited success as a result. It is a probing amendment because it is common ground that index linking is applicable to the widow's pension. She does not receive merely one-half of what her husband received at the moment of retirement, she receives one-half of his pension as increased from time to time under the Pensions (Increase) Act 1971 by virtue of indexation.
It therefore occurred to my noble and learned friend Lord Wilberforce, and subsequently to me, that the words set out in the amendment should be included in the Bill. However, in a complex Bill we may have missed the possibility that the point is adequately catered for elsewhere and it may be that tucked away in this complex Bill there is sufficient clarification that the widow receives half her husband's pension, as indexed, and thereafter has the advantage of indexation. However, if that is not the case the amendment is necessary. I beg to move.
Lord Wilberforce: My Lords, perhaps I may add a few words in support of my noble and learned friend's amendment. There is no dispute about what is intended. It is clearly intended that a widow should have half of the indexed pension of her husband in the sum at the date of his death, which is not the same as at the date of his retirement. There is no dispute about that. That is the law under the 1981 Act. That is how pensions are paid at present. At the Report stage the noble and learned Lord made it clear that that is the case. The only question is whether the amendment is necessary.
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I felt that there was a difficulty in the terminology of the Bill which might produce a contrary result. I shall have to go through the hoops very rapidly, being conscious of the necessity of not boring the gentlemen in the bar at this stage.
The widow's pension is dealt with in Clause 5. On line 5 on page 7 it is indicated that it is:
"one-half of the annual rate of the deceased's judicial pension".
That appears very clear. Lines 18 and 22 state that,
'"the annual rate of the deceased's judicial pension' means…the appropriate annual rate of that pension".
Then one jumps back to Clause 3(1) which indicates that,
"'the appropriate annual rate' for the purposes of this Act is an annual rate equal to one-half of his pensionable pay".
As if that were not enough, one then has to turn to Clause 3(3), which states that,
"a person's 'pensionable pay' is the greater of the following…the pension-capped salary",
which means the salary of the last 12 months.
That rather strong collection of phrases seems to limit the court to giving the widow anything more than one-half of the deceased's pensionable pay in the last 12 months, three years, or 10 years, or whatever it may be, of his life.
There is no provision anywhere else in the Bill that I can find which says that she has to have the benefit of indexation. One leaves aside that her own pension is indexed by virtue of the Act of 1971. In order to get to the right starting point she has to establish that she is entitled to one-half of her husband's pension as increased by indexation.
It may be that this amendment is unnecessary. If the noble and learned Lord can tell us so, I shall be happy indeed. I hope he will not reject it out of hand. Both I and my noble and learned friend have given considerable thought to it. We believe that the point is a valid one. If he cannot agree to it this evening, I earnestly ask him to take it away, consult with his advisers and see whether in another place some provision is necessary. We all agree on what we want to do. It is just a question of the means.
9.45 p.m.
The Lord Chancellor: My Lords, I am grateful for those explanations. It is absolutely clear that we all have the same desire for the end result. The advice I have received so far—I shall look at it again in the light of what my noble and learned friends have said—is that the surviving spouse receives a pension increase to which he or she is entitled. That will happen under the Bill as currently drafted. I refer in particular to Clause 22 which specifically applies the pensions increase legislation to pensions under the Bill.
The advice that I have received is that the amendment in its present form would put a pension increase on to the pension which would be derived from the judge's pension. In other words, it would provide for index linking twice. None of us has that in mind. My noble and learned friends can be assured that I shall certainly look closely at what has been said tonight to ensure that the effect is that which all of us desire.
Lord Wilberforce: My Lords, I do not know who is entitled to reply but perhaps I may add a few words. Clause 22 does not help. It only applies indexation to the widow's own pension. That is all right. When she gets her pension, it is indexed by virtue of the 1971 Act. I cannot see at the moment that Clause 22 helps to establish the initial calculation of the figure of which the widow is to receive half.
I do not think that there is any case of double indexation, except that the husband's pension is indexed and when he dies his wife's pension goes on being indexed. That is not double indexation. It is consecutive indexation.
I have said enough. I am happy to know that the noble and learned Lord will look at the provision again. If he finds it necessary, I am sure that something like this amendment, if not identical, will be brought forward at another stage in another place.
Lord Ackner: My Lords, on that basis, we both seek leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 25 not moved.]
Clause 6 [Grant and payment of a children's pension]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 26:
Page 7, line 37, leave out from ("shall,") to ("be") in line 38.
The noble and learned Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 27 to 33.
The purpose of these amendments is to extend the scope of children eligible to receive a children's pension under the Bill. I undertook, following our discussions at the Committee stage of the Bill, to look at this area further, and at Report to bring forward these amendments. Their effect is to make all children who fall within the period of full-time education and childhood in Clause 7 eligible for a children's pension if they are a natural child of the deceased or a step-child of the deceased. In respect of natural children there is no longer any requirement that the scheme member must have been married.
Natural and step-children may be included regardless of retirement. With regard to adopted children, however, the redrafted Clause 6 will still require that they be adopted before retirement unless the Treasury directs that a pension may be paid in other circumstances. This is because it would not be right for the public purse to be expected to give an open-ended commitment to provide a pension for any number of children an officer might choose to adopt following retirement.
The amendment to Clause 8 removes entirely the present requirement that the children's pension should cease if the spouse remarries unless the Treasury direct otherwise. It also replicates a provision in the 1981 Act which enables the Treasury to direct that, on a spouse's remarriage, the pension may be paid at the higher rate which would apply if there was no surviving spouse at all.
I hope that your Lordships will agree that I have taken full account of the points made in our discussion of this area of the new scheme and that the amendments I now bring forward are a significant
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improvement to the arrangements for children under the Bill as drafted. With your Lordships' leave I shall wish to move Amendments Nos. 27 to 33 en bloc. I beg to move Amendment No. 26.
Lord Simon of Glaisdale: My Lords, although it is late at night and we have been almost seven hours without remission, I should like to ask two questions on Amendment No. 27. They relate to the term "natural children". My first is a purely technical question. Why was it necessary to specify "natural children"? My understanding was that until 1969 children in a statute meant legitimate children. But I believe that that rule has been abrogated since 1969.
Our statute book continues to swell, becoming increasingly prolix and extensive as a result. In my submission, we ought not to put in even one unnecessary word. I suggest that since 1969 the word "natural" may be an unnecessary word.
The second question raises a rather wider social aspect: that is, whether we are not in danger of drifting almost blindly and without apprehension into recognising a status of concubinage. Many legal systems have such a status, well defined, with the children's interests properly defined. We seem to be drifting, especially in the social service code, into recognition of concubinage as if it were the equivalent of marriage to the detriment of the status of marriage. I should be grateful if my noble and learned friend could advert to that matter.
I hear from every side nowadays the phrase "common law marriage", a phrase my noble and learned friend would certainly never use since Scottish law recognised common law marriages up to 1939. However, there seems to be from the linguistic aspect a recognition of semi-concubinage as a status.
The Lord Chancellor: My Lords, we have used the expression "natural children" especially, and defined it for the purposes of this section in Amendment No. 32. We use the expression to distinguish between the other types of children referred to—for example, step-children and adopted children—because we did not wish to deal with them all in exactly the same way.
On my noble and learned friend's second point, of course the measure provides that any children of whom that person is the genetic father or mother will be regarded as the natural children, and therefore subject to being supported by a pension under the Bill. That seems to me to be reasonable in the circumstances.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment Nos. 27 to 32:
Page 7, leave out lines 43 to 47 and insert:

("(a) any natural children of the deceased,

(b) any step-children of the deceased,

(c) any children adopted by the deceased before his retirement from qualifying judicial office, and

(d) any children adopted by the deceased after his retirement from qualifying judicial office and in respect of whom a direction is given under subsection (6) below,").

Page 8, line 19, leave out subsection (5).
Page 8, line 23, leave out ("(c)") and insert ("(d)").
Page 8, leave out lines 25 to 36 and insert:

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("(a) that the deceased had, before his retirement from qualifying judicial office, formed the intention of adopting the child; and

(b) that, immediately before that retirement, the child was wholly or mainly dependent on the deceased.").

Page 8, line 38, leave out ("(2) (b)") and insert ("(2) (c)").
Page 8, line 39, at end insert:
("() In this section, "step-children of the deceased" means—

(a) any natural children of any person to whom the deceased was at any time married who, at the time of the marriage, either had been born or were in gestation;

(b) any children adopted by such a person before the marriage to the deceased; and

(c) any children adopted by such a person after the marriage to the deceased in a case where the adoption proceedings were pending at the time of the marriage.

() For the purposes of this section the "natural children" of any person are any children of whom that person is the genetic father or mother.").
On Question, amendments agreed to.
Clause 8 [Rate of children's pension]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 33:
Page 10, line 13, leave out subsection (3) and insert:
("(3) Where the deceased leaves a surviving spouse who remarries, the Treasury may, if they think fit, direct that subsection (1) above shall apply instead of subsection (2) above as respects any period when the surviving spouse has a spouse.").
On Question, amendment agreed to.
Clause 9 [Contribution towards cost of surviving spouse's and children's pension]:
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 34:
Page 10, line 41, at end insert:
("() Regulations made under this section shall be subject to the affirmative resolution of both Houses of Parliament.").
The noble and learned Lord said: My Lords, I can deal with the matter briefly because much of the ground was covered in respect of an earlier amendment; namely, the status of parliamentary control over our delegated legislation. Earlier I drew attention to the first criterion which was established by the joint Select Committee on delegated legislation; that is, whether the regulation made a substantial contribution to the body of legislature. This is a different point and arises under the second head to which my noble and learned friend averted; namely, powers to impose financial charge or to make other forms of financial provision. The clause deals with contributions to be made towards improved benefits for dependents by the judge himself. That is reasonable enough and has always been accepted.
Clause 9(3) provides that the contributions shall be prescribed. The only question is whether when contributions are prescribed they fall under the heading of powers to enforce financial charge. In my respectful submission it is obvious that they do so. In recent years we have come across such a provision. The most notorious was in the Statutory Sick Pay Act 1991, as it was introduced. That Act amended an earlier Statutory Sick Pay Act under which employers were enjoined to pay statutory sick pay to their employees and the Government were enjoined to reimburse them 100 per cent. However, under the recent Act the figure was reduced to 80 per cent. It
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may seem extraordinary that under another provision the Minister was empowered to alter that figure of 80 per cent., obviously imposing a charge on the individual employer and affecting a charge on public funds. Even more strange is the fact that it was subject only to negative resolution, which is relevant here.
A protest was immediately made in respect of another place. The Government hastened to accept that the provision ought to be subject to affirmative resolution. In fact, when the Bill came to this House your Lordships would not have the Henry VIII provision. By a vote carried against the Government your Lordships expunged that from the Bill and the Government finally bowed to the view of this House. In this case the only question is whether the provision should be subject to affirmative resolution. That is answered by the reply to the question: does the clause confer powers to impose a financial charge? Since it does, in my respectful submission it should be affirmative. I beg to move.
10 p.m.
The Lord Chancellor: My Lords, the second head of the Joint Committee's recommendation was only as regards matters which would normally be appropriate to taxation. It states:
"powers to impose or increase taxation or other financial burdens on the subject or to raise statutory limits",
and so on. I do not believe that this is within that category. It regulates the terms of contributions by those who will be members of the scheme.
I am comforted by the fact that the corresponding provision for contributions in Section 23 of the 1981 Act, which was a consolidating Act, was subject to the negative resolution procedure. This is an area in which that type of negative resolution procedure is adequate. I have heard no suggestion that such a procedure has not worked perfectly satisfactorily in the context of the 1981 Act.
It may be very necessary to maintain a degree of flexibility about this matter. For example, at an earlier stage my noble and learned friend Lord Wilberforce referred to increasing benefits if one wished to pay for them. That possibility exists. I should have thought it to be very much a matter for negotiation.
In this case I submit to your Lordships that the correct view to take is that in all the circumstances the negative resolution procedure is appropriate, par-ticularly having regard to the history of the antecedent Section 23.
Lord Simon of Glaisdale: My Lords, there are three points. The first is whether the power to levy and impose a contribution is one which imposes a financial charge. My noble and learned friend did not answer that question. It could have been answered by either yes or no. It certainly must be answered.
The second matter is the point made by my noble and learned friend that it is a negative procedure only in the 1981 consolidation Act. The lesson from that is that Parliament cannot always uniformly exercise vigilance in these matters. Formerly it was exercised to a large extent within the government by the legislation committee of the Cabinet. However, for some years that committee has abnegated that responsibility.

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It cannot be expected that Members of Parliament should read every line of every statute to see whether there is a bureaucratic encroachment. It may be that the committee which your Lordships set up earlier this week, following the Australian institution—the Delegated Powers Scrutiny Committee—may perform that duty. However, it is no answer to say that that has been done before. On the contrary, it shows that we must be extremely careful in passing any power of this kind which admits bureaucratic encroachment.
That leads me to the last point. Are we not in danger of seeing the progressive erosion of the criteria established by the Joint Select Committee because we can only look at single incidents? It is like examining the wavelengths on the beach, irrespective of whether the tide is coming in. A great bureaucratic tide has been invading the legislature in recent years. However, at this hour, I must bow to the superior force of the Whips and, if my noble and learned friend will allow me to say so, not to the superior force of his argument.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Additional benefits from voluntary contributions]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 35:
Page 11, line 4, after ("benefits") insert (", whether").
The noble and learned Lord said: My Lords, with this amendment I wish to speak also to Amendments Nos. 36 to 44 and 46 to Clause 10; Amendments Nos. 53 and 54 to Schedule 3 and Amendments Nos. 86 to 89 to Clause 9. These amendments give effect to the undertaking I gave at Report stage of the Bill to amend the provisions of the Bill relating to additional voluntary contributions to permit these to be made up to Revenue limits provided retained benefits are taken into account.
The analogous provisions to those in Clause 10 contained in the Judicial Pensions Act 1981 have never been implemented. The reason for this is that, until recently, the view was that the 1981 schemes were so generous, particularly in their treatment of retained benefits, in comparison to other occupational pension schemes, that there was no scope for affording further tax advantages to scheme members. As I explained at Committee, it took a good deal of consideration to overcome this. I am now in a position, with the Revenue's agreement, to allow judicial officers to make additional voluntary contributions to increase their own benefits provided that they do so within the limits which apply to all other tax approved occupational pension schemes. That means that any retained benefits from other personal or occupational pension schemes of which a scheme member has been a member, will have to be declared and taken into account for the purposes of assessing the scope for each individual to make additional voluntary contributions. Such contributions will attract tax relief at the highest rate.
The amendments ensure that the regulations under this clause will be able to require a member to declare his or her retained benefits. They also enable those benefits to be valued and aggregated with the judge's
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potential entitlement under the main judicial pension scheme, to determine whether or not there is any headroom between that aggregated figure and the effective ceiling established by the Revenue's overall limits. The regulations will also have to cover a number of administrative and procedural matters and I have taken the opportunity of making sure that the regulation-making power is adequate.
The amendments cover not only the new scheme, but also the 1981 schemes, and the analogous Scottish and Northern Ireland legislation. There will therefore be no need for judicial officers to join the new scheme when it is established in order to take advantage of this particular development. The requirement to take into account retained benefits will apply of course only to those judges who wish to make AVCs. There will be no requirement for anyone else to declare their retained benefits.
Your Lordships may remember that my noble friend Lord Colville of Culross, said during our discussions at Report stage that this could be one of the most important points discussed during that debate. I very much agree with that view. An effective additional voluntary contribution facility will allow those scheme members who, for whatever reason, have been unable to make adequate provision for themselves and their families before appointment, to increase that provision to the maximum level allowed by the Revenue for a member of a tax approved scheme.
My noble friend Lord Colville of Culross, explained earlier to me that he was unable to be with us this evening, but he told me that he welcomed these particular amendments. He understood that they had also been welcomed by his contacts among the circuit judges. I beg to move.
Lord Coleraine: My Lords, I wish to thank my noble and learned friend for these amendments which, I am advised, largely answer the anxieties which I expressed at earlier stages of the Bill on behalf of those judges who first took up posts as judges before the age of 45.
Lord Chancellor: My Lords, I am very much obliged to my noble friend. I am glad that we have been able to accommodate his anxieties.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 36 to 44:
Page 11, line 5, at end insert ("or otherwise.
(1A) Regulations may make provision for the purpose of imposing, in a case where a person to whom this Part applies makes voluntary contributions, upper limits with respect to—

(a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such person; and

(b) the amount which any such person may pay by way of such contributions;

and, without prejudice to the generality of paragraph (b) above, any such regulations may, in particular, impose such an upper limit on the amount which a person may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) above will not exceed the limit prescribed under that paragraph.
(1B) Regulations may—

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(a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A) above;

(b) confer on the administrators of the scheme constituted by this Part power to require a person to whom this Part applies who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;

(c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—

(i) to, or to any officers of, the Commissioners of Inland Revenue; or

(ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided.").

Page 11, line 6, leave out ("Any such").
Page 11, line 9, after ("than") insert ("either or both of the following, that is to say—

(i) such upper limit as may be imposed by virtue of subsection (1A) (b) above; or

(ii)").

Page 11, line 26, leave out ("under this section").
Page 11, line 30, leave out ("and").
Page 11, line 33, leave out ("limit imposed by virtue of") and insert ("such limit as is mentioned in").
Page 11, line 33, at end insert:

("(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;

(d) provide for the manner in which voluntary contributions are to be paid;

(e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;

(f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;

(g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;

(h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;

(i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contribu-tions scheme.").

Page 11, line 34, leave out subsection (4).
Page 11, line 37, at end insert:
("() Regulations may provide—

(a) for such additional benefits arising under or by virtue of this section as may be prescribed—

(i) to be charged on, and paid out of, the Consolidated Fund, or

(ii) to be paid out of money provided by Parliament, and

(b) for payments to be made into or out of the Consolidated Fund, or out of money provided by Parliament, in connection with the operation or administration of any prescribed voluntary contributions scheme.").

On Question, amendments agreed to.
[Amendment No. 45 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendment No. 46:
Page 11, line 40, at end insert:
()In this section—

"aggregable benefits" means—
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(a) any pensions or other benefits under this Part, other than such additional benefits as are mentioned in subsection (1) above;

(b) such additional benefits so mentioned as may be prescribed; and

(c) such retained benefits as may be prescribed;

"employment" has the same meaning as it has in the Social Security Pensions Act 1975 (and accordingly includes employment as a self-employed earner, within the meaning of that Act);

"occupational pension scheme" has the meaning given by section 66(1) of the Social Security Pensions Act 1975;

"personal pension scheme" has the meaning given by section 84(1) of the Social Security Act 1986;

"prescribed" means specified in, or determined in accordance with, regulations;

"regulations" means regulations under this section;

"relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;

"retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;

"surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b) above;

"tax-exemption" and "tax-approval" have the meaning given by section 84(1) of the Social Security Act 1986;

"voluntary contributions scheme" means any occupa-tional or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) above are, or are to be, provided.

() Without prejudice to section 29(6) below, regulations under this section may make different provision for different classes or descriptions of voluntary contributions scheme.").
The noble and learned Lord said: My Lords, I have already spoken to this amendment in speaking to Amendment No. 35. I beg to move.
On Question, amendment agreed to.
Clause 19 [Benefits in respect of earnings in excess of pension-capped salary]:
[Amendment No. 47 not moved.]
Clause 26 [Retirement date for holders of certain judicial offices etc.]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 48:
Page 20, line 18, leave out ("other than Circuit judge").
The noble and learned Lord said: My Lords, this is a drafting amendment and it has no effect on the substance of the clause. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 49:
Page 20, line 45, leave out paragraph (b) and insert:
("(b) participate in the hearing and determination of any appeal, or any petition for leave to appeal, to the House of Lords, unless he is the Lord Chancellor;").
The noble and learned Lord said: My Lords, in moving this amendment, I wish also to speak to Amendment No. 80. I am bringing forward both amendments as a result of the observations on the existing drafting made by my noble and learned friend Lord Wilberforce. My noble and learned friend pointed out in Committee and again on Report that the present drafting does not achieve its purpose, which is to ensure that no one over the age of 75, other

423
than a serving Lord Chancellor, should hear and determine appeals and petitions for leave to appeal to your Lordships' House. I believe that the present amendment achieves this purpose, and Amendment No. 80 in Schedule 6 is a consequential textual amendment to the Appellate Jurisdiction Act 1876. I am particularly grateful to my noble and learned friend Lord Wilberforce for raising this point and I hope that this is a satisfactory solution to it. I beg to move.
Lord Wilberforce: My Lords, I am very much obliged to the noble and learned Lord for bringing forward this clause, which gives full effect to what I had wanted to do at previous stages. Having said that, I hope it is not ungracious to say that I would much prefer that the clause were not there at all. This whole matter of asking people to sit on after a certain age ought to be dealt with gracefully by administration, by courtesy or good sense, rather than by the heavy hand of primary legislation. However, we are set on that course and given that the present clause is much better than the previous wording, I am very happy to agree to it.
On Question, amendment agreed to.
Clause 27 [Completion of proceedings after retirement]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 50:
Page 23, line 15, at end insert:
("(4) If and to the extent that any prohibition imposed by subsection (7) of section 26 above would not, apart from this subsection, be regarded as a prohibition on the holding of an office, it shall be treated for the purposes of this section as if it were such a prohibition, and references in this section to office, or to vacating or otherwise ceasing to hold office, shall be construed accordingly.").
The noble and learned Lord said: My Lords, this is a technical drafting amendment. Its purpose is to remove any doubt as to the provisions of Clause 27 which allow a judge to finish off a case even though he has vacated his office and to work in a case even where a judge does not actually vacate an office but merely becomes ineligible to take part in the proceedings. An example of this we have just considered, and that is that a person of 75 is no longer able to participate in the hearing of appeals to the House of Lords. It might be argued that he does not vacate any office; he merely becomes ineligible to take part. The amendment removes any doubt that there may be on this. I beg to move.
On Question, amendment agreed to.
Clause 29 [Regulations and orders]:
[Amendment No. 51 not moved.]
Clause 30 [Interpretation]:
[Amendment No. 52 not moved.]
Schedule 3 [Corresponding minor amendments to other pensions enactments]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 53 and 54:
Page 35, line 35, at end insert:
("Additional voluntary contributions
.—(1) Section 33A of the 1981 Act (which confers power to make regulations entitling any member of a judicial pension scheme constituted by that Act or by the Sheriffs' Pensions
424
(Scotland) Act 1961 to make voluntary contributions towards the provision of additional benefits under the scheme) shall be amended in accordance with the following provisions of this paragraph.
(2) In subsection (1), for the words "under the scheme" there shall be substituted the words "whether under the scheme or otherwise".
(3) After that subsection there shall be inserted—
"(1A) The regulations may make provision for the purpose of imposing, in a case where a member makes voluntary contributions, upper limits with respect to—

(a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such member; and

(b) the amount which any such member may pay by way of such contributions;

and, without prejudice to the generality of paragraph (b) above, the regulations may, in particular, impose such an upper limit on the amount which a member may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) above will not exceed the limit prescribed under that paragraph.

(1B) The regulations may—

(a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A) above;

(b) confer on the administrators of a judicial pension scheme power to require a member who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;

(c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—

(i) to, or to any officers of, the Commissioners of Inland Revenue; or

(ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided."

(4) In subsection (2), in paragraph (b) (no limit on voluntary contributions, other than an upper limit corresponding to that imposed by section 594 of the Income and Corporation Taxes Act 1988) after the words "other than" there shall be inserted the words "either or both of the following, that is to say—

(i) such upper limit as may be imposed by virtue of subsection (1A) (b) above; or

(ii)".

(5) In subsection (3) (regulations about valuation of benefits etc)—

(a) the word "and" immediately preceding paragraph (b) shall be omitted; and

(b) in that paragraph, for the words "limit imposed by virtue of" there shall be substituted the words "such limit as is mentioned in".

(6) At the end of that subsection there shall be added—

"(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;

(d) provide for the manner in which voluntary contributions are to be paid;

(e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;

(f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;

425

(g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;

(h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;

(i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contributions scheme."

(7) Subsection (4) (limitation of voluntary contribu-tions by reference to maximum entitlement of members) shall be omitted and before subsection (5) there shall be inserted—
"(4A) The regulations may provide—

(a) for such additional benefits arising under or by virtue of this section as may be prescribed—

(i) to be charged on, and paid out of, the Consolidated Fund; or

(ii) to be paid out of money provided by Parliament; and

(b) for payments to be made into or out of the Consolidated Fund, or out of money provided by Parliament, in connection with the operation or administration of any prescribed voluntary contributions scheme."

(8) After subsection (5), there shall be inserted—
"(5A) The regulations may make different provision for different classes or descriptions of voluntary contributions scheme."
(9) After subsection (8) of that section there shall be added—
"(9) In this section—

"administrators", in relation to any scheme, means the persons entrusted with the administration of that scheme;

"aggregable benefits" means—

(a) any pensions or other benefits under a judicial pension scheme, other than such additional benefits as are mentioned in subsection (1) above;

(b) such additional benefits so mentioned as may be prescribed; and

(c) such retained benefits as may be prescribed;

"employment" has the same meaning as it has in the Social Security Pensions Act 1975 (and accordingly includes employment as a self-employed earner, within the meaning of that Act);

"judicial pension scheme" has the meaning given by section 14A(2) above;

"member" means member of a judicial pension scheme;

"occupational pension scheme" has the meaning given by section 66(1) of the Social Security Pensions Act 1975;

"personal pension scheme" has the meaning given by section 84(1) of the Social Security Act 1986;

"prescribed" means specified in, or determined in accordance with, the regulations;

"relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;

"retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;

"surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions
426
scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b) above;

"tax-exemption" and "tax-approval" have the meaning given by section 84(1) of the Social Security Act 1986;

"voluntary contributions", in relation to any member of a judicial pension scheme, means voluntary contributions towards the provision of additional benefits, whether under that scheme or otherwise;

"voluntary contributions scheme" means any occupational or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) above are, or are to be, provided."").

Page 38, line 22, at end insert:
("Additional voluntary contributions
.—(1) The following enactments (which correspond to section 33A of the 1981 Act), that is to say—

(a) section 11A of the 1951 Act,

(b) section 127A of the 1959 Act, and

(c) section 9A of the 1960 Act,

shall be amended in accordance with the following provisions of this paragraph.
(2) In subsection (1), for the words "under the scheme" there shall be substituted the words "whether under the scheme or otherwise".
(3) After that subsection there shall be inserted—
"(1A) The regulations may make provision for the purpose of imposing, in a case where a member makes voluntary contributions, upper limits with respect to—

(a) the aggregate value of the aggregable benefits which may be paid to or in respect of any such member; and

(b) the amount which any such member may pay by way of such contributions;

and, without prejudice to the generality of paragraph (b), the regulations may, in particular, impose such an upper limit on the amount which a member may pay by way of voluntary contributions as will, so far as reasonably practicable, secure that the aggregate value referred to in paragraph (a) will not exceed the limit prescribed under that paragraph.

(1B) The regulations may—

(a) prescribe the manner in which aggregable benefits are to be valued for the purpose of any such aggregation as is mentioned in subsection (1A);

(b) confer on the administrators of a judicial pension scheme power to require a member who is making, or who wishes to make, voluntary contributions to provide such information as they may require concerning any retained benefits of his;

(c) permit the disclosure by those administrators of any information which they may obtain concerning any such retained benefits—

(i) to, or to any officers of, the Commissioners of Inland Revenue; or

(ii) to, or to any servants or agents of, the trustees, managers or administrators of the scheme under which the additional benefits in question are to be provided."

(4) In subsection (2), in paragraph (b) (no limit on voluntary contributions, other than an upper limit corresponding to that imposed by section 594 of the Income and Corporation Taxes Act 1988) after the words "other than" there shall be inserted the words "either or both of the following, that is to say—

(i) such upper limit as may be imposed by virtue of subsection (1A) (b); or

(ii)".

(5) In subsection (3) (regulations about valuation of benefits etc)—

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(a) the word "and" immediately preceding paragraph (b) shall be omitted; and

(b) in that paragraph, for the words "limit imposed by virtue of" there shall be substituted the words "such limit as is mentioned in".

(6) At the end of that subsection there shall be added—

"(c) provide for any administrative expenses incurred by any person by virtue of this section to be defrayed out of sums received by way of voluntary contributions;

(d) provide for the manner in which voluntary contributions are to be paid;

(e) make provision for, and in connection with, the valuation of a person's accrued rights under any occupational or personal pension scheme which are to be transferred into a voluntary contributions scheme;

(f) prescribe the additional benefits which are to be available under a voluntary contributions scheme and the rates and times at which those benefits are to be payable;

(g) make provision for and in connection with the making of elections between different benefits available under voluntary contributions schemes;

(h) provide for the terms on which a person may terminate his membership of a voluntary contributions scheme;

(i) provide for the terms on which surplus funds may be refunded to a person who has made payments by way of voluntary contributions to a voluntary contributions scheme."

(7) Subsection (4) (limitation of voluntary contribu-tions by reference to maximum entitlement of members) shall be omitted and before subsection (5) there shall be inserted—
"(4A) The regulations may provide—

(a) for such additional benefits arising under or by virtue of this section as may be prescribed—

(i) to be charged on, and paid out of, the Consolidated Fund of the United Kingdom; or

(ii) to be paid out of money provided by the Parliament of the United Kingdom; and

(b) for payments to be made into or out of the Consolidated Fund of the United Kingdom, or out of money provided by the Parliament of the United Kingdom, in connection with the operation or administration of any prescribed voluntary contributions scheme."

(8) After subsection (6) of that section there shall be added—
"(7) In this section—

"administrators", in relation to any scheme, means the persons entrusted with the administration of that scheme;

"aggregable benefits" means—

(a) any pensions or other benefits under a judicial pension scheme, other than such additional benefits as are mentioned in subsection (1);

(b) such additional benefits so mentioned as may be prescribed; and

(c) such retained benefits as may be prescribed;

"employment" has the same meaning as it has in the Social Security Pensions (Northern Ireland) Order 1975 (and accordingly includes employ-ment as a self-employed earner, within the meaning of that Order);

"judicial pension scheme" means a scheme constituted by this Act;

"member" means member of a judicial pension scheme;

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"occupational pension scheme" has the meaning given by Article 2(2) of the Social Security Pensions (Northern Ireland) Order 1975;

"personal pension scheme" has the meaning given by Article 2(2) of the Social Security (Northern Ireland) Order 1986;

"prescribed" means specified in, or determined in accordance with, the regulations;

"relevant benefits" has the meaning given by section 612(1) of the Income and Corporation Taxes Act 1988;

"retained benefits", in the case of any person, means any rights retained by him to relevant benefits under any occupational or personal pension scheme which has, or which may be expected to qualify for, tax-exemption or tax-approval, being rights which accrued during some previous employment;

"surplus funds", in relation to a person and any voluntary contributions scheme, means any funds which are, or have been, held for the purposes of that voluntary contributions scheme and which fall to be returned to him in consequence of any such limit as is mentioned in subsection (2) (b);

"tax-exemption" and "tax-approval" have the meaning given by Article 2(2) of the Social Security (Northern Ireland) Order 1986;

"voluntary contributions", in relation to any member of a judicial pension scheme, means voluntary contributions towards the provision of additional benefits, whether under that scheme or otherwise;

"voluntary contributions scheme" means any occupational or personal pension scheme if and to the extent that it is a scheme under which such additional benefits as are mentioned in subsection (1) are, or are to be, provided."").

The noble and learned Lord said: My Lords, I have already spoken to Amendments Nos. 53 and 54 with Amendment No. 35. I beg to move these amendments en bloc with your Lordships' leave.
On Question, amendments agreed to.
Schedule 4 [Pensions for senior public investigative officers]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 55:
Page 39, line 29, leave out ("(3)") and insert ("(4)").
The noble and learned Lord said: My Lords, in moving Amendment No. 55, I should like to speak to Amendments Nos. 56 to 78. These are largely technical amendments to give effect to the undertak-ings that I gave at Report stage to make a number of consequential amendments in respect of senior investigative officers. They are designed to extend the provisions of Part II of the Bill to such officers, because the Bill as drafted omits to do so. They also ensure that the appropriate Minister in respect of such officers is to be a Treasury Minister. As drafted, only some of the references to "appropriate Ministers" are to Ministers in the Treasury, which has ministerial responsibility for their pension arrangements. With your Lordships' leave, I will move Amendment No. 55 and then take Amendments Nos. 56 to 78 en bloc.
On Question, Amendment agreed to.
10.15 p.m.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 56 to 78:
Page 39, line 29 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").
Page 39, line 31, after ("salary") insert (", appeals and transfer of accrued rights)").
Page 40, line 1, leave out ("and").
Page 40, line 1, leave out ("or) and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").
Page 40, line 2, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").
Page 42, line 33, leave out ("(3)") and insert ("(4)").
Page 42, line 34 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").
Page 42, line 35, after ("salary") insert (", appeals and transfer of accrued rights)").
Page 43, line 3, leave out ("and").
Page 43, line 3, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").
Page 43, line 4, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").
Page 46, line 38, leave out ("(3)") and insert ("(4)").
Page 46, line 39 leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").
Page 46, line 40, after ("salary") insert (", appeals and transfer of accrued rights)").
Page 47, line 7, leave out ("and").
Page 47, line 7, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").
Page 47, line 8, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").
Page 49, line 32, leave out ("(3)") and insert ("(4)").
Page 49, line 33, leave out ("section 19 of that Act (which provides") and insert ("sections 19, 20 and 23 of, and Schedule 2 to, that Act (which provide for").
Page 49, line 34, after ("salary") insert (", appeals and transfer of accrued rights)").
Page 50, line 2, leave out ("and").
Page 50, line 2, leave out ("of") and insert (" 19 (benefits in respect of earnings in excess of pension-capped salary) and 20 (appeals) of, and Schedule 2 (transfer of accrued rights) to,").
Page 50, line 3, at end insert ("and the power conferred by paragraph 2 of that Schedule to make regulations shall be exercisable by the Treasury.").
On Question, amendments agreed to.
10.15 p.m.
Schedule 5 [Retirement provisions: the relevant offices]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 79:
Page 54, line 5, at end insert:
("President of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").
The noble and learned Lord said: My Lords, with this amendment, I wish to speak also to Amendments Nos. 81, 84 and 85. The purpose of this amendment is to add the office of president of the Industrial Court in Northern Ireland to the list of offices in Schedule 5 to this Bill. In other words, the office will become a "relevant office" so as to be governed by the retirement provisions of the Bill.
Amendment No. 81 provides for consequential textual amendments to the legislation affecting the
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office; and Amendments Nos. 84 and 85 provide for transitional retirement arrangements for the existing holder of the office. I beg to move.
On Question, amendment agreed to.
Schedule 6 [Retirement dates for certain judicial offices]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 80:
Page 55, leave out lines 27 and 28 and insert:
(""but this section is subject to sections 26(7) (b) and 27 of the Judicial Pensions and Retirement Act 1992 (prohibition on participating in the hearing and determination of appeals after attaining the age of seventy-five years, except for the purpose of completing proceedings already begun)."").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 49. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 81:
Page 64, line 3, at end insert:
("President of the Industrial Court in Northern Ireland
In Article 91 of the Industrial Relations (Northern Ireland) Order 1992, at the beginning of paragraph (3) (terms of appointment of president and other members of the Industrial Court) there shall be inserted the words "Subject, in the case of the president, to paragraph (3A)," and after that paragraph there shall be inserted—
"(3A) The president shall vacate his office on the day on which he attains the age of 70; but this paragraph is subject to section 26(4) to (6) of the Judicial Pensions and Retirement Act 1992."").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 79. I beg to move.
On Question, amendment agreed to.
Schedule 7 [Retirement dates: transitional provisions]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 82:
Page 75, line 51, at end insert (", or whose arrangements with respect to retirement,").
The noble and learned Lord said: My Lords, with this amendment I should like to speak also to Amendment No. 83. Amendment No. 82 is a drafting amendment to ensure that the provisions of Schedule 7 which supply a transitional retirement date by reference to a person's standard terms of appointment work equally well when there are no standard terms of appointment but only "arrangements with respect to retirement". Amendment No. 83, which gave rise to the need for Amendment No. 82, ensures that a Social Security Commissioner who was appointed before 23rd May 1980 has, as his transitional retirement date, the last day of the completed year of service in which he attains the age of 72. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 83:
Page 76, line 4, at end insert:
("() Social Security Commissioner appointed before 23rd May 1980;").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 82. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 84 and 85:
Page 76, line 18, at end insert:
("() president of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").
Page 77, line 12, at end insert:
("() president of the Industrial Court appointed in pursuance of Article 91 of the Industrial Relations (Northern Ireland) Order 1992").
The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No. 79. With your Lordships' leave I shall take them en bloc. I beg to move.
On Question, amendments agreed to.
Schedule 9 [Repeals and revocations]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 86 to 89
Page 84, line 18, at end insert:

("1951 c.20 (N.I.).

The Judicial Pensions Act (Northern Ireland) 1951.

In section 11A, in subsection (3), the word "and" im-mediately preceding paragraph (b), and subsection (4).").

Page 84, line 19, column 3, at end insert ("In section 127A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").
Page 84, line 22, column 3, at beginning insert ("In section 9A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").
Page 85, line 10, column 3, at end insert ("In section 33A, in subsection (3), the word "and" immediately preceding paragraph (b), and subsection (4).").
The noble and learned Lord said: My Lords, you will be aware that I have already spoken to these amendments when I spoke to Amendment No. 35. With your Lordships' leave, I should like to take them en bloc. I beg to move.
On Question, amendments agreed to.
Amendment (privilege) made.
10.18 p.m.
The Lord Chancellor: My Lords, I beg to move, That the Bill do now pass.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
Lord Williams of Mostyn: My Lords, I had wished to speak earlier on Report but as I had not made my maiden speech I could not. I have nothing useful to add this evening therefore I shall not.
Lord Ackner: My Lords, pensions are deferred pay. That is common ground. The Top Salaries Review Body—the TSRB—which was appointed over 20 years ago is required by its terms of reference to advise the Prime Minister on the remuneration of, among others, the higher judiciary and certain other judicial appointments. That too must be common ground.
When it came to reconsidering the extent to which the Judicial Pensions Act 1981—a consolidating Act—should be fundamentally altered, it was to be expected that the whole issue of judicial pensions would be referred to the TSRB. After all, that had recently been done in relation to pensions of Members of Parliament. The TSRB produced recommendations
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which were subsequently, so I understand, accepted. Why was it that this most important aspect of judicial pay—a vital constituent of judicial independence—was confined within the Lord Chancellor's Department, which merely sought comments from, inter alia, the TSRB, but never published those comments? It took a little time for the penny to drop, but at the conclusion of the debate on the Bill the explanation is a simple but depressing one.
For some years there has been mounting pressure to reduce the retiring age of the judiciary, fixed for the first time some 33 years ago at 75 for the senior judiciary and at 72 for the Circuit Bench. This pressure has had the support of judges themselves and had ultimately to be accepted by the Government. The financial implications were immediately recognised by that venerable senior wrangler, Lord Denning, who in an interview in recent times said in his inimitable way that this was going to cost the Treasury a pretty penny. As your Lordships would expect, in his speech on Second Reading, on 16th June (col. 152 of Hansard), the noble Lord, Lord Benson, explained the matter trenchantly in accountancy terms. He said:
"if one reduces the retiring age it increases the cost"—
of a pension scheme—
"to an extravagant degree, depending on the number of people involved".
However, the Treasury had no intention of accepting that the reduction in the judicial retiring age, which from a financial point of view it no doubt viewed with scanty enthusiasm, would cost it a pretty penny or any penny. On the contrary, it was determined that it would cost nothing by the simple process of requiring the senior judiciary and the circuit judges themselves to pay for the obligation to be imposed upon them to cease to work at an earlier age. That was to be achieved quite simply in one and the same Bill by reducing the retiring age and downgrading the value of the judicial pension for such judges.
That was made abundantly clear by the statement on page 3 of the Bill where, under "Financial Effects of the Bill," it is stated:
"The difference in cost between the existing arrangements and the new arrangements will take some years to emerge, but the effect on public expenditure is expected to be broadly neutral."
That is particularly significant since, in restructuring judicial pensions, certain injustices, anomalies and inadequacies relating to, among others, stipendiary magistrates and registrars, now known as district judges, required remedying. That too would prove costly.
Let me now justify my assertions. As your Lordships now know, for nearly 200 years—that is, since the first judicial pension legislation in 1799—the period which the senior judiciary and subsequently the county court and circuit judges have had to serve to earn their pension—not a generous one, being half their salary—has been 15 years. That is not an idiosyncratic feature of the English legal system. The period in the United States, Canada and Australia is 50 per cent. less; that is, 10 years. In New Zealand, as I pointed out to your Lordships, there is a slightly

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strange compromise. It is one year longer than in England—that is, 16 years—but the judges obtain a tax-free pension of two-thirds of their salary.
There seemed during debates to be a certain reticence in my noble and learned friend the Lord Chancellor in his responses to the inquiry as to what it cost the Treasury to provide the judicial pension. I found that a little surprising as it is all neatly set out in Table 7 on page 60 of the latest report of the TSRB, Report No. 33. The table is headed "Comparative Value of Public and Private Sector Pensions" and is subheaded "Cost to employer of Pension Benefits as at April 1991". In relation to the High Court judge and the circuit judge, it shows that that cost is 30 per cent. of pensionable salary; that is to say, in those days, in relation to the High Court judge, £25,000. By imposing upon the judge the obligation to work an extra five years to earn his full pension, the Treasury is in effect imposing a salary cut of one-quarter of 30 per cent.—that is to say, 7.5 per cent.—upon those judges. Expressed in another way in relation to every High Court judge who previously would have retired having served 15 years to obtain his full pension but who in future will now have to work an extra five years, the Treasury will save each year over £6,000 per judge or, over the whole five-year period on current figures, something in the region of £30,000. That is only one of the many savings.
Until now the judicial pension has been based on the current annual rate of pay. Thus a judge who retired shortly after a pay rise would receive a pension of one-half of his annual salary thus increased. Henceforth, to achieve yet another saving, the pension is to be based upon his salary as averaged over the year before his retirement. Applying a recent 4 per cent. salary increase, the judge who retires not immediately after a pay increase but half way through the year will, if he be a circuit judge, suffer a reduction in his annual pension of £650 or, in the case of a Law Lord, the sum would be £1,000. His widow's pension which is half of his pension will be proportionately reduced, as will be the lump sum he obtains on his retirement. That has nothing whatever to do with conforming to the general tax law. A yet further saving is produced by the capping of the lump sum at the current figure of £75,000. Sums above that amount will doubtless be taxed at 40 per cent.
In moving Amendments Nos. 2 and 3, I have today drawn your Lordships' attention to the quite shabby treatment which the Bill sought to inflict upon disabled judges, their widows or widowers and orphans; to the strong criticism provoked from independent experts; and to the inadequate provision ultimately extracted, with difficulty, from the Government. I shall not repeat myself. In addition, there was total unanimity among the experts with regard to the Government's meanness in relation to the tax free lump sum, to the death-in-service benefits, to the out-of-date obligation upon the judiciary to pay contributions towards widows' and widowers' benefits and to their position upon remarriage.
The experts made it quite clear that what the Government were seeking to do was to enshrine in primary legislation out-of-date concepts, ignoring
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how pension provisions have evolved over the years. A consultant actually advising the judges concluded that the saving to the Treasury amounted to between 10 per cent. and 15 per cent. of the judicial salary, and that was without taking into account the new important basis for the calculation of the pension to which I referred earlier.
About five years ago in an important lecture which was prominently reported by the press, my noble and learned friend Lord Browne-Wilkinson—then the Vice-Chancellor, the head of the Chancery Division of the High Court—said that,
"the old machinery regulating the administration of justice no longer ensures the independence of that system from executive control. Judges are sitting in an environment wholly determined by executive decision in the Lord Chancellor's department, which in turn is operating under the financial constraints and pressures imposed by the Treasury. The yardstick for decision taking is financial value for money not the interests of justice. What constitutes value for money is being determined by the executive, not judicial decision. The Lord Chancellor's own position, representing as he does simultaneously both the independent judiciary and the interests of the Government, is becoming more and more difficult, since the price to be paid for obtaining funds for the administration of justice is dependent on satisfying the Treasury that any particular cause represents, in their terms, value for money".
The accuracy of those observations was illustrated vividly quite recently on 22nd October in the debate on an Unstarred Question asked by the noble Lord, Lord Irvine of Lairg, about the continuing gross shortage of High Court judges, which, in the words of my noble and learned friend the Lord Chief Justice,
"will truly become a national disgrace".—[Official Report, 22/10/92; col. 879.]
Your Lordships will recall the debate on Report on Amendment No. 46 which sought to reinstate, in the public interest, the accrual period of 15 years. The alteration proposed by the Government would prejudicially affect, in future, the calibre of judges who accept the appointments and thereby the quality of the administration of justice. That amendment, defeated by 84 votes to 79, was supported by the former Lord Chancellor, the former Lord Chief Justice, the current Lord Chief Justice, the former Master of the Rolls, 10 Law Lords and two former Law Officers. I need not remind your Lordships that one of the great constitutional tasks of the court today is to control the misuse of power by government Ministers and departments; thus the quality of the judiciary has never been so important.
It cannot be disputed that since the war the Lord Chancellor no longer presides frequently over the judicial sittings of the House, but his fundamental responsibility under the constitution is, and remains, to maintain at all costs the independence of the judiciary and the legal profession. My noble and learned friend Lord Hailsham, in a lecture which he gave in 1989 on "The Office of the Lord Chancellor" which will be found printed in the Civil Justice Quarterly of October 1989, considered that to be the one paramount duty of the Lord Chancellor. He added:
"If he does it well, he is a good Lord Chancellor whatever his other defects. If he does it ill, whatever his other qualities, he is not".

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for the past 18 months I have, at the instance of the British Council or the Council of Europe, addressed judges in Hungary, Czechoslovakia, Poland, Moscow, Estonia and Lithuania. On some of those occasions other senior judges from Western Europe spoke. I, on behalf of the United Kingdom, was always asked to speak on the subject of the independence of the judiciary. No doubt it was thought that the common law system particularly protected that fundamental feature of justice. I must therefore confess my astonishment when I found in the Bill, in Clause 25, that power was to be taken by the Lord Chancellor, at his sole discretion, to continue the senior judiciary in office beyond the now compulsory retirement age of 70, from year to year, up to a period of five years—a system of judges on contract.
Over 50 years ago that concept was rejected by the Royal Commission, the Peel Commission, of which Sir Claud Shuster, an outstanding Permanent Secretary in my noble and learned friend's department, was a member. In the debate on Report on 29th October my noble and learned friend Lord Simon of Glaisdale expressed his astonishment that,
"This unconstitutional provision ever appeared in the Bill"—(Official Report; 29/10/92; col. 1262.],
in terms with which I respectfully concur. Thankfully, my noble and learned friend the Lord Chancellor had second thoughts and removed the offending clause, but not until the Report stage.
I do not belong to, nor do I sympathise with, the aprèsmoi school of thought. I have a passionate belief that a strong and independent judiciary is one of the essential foundations of our liberty, without which the rule of law could not exist. Because the calibre of the future judiciary cannot but be weakened by this mean, penny-pinching Bill, I have felt obliged to intervene in the debates much more than I would otherwise have wished. It was not how I expected spending my first few weeks of retirement. For this I therefore crave your Lordships' indulgence.
"The greatest thing in the world"—
Montaigne said—
"is to know how to be self sufficient".
In the past, the judiciary has looked for the protection of its independence to the Lord Chancellor and his department. It is quite clear that in future it must look to itself.
Lord Benson: My Lords, I say farewell to the Bill with a deep sense of frustration. Some of the terms proposed for the High Court and circuit judges are mean and penny-pinching. The inevitable conse-quence is that we shall not appoint the best men to the Bench. That is the sole purpose of my interest in the Bill.
The reason why I say that they must be mean and penny-pinching is that the existing scheme which I thought was settled 11 years ago—and the noble and learned Lord, Lord Ackner, has explained that it was a great many years before that—settled what was then thought to be fair. The present proposals in the Bill for the High Court and the circuit judges are below that scheme settled 11 or however many years ago it was.
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How can this Bill possibly be fair if its terms are below the existing terms settled long ago? We must remember that retirement benefits have changed enormously in the intervening years and what was fair 11 or 20 years ago is now totally unfair, so the comparison should be on quite different terms.
I have been at pains to try to find out what are the Government's objections to the numerous amend-ments that have been made to remove the penny-pinching, mean provisions in certain clauses of the Bill. There seem to be only two. Whenever an amendment was proposed, the answer came back, "Oh, it's the retained benefits". At this end of the Chamber we got very tired of that refrain and formally asked that it should not be repeated, we were weary of it. However, we took note of the point.
Then amendments were put forward saying, "We will bring the retained benefits into charge", which removed the objections. But those have been rejected, and the rejection of what was prayed for so often has made one wonder whether the sincerity on the retained benefits was satisfactory.
The second factor on which the mean and penny-pinching clauses have been resisted is that the Bill must comply with the general law. I cannot discuss or contest questions of law with so many eminent lawyers. But I can put forward the plain, commonsense view. This general law is not some great doctrine which was settled at Magna Carta; it is two or three sections in a taxation Act passed five years ago.
The judiciary are sui generis. They have always needed an Act to deal with their remuneration and pensions, apart from any other Act which might otherwise apply. I cannot see why, if the judiciary are sui generis and need an Act of Parliament of their own, that Act must, for one special purpose only and in one particular only, comply with a section in a taxation Act passed five years ago.
As a layman, I can think without any difficulty at all of half-a-dozen situations where the general law applies to the citizen, but the general law is deliberately amended to meet particular circumstan-ces. I shall not bother to give examples which spring to mind, the many lawyers here will know dozens from their experience. But what makes me convinced that this general law doctrine, which has been thrown at us so often, is totally untenable is that this general law, this taxation section, was passed four or five years ago. But we have lived with the present scheme which is supposed to be contrary to it for five years without the smallest difficulty. No one has complained. No one has raised constitutional or legal difficulties. No difficulties have arisen in practice. There have been no problems at all. The two have worked in harness and the present Bill could go on indefinitely, contrary to so-called general law. So that does not seem to me much of an answer to the points which have been raised again and again to remove these mean and penny-pinching provisions.
But I think what has happened is the following. This was made plain to me in a letter which the noble and learned Lord the Lord Chancellor was kind enough to send to me. We had correspondence about

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certain parts of the Bill which I need not bother the House with and which in no way affects what I am saying. In the course of a letter of 27th October the noble and learned Lord said:
"In the current public expenditure climate, the Government did not feel able to entertain a revised scheme for the judges with overall costs which were greater than the present arrangements".
There we have it. That is really the whole problem. What happened was that the Government thought the economy was in good shape, at any rate up until about June or July. In August they discovered that the economy was in a grave mess. Then the decision clearly was made that in the current expenditure climate this Bill should be kept within the same cost as the existing arrangement. That is not administration; that is not a proper way to legislate at all. It is pure panic policy and pure panic decisions.
This Bill is not intended—as we know so well—to come into force for 15 or 20 years. To fix its provisions on the basis of the worst slump for 60 years and to say that we cannot exceed the cost of the existing scheme is really ludicrous because the existing scheme has been varied anyhow. To say that the new scheme must have exactly the same costs as the existing one when you have changed the circumstances means that you could not possibly have a fair Bill. That is exactly what has happened.
I have one other gasp of frustration before I sit down. I have been offended in another way. We have gone through four stages on this Bill extending over a period of six months. Decisions after decisions have been made and amendments after amendments have been made. Never at any time in the whole history of the Bill, until last Tuesday at midday, have we known the effect of those decisions. If one runs a whelk stall or a paper shop and one wishes to change the terms of one's customers, or indeed of one's own administra-tion, one works out the cost of doing so stage by stage, quantifies it and assesses the effects.
When we come to settle a Bill for the pensions of the highest judicial officers in the country, we do not do that. We put these amendments through without anybody knowing the cost of doing so, what the effect is and how the new provision compares with the existing scheme. The provision was eventually produced, as I say, last Tuesday. The House has never seen it. As far as I know the only people who have seen it are two or three people down at this end of the House and, I suppose, the Ministers on the Front Bench. But the idea that we should ask the House to make decisions without telling it what the effects of those decisions are, how the different amendments change the scheme, and how the new provision compares with the existing scheme, seems to me totally intolerable. I hope that this is not a way in which legislation will be conducted in future.
10.45 p.m.
Lord Simon of Glaisdale: My Lords, the debate on the Motion that the Bill do now pass generally engenders a somewhat autumnal air. Even the opponents of a measure tend to look on it a little less
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unkindly and we try to speak well of each other. Such a balmy atmosphere is not altogether possible on this occasion.
The first reason is the way your Lordships have been treated today by the Government's business managers. There were 89 amendments covering 18 pages. Seven-eighths of those were government amendments. To get through that business on a Thursday, when business begins at 3 o'clock, would at the best of times have been exacting; but to interpolate two long statements so that the second amendment was only called at 6 o'clock, and then to refuse the promised respite so that your Lordships who were interested in the Bill were kept on these Benches from 3 o'clock until a quarter to 11 —and we have not yet finished—is quite intolerable. It is no way to treat your Lordships' House.
The second reason is that it would be idle and hypocritical to pretend that this Bill is other than mischievous. Anyone who heard the speeches of the Lord Chief Justice, the noble and learned Lord, Lord Donaldson of Lymington—who has just retired from his very distinguished tenure of the office of Master of the Rolls; as distinguished administratively as it was juristically—and my noble and learned friend Lord Hailsham of Saint Marylebone, the pre-eminent Lord Chancellor of post-war years, could not doubt that the Bill is, at the highest possible estimation, going to do great damage to the judiciary of the future and thus to the standard of judgment and therefore to the rule of law and the liberty of the citizen who depends on the rule of law.
Although I do not like to hear harsh words used of the Treasury I cannot gainsay the epithets which have been expressed by my noble and learned friend Lord Ackner and my noble friend Lord Benson tonight and on earlier occasions.
It is pleasant to pass from the Bill to those who have participated in your Lordships' debates. First, there must be mention of my noble and learned friend on the Woolsack. He has had to defend the Bill on his own against the most forceful and expert attack. If he has seemed at times to be a little less than on his best form, which is very high indeed, one must remember that the arguments that he had to gainsay were those which he must himself have been urging on his colleagues while the Bill was being prepared.
It is not for a moment to be credited that my noble and learned friend did not see the matters that were urged and did not try to persuade his colleagues to adopt a rather less harsh procedure and do less constitutional damage. Any great advocate on the whole tends to convince himself of the validity of his case as he develops it. Nevertheless, it is bound to impair to some extent dialectic and forensic performance when one realises at every stage that one is urging arguments against which one has protested at a very recent time.
Up against my noble and learned friend has been a formidable artillery and a great debt is owed by your Lordships (I am sure noble Lords will agree) to my noble and learned friend, Lord Ackner. His activity, intellectual and physical, has been quite phenomenal. He marshalled his arguments with astonishing

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lucidity, based often on complicated figures and intricate arguments, all put lucidly forward. Noble Lords must consider themselves very much in his debt.
There is also my noble friend Lord Benson, who brings unexampled expertise on these matters of pensions, at the end of such a distinguished career as his. But there is another reason why your Lordships would wish to be grateful to him. He was chairman of the Royal Commission on the legal profession in England, as the noble Lord, Lord Hughes, was chairman of a similar Royal Commission for the Scottish system. My noble friend Lord Benson, with great labour for three years presided over that commission, taking evidence and weighing it, marshalling the arguments and finally producing an authoritative report. That report was accepted by the Government. But in a sudden ideological spasm the Government changed their mind and brought in a diametrically opposite scheme, a scheme opposite to that of the English commission and opposite to that of the Scottish commission.
It would not have been surprising in those circumstances if my noble friend Lord Benson had then decided to wash his hands entirely of the law, having been treated in that way. We are very greatly in his debt. Not only has he brought his great knowledge and experience to the discussion of this Bill, but he continues to take a vital and a wide-eyed interest in the future of our judicial system.
I have only one other point to make and that is, I hope, a constructive suggestion. At every stage in the passage of this Bill comparisons have been made with whatever system is most unfavourable to the judicial scheme: the public sector pension scheme, private sector pension schemes and the Inland Revenue regime. Although it will not be possible to repair the substantial damage done by the Bill, I have no doubt that my noble and learned friend will be looking for ways to mitigate the injuries that it inflicts on the public interest. I suggest that when comparisons are being made, as they have been made so frequently with the public sector pension schemes, he should keep his eye open for attempts to improve on it. Comparisons have been made with those schemes because most of the public sector schemes are badly out of date. It does not require great gifts of prophecy to forecast that as soon as financial conditions are less stringent the public service trade unions will be agitating strongly for an improvement in the public sector pension schemes to bring them more into line with what the private sector is now doing, as my noble friend Lord Benson has so trenchantly shown during the debate.
I hope that my noble and learned friend on the Woolsack will be able to assure your Lordships that he will watch carefully the improvements that will be made in the public sector pension schemes. Wherever they are improved from a position where they have been used to the disadvantage of the judicial scheme, I hope that he will ensure that the judicial scheme is similarly improved. I hope that my noble and learned friend will be able to give that assurance.
We pass the Bill without great enthusiasm.
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However, if my noble and learned friend gives that assurance there is at least the knowledge that there will be some mitigation of the harm that it will do.
The Lord Chancellor: My Lords, it would not be appropriate for me to speak at great length at this time of the evening. Your Lordships still have other business on the Order Paper. However, I wish to say one or two things.
Of course I shall be keeping in mind what happens both in public and private sector pension schemes as the future rolls on.
Secondly, the occasion for the Bill was the change in the tax position of pension schemes brought about under the legislation to which the noble Lord, Lord Benson, has referred. It was very desirable that the conformity of the judicial pension scheme to the general tax law to which I referred should be brought about in a Bill which concerned itself with the judicial schemes as a whole. Your Lordships know—I noticed that there was not much reference to it in what we heard in the latter part of the evening—that a number of different schemes affect different parts of the judiciary. One of the objectives of the Bill is to produce a comprehensive scheme that applies to the judiciary as a whole and produces a fair result for all of them.
Some reference has been made, for example, to the arithmetical costing exercise by my noble and learned friend Lord Ackner. However, such an approach does not take into account the pattern of the time for which judges sit. The simple calculation which he made ignores the fact that in present circumstances most judges on average hold office for longer than the time for which they need to serve in order to qualify for a full pension. A number of my noble and learned friends have done that. Therefore, the effect of the present scheme and the new scheme must take account of the pattern that is likely to emerge. It is appropriate to the new scheme to apply to the judiciary as a whole in a consistent way. That makes it much easier for people to move up the scheme without detriment. A number of anomalies in the present scheme have often been referred to and those have been removed by the new structure.
I was delighted to hear the comments of the noble Lord, Lord Williams of Mostyn, about the quality of the judiciary. I believe that he was correct and that the standard of the judiciary is as high as it ever was. I believe also that that high standard will continue and I have no reason to believe that it will be anything else.
During the course of our discussions on the Bill we have made a number of improvements. Our debates have contributed to improving the Bill. I am grateful to all noble Lords who took part, whether or not they were particularly complimentary to me in their submissions. I should not wish to distinguish on such an irrelevant ground. I thank all noble Lords most sincerely for your help in improving the Bill. Assuming that my Motion is agreed to, the Bill will go to another place where what has been proposed will no doubt be discussed fully.
As I made clear at the outset, I understand that the judiciary has a different career pattern from other professions. I explained that within the structure of

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the general tax and pension law to which I have referred the position of the judiciary was recognised as special by the particular arrangements for the retained benefits. In the old days to which my noble and learned friends and the noble Lord, Lord Benson, referred, there were not the same provisions for people making contributions for their retirement at the expense of the Exchequer.
Pension provisions for the self-employed with tax relief are a comparatively recent development. I do not believe that it is proper that where people have come into the judiciary after attaining a standard in that profession to ignore that fact. That is why I said earlier that I believed that it was an important fact. The overall importance of the tax law in this connection is primarily that to have a scheme that is tax approved it is necessary that it does not accrue faster than over 20 years for the full pension. Within these constraints, the Bill has produced a tax efficient system and it has produced a reasonable result for the judiciary. I have said already that as compared with schemes in the private sector and the public sector taken as a whole the judicial scheme is most favourable.
I wish to thank all noble Lords who have taken part in the debate; those who are still here and those who have left. I am particularly appreciative of the extent to which my noble and learned friend Lord Ackner has taken part in the debates. I am grateful to my noble and learned friends Lord Simon of Glaisdale, the Lord Chief Justice, Lord Hailsham of Saint Marylebone, Lord Donaldson of Lymington and the noble Lords, Lord Benson, Lord Mishcon and Lord Wigoder and my noble friend Lord Renton. I am grateful to my noble and learned friends from Scotland, Lord Morton of Shuna and Lord McCluskey and many others to whom perhaps I may refer in a more composite way. Perhaps I should mention in particular my noble friend Lord Coleraine. I acknowledge the contribution of the noble Lord, Lord Williams of Mostyn, so recently arrived here. I am sure that we all look forward to many distinguished contributions from him in the future.
The debates on this Bill will continue as it passes to another place. I believe that it produces a complete system for the judiciary as a whole which is fair to the judiciary in comparison with other schemes to which attention has been directed. I beg to move.
On Question, Bill passed, and sent to the Commons.

Legal Advice and Assistance (Scope) (Amendment) Regulations 1992
11.6 p.m.
The Lord Chancellor The Lord Chancellor rose to move, That the draft regulations laid before the House on 28th October be approved [9th Report from the Joint Committee].
The noble and learned Lord said: My Lords, the draft statutory instrument is designed to extend the legal aid scheme to prisoners serving discretionary life sentences who appear before the Parole Board in specified circumstances.
The Criminal Justice Act 1991 defines discretionary life prisoners as those who have received a life sentence, not required by law, for a violent or sexual offence and who have had a part of their sentence specified by the court for these purposes. Once the specified part of the sentence is served, the prisoner's case is referred to the Parole Board and, if the board is satisfied that his confinement is no longer necessary for the protection of the public, he is released. Prisoners whose cases are turned down, or who are released but recalled, may require their cases to be referred to the board at set intervals.
The draft statutory instrument would provide legal aid for such prisoners appearing before the Parole Board in these circumstances. It amends the Legal Advice and Assistance (Scope) Regulations 1989 by including these proceedings among those for which an eligible person may receive ABWOR; that is, advice by way of representation. The means test will be that which is applicable to all ABWOR, but the merits test will be the more generous one that is applied to applicants for ABWOR for mental health review tribunals; that is, that ABWOR will be granted unless it appears unreasonable that it should be granted.
The statutory instrument also brings the Scope regulations up to date by submitting a reference to disciplinary proceedings before a prison governor for references to proceedings before a board of visitors; this reflects changes to the Prison Rules 1964.
I should mention that remuneration for this work will not be at the ordinary ABWOR rate but at the higher rate which applies before mental health review tribunals. This is because the Parole Board hearings are modelled on and similar to those of the mental health review tribunals, the rules of which have been used as the basis for the rules for the board's arrangements. This is provided for by a separate instrument, subject to negative resolution procedure, which was laid before the House on 2nd November.
Moved, That the draft regulations laid before the House on 28th October be approved [9th Report from the Joint Committee].—(The Lord Chancellor)
Lord Graham of Edmonton: My Lords, my noble friends who cannot be here this evening have asked me to say how pleased they are at the terms of the regulations. We give them a very warm welcome.
On Question, Motion agreed to.

European Communities (Definition of Treaties) (Europe Agreement establishing an Association between the European Communities and their Member States and the Republic of Poland) Order 1992
11.10 p.m.
Baroness Chalker of Wallasey Baroness Chalker of Wallasey rose to move, That the draft order laid before the House on 19th October be approved [8th Report from the Joint Committee].
The noble Baroness said: My Lords, the draft Orders in Council under consideration specify the EC

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association agreements with Hungary and Poland as European Treaties under Section 1(3) of the European Communities Act 1972. These require ratification by all EC member states. The European Parliament gave its assent in September; another place discussed these matters on 3rd November.
The association agreements are the basic link between the EC and Poland and Hungary. Our intention is to interpret them positively and give them real substance so they can fulfil their prime function of reinforcing political stability and economic growth.
The Government hope that Poland and Hungary will join the Community as soon as they are able to assume the obligations of membership. We shall give them every possible assistance towards that goal. The association agreements are the best means of doing that. I beg to move.
Moved, That the draft order laid before the House on 19th October be approved [8th Report from the Joint Committee].—(Baroness Chalker of Wallasey.)
Lord Graham of Edmonton: My Lords, the noble Baroness has said in less than a minute what her right honourable friend Mr Tristan Garel-Jones took 11 minutes to say. It is very agreeable and acceptable. As she knows from earlier conversations, these are very small steps in the totality of the enormous problems
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which face not only those countries but also in the attempt to bring them into closer comity with other members of the Community and whom we have supported for a long time.
As the noble Baroness knows, on another occasion both she and I would have wanted to say a great deal more. But she has said sufficient for me to say that we welcome what has been said and endorse the actions that have been taken.
On Question, Motion agreed to.

European Communities (Definition of Treaties) (Europe Agreement establishing an Association between the European Communities and their Member States and the Republic of Hungary) Order 1992
Baroness Chalker of Wallasey: My Lords, I beg to move.
Moved, That the draft order laid before the House on 10th October be approved [8th Report from the Joint Committee].—(Baroness Chalker of Wallasey.)
On Question, Motion agreed to.
House adjourned at twelve minutes past eleven o'clock.