Lords Sitting of 12 July 1995

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

European Union and Sovereignty
The Clerk of the Parliaments: Lord Pearson of Rannoch.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, no.
Lord Pearson of Rannoch: My Lords, I am most grateful to my noble friend for that reply, but I believe that it is in order for me to put the Question before she answers. I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that widening the European Union to include new member states is likely to lead to an increase in the powers of the European Commission and other Community institutions at the expense of the sovereignty of national parliaments.
Baroness Chalker of Wallasey: My Lords, I must apologise to my noble friend and the House for that error, but I was so keen to give my noble friend the Answer. No. There is no reason why further enlargement should change the broad balance of powers within the European Union.
Lord Pearson of Rannoch: My Lords, I am most grateful to my noble friend for that reply, by which I take it she confirms that there will be no extension of the qualified majority vote or any loss of our veto under Article N of the treaty. In view of my noble friend's robust reply, does she agree with me that any future widening of the Community should give the UK the opportunity to achieve the variable geometry, or different nations moving at different speeds towards perhaps different European goals—the variable geometry so favoured by my right honourable friend the Prime Minister, and, I would hope, favoured by the Foreign Office and even perhaps the Treasury?
Baroness Chalker of Wallasey: My Lords, the treaty retains unanimity for highly sensitive issues of treaty change, accession and own resources, and certainly that will continue. Recent evidence suggests to us that unanimity does not prevent decisions being reached on highly difficult issues. We do not anticipate more qualified majority voting; the Prime Minister has made that clear many times over. I can also agree with my noble friend that widening should allow us to achieve the very variable geometry which indeed has been something this country has worked successfully for and which many other countries are now working for.
Lord Barnett: My Lords, does the Minister agree that in current circumstances, or certainly in an enlarged Community, qualified majority voting as it is now would not necessarily be helpful to the UK?
Baroness Chalker of Wallasey: My Lords, the noble Lord is not referring to qualified majority voting; he is referring indirectly to the balance in the number of votes. As he well knows, that is a matter for further discussion because the large nations in the European Union feel that they are sometimes not well looked after by the current system. But that does not mean extending QMV.
Lord Boyd-Carpenter: My Lords, surely the addition to the Community of a number of well run democratic states, as is proposed, will, if anything, diminish the influence of the central authority and will help also to offset the predominance which exists at the moment of France and Germany.
Baroness Chalker of Wallasey: My Lords, my noble friend is absolutely right. We have to have a better balance. That is essentially what he is saying, and we agree. We know also that one cannot force 15, let alone 20 or more members, as we may well be in the next 10 years, into the same mould. As a cook, I can tell my noble friend that putting too much mixture into a vessel and cooking it too hard will break that vessel. We had better take things step by step. I believe also that it is important that we conform where necessary but ensure that flexibility is the name of European Union relationships.
Lord Thomson of Monifieth: My Lords, is it not a major UK interest to see the major reform of the CAP? Will not that be promoted by the enlargement of the Community? Does the Minister believe that that kind of reform of the CAP in an enlarged Community can be brought about without qualified majority voting?
Baroness Chalker of Wallasey: My Lords, the answer is yes to the noble Lord's first two questions. We must think carefully about how we reform the CAP. Unless we do, it is becoming clearer and clearer that the enlargement of the Community cannot take place. I believe that it can be done without forcing a situation, as some would have us do, where we move to qualified majority voting on something which has a major financial implication.
Lord Tebbit: My Lords, would my noble friend care to re-read the Question? She says that there is no reason for an increase in the powers of the Commission. Of course not; there never has been. However, the Question is whether she thinks it likely.
Baroness Chalker of Wallasey: My Lords, my answer to whether I thought it likely was no.
Lord Bruce of Donington: My Lords, the Minister was kind enough to indicate that she thought that the broad balance of powers between the institutions would continue more or less unchanged. Within that context, would she confirm that the Commission will retain the absolute and exclusive power given to it under the Treaty of Maastricht to originate all proposals?
Baroness Chalker of Wallasey: My Lords, I would have thought that by now my good friend the noble Lord would have realised that that is not quite how the reality occurs. It may be a formal matter that the Commission proposes but, before one ever has a proposal from the Commission, the amount of discussion is something which I have learned to respect. During that pre-discussion and pre-proposal phase we must remain at the heart of Europe in order to influence what arises in the first place.
The Earl of Onslow: My Lords, will my noble friend help me on the issue raised by the noble Lord, Lord Thomson? She says that she hopes the Community will be widened in the next 10 years. A committee of your Lordships' House found that it was totally impossible to do that with the common agricultural policy in its present state. The CAP takes 50 per cent. of direct expenditure and about 20 per cent. of indirect expenditure. In other words, it takes about 70 per cent. of the European budget. That must be reformed. How does the Minister see that being done root and branch, which is the only way that it can happen?
Baroness Chalker of Wallasey: My Lords, there is only one answer to my noble friend's question; it is by discussion and hard work. We must recognise the kind of agricultural policy that we all need and how it affects markets world wide. We must also recognise the need to develop the agricultural markets of the developing nations.
Lord Richard: My Lords, is the Minister aware that I was pleased to hear her say that she did not foresee that a widening of the Community would result in any great change in the balance between its different institutions? Is she also aware that I share her views on the way in which the Commission works? However, may I urge the Minister not to be over-mathematical in her approach to the way in which the Community will develop? The trouble with mathematics is that all too frequently it ceases to be variable and flexible, which is what we need.
Baroness Chalker of Wallasey: My Lords, I agree about flexibility. As a mathematician and a statistician, I learnt a long time ago not to put all my faith in figures but to look at what lies behind them.

Indonesia
2.46 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What was the outcome of the recent discussions between the Minister for Overseas Development and the Indonesian Government on the British aid programme in Indonesia.
Baroness Chalker of Wallasey: My Lords, during my visit I saw some of our aid projects in East Java and Kalimantan. I had useful discussions in Jakarta with Indonesian Ministers and senior officials about our programme and a range of other issues. I also signed a new concessional loan arrangement between the United Kingdom and the Government of Indonesia.
Lord Judd: My Lords, does the Minister agree that the whole organisation of the armed forces in Indonesia continues to be geared to repression? Has she seen the recent reports of arrests of journalists, the imprisonment of young East Timorese recently peacefully commemorating the Dili massacre, the killing of 37 people in the vicinity of the Freeport copper mine during the forced removal of tribals and the arrest of the opposition parliamentarian Sri Bintang Pamungkas following his lecture in Germany? Does all that amount to a case for increased aid? How can it be reconciled with the Minister's commitment to the importance of human rights in aid and also to the recent Halifax G7 statement that unwarranted military spending must be taken into account in deciding aid levels?
Baroness Chalker of Wallasey: My Lords, we target our aid on strengthening human resource development, tackling environmental problems, promoting good government and transportation. Indonesia is still a relatively poor country, with a GNP per head of approximately 730 dollars per annum and with a large population. Its government are pursuing sound economic policies. But we have always made it absolutely clear that we are against repression wherever it occurs.
Although there has been some improvement in human rights in Indonesia, I can tell the noble Lord that not only have I seen the reports that he mentioned but I have made it absolutely clear to Indonesian Ministers, including the Foreign Minister, that we believe that, although the establishment and manning of the National Human Rights Commission are steps in the right direction—as is the recent sentencing of soldiers involved in the Liquica killings and the greater openness for visitors to East Timor—there is considerable scope for further progress. That is why we are pressing them on that issue. The very fact that we have a decent relationship with the government enables us to press all the harder.
Lord Rea: My Lords, does the noble Baroness not agree that any form of aid, apart from perhaps disaster relief, frees funds in the recipient country for purchasing weapons from Britain or anywhere else? Does she not agree with my noble friend that over the past 30 years arms in Indonesia have been used solely for internal repressive purposes or for the illegal invasion and suppression of East Timor and West Irian?
Baroness Chalker of Wallasey: My Lords, the noble Lord is not correct in his last statement. Indonesia plays a full part in ASEAN, and it is for those purposes that various countries have supplied equipment to Indonesia. We have made it absolutely clear on every occasion when an application has been made for licences that those licences will be granted only where equipment is being bought for legitimate purposes, and that does not include the repression of Indonesia's own people.
Viscount Waverley: My Lords, is it not misleading to refer to the loan as an aid agreement? Is it not better to call it what it is? It is a development agreement which strengthens the ability of UK companies to supply capital goods and related services, and it prohibits the purchase of luxury goods or items for military or

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defence purposes. Does the Minister not agree that any form of leverage for improvement in relation to human rights is not possible as Indonesian government policy excludes expressly foreign debt being tied to non-economic conditionalities?
Baroness Chalker of Wallasey: My Lords, the concessional loan arrangement is a soft loan and it will be repaid over 25 years. The projects which it will enable to take place will be good for Britain and will concentrate on health, education, transport, water and sanitation and the environment. Therefore, the noble Viscount is absolutely right to say that that concessional loan arrangement is for very important developmental purposes.
Lord Jenkins of Putney: My Lords, if weapons and arms supplied to Indonesia are not intended to be used for internal repression, will the Minister tell the House against what potential threat it is proposed that they are used?
Baroness Chalker of Wallasey: My Lords, it is not for me to second guess Indonesia or any of the other ASEAN countries. But I know from international discussions on the security of the region that countries certainly wish to have the means with which to defend themselves under the UN Charter, and they have every right to do that.
Lord Judd: My Lords, does the Minister not accept that the difficulty in Indonesia is that, with the overall role of the armed forces as regards repression, it is very difficult, if not impossible, to separate what is and what is not used for repression? Does she not agree also that if she is as determined as we know she is to promote human rights, it is sad to be increasing aid at a time when the situation is deteriorating rather than improving?
Baroness Chalker of Wallasey: My Lords, I hear what the noble Lord says, but looking at the facts of the situation—and I truly mean this—and in response to the questions that I have put to Indonesian Ministers, I believe that, although, as I said in answer to the noble Lord's original Question, there is still some way to go, the very fact that soldiers have quite rightly been sentenced for the Liquica killings—something which could not have happened a few years ago—and the establishment and proper manning of the National Human Rights Commission mean that Indonesia is seeking to do things in a very much better and more acceptable way than in the past. We need to encourage that progress.
Viscount Brentford: My Lords, will my noble friend elucidate further as to whether in her discussions with the Indonesian government she obtained the impression that they were planning to ease repression in East Timor as well as taking the action that they have taken to which she referred in her last answer?
Baroness Chalker of Wallasey: My Lords, the government of Indonesia know only too well that they must stop the repression of persons. But of course the critical issue in relation to East Timor is the relationship between East Timor, Portugal and the Indonesian
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Government. Until discussions take place to resolve that matter, we know that there will always be room for dispute, which has occasionally in the past spilled over into violence and may sadly do so in the future. But we have made our point and that of all European members absolutely clear.

Rail Users' Consultative Committees
2.55 p.m.
Lord Harris of High Cross Lord Harris of High Cross asked Her Majesty's Government:
Whether they consider that rail users' consultative committees play an effective role in protecting the interests of passengers.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, the Government recognise the valuable role that the rail users' consultative committees play in protecting the interests of passengers. The role of the committees was strengthened by the Railways Act 1993 which widened their powers to comment on levels of service, closure and all aspects of fares.
Lord Harris of High Cross: My Lords, I thank the noble Viscount for that somewhat evasive reply. He is no doubt aware that smoking was banned on the Brighton line in January, 1993, after 150 years of such practices. That was done without any reference whatever to the consultative committee, which was very upset about it. However, is he aware that, within a few weeks of that ban, Sir Bob Reid, the then chairman of British Rail, wrote to Sir Patrick Mayhew saying:
"We liaise carefully with statutorily constituted representatives of transport users and the respective proportions of smoking and non-smoking accommodation provided in trains has been changed in response to regular consultations with them"?
Does the Minister find that this misrepresentation of the consultative committee's procedures is satisfactory?
Viscount Goschen: My Lords, Network SouthEast accepts that problems did occur in informing the TUCCs of the intention to extend the ban. The company tendered a formal apology to the CTCC, which was accepted. Nevertheless, the question of whether or not to ban smoking on trains is properly for the operator and the operator alone.
Lord Taylor of Gryfe: My Lords, is the Minister aware that reports in the press state that the bids for the privatisation of certain sectors of British Rail—notably ScotRail—are to be postponed further? Does he agree that that uncertainty as regards the dates for receiving bids for the privatisation process is causing a deterioration in the standard of service provided by British Rail? Therefore, does he not believe that the rail users' consultative committees have a vital role to play not only as regards the Brighton line but also in overlooking the entire situation of British Rail, which is rapidly deteriorating?
Viscount Goschen: My Lords, I do not accept that it is deteriorating. We believe firmly that with privatisation we shall see clear increases in the level of

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services being provided. The noble Lord is right to say that the consultative committees play a very strong role in the process. He referred to ScotRail. The consultation with the regional councils and the Scottish Rail Users Consultative Committee on ScotRail's passenger service requirement ends today. The views of the committee have been taken fully into account.
Lord Skelmersdale: My Lords, in the past few weeks there have been two examples of a failure by British Rail to consult the relevant consultative committees: first, on the west coast of Scotland in relation to the sleeper service, and, secondly, the matter now referred to by the noble Lord, Lord Harris. What sanctions are there on British Rail or ScotRail when there is a failure to consult in the manner dictated to them under the various Acts of Parliament?
Viscount Goschen: My Lords, I agree with my noble friend that it is important that the operators consult properly. As regards ScotRail, the sleeper arrangements are part of the negotiations which have gone forward. It is important to note that the sleeper service has not been included in the draft ScotRail passenger service requirement; that is, the Fort William service. Of course, other sleeper services have been included. As I said, the consultative committees have been consulted on the draft PSRs and that consultation ends today.
Lord Howell: My Lords, is the Minister aware that people who use mobile telephones in railway carriages are a much greater nuisance than smokers? Will he kindly make representations to the authorities that mobile telephone users and smokers should be confined to one carriage in our trains?
Noble Lords: Hear, hear!
Viscount Goschen: My Lords, the noble Lord's views certainly seem to have support within your Lordships' House. I shall ensure that his comments are passed on to British Rail.
Lord Beloff: My Lords, does my noble friend the Minister agree that, although it might have been desirable to consult the railway users' body, the fact is that those like myself, whose presence in your Lordships' House is made possible in reasonable health by the banning of smoking on the Brighton line, are perfectly happy with the outcome of what has been done?
Viscount Goschen: My Lords, of course we are all very pleased that my noble friend is able to attend your Lordships' House and make such interventions. It is clear that there is a wide body of opinion that supports the banning of smoking on those trains.
Lord Clinton-Davis: My Lords, does the Minister agree that the use of mobile telephones in one carriage as suggested by my noble friend, together with a carriage reserved for smokers, would be an excellent idea because people would be totally suffused by the smoke and perhaps, therefore, debarred from using their mobile telephones? However, to return to the Question which was not really about smoking, does the Minister further agree that the record of the consultative committees has been commendable? It has been
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commendable in trying to save the Fort William Motorail and sleeper services; commendable in underlining the gross underinvestment in the railways that has taken place over the past few years; commendable in pointing out the shortcomings of government undertakings to consult, which have in fact drifted into the sand in too many instances; and commendable also in pointing out the overweening bureaucracy that privatisation has already meant.
Viscount Goschen: My Lords, I agree with the noble Lord that the rail users' consultative committees have done a valuable job in protecting the interests of passengers. However, I do not agree with anything else said by the noble Lord.
Lord Harris of High Cross: My Lords, perhaps I may return to the Question. The Minister said that it was for the rail operators alone to decide such matters. However, the rail regulator, Mr. John Swift, said that he was concerned at the failure of British Rail to consult the consultative committee, which he described as his "ears and eyes". Can the Minister say—apart from party political observations—how we are to get people of substance to serve on consultative committees if they are bypassed in such a way by these large organisations?
Viscount Goschen: My Lords, it is important that good quality people are able to serve on such committees and that they should be consulted in the proper way. However, I know that the noble Lord, Lord Harris, is especially concerned about the issue of smoking on that particular line. The arguments have been very thoroughly rehearsed and there does seem to be a large body of opinion from people who actually use that line and who support the banning of smoking on those services. As I said, it is ultimately a matter for the operator to decide.

Metric Units: Status
3.3 p.m.
The Earl of Onslow The Earl of Onslow asked Her Majesty's Government:
In how many member states of the European Union it is a criminal offence to sell goods other than in metric units.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, the Government understand that in all other member states metric units are the only lawful units of measurement, although the Government do not know whether other member states treat a failure to use metric units as a criminal offence.
The Earl of Onslow: My Lords, is my noble and learned friend aware that in France they sell plumbers' pipes in inches and that in Germany floppy discs are sold in inches? I believe that that will be a criminal offence in England after 1st October. Have we actually gone further in the implementation of the European Community directive on metrication than the directive itself actually specifies, especially bearing in mind that when metrication was first introduced into this county

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in 1968, the then President of the Board of Trade, the noble Lord, Lord Jay, promised that it would never be made compulsory?
Lord Fraser of Carmyllie: My Lords, I do not believe that we have over-implemented the directive. The particular example used by my noble friend of the three-and-a-half inch floppy disc is incorrect. Indeed, it is not a product which is required by law to be sold by weight, volume, length, area or capacity measure. Accordingly, there is no obligation under our law to use metric units. After all, one does not go into a shop and ask for a two-and-a-half or a three-and-a-half inch floppy disc. One asks for a floppy disc.
Lord Stoddart of Swindon: My Lords, after using our own measurements for hundreds of years, why should British people, British businessmen, British retailers and market people suddenly find themselves criminalised because they are no longer allowed to sell in pounds and ounces, which British people are used to? Why on earth should people not be able to continue to trade in pounds, ounces, litres and goodness knows what else—indeed, anything that people understand and are willing freely to trade in—rather than be subject to fines and imprisonment if they do not comply?
Lord Fraser of Carmyllie: My Lords, the decision that the United Kingdom should adopt metric units as the primary system of measurement was taken as far back as 1965. It was taken in response to active lobbying from business and industrial interests. Perhaps I may point out to the noble Lord that it is the finest and oldest of English traditions going back as far as Magna Carta that we should have uniform systems of measurement and that there have always been criminal sanctions attached; indeed, medieval mercantile courts relied on flogging and pillorying to support them.
Lord Skelmersdale: My Lords, why did not my noble and learned friend include the ell, the rod, the pole and the perch?
Lord Fraser of Carmyllie: My Lords, I guess probably because not very many people in your Lordships' House or elsewhere would be able to say what those units of measurement were. It is clearly of advantage that we should have a standard unit of measurement. After all, Queen Victoria had 16 years to sit on her throne when we first signed up to the metric convention.
Lord Renton: My Lords, are we to abandon the nautical mile? Further, will we not be allowed to say in future that a cricket pitch should be 22 yards long?
Lord Fraser of Carmyllie: My Lords, one does not sell cricket pitches by the yard. Although there are some that might be sold at present, they are not sold in that fashion. However, with reference to the specific question put by my noble friend, perhaps I may point out that the nautical mile and the knot are to be retained. So far as concerns aviation matters and aircraft heights, we shall continue to use the foot.
Lord Peston: My Lords, it would not be bad for England's bowlers—or, indeed, for England's batsmen—if the pitch were at least 22 metres. However,
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that is by the way. Does not the opposition to such implementation totally underestimate the young people in our country who are the ones we are doing this for? Is it not right that they are now taught in metric measures in school and that they have not the slightest difficulty coping with them? In the future, when they occupy the Benches of your Lordships' House, they will wonder what we old people were worrying about at this time.
Lord Fraser of Carmyllie: My Lords, the noble Lord is absolutely right. Since 1974, primary schools have been teaching in metric units. I certainly find that my 14 year-old daughter has great difficulty understanding what an inch is now. However, we should not exaggerate the changes that have been made. From 1st January of this year we moved to the selling of alcohol—whisky and spirits—in bars by metric units. From the personal research I have been carrying out in the Bishops' Bar, your Lordships seem to have accommodated that change admirably.

Business
3.8 p.m.
Lord Strathclyde: My Lords, at a convenient moment after 4.30 p.m. my noble friend Lady Chalker of Wallasey will, with the leave of the House, repeat a Statement that is to be made in another place on Srebrenica.

Birmingham Assay Office Bill
Read a third time, and passed, and returned to the Commons with an amendment.

Landlord and Tenant (Covenants) Bill
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Landlord and Tenant (Covenants) Bill, have consented to place their perogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Earl of Northesk: My Lords, I beg to move that the Bill be now read a third time. I hope that your Lordships will permit the small indulgence of a few words. It would be a discourtesy if I were to let the moment pass without paying due tribute to my noble friend Lord Courtown for the masterful way in which he steered the Bill to this stage. His assiduous and skilful handling of matters has been given its just reward, and I take this opportunity to congratulate him most warmly upon his new position. My noble friend has asked me to step into the breach vacated by his appointment. I am entirely happy so to do, secure in the knowledge that his sterling efforts have ensured that the Bill will be workable and effective, and that the ghost of Amendment No. 61, which caused my noble friend some agonies in Committee, will not haunt me.

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I should also take this opportunity on behalf of my noble friend to reiterate his gratitude to my noble and learned friend the Lord Chancellor and his department, to the Law Commission and to parliamentary counsel for their invaluable assistance. Thanks are also due to the noble Lord, Lord Irvine of Lairg, to the noble Lord, Lord Meston, and to the BRC and the BPF.
Moved, That the Bill be now read a third time.—(The Earl of Northesk.)
On Question, Bill read a third time.
The Earl of Northesk: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(The Earl of Northesk.)
On Question, Bill passed, and returned to the Commons with amendments.

Pensions Bill [H.L.]
3.10 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords,
I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The page and line refer to Bill (87) as first printed by the Commons.]
1 Clause 3, page 3, line 4, after 'force' insert 'by order'.
2 Clause 4, page 3, line 18, leave out 'or'.
3 Page 3, line 22, at end insert 'or
() where the trustee is a company or Scottish partnership and, if any director or, as the case may be, partner were a trustee, the Authority would have power to suspend him under paragraph (b),(c) or (e)'.
4 Page 3, line 42, after '(1)' insert `by order'.
5 Clause 5, page 4, line 5, leave out 'in the United Kingdom'.
6 Page 4, line 14, leave out 'in the United Kingdom'.
7 Page 4, line 22, leave out 'in the United Kingdom'.
8 Page 4, line 23, leave out from first 'given' to end of line 25 and insert 'to any person under this section may be given by delivering it to him or by leaving it at his proper address or by sending it to him by post; and, for the purposes of this subsection and section 7 of the Interpretation Act 1978 in its application to this subsection, the proper address of any person is his latest address known to the Authority.'.
9 Clause 10, page 6, line 1, after 'that' insert 'by reason of any act or omission'.
10 Page 6, line 3, leave out 'not exceeding a prescribed amount' and insert 'in respect of that act or omission not exceeding the maximum amount'.
11 Page 6, line 3, at end insert:
'(lA) In this section "the maximum amount" means?—

(a) £5,000 in the case of an individual and £50,000 in any other case, or

(b) such lower amount as may be prescribed in the case of an individual or in any other case,
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and the Secretary of State may by order amend paragraph (a) by substituting higher amounts for the amounts for the time being specified in that paragraph.'.

12 Page 6, line 4, leave out 'require' and insert 'provide for'.
13 Page 6, line 6, leave out 'a prescribed amount' and insert 'an amount specified in the regulations; and the regulations must specify different amounts in the case of individuals from those specified in other cases and any amount so specified may not exceed the amount for the time being specified in the case of individuals or, as the case may be, others in subsection (1A) (a).
() An order made under subsection (1A) or regulations made by virtue of subsection (2) do not affect the amount of any penalty recoverable under this section by reason of an act or omission occurring before the order or, as the case may be, regulations are made.'.
14 Clause 11, page 6, line 35, leave out 'subsection (6)' and insert 'the following provisions of this section'.
15 Page 6, line 41, leave out 'in the best' and insert 'necessary in order to protect the'.
16 Page 6, line 42, at end insert:
'(OA) The Authority may not make an order under this section on either of the grounds referred to in subsection (1) (a) or (b) unless they are satisfied that the winding up of the scheme—

(a) cannot be achieved otherwise than by means of such an order, or

(b) can only be achieved in accordance with a procedure which—

(i) is liable to be unduly complex or protracted, or

(ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty,

and that it is reasonable in all the circumstances to make the order.'.
17 Page 7, line 13, at beginning insert 'except for the purpose of the Authority determining whether or not they are satisfied as mentioned in subsection (1A)'.
18 Clause 12, page 7, line 28, at end insert:
'() Subsection (1A) of section 11 applies for the purposes of this section as it applies for the purposes of that, but as if references to the Authority were to the appropriate authority.'.
19 Clause 14, page 8, line 12, leave out paragraph (b) and insert:
'() that any act or omission of the trustees or managers of an occupational pension scheme was in contravention of section 35'.
20 Page 8, line 18, leave out 'transaction was entered into' and insert 'payment or distribution was made, or the act or omission occurred'.
21 Clause 15, page 8, line 29, leave out 'other'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 21. I also wish to speak to Amendments Nos. 43 to 45, 64, 99, 102, 129 to 131, 154, 172, 174 to 180, 238, 271, 273, 284 to 292, 294 to 296, 335, 337, 339, 353, 384 and 391. Noble Lords may think that that speech is almost long enough in itself without my going any further.
This is the first group of amendments with which we shall be dealing this afternoon. I know that the large number of amendments we have to deal with will not have escaped your Lordships' notice. Perhaps I can explain briefly why we need so many. We have brought some forward to meet commitments that were given

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both in your Lordships' House and in the other place. Many of the commitments were given by myself and some were given by my noble friend.
I am sure your Lordships do not need me to say what a difficult and complex subject we are dealing with. We have benefited greatly from input from the Occupational Pensions Joint Working Group; the Institute of Actuaries, the Faculty of Actuaries; the Association of Pensions Lawyers; the TUC; and many others. These amendments reflect a great deal of consultation that has been going on to try to make the provisions in the Bill work as well as possible.
Before I go into the detail of this group I should say that my department submitted a memorandum setting out the regulation-making powers in the Bill to the Delegated Powers Scrutiny Committee in January and of course that formed part of our discussion. The committee followed that up on 17th March giving details of changes in the regulation-making powers which had been made during the Bill's passage through your Lordships' House. The Bill finished its passage in the Commons last week and my officials wrote to the scrutiny committee with details of changes in the regulation-making powers on 10th July. This set out the effect of all the amendments that had been made during the Bill's passage through the Commons which affected powers to make delegated legislation.
I shall begin with the first group of amendments. The cement, so to speak, that binds together all the amendments in this group is that they all deal with the Occupational Pensions Regulatory Authority. Amendments Nos. 1, 4, 43 and 99 are intended to make it clear that revocations by the authority in respect of prohibitions, suspensions and disqualifications of trustees are orders and will need to be made in writing.
Amendments Nos. 2 and 3 are needed to ensure that the authority can take action to protect a scheme while proceedings, which could result in a person and in consequence of this his company or Scottish partnership being automatically disqualified from acting as a trustee, make their way through the appropriate court. Amendment No. 44 is designed to ensure that the trustees who have been disqualified by the authority because they were incapable because of a mental disorder, or are a company that is going through liquidation, are included in the registry of disqualified trustees. Amendments Nos. 5 to 8 follow debate in the other place about whether OPRA should be obliged to issue the notice of a prohibition order to the last known address of a trustee resident overseas. These amendments require notice to be sent to the last known address, wherever it is.
Amendments Nos. 9 to 13, 45, 238 and 273 relate to the authority's power to impose civil penalty fines. Amendment No. 9 makes it clear that the authority can impose a civil penalty only for an act or omission which breaches a particular obligation. Amendment No. 45 extends the principle that a trustee will not be permitted to use scheme assets to reimburse himself for fines imposed by the courts or for any civil penalties imposed by the authority under the Pension Schemes Act 1993.
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Amen0dments Nos. 10 to 13, 238 and 273 deal with matters raised in your Lordships' House about the maximum level of civil penalties which the authority is able to impose. We have considered these matters carefully, including the comments made by the Delegated Powers Scrutiny Committee. We have concluded that it would be appropriate for the maximum amounts of fines to appear on the face of the Bill. These amendments set down the maximum penalties, which can be uprated from time to time by order. Any order will be subject to the affirmative resolution procedures, so the maximum penalties cannot be increased without being debated by Parliament.
Amendments Nos. 14 to 18 have been introduced in response to concerns expressed by your Lordships that the provisions of Clause 11 might allow the authority too much freedom to wind-up a scheme where the action was not essential to protect the scheme members' interests. These amendments ensure that the provisions mirror the existing powers of the Occupational Pensions Board. They allow the authority to entertain an application to wind up a scheme under Clause 11(1) (a) and (b) if the wind-up could not be achieved in any other way; if it can only be achieved by an unduly complex or protracted process; or if it involves obtaining consents that are unavailable. Similar limitations will apply to orders made to wind up public service schemes under Clause 12. Amendment No. 15 ensures that the authority can wind up a scheme under Clause 11(1) (c) where this is the only option available to protect scheme members' interests.
Amendment No. 271 responds to concerns raised by the noble Baroness, Lady Seear. It ensures that all orders made by appropriate authorities in respect of public service schemes under Clauses 12 and 66 will have to be statutory instruments made by the negative resolution procedure. This also meets a point made by the Delegated Powers Scrutiny Committee.
Amendment No. 21 will enable the authority to require the trustees of any trust scheme to send a copy of a statement prepared by the authority to the scheme members. We believe that this is necessary because there are likely to be occasions when it would not be appropriate to hold back a statement for issue with an annual report. This could cause undue delay or the report may not be circulated widely enough.
Amendment No. 64 tightens the criminal offence in Clause 35 so that it is more serious than the breach that carries a civil penalty. It makes it a criminal offence for a trustee or a manager of an occupational pension scheme to agree to a determination to make an investment that breaches the provisions on employer related investments. We believe that those who agree to use scheme assets in breach of these provisions should be liable to prosecution. Such action is, in many ways, equivalent to theft, and there must be a strong deterrent.
Amendment No. 102 will allow the authority to impose a civil penalty under Clause 10 on anyone who fails, in cases where payments of benefit to scheme members are made by an employer, to place any payments not made to members within a prescribed period into a separate bank account. Amendment No. 154 will make a failure by an employer to make

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payments by the date required in the schedule of contributions subject to Clause 10. We believe it is a serious matter if contributions are not paid according to the payment schedule. That is why we believe that an employer in breach of the requirements should be subject to a penalty.
Amendments Nos. 174 to 180 relate to the authority's information gathering and disclosure powers. Clause 93(2) is brought into line with other criminal offences in the Bill. Refusal to comply with the request from the authority to provide information will remain an offence, but a defence will be available if refusal can be justified as being reasonable in the circumstances.
The authority will have a clear right to have access to all documents that may be relevant in investigating a scheme. It can require a document to be produced even though a third party may have legal claim to it. The more flexible use of restricted information provided by the authority by allowing people holding such information to disclose it further is given, but only where the authority consents.
Amendment No. 180 ensures that the Inland Revenue is not prevented from providing relevant information to the authority.
Amendment No. 292 gives the Secretary of State the ability to make staff and other resources available to the authority. That will ensure that it has sufficient flexibility to be able to adjust its staffing levels quickly in response to unexpected workload changes. That could be particularly important in the vital early years of operation.
Amendments Nos. 335, 339 and 384 are consequential upon the dissolution of the Occupational Pensions Board.
That is a brief summary of the main provisions of this group of amendments. Perhaps I may draw your Lordships' attention to the book—which is the only way to describe it—we have produced and made available in the Printed Paper Office which explains each of the amendments in turn. Those notes on the amendments are available to your Lordships. We have tried to make them as user friendly as possible. There is a table of contents at the front and an index of the amendments at the back. Therefore, I hope that between my brief explanation and those more detailed notes provided by my department your Lordships will have a clear idea of what the various amendments add up to. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 21.—(Lord Mackay of Ardbrecknish.)
Lord Simon of Glaisdale: My Lords, I apologise for coming belatedly into the consideration of the Bill, having intervened only on one matter at an earlier stage. However, it caught my ear when the Minister referred to a certain amendment which was designed to ensure that the Inland Revenue was not prevented from giving information. That is a matter that we considered in considerable detail and force on the Child Support Bill. I can see the noble Lord smiling. The confidentiality of the Inland Revenue is a matter of great importance. Can the noble Lord expand on what he said?
Lord Mackay of Ardbrecknish: My Lords, when I looked through the amendments I wondered whether the noble and learned Lord would allow the issue to pass without raising that question, which we debated at some length in a slightly different context on the Child Support Bill.
Perhaps I may explain that Amendment No. 180 removes a potential barrier to the exchange of information between the authority and the Inland Revenue. Section 182 of the Finance Act 1989 sets out the various duties of confidentiality owed by the board and staff of the Inland Revenue. However, the Board of the Inland Revenue and its staff are also subject to a duty of secrecy by virtue of Section 6 of the Taxes Management Act 1970. The amendment ensures that the Inland Revenue is not prevented from providing relevant information to the authority.
Perhaps I can help the noble and learned Lord by assuring him that the provisions for disclosure respect the usual conventions of confidentiality with regard to the Inland Revenue.
On Question, Motion agreed to.

COMMONS AMENDMENTS
22 Clause 16, page 8, line 37, after 'secure' insert '(a)'.
23 Page 8, line 39, after 'and' insert:
'(b) that those arrangements, and the appropriate rules, are'.
24 Page 8, line 43, leave out from 'provide' to end of line 16 on page 9 and insert:

'(a) for any person who has been nominated and selected in accordance with the appropriate rules to become a trustee by virtue of his selection, and

(b) for the removal of such a person to require the agreement of all the other trustees.

() Where a vacancy for a member-nominated trustee is not filled because insufficient nominations are received, the arrangements must provide for the filling of the vacancy, or for the vacancy to remain, until the expiry of the next period in which persons may be nominated and selected in accordance with the appropriate rules.'.
25 Page 9, line 20, leave out from 'years' to end of line 22.
26 Page 9, line 32, leave out from 'trustee' to end of line 35 and insert but, for the purposes of this subsection—

(a) any provision made by an order under section 8(4), and

(b) section 22(2),

shall be disregarded'.
27 Clause 17, page 9, line 42, leave out from 'scheme' to 'and' in line 3 on page 10 and insert:
'(b) the arrangements referred to in the proposal are for the time being approved under the statutory consultation procedure'.
28 After Clause 17, insert the following clause:—
Corporate trustees: member-nominated directors
`.—(1) Where a company is a trustee of a trust scheme and the employer is connected with the company or prescribed conditions are satisfied, the company must, subject to section (Corporate trustees: exceptions), secure—

(a) that such arrangements for persons selected by the members of the scheme to be directors of the company as are required by this section are made, and

(b) that those arrangements, and the appropriate rules, are implemented.

(2) Persons who become directors under the arrangements required by subsection (1) are referred to in this Part as "member-nominated directors".
(3) The arrangements must provide—

(a) for any person who has been nominated and selected in accordance with the appropriate rules to become a director by virtue of his selection, and

(b) for the removal of such a person to require the agreement of all the other directors.

(4) Where a vacancy for a member-nominated director is not filled because insufficient nominations are received, the arrangements must provide for the filling of the vacancy, or for the vacancy to remain, until the expiry of the next period in which persons may be nominated and selected in accordance with the appropriate rules.
(5) The arrangements must provide for the selection of a person as a member-nominated director to have effect for a period of not less than three nor more than six years.
(6) The arrangements must provide for the number of member-nominated directors to be—

(a) at least two or (if the scheme comprises less than 100 members) at least one, and

(b) at least one-third of the total number of directors;

but the arrangements must not provide for a greater number of member-nominated directors than that required to satisfy that minimum unless the employer has given his approval to the greater number.
(7) The arrangements must provide that, if a member-nominated director who was a member of the scheme when he was appointed ceases to be a member of the scheme, he ceases to be a director by virtue of that fact.
(8) Where this section applies to a company which is—

(a) a trustee of two or more trust schemes, and

(b) a wholly-owned subsidiary (within the meaning of section 736 of the Companies Act 1985) of a company which is the employer in relation to those schemes,

the following provisions apply as if those schemes were a single scheme and the members of each of the schemes were members of that scheme, that is: the preceding provisions of this section, section (Selection, and eligibility, of member-nominated trustees and directors) and section 18(7).'.
29 Insert the following clause:—
Corporate trustees: exceptions
'.—(1) Section (Corporate trustees: member-nominated directors) does not apply to a company which is a trustee of a trust scheme if—

(a) a proposal has been made by the employer for the continuation of existing arrangements, or the adoption of new arrangements, for selecting the directors of the company,

(b) the arrangements referred to in the proposal are for the time being approved under the statutory consultation procedure, and

(c) such other requirements as may be prescribed are satisfied.

(2) Where—

(a) by virtue of subsection (1), section (Corporate trustees: member-nominated directors) does not apply to a company which is a trustee of a trust scheme, and

(b) the employer's proposal was for the adoption of new arrangements which, in consequence of subsection (1) (b), are adopted,

the company must secure that the proposed arrangements are made and implemented.
(3) For the purposes of this section, the arrangements for selecting the directors of a company include all matters relating to the continuation in office of the existing directors,
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the selection or appointment of new directors and the terms of their appointments and any special rules for decisions to be made by particular directors.
(4) Section (Corporate trustees: member-nominated directors) does not apply to a company which is a trustee of a trust scheme if the scheme falls within a prescribed class.
(5) Section 10 applies to any employer who—

(a) makes such a proposal as is referred to in subsection (1) (a), but

(b) fails to give effect to the statutory consultation procedure.'.

30 Insert the following clause:—
Selection, and eligibility, of member-nominated trustees and directors
'.—(1) For the purposes of sections 16 to 18, the appropriate rules are rules which—

(a) make the provision required or authorised by this section, and no other provision, and

(b) are for the time being approved under the statutory consultation procedure or, if no rules are for the time being so approved, are prescribed rules;

and the arrangements required by section 16 or (Corporate trustees: member-nominated directors) to be made must not make any provision which is required or authorised to be made by the rules.
(2) The appropriate rules—

(a) must determine the procedure for the nomination and selection of a person to fill a vacancy as a member-nominated trustee, and

(b) may determine, or provide for the determination of, the conditions required of a person for filling such a vacancy.

(3) The appropriate rules must provide for a member-nominated trustee to be eligible for re-selection at the end of his period of service.
(4) Where a vacancy for a member-nominated trustee is not filled because insufficient nominations are received, the appropriate rules must provide for determining the next period in which persons may be nominated and selected in accordance with the rules, being a period ending at a prescribed time.
(5) The appropriate rules must provide that, where the employer so requires, a person who is not a member of the scheme must have the employer's approval to qualify for selection as a member-nominated trustee.
(6) Where section (Corporate trustees: member-nominated directors) applies to a trust scheme, references in this section to a member-nominated trustee include a member-nominated director.'.
31 Clause 18, page 10, line 28, after first 'implemented' insert `or the appropriate rules'.
32 Page 10, line 30, at end insert:
`() If, in the case of a company which is a trustee of a trust scheme—

(a) such arrangements as are required by section (Corporate trustees: member-nominated directors)(1) or (Corporate trustees: exceptions)(2) to be made have not been made, or

(b) arrangements required by section (Corporate trustees: member-nominated directors)(1) or (Corporate trustees: exceptions)(2) to be implemented, or the appropriate rules, are not being implemented,

sections 3 and 10 apply to the company.'.
33 Page 10, line 31, after 'arrangements' insert 'or rules'.
34 Page 10, line 38, leave out 'or 17(2)' and insert & 17(2), (Corporate trustees: member-nominated directors)(1) or (Corporate trustees: exceptions)(2)'.
35 Page 10, line 39, leave out paragraph (b) and insert:

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`() trustees or directors are required to be selected in pursuance of the appropriate rules'.
36 Page 10, line 41, leave out from 'when' to end of line 3 on page 11 and insert 'any approval under the statutory consultation procedure—
() of the appropriate rules, or
() of arrangements for selecting the trustees of a scheme, or the directors of a company, given on a proposal by the employer.'.
37 Page 11, line 5, leave out & 17' and insert 'to (Selection, and eligibility, of member-nominated trustees and directors)'.
38 Page 11, line 7, leave out & 17' and insert 'to (Selection, and eligibility, of member-nominated trustees and directors)'.
39 Page 11, line 9, at end insert:
`(7) For the purposes of this and those sections—

(a) approval of the appropriate rules, or of arrangements, under the statutory consultation procedure must be given by—

(i) the active and pensioner members of the scheme, and

(ii) if the trustees so determine, such deferred members of the scheme as the trustees may determine,

taken as a whole, and

(b) references to the approval of the appropriate rules, or of arrangements under section 17 or (Corporate trustees: exceptions), by any persons under the statutory consultation procedure are to prescribed conditions in respect of those rules or, as the case may be, arrangements being satisfied in the case of those persons in pursuance of the procedure, and those conditions may relate to the extent to which those persons have either endorsed, or not objected to, the rules or, as the case may be, arrangements.'.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 22 to 39 en bloc. I wish to speak also to Amendments Nos. 46 to 50, 63, 70, 128 and 309 to 312. This group of amendments concerns trustees. The most important changes concern the provisions for member-nominated trustees.
Baroness Hollis of Heigham: My Lords, with the leave of the House and the consent of the Minister, perhaps I may make a suggestion. As he goes through the amendments the Minister gives the number of an amendment and then explains its purpose. It would be very helpful if at the end of each explanation he would repeat the number of the amendment to which he referred. There are so many amendments that by the time we realise which are the significant ones we have forgotten which number they were. The index, however friendly and useful, does not relate to the content of the amendments but merely gives their numbers. I believe that it would help the House if he would do that so that noble Lords can refer quickly to the amendments when so many are moved at once.
Lord Mackay of Ardbrecknish: My Lords, I am happy to try to oblige the noble Baroness. If I forget at any point perhaps she will remind me.
The member-nominated trustee provisions are an integral and vital part of this reform package. We are fully committed to the benefits of appointing member-nominated trustees. Our overriding objective has been to make them a requirement for all schemes.
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However, we recognise that some schemes already have perfectly satisfactory arrangements and we do not want our proposals to force them to abandon those arrangements if scheme members are happy with them. That is why we made provision for schemes to opt out of the requirement, but only with the approval of scheme members.
The reason for the changes which we have brought forward in these provisions is that there was some ambiguity in Clause 16. This left it unclear about which aspects of the member-nominated trustee requirements could be left to the discretion of the existing trustees and which must be approved by members under the statutory consultation procedure.
Our concern was that Clause 16 could be interpreted to mean that the trustees alone might be responsible for determining the detailed composition of the trust board and that members' approval could be restricted to procedural matters concerning the actual nomination and selection of member-nominated trustees. The trustees could have determined, for example, that only active members were eligible to be trustees, leaving the members with the option of accepting or rejecting the proposed mechanics of the nomination and selection process. That is certainly not what we want. Scheme members should be able to say no to rules which are not acceptable to them and to ask their trustees to think again. They must be free to require arrangements which provide for a pensioner trustee if that is what they want. Amendment No. 30 in particular reflects our policy clearly and unambiguously. However, I must make it crystal clear that there is no change in policy.
We have also made it clear that where there are corporate trustees, members should have a right to nominate at least a third of the directors. Scheme members should not be deprived of the right to nominate as directors at least some individuals whose perspective differs from that of the employer. So for these schemes we are providing broadly similar arrangements to those for other schemes through Amendments Nos. 28 and 29. Therefore, Amendments Nos. 28 and 29 refer to corporate trustee members and run in parallel with the considerable discussions we had on trustee hoard members in ordinary schemes.
Turning to Amendments Nos. 46 and 47, these affect the provisions dealing with decisions taken by trust boards on a majority basis. Concerns were expressed about that in your Lordships' House. We have concluded that it would be wrong for trustees to be able to override scheme rules in all cases, even where, for example, the rules currently provide for unanimity or for a weighted majority in respect of decisions on particular matters.
Therefore, we have now brought forward amendments which ensure that where scheme rules already provide for voting to be other than by majority, those rules would not automatically be overridden. We believe that that will achieve the basic objective of the PLRC recommendation in respect of schemes which do not specify how decisions should be taken and which are at the moment required under trust law to operate only by unanimity. That is achieved in Amendments Nos. 46 and 47.

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We have also brought forward in Amendment No. 63 a new clause to give effect to the recommendation made by Mr. Justice Lindsey in the High Court judgment on the case of Manning v. Drexel Burnham Lambert Holdings Limited. His recommendation referred to the dilemma of a member trustee with a conflict of interest and the general rule of equity that a person in a fiduciary position is not permitted to benefit from his or her position. The recommendation was brought into sharp focus by the requirement to appoint member-nominated trustees.
The Drexel case has been the subject of debate in both your Lordships' House and the other place. It highlighted a number of issues which led us to reconsider. We have listened carefully to the views of pensions experts and others and have brought forward Amendment No. 63. I express my particular gratitude to the Association of Pension Lawyers and to Professor Hayton, of Kings College Law School, for their advice. The new clause in Amendment No. 63 aims to protect member trustees so that they may take discretionary decisions with confidence and at the same time enjoy any incidental benefits that arise from them.
Another change I am pleased to bring forward is Amendment No. 70, which provides protection to pension scheme trustees against victimisation by their employers. It overstates the matter a little to say that I was harried by the noble Baronesses, Lady Turner and Lady Dean of Thornton-le-Fylde. They debated strongly with me about this need.
Baroness Hollis of Heigham: We pressed.
Lord Mackay of Ardbrecknish: The noble Baronesses pressed me strongly on this need. As I indicated, I was reflecting on it and Amendment No. 70 was brought forward in the Commons. It means that pension scheme trustees will be given a right to complain to an industrial tribunal if they are dismissed or are subject to any other adverse treatment in connection with their duties as trustees. This is not subject to any qualifying length of service, hours of work or age threshold. The amendment is in response to the strong arguments put forward in your Lordships' House and in the other place, and we have been persuaded that it is necessary.
We are confident—as I said in the debate—that very few employers indeed will ever be tempted to act in such an irresponsible manner but we also believe that we must ensure that employee trustees can carry out their important duties confident in the knowledge that they have the protection afforded under employment protection legislation. That sketches out the main effect of the group of amendments. I commend the amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 22 to 39.—(Lord Mackay of Ardbrecknish.)
Baroness Hollis of Heigham: My Lords, if I trespass on the rules of the House perhaps noble Lords will forgive me. Is the Minister encouraging us at this time to comment on the other amendments he moved in the grouping, although they are not in the block? I presume that when the Minister moves the amendments later he
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will merely say that they have been spoken to. If this is the opportune time, I believe that I speak for the whole House in welcoming the fact that the Government reconsidered their opposition to the amendment pressed by my noble friend Lady Turner in Committee and at Report stage to give trustees protection. It was clearly one of the lessons to be learned from the Maxwell scandals. It was precisely because trustees did not have the confidence that they could speak out and protect their position as employees that so much of what could have been heard was not said.
We welcome the fact that the Government took on board the arguments brought forward and as a result we can hope that the trustees will join with OPRA in being whistle blowers in those unfortunate circumstances where it is necessary.
Lord Boyd-Carpenter: My Lords, perhaps I may say that I wholly agree with what the noble Baroness said and very much welcome the provision.
On Question, Motion agreed to.

COMMONS AMENDMENTS
40 Clause 24, page 14, line 17, leave out subsections (2) and (3) and insert:
'(2) Subsection (1) does not make a person who is a director, partner or employee of a firm of actuaries ineligible to act as an actuary of a trust scheme merely because another director, partner or employee of the firm is a trustee of the scheme.
(2A) Subsection (1) does not make a person who falls within a prescribed class or description ineligible to act as an auditor or actuary of a trust scheme.
(3) A person must not act as an auditor or actuary of a trust scheme if he is ineligible under this section to do so.'.
41 Clause 25, page 14, line 41, leave out from 'so' to 'are' in line
42 Page 14, line 44, leave out subsection (4) and insert:
'() Where—

(a) a trustee of a trust scheme acts as auditor or actuary of the scheme, or

(b) a person acts as auditor or actuary of a trust scheme when he is ineligible under section 24 to do so by reason of being connected with, or an associate of, a trustee of the scheme,

section 3 applies to the trustee.'.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House I beg to move that the House do agree with the Commons in their Amendments Nos. 40 to 42 en bloc. I speak also to Amendments Nos. 65 to 69, 71 to 74, 76, 77, 79, 80, 82, 85 to 98, 100, 101, 187 and 235. We have always made clear that professional advisers have a crucial role to play in our reforms. Amendments Nos. 40 to 42 change the requirement that neither the scheme actuary nor the scheme auditor should act as trustees of the pension scheme. Nor can a person who is connected with, or is an associate of, the scheme actuary or auditor. We consider that it would be wrong for an auditor to audit a pension scheme for which one of his associates is a trustee.
However, we believe that a person who is a director, a partner or an employee of a firm of actuaries should not be ineligible to act as an actuary of a trust scheme simply because another director, partner or employee of the firm is a trustee of the scheme.

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Amendments Nos. 40 to 42 will allow regulations to permit a person who falls within a prescribed class not to be ineligible to act as an actuary. That will allow firms which provide package arrangements to continue to provide those services.
We have also brought forward Amendments Nos. 71 to 80, 82, and 85 to 91 to ensure that the requirement to appoint a scheme auditor and a scheme actuary can apply to all occupational pension schemes rather than just those which are trust based. We do not mean to require a scheme actuary when there is no need for such services. For example, unfunded public service schemes which are set up under statute and whose benefits are guaranteed will be exempted from the requirement to appoint a scheme actuary. So will most money purchase schemes. However, we shall now be able to ensure consistency throughout the Bill. We can ensure that all relevant occupational pension schemes, and not just trust based schemes, must appoint a scheme auditor and a scheme actuary and so benefit from the whistle blowing provisions of the Bill.
In Amendment No. 96 we have ensured that those involved in running a scheme will be protected from being sued for breach of confidentiality if they report a matter to the regulatory authority. That is designed primarily to protect those individuals who may be employees of the employer sponsoring the scheme whose contracts of employment may include confidentiality clauses. They might otherwise be inhibited from reporting matters of concern about the scheme to the authority. We shall exclude legal advice from this protection. So those involved in running schemes can continue to expect lawyers to treat their exchanges in confidence.
I believe that these and other amendments contained in the group will improve the Bill. I commend them to your Lordships.
Moved, That the House do agree with the Commons in their Amendments Nos. 40 to 42.—(Lord Mackay of Ardbrecknish.)
Baroness Hollis of Heigham: My Lords, perhaps I may ask the Minister the intent of Amendment No. 40. I understand the purpose of it: that where the connections are fairly loose one should not rule out an entire firm because of package arrangements.
In the worst possible scenario, if an actuary or an accountant audits a scheme, and, as part of that job, may be required to whistle blow, if another partner in the firm is a trustee of that firm, will he feel free, able and empowered to whistle blow on a fellow partner who may be colluding with impropriety?
I realise that the provision refers to actuaries, but I understand that it also refers to auditors. I think that a conflict of interest could arise. It is asking one auditor to blow the whistle possibly on a partner in his own firm who acts as a trustee. How confident can the Minister be that the whistle blowing will be effective in those circumstances?
Lord Mackay of Ardbrecknish: My Lords, it is complicated when so many amendments are grouped together. However, there is a distinction between an auditor and an actuary. Perhaps I may deal with the position about an auditor.
As I mentioned, we consider—I believe this is what the noble Baroness asks me—that it would be wrong for an auditor to audit a pension scheme for which one of his associates is a trustee. The role of an auditor is to provide an opinion on whether the accounts provide a true and fair view of the financial health of the scheme. The actuary's role is different. His job is to take a broad view of the scheme provided by some funding matters, valuations including statements and contribution levels and the calculation of transfer values. The actuary is not involved in matters of scheme security in quite the same way as the auditor. We do not believe that there is the same need to extend the bar to the firm by which the actuary is employed.
That is the position. There is a difference between the actuary and the auditor. Regardless of whatever relationships there may be, there is a statutory duty to whistle blow and there will be professional requirements to do so with disciplinary back up if it does not happen. I hope that with that explanation and assurance the noble Baroness is content.
Baroness Seear: My Lords, we understand the explanation but that is not the same as saying that we like it. All the time we were debating the Bill many of us stressed again and again the inadequacy of the provision for whistle blowing. It remains inadequate. I find it difficult to believe that if a partner in a firm has a paid appointment in the organisation—even if it is as an actuary and not as an auditor—he, the potential whistle blower, will not be influenced. He is not likely to blow the whistle against a colleague in his own firm.
However, there is not much point in repeating the arguments that we made at great length during earlier proceedings on the Bill; but simply to remark that we are not satisfied with the solution.
On Question, Motion agreed to.

COMMONS AMENDMENTS
43 Clause 26, page 16, line 9, at beginning insert 'by order'.
44 Clause 27, page 16, line 43, after 26(3)' insert 'or (4)'.
45 Clause 28, page 17, line 6, at end insert 'or under section 168(4) of the Pension Schemes Act 1993'.
46 Clause 29, page 17, line 29, leave out subsections (1) and (2) and insert:
'() Decisions of the trustees of a trust scheme may, unless the scheme provides otherwise, be taken by agreement of a majority of the trustees.'.
47 Page 17, line 38, leave out from 'trustees' to 'by' in line 40 and insert:
'(a) the trustees may, unless the scheme provides otherwise,'.
48 Page 17, line 43, leave out 'meetings' and insert 'any occasions'.
49 Page 17, line 43, after 'must' insert 'unless the occasion falls within a prescribed class or description'.
50 Page 18, leave out lines 1 to 3 and insert:
'() This section is subject to sections 8(4) (b), 16(3) (b) and 22(2).'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 43 to 50 en bloc. I spoke to them in an earlier debate.
Moved, That the House do agree with the Commons in their Amendments Nos. 43 to 50.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.
3.45 p.m.

COMMONS AMENDMENTS
51 Clause 30, page 18, line 11, leave out from 'the' to 'under' in line 12 and insert 'function has been delegated'.
52 Page 18, leave out line 14.
53 Clause 31, page 18, line 29, leave out from beginning to 'except' in line 33 and insert:
'(2) Any discretion of the trustees of a trust scheme to make any decision about investments—

(a) may be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) applies to be exercised in accordance with section 33, but

(b) may not otherwise be delegated'.

54 Page 18, line 44, at end insert 'or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself'.
55 Page 18, line 45, leave out 'he' and insert 'the fund manager'.
56 Clause 31, Page 19, line 3, leave out subsection (5) and insert:
'(5) Subject to any restriction imposed by a trust scheme—

(a) the trustees may authorise two or more of their number to exercise on their behalf any discretion to make any decision about investments, and

(b) any such discretion may, where giving effect to the decision would not constitute carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) does not apply to be exercised in accordance with section 33;

but in either case the trustees are liable for any acts or defaults in the exercise of the discretion if they would be so liable if they were the acts or defaults of the trustees as a whole.
() Section 30 does not prevent the exclusion or restriction of any liability of the trustees of a trust scheme for the acts or defaults of a fund manager in the exercise of a discretion delegated to him under subsection (5) (b) where the trustees have taken all such steps as are reasonable to satisfy themselves, or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—

(a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and

(b) that he is carrying out his work competently and complying with section 33;
and subsection (2) of section 30 applies for the purposes of this subsection as it applies for the purposes of that section.'.

57 Clause 32, page 19, line 34, at end insert:
'() Neither the trust scheme nor the statement may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.'.
58 Clause 33, page 20, line 9, leave out 'they have delegated any discretion' and insert 'any discretion has been delegated'.
59 Page 20, line 28, leave out 'fund manager' and insert 'the fund manager to whom any discretion has been delegated under section 31'.
60 Page 20, line 32, leave out paragraph (a) and insert:

'(a) where giving the advice constitutes carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), advice—

(i) given by a person authorised under Chapter III of Part I of that Act,

(ii) given by a person exempted under Chapter
IV of that Part who, in giving the advice, is acting in the course of the business in respect of which he is exempt,

(iii) given by a person where, by virtue of paragraph 27 of Schedule 1 to that Act, paragraph 15 of that Schedule does not apply to giving the advice, or

(iv) given by a person who, by virtue of regulation 5 of the Banking Coordination (Second Council Directive) Regulations 1992, may give the advice though not authorised as mentioned in sub-paragraph (i) above'.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 51 to 60 en bloc. I wish to speak also to Amendments Nos. 75, 78, 81, 83 and 84. We now move on to amendments covering investments.
When we considered Clauses 30 to 33, a number of noble Lords expressed concern that they did not provide trustees with sufficiently wide powers to delegate their investment functions and therefore to administer their pension funds effectively. There was also concern that it could result in trustees being less willing to make investments, such as in property, which fall outside the scope of the Financial Services Act. I can recall the noble Lord, Lord Ezra, being very involved in the matter, as well as my noble friend Lord Buckinghamshire.
I then promised your Lordships that we would look carefully at the issues and would introduce suitable amendments as necessary. The outcome is Amendments Nos. 53 to 56. They will enable trustees to continue to enjoy the benefits associated with wider powers of delegation, such as greater operational flexibility and reduced administration and operational costs. We have also introduced a number of consequential amendments.
Amendment No. 56 will enable trustees to continue to benefit from exemptions from liability, when they invest in areas outside the scope of the Financial Services Act, provided that proper care is taken in appointing and monitoring those managers. The group of amendments, Amendments Nos. 53 to 56, I believe meet the concerns which were expressed when we considered matters during our discussions on the Bill. Amendment No. 57 is intended to make it absolutely clear that Clause 32 makes the trustees responsible for deciding investment policy after taking appropriate professional advice and fully consulting the employer. That is in line with recommendation 46 of the Pension Law Review Committee.
I hope that your Lordships will agree that we have taken full account of the debates which we had at an earlier stage on these important issues. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 51 to 60.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
61 Clause 34, page 21, line 21, at end insert:
'() where the power is conferred by the scheme on the employer, the employer has asked for the power to be exercised, or consented to it being exercised, in the manner so proposed'.
62 After Clause 34, insert the following clause:
Power to defer winding up
'.—(1) If, apart from this section, the rules of a trust scheme would require the scheme to be wound up, the trustees may determine that the scheme is not for the time being to be wound up but that no new members are to be admitted to the scheme.
(2) Where the trustees make a determination under subsection (1), they may also determine—

(a) that no further contributions are to be paid towards the scheme, or

(b) that no new benefits are to accrue to, or in respect of, members of the scheme;

but this subsection does not authorise the trustees to determine, where there are accrued rights to any benefit, that the benefit is not to be increased.
(3) This section does not apply to—

(a) a money purchase scheme, or

(b) a scheme falling within a prescribed class or description.'.

Lord Mackay of Ardbrecknish: My Lords, with the leave of the House I beg to move that the House do agree with the Commons in their Amendments Nos. 61 and 62. With those amendments I should like to speak also to Amendments Nos. 132 to 146 and Amendment No. 234.
These amendments are in a group of amendments that deal with surplus and wind up. Amendment No. 61 provides that trustees who wish to make a payment from surplus to the employer must ensure that the employer is content to receive it. Perhaps it will help to remind your Lordships that Clause 34 provides that in a scheme which permits a payment from surplus to the employer, the trustees alone will be able to decide whether or not to make such a payment. Trustees may exercise the power only where certain statutory requirements have been met.
One of the main conditions is that benefits must be increased annually, in line with inflation, up to a maximum of 5 per cent. for both past and future service. In defined benefit schemes, the employer stands behind the pension promise and funds accordingly. Most scheme rules give the employer the sole power to authorise improvements.
The Bill places a statutory obligation on employers to fund their schemes so that the benefits are protected. That is entirely reasonable if the employer controls the commitment to additional enhanced benefit. But it would be more difficult to justify if the employer can be faced with potential additional costs as a result of benefit increases which he has not agreed.
Amendment No. 61 therefore provides that the trustees must ensure that the employer is content to receive a payment from surplus and not act unilaterally. That will ensure that any consequent increase in benefits
1700
is approved by the employer and that the employer has the opportunity to weigh all the implications before accepting the payment.
Amendment No. 62 overrides scheme rules which require the scheme to wind up in certain circumstances. It will allow trustees to continue a scheme where they believe it would be in the interests of the members to do so. We believe that it is right that trustees of a properly funded scheme should be able to discharge their liabilities on a gradual basis as and when they crystallise. Members will be protected because the trustees can continue with the scheme only if it is in the best interests of the members.
Amendments Nos. 132 and 133 develop our intention that additional voluntary contributions should attract a high level of protection, even when they have been transferred from another pension scheme. I have accepted that it is right in principle that the first priority should be given to any pension rights attributable to additional voluntary contributions. I undertook to bring forward an amendment at a later stage to cater for all variations. These amendments redeem that commitment.
Amendments Nos. 134 and 135 deal with the priority to be accorded to dependants' benefits. An example would be of a pensioner who died during winding-up. His pension would attract a high priority under the Bill because it was in payment at the time winding-up commenced. But a widow's or widower's pension coming into payment after the date on which the winding-up commenced would appear to attract a lower priority. My noble friend Lord Buckinghamshire raised the point and I promised to consider it. These amendments make it clear that any contingent dependant's benefit is accorded the same priority as the scheme member's entitlement.
We were also concerned that the way in which the categories of preferential liabilities in the clause are set out could be interpreted as implying that accrued rights do not include provision for indexation. They do. However, misunderstandings could have arisen because accrued rights and indexation are treated separately in the clause. The amendments remove any potential ambiguity.
Amendments Nos. 136 and 137 add to the flexibility which Clause 68 gives trustees in the way they discharge scheme liabilities when a scheme winds up. The clause provides a range of options for discharging liabilities but it has been suggested that the option to purchase transfer credits in another scheme does not apply when it is in respect of an existing pension entitlement. That could be particularly important when an employer is merging schemes or is being taken over. In those circumstances, a transfer may be a suitable alternative to the purchase of an annuity for the discharge of pensioner liabilities.
Amendments Nos. 138 and 146 address the situation where the scheme has wound up, liabilities have crystallised and the value of any excess assets can be calculated precisely. Most scheme rules have clear provisions setting out exactly how assets should be allocated on wind-up. A small minority of schemes have wind-up rules which could in principle result in assets being left unallocated. There could be need for a court to

1701
determine whether the excess assets should be deployed to increase members' benefits to Inland Revenue limits, whether they should be paid to the employer or whether they should go to the Crown. The PLRC recommended that where scheme rules were clear on the allocation of scheme assets on wind-up they should not generally be interfered with.
It has been suggested to us that Clause 70 does not achieve the desired effect. It would in practice override scheme rules on allocating excess assets on scheme wind-up by effectively requiring the trustees to authorise benefit improvements up to Inland Revenue limits before any payment could be made to the employer. That is not what the PLRC recommended; and it is not what we intend.
Amendments Nos. 138 to 146 restructure Clause 70 so that clear scheme rules will be applied, subject to the additional constraint that limited price indexation must be awarded in respect of past and future service, and members must he notified and given an opportunity to make representations to the authority.
Amendment No. 234 introduces a new clause to provide new options for contracted out money purchase schemes which are in the process of winding up. It addresses concerns about the problems that many schemes have found in placing protected rights in appropriate homes. The new clause brings in new ways for discharging protected rights and will help trustees and managers to wind up schemes. It will enable insured schemes to secure protected rights through appropriate insurance policies. We believe that these measures will protect the interests of both the members and the taxpayer who has contributed to members' protected rights. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 61 and 62.—(Lord Mackay of Ardbrecknish.)
Lord Boyd-Carpenter: My Lords, will my noble friend clear up one point on Amendment No. 146? This appears to give power by regulations to modify a section of the Act. I should like to know whether those regulations are themselves subject to parliamentary control.
Lord Monkswell: My Lords, I have a question on the group of amendments relating to provisions on the wind-up of a scheme and the disbursement of surplus funds. I was not quite clear as to what the Minister meant in relation to Amendment No. 138. He mentioned that the surplus might go to make up benefits to scheme members to Inland Revenue limits, go to the employer or go to the Crown. I gathered that that would happen if there were no effective mechanisms or rules to determine what should happen to the surplus on wind-up. Can we be assured that the new amendments the Minister presents will ensure that surplus money in a scheme remains the property, if I may put it that way, of scheme members. It is well established that the funds in a scheme represent deferred pay and are therefore in the ownership of the members. Parliament accepted that prior to wind-up, if there is a surplus, some of that surplus can go to the employer on the basis that if there were a deficit the employer would have to make up the difference. While that might be contested, it is now accepted by Parliament. But on the
1702
wind-up of a scheme that situation does not pertain. Effectively, any liability that the employer might have is wiped out. Therefore any surplus left in the scheme after all the agreed benefits have been paid should remain the property of scheme members and be distributed in some fashion to them, not go to the employers.
The Earl of Buckinghamshire: Perhaps I may make a few comments on the clutch of amendments on the priority clauses on wind-up; namely Amendments Nos. 132 to 135. I am pleased to have the Minister's response on the improved priority clause on treatment of additional voluntary contributions and for dealing with contingent liabilities. However, I remain concerned about the changing of this priority clause in so far as it affects pensions in payment and pensions increases which are attached to those particular pensions.
I spoke on this matter at some length previously in the House, and I do not wish to rehearse the whole argument. There is increasingly widespread concern about the diminution and, as it were, the weakening in part of the position of accrued rights. Bearing in mind that the Bill, at least in part, deals with the security of accrued rights, it is somewhat strange to find that pension increases and payment will not be treated as a prior liability. That is the situation as I understand it.
There are some practical difficulties with the Bill as it stands. It is not clear how pension increases which have already been bought out with insurance companies could be unravelled in the event of the wind-up of a scheme where those annuities have been bought out in the name of the trustees. I am dealing with a scheme at the moment in relation to which I am trying to assign the annuities bought out by the trustees to the members. I am having considerable difficulties with the insurance company involved, which is trying to change the terms of the contract, and even to weaken that particular contract still further. Therefore I have some concerns.
As the Bill stands at the moment, trustees who have bought out annuities in their own name for pensioners would be advised to look at assigning those policies to the individual annuities so that there is no danger, no matter how unlikely it is, that in future schemes will go into wind-up in deficit. I do not believe that this clause was fully debated in another place. I look forward to hearing the Minister's comments. I hope that he can offer some words of comfort.
Baroness Turner of Camden: My Lords, I support the remarks of the noble Earl. The Minister will no doubt recall that I raised the whole question of pensioners and their order in priorities in the event of wind-up. I was very concerned that the order seemed to have been reversed, with pensioners now appearing at the bottom of the list.
I understood the Minister to say during his presentation of these amendments that existing rules would not be overridden. It is to try to maintain rights that exist in current rules that I am most concerned. There are schemes that have a priorities rule which puts pensioners higher up the list than was proposed in the Bill. If that will still remain the situation where rules are in force, that at least would he a more satisfactory position. Perhaps the Minister would care to elucidate.
Lord Mackay of Ardbrecknish: My Lords, perhaps I may start with the simplest of the questions I was asked; namely, that from my noble friend Lord Boyd-Carpenter. Amendment No. 146 amends Clause 71 to enable regulations to modify the application of the clause. An example of the way in which we intend to use the power is to enable an individual section of an industry-wide scheme to be treated as a scheme in its own right. The power is similar to that for the other winding-up clauses in the Bill. It will be done by regulations, using the negative procedure. That is our intention.
Lord Boyd-Carpenter: My Lords, will my noble friend repeat what he said? Did he say "using the negative procedure"? I did not hear what he said.
Lord Mackay of Ardbrecknish: Yes, my Lords, I did say that it would be done using the negative resolution procedure.
To turn to the question put by the noble Lord, Lord Monkswell, most schemes have clear and carefully balanced provisions in place setting out exactly how scheme assets should be allocated on wind-up. Only a small minority of schemes have wind-up rules that could in principle result in assets being left unallocated. As I said, this can mean that when such a scheme winds up there is a need for a court to determine whether the excess assets should be deployed to increase members' benefits to the Inland Revenue limits or paid to the employer if he can establish a claim under what I gather is called "resultant trust" or go to the Crown as bona vacantia. No doubt the noble Lord understands exactly what that means.
4 p.m.
His argument may have been based on a slightly false premise. The money in a pension fund is not deferred pay. Once members' benefits are fully secured, any excess assets should be distributed according to the scheme rules, which could include payment to the employer. That is what the PLRC said and that seems the right course to us. That is what Amendments Nos. 138 to 146 will ensure. It has been debated quite fully during the passage of the Bill, both in this Chamber and in the other place.
I hope that that explanation will reassure the noble Lord, Lord Monkswell, that in the case of wind-up, the great majority of pension funds will already have clearly defined rules on what they do with the money and anything they have left over.
I come to the point raised by my noble friend Lord Buckinghamshire and the noble Baroness, Lady Turner. I appreciate the concerns expressed by my noble friend. Indeed, we had some considerable debate on the question of protecting the interests of pensioners in those circumstances. If a scheme is funded to at least a level of the MFR, pensioners' rights, including to indexation, will of course be protected. My noble friend was concerned about what would happen if a scheme winds up under-funded. We hope that that will not happen but, if it does, I am afraid that inevitably some members will lose out.
1704
The clause protects pensioners by making the continuation of pensions in payment at their current level the top priority after AVCs. It also protects them through the proposed basis for valuing accrued rights under this clause, which will entail the rights of pensioners and those close to retirement being valued on a relatively conservative basis. Beyond that, the clause does indeed incorporate the outcome of some hard choices. It is possible that, as a result of this clause, some pensioners' future pension increases will be reduced. But that is fairer than the current situation in which those close to retirement can be left with a very severely reduced pension at a stage in life when they are not in a position to do anything about it. Those of your Lordships who were with me in the long hours of debate on the Pensions Bill will remember that we discussed that particular balance in some detail.
We believe that all that is consistent with the general philosophy of the Bill, which is to protect all accrued rights, whether derived from service before or after 1997. It does not represent a retrospective reduction in pensioners' rights. It merely ensures that if a scheme winds up, and is unable to secure its members' rights in full, the pain is shared on an equitable basis with a bias towards pensioners' interests.
My noble friend will also be reassured to hear that a transitional order of preferential liabilities will apply over the period until the MFR is fully in place. This will give higher protection to the rights of existing pensioners, including to indexation, and to accrued GMP rights. Therefore, it will avoid any sudden change in the position of pensioners or those with substantial contracted out rights. The extent to which rights are covered by the preferential liabilities in this clause will increase in line with the build-up of funds in schemes under the MFR.
I trust that that reassures my noble friend. I believe that we have struck the right balance in this difficult area. However, I have to say to him, at the risk of opening a Pandora's Box, that one of the advantages of regulations in difficult areas of this kind is that, if experience proves us wrong, the clause contains powers to modify the preferential liabilities to achieve what might be considered, should something happen in the future, a more satisfactory outcome.
The noble Baroness, Lady Turner, asked me whether the Bill would override existing scheme rules. The Bill will override scheme rules in establishing a new statutory priority order. It is the scheme rules on distributing excess assets on wind-up which will be left in place. The new priority order will, we believe, produce a fairer distribution of assets, if a scheme winds up under-funded with, as I said, a bias towards protecting pensioners.
I hope that I have answered the points that were made. Perhaps I may take the opportunity to say to those noble Lords who are very interested in this complicated matter that if anybody comes across anything or needs clarification I should be more than happy to correspond with him over the Summer Recess. With those remarks, I hope that the House will accept the amendments.
On Question, Motion agreed to.

COMMONS AMENDMENTS
63 After Clause 34, insert the following clause:
Exercise of powers by member trustees
'.No rule of law that a trustee may not exercise the powers vested in him so as to give rise to a conflict between his personal interest and his duties to the beneficiaries shall apply to a trustee of a trust scheme, who is also a member of the scheme, exercising the powers vested in him in any manner, merely because their exercise in that manner benefits, or may benefit, him as a member of the scheme.'.
64 Clause 35, page 22, line 39, leave out from beginning to 'is' in line 40 and insert 'If any resources of an occupational pension scheme are invested in contravention of subsection (1), any trustee or manager who agreed in the determination to make the investment'.
65 Clause 36, page 23, line 7, leave out 'audited accounts' and insert 'accounts audited by the auditor'.
66 Page 23, line 8, leave out 'an' and insert 'the'.
67 Page 23, line 9, leave out 'an' and insert 'the'.
68 Page 23, line 25, at end insert 'in the case of occupational pension schemes to which section 41 does not apply'.
69 Page 23, line 32, leave out from beginning to 'make' and insert 'Regulations shall make provision for referring to an industrial tribunal any question whether an organisation is such a trade union as is mentioned in subsection (4) (d) and may'.
70 After Clause 40, insert the following clause:
Right not to suffer detriment in employment or be unfairly dismissed
'.—(1) Subject to subsection (2), an employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
(2) Subsection (1) does not apply where the detriment in question amounts to dismissal, except where an employee is dismissed in circumstances in which, by virtue of section 142 of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act"), section 54 of that Act does not apply to the dismissal.
(3) Sections 22B and 22C of the 1978 Act (which relate to proceedings brought by an employee on the grounds that he has been subjected to a detriment in contravention of section 22A of that Act) shall have effect as if the reference in section 22B (1) to section 22A included a reference to subsection (1).
(4) In the following provisions of the 1978 Act—

(a) section 129 (remedy for infringement of certain rights),

(b) section 141(2) (employee ordinarily working outside Great Britain), and

(c) section 150 and Schedule 12 (death of employee or employer),
any reference to Part II of that Act includes a reference to subsection (1).

(5) The dismissal of an employee by an employer shall be regarded for the purposes of Part V of the 1978 Act as unfair if the reason (or, if more than one, the principal reason) for it is that, being a trustee of a trust scheme which relates to his employment, the employee performed (or proposed to perform) any functions as such a trustee.
(6) Where the reason or the principal reason for which an employee was selected for dismissal was that he was redundant, but it is shown—

(a) that the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by him and who have not been dismissed by the employer, and

1706

(b) that the reason (or, if more than one, the principal reason) for which he was selected for dismissal was that specified in subsection (5),

then, for the purposes of Part V of the 1978 Act, the dismissal shall be regarded as unfair.
(7) Section 54 of the 1978 Act (right of employee not to be unfairly dismissed) applies to a dismissal regarded as unfair by virtue of subsection (5) or (6) regardless of the period for which the employee has been employed and of his age; and accordingly section 64(1) of that Act (which provides a qualifying period and an upper age limit) does not apply to such a dismissal.
(8) Any provision in an agreement (whether a contract of employment or not) shall be void in so far as it purports—

(a) to exclude or limit the operation of any provision of this section, or

(b) to preclude any person from presenting a complaint to an industrial tribunal by virtue of any provision of this section.

(9) Subsection (8) does not apply to an agreement to refrain from presenting or continuing with a complaint where—

(a) a conciliation officer has taken action under section 133(2) or (3) of the 1978 Act (general provisions as to conciliation) or under section 134(1), (2) or (3) (conciliation in case of unfair dismissal) of that Act, or

(b) the conditions regulating compromise agreements under the 1978 Act (as set out in section 140(3) of that Act) are satisfied in relation to the agreement.

(10) In this section, "dismissal" has the same meaning as in Part V of the 1978 Act.
(11) Section 153 of the 1978 Act (general interpretation) has effect for the purposes of this section as it has effect for the purposes of that Act.'.
71 Clause 41, page 25, line 16, leave out 'trust' and insert 'occupational pension'.
72 Page 25, line 17, after 'trustees' insert 'or managers'.
73 Page 25, line 20, after 'trustees' insert 'or managers'.
74 Page 25, line 22, leave out 'trust' and insert 'occupational pension'.
75 Page 25, line 24, after 'by' insert 'or on behalf of.
76 Page 25, line 24, after 'trustees' insert 'or managers'.
77 Page 25, line 25, leave out 'a trust' and insert 'an occupational pension'.
78 Page 25, line 25, leave out from 'person' to 'to' in line 29 and insert:

'(a) is appointed otherwise than by the trustees or managers as legal adviser or to exercise any prescribed functions in relation to the scheme, or

(b) is appointed otherwise than by or on behalf of the trustees or managers as a fund manager,

sections 3 and 10 apply'.

79 Page 25, line 29, after 'trustee' insert 'and section 10 applies to any manager'.
80 Page 25, line 31, leave out 'a trust' and insert 'an occupational pension'.
81 Page 25, line 32, leave out from 'actuary' to 'referred' in line 35 and insert 'and legal adviser appointed by the trustees or managers,
() any fund manager appointed by or on behalf of the trustees or managers, and
() any person appointed by the trustees or managers to exercise any of the functions referred to in subsection (3) (a), are'.
82 Page 25, line 36, at beginning insert 'This section does not apply to an occupational pension scheme falling within a prescribed class or description and'.
83 Page 25, line 41, leave our from 'which' to end of line 42 and insert 'professional advisers may be appointed and removed'.
84 Page 25, line 43, leave out from 'which' to '(including' in line 44 and insert 'professional advisers may be appointed'.
85 Page 26, line 1, after 'trustees' insert 'or managers'.
86 Page 26, line 3, leave out 'a trust' and insert 'an occupational pension'.
87 Page 26, line 6, after 'trustee' insert 'and section 10 applies to any manager'.
88 Page 26, line 8, leave out 'trust' and insert 'occupational pension'.
89 Page 26, line 11, after 'trustees' insert 'or managers'.
90 Page 26, line 13, after 'trustees' insert 'or managers'.
91 Page 26, line 15, at end insert:
'() If in the case of an occupational pension scheme a person fails to comply with any duty imposed under subsection (9) (a), section 10 applies to him.
() If in the case of an occupational pension scheme any duty imposed under subsection (9) (b) is not complied with, sections 3 and 10 apply to any trustee, and section 10 applies to any manager, who has failed to take all such steps as are reasonable to secure compliance.'.
92 Clause 42, page 26, line 16, leave out 'trust' and insert 'occupational pension'.
93 Page 26, line 19, after 'trustees' insert 'or managers'.
94 Page 26, line 26, leave out 'trust' and insert 'occupational pension'.
95 Page 26, line 29, leave out 'trust' and insert 'occupational pension'.
96 Page 26, line 31, at end insert:
'(3A) If in the case of any occupational pension scheme any professional adviser (other than the auditor or actuary), any trustee or manager or any person involved in the administration of the scheme has reasonable cause to believe as mentioned in paragraphs (a) and (b) of subsection (1), he may give a report of the matter to the Authority.
(3B) In the case of any such scheme, no duty to which any such adviser, trustee or manager or other person is subject shall be regarded as contravened merely because of any information or opinion contained in a report under this section; but this subsection does not apply to any information disclosed in such a report by the legal adviser of an occupational pension scheme if he would be entitled to refuse to produce a document containing the information in any proceedings in any court on the grounds that it was the subject of legal professional privilege or, in Scotland, that it contained a confidential communication made by or to an advocate or solicitor in that capacity.
(3C) Subsections (1) to (3B) apply to any occupational pension scheme to which section 41 applies.'.
97 Page 26, line 37, leave out 'trust' and insert 'occupational pension'.
98 Page 26, line 39, leave out 'trust scheme or all trust' and insert 'occupational pension scheme or all occupational pension'.
99 Page 26, line 43, after 'subsections' insert 'by order'.
100 Page 26, line 45, leave out 'a trust' and insert 'an occupational pension'.
101 Page 27, line 2, leave out 'a trust' and insert 'an occupational pension'.
102 Clause 43, Page 27, line 35, after '(3)' insert 'or (5)'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 63 to 102 en bloc. I have already spoken to these amendments.
Moved, That the House do agree with the Commons in their Amendments Nos. 63 to 102.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
103 Clause 45, page 28, line 31, at beginning insert 'Subject to subsection (3A)'.
104 Page 28, line 39, leave out from 'scheme' to and' in line 40.
105 Page 28, line 45, leave out from 'it' to second 'is' in line 46.
106 Page 28, line 47, at end insert 'or, in the case of money purchase benefits, to payments in respect of employment carried on on or after the appointed day'.
107 Page 29, line 2, at end insert 'or, as the case may be, to payments in respect of employment carried on'.
108 Page 29, line 5, at end insert:
'(2A) Subsection (2) does not apply to a pension under an occupational pension scheme if the rules of the scheme require—

(a) the annual rate of the pension, or

(b) if only part of the pension is attributable to pensionable service or, as the case may be, to payments in respect of employment carried on on or after the appointed day, so much of the annual rate as is attributable to that part,

to be increased at intervals of not more than twelve months by at least the relevant percentage and the scheme complies with any prescribed requirements.
(2B) For the purposes of subsection (2A) the relevant percentage is—

(a) the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules,
or

(b) the percentage for that period which corresponds to 5 per cent per annum,
whichever is the lesser'.

109 Page 29, line 6, leave out 'subsection (2)' and insert 'subsections (2) and (2A)'.
110 Page 29, line 8, leave out from 'service' to end of line 12 and insert 'or to payments in respect of employment were attributable to pensionable service or, as the case may be, payments in respect of employment—

(a) before the appointed day,

(b) on or after that day, or

(c) partly before and partly on or after that day'.

111 Page 29, line 12, at end insert:
'(3A) This section does not apply to any pension or part of a pension which, in the opinion of the trustees or managers, is derived from the payment by any member of the scheme of voluntary contributions.'.
112 Page 29, line 13, leave out subsection (4).
113 Clause 48, page 30, line 40, leave out from second 'the' to end of line 43 and insert 'revaluation percentage for the revaluation period the reference period for which ends with the last preceding 30th September before the increase is made (expressions used in this definition having the same meaning as in paragraph 2 of Schedule 3 to the Pension Schemes Act 1993 (methods of revaluing accrued pension benefits)'.
114 Page 30, leave out lines 44 to 50.
115 Page 31, line 2, leave out from 'scheme' to end of line 7 and insert 'and includes an annuity'.
116 Clause 49, page 31, leave out lines 19 to 22 and insert 'the principal appointed day for the purposes of Part III of the Pensions Act 1995'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 103 to 116 en bloc. I should like to speak at the same time to Amendments Nos. 244 to 247.
This group of amendments change the indexation provisions in the Bill. When we discussed the indexation requirements both in your Lordships' House and the other place, the view was put forward that there should be a statutory requirement to index pensions derived from free-standing additional voluntary contributions. Those of your Lordships who attended the debate will remember that we consistently opposed that view. These arrangements are, by definition, voluntary. Individuals may be deterred from making such arrangements for their retirement if tighter controls are put in place.
We have accepted the point that it would be inconsistent to treat free-standing AVCs differently from AVCs paid to an individual occupational scheme. By definition, all AVCs are voluntary. So we have brought forward amendments to treat all pensions derived from AVCs in the same way. We do that by excluding them from the indexation requirements. Let me make it clear that Amendments Nos. 103, 104, 111 and 114 simply stop indexation being a statutory requirement. Schemes will still be free to index pensions arising from AVCs if they so choose.
We have listened to concerns about the administrative difficulty that some schemes may face by linking the increases required in the Bill to the timing of revaluation orders. The difficulty is that schemes have their own scheme year and may well already have indexation requirements which link with it. The Bill would require schemes to base their increases on the period ending every 30th September. We believe that that is too restrictive. Therefore, we have allowed an appropriate exemption. We have also taken a regulation-making power in Amendments Nos. 108 and 109 so that details of variations in the way that schemes administer increases can in fact be catered for. I should like to make clear that this is not at all a dilution in any way of the indexation requirements. It is simply to deal with the administrative difficulties that I mentioned.
Moved, That the House do agree with the Commons in their Amendments Nos. 103 to 116.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
117 Clause 50, page 31, line 34, after 'verified' insert 'by a prescribed person and'.
118 Clause 51, page 32, line 4, leave out 'at' and insert 'before the end of'.
119 Page 32, line 5, after 'occasions' insert 'or within prescribed periods'.
120 Clause 52, page 33, line 24, after 'be' insert:

'(i) rates of contributions determined by the trustees or managers, being such rates as in their opinion are adequate for the purpose of securing that the minimum funding requirement will continue to be met throughout the prescribed period or, if it appears to them that it is not met, will be met by the end of that period, and

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(ii) other'.

121 Clause 53, page 34, line 3, at beginning insert 'Except in prescribed circumstances'.
122 Clause 54, page 34, line 42, at beginning insert 'Except in prescribed circumstances'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 117 to 122 en bloc. I should also like to speak to Amendments Nos. 152, 153 and 155.
This group of amendments deals with funding. Amendment No. 117 is designed to ensure that the minimum funding requirement will operate properly by ensuring that the scheme actuary appointed by the trustees will also be the individual who undertakes the valuation of the scheme assets and liabilities. We shall be able to do that in regulations made as a result of this amendment. We intend to make it clear that the individual will be a properly qualified actuary who is a Fellow of the Institute of Actuaries or Faculty of Actuaries. This mirrors a similar provision in Clause 69(5).
Amendments Nos. 118 and 119 affect the timing of actuarial valuations and certificates. We intend that schemes should have valuations at intervals of not more than three years, with annual certificates to check on the funding position in the years in between. The Bill could have been interpreted as requiring those to be carried out on a particular day. Amendments Nos. 118 and 119 allow for flexibility to ensure that the provisions actually work in practice.
Amendment No. 120 has already been signalled in an earlier debate. It is about the operation of the schedule of contributions. We would normally expect the employer and trustees to agree the rates of contribution to be entered in the schedule. But there needs to be a failsafe should they not be able to agree. That needs to rest with the trustees, but they should not have a carte blanche to expose employers to financial risks. This amendment would leave the trustees with the power to set the contribution rate but limit their discretion so that they cannot preset a rate which is more than adequate to comply with the minimum funding requirement.
Amendments Nos. 121, 122 and 153 will enable regulations to clarify the duty on trustees to notify OPRA and members when payments due in the schedule of contributions are not made by the date. Without these amendments, the Bill would require trustees to notify OPRA and scheme members whenever a payment was overdue, even if it was delayed for a short time or for a trivial reason. That would involve unnecessary costs and cause anxiety for members. The amendments will allow regulations not to require OPRA and members to be notified where payment is delayed for good reason, for example, administrative fault or where it is made following OPRA's intervention.
I am sure your Lordships will be aware of the importance of the schedule showing rates of contributions and when they should be paid. Amendment No. 152 clarifies how the rates and due dates of contributions to he shown in the schedule are to he determined in respect of money-purchase schemes. It has been suggested that the clause does not make it sufficiently clear that the matters to be shown in the schedule should be consistent with

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scheme rules. To make it completely clear, Amendment No. 152 spells out that if the matters are already set down in the scheme rules, it is what is contained in those rules that should be shown on the schedule. If they are not contained in the scheme rules, they should be agreed between the employer and the trustees. If exceptionally they cannot agree they should be determined by the trustees. This amendment will leave trustees in no doubt how the matters to be shown in the contributions schedule should be determined.
Amendment No. 155 introduces a power to modify the minimum funding requirement and the employer debt provisions to apply to money-purchase schemes in certain circumstances. The PLRC Report noted that:
"in money-purchase schemes funding is automatic unless a scheme member bears the investment risks but there is no reason why the member should also bear the risk of loss through misappropriation of scheme assets".
We have accepted this by agreeing that the compensation arrangements should cover money-purchase schemes where there has been dishonest removal of assets. But this will apply only where the employer is insolvent. This amendment addresses the situation where an employer sponsoring a money-purchase scheme which has suffered fraud remains solvent. It places a requirement on such employers to make up a deficit arising from theft or fraud. Our proposal is about protecting members from the risk of loss through misappropriation of assets, not about protection from investment risk. So members, not employers, of money-purchase schemes will still bear the investment risk, but members should have similar protection to members of salary-related schemes in cases of misappropriation. The amendment will ensure that they do.
Amendment No. 155 will also provide a power that can be used to ensure that certain schemes that pay defined benefits are not inadvertently excluded from the minimum funding requirement. That is because some of the schemes are hybrid and pay out defined benefit pensions instead of purchasing annuities. We would not wish to exclude them from the minimum funding requirement.
I believe that these amendments will all improve the Bill and I commend them to your Lordships.
Moved, That the House do agree with the Commons in their Amendments Nos. 117 to 122.—(Lord Mackay of Ardbrecknish.)
4.15 p.m.
Baroness Hollis of Heigham: My Lords, we welcome Amendment No. 155. However, can the Minister give us a little more help in relation to Amendment No. 120? It may be that I misunderstood the purport of what he was saying. He seemed to be suggesting that trustees could not increase the rate of contribution which would produce funds which would more than meet the minimum funding requirement. In other words, they may levy only such contributions as would meet a minimum funding standard.
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If that is correct—I believe that is what the Minister said—it would mean that what was a minimum has become a maximum. At present, as I understand it, virtually all good company schemes are funded above the current minimum funding level, which is only around 80 per cent. on average of what most schemes contain. From what the Minister said in his introduction to the amendment, that would in future depress that level of funding and reduce the level of contributions payable by the employer and possibly also by the members but would expose the scheme to greater risk in the unlikely event of a subsequent wind-up. Can the Minister explain that point to us?
Lord Boyd-Carpenter: My Lords, my noble friend referred to Amendment No. 117 and indicated that this was to secure that verification was undertaken by an actuary. The amendment refers to a "prescribed person". Where is it laid down that a "prescribed person" means an actuary?
Lord Mackay of Ardbrecknish: My Lords, to answer my noble friend Lord Boyd-Carpenter first, in a slightly less simple question than the one he asked me earlier, I have explained that it is our intention to ensure that the people defined will be as I indicated—Fellows of the Institute of Actuaries or of the Faculty of Actuaries. We shall be making it clear in regulations that those qualifications will be necessary for those individuals described as "prescribed persons". It is not laid down in the Bill, but our intention is that it will appear in the regulations.
To turn to Amendment No. 120, as the noble Baroness indicated, we would normally expect the employer and the trustees to agree the rates of contribution to be entered in the schedule. But there needs to be a failsafe in the event of their being unable to agree. We believe that it is appropriate for that failsafe to rest with the trustees but that they should not be able to expose employers to financial risk. The amendment would leave the trustees with the power to set the contribution rate but limit their discretion so that they cannot prescribe a rate which is more than adequate to comply with the minimum funding requirement.
The noble Baroness is arguing that that limits the powers and the responsibilities of the trustees. But this is a default procedure in the event of an agreement not being reached between the employer and the trustees. It must be in the interests of all the parties that that does not happen and that they do reach agreement. The amendment is necessary to keep a balanced approach and avoid the risk of the employer being put at financial risk should the trustees demand an unreasonably high rate of contributions which was over and above the rate acceptable to the employer and more than adequate for the scheme to meet the minimum funding requirements.
Our analysis indicates that the vast majority of schemes, as the noble Baroness said, are already funding above the minimum funding level and there is no reason why the introduction of the minimum funding requirement should change that. It would be prudent practice for schemes and sponsoring employers to keep a margin in the fund above the minimum level to avoid the risk of the scheme failing to meet the test and

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triggering what could be a destabilising cash call on the employer. We hope that Amendment No. 120 provides a backstop—a failsafe—in the event of the employer and the trustees being unable to reach agreement.
While I see the point being made by the noble Baroness, we hope that we have struck a balance in the light of disagreement between the trustees and what their views might be and the needs of the employer. However, we hope that the situation will not arise where the use of the failsafe becomes necessary.
Baroness Hollis of Heigham: My Lords, the Minister has confirmed what I feared—where there is a dispute the minimum funding requirement becomes effectively a maximum funding requirement. His point that most schemes will go above it, for the sake of prudence and so on, should precisely apply in those situations where there is a dispute between employers and trustees, because that dispute is likely to occur when there is either some controversy in the management or there is some doubt about the financial viability of the employer's scheme, and so on.
I am rather worried. From what the Minister has suggested, those schemes where the trustees have most doubt, because there they are not getting the support of the employer, are precisely the ones which will have as their maximum funding requirement the minimum funding requirement and, as the Minister himself said, that is not for the most part likely to be adequate for a scheme to be prudently managed. The Minister has allowed no headroom for a situation where there is a dispute between employers and trustees. I wonder whether even at this late stage the Minister might like to produce some headspace. After all, this is only about an 80 per cent. minimum funding requirement of what is required for full solvency. Therefore, where there is a dispute—precisely where headspace is needed—there will not be headspace. That will expose more scheme members to more risk than was ever intended. Can the Minister help us further?
Lord Mackay of Ardbrecknish: My Lords, of course I should like to help the noble Baroness further in this regard but I should perhaps remind her that we had a debate about this problem. I cannot recall whether it was a long one or a short one. It did not take up too many columns of Hansard, so it must have been fairly short. My noble friend Lord Buckinghamshire raised a concern that the Bill as originally drafted would leave the trustees with control over the rates of contribution payable by the employer and that could potentially leave employers financially vulnerable.
The amendment with which we are dealing now was made in the other place in June. It is needed to achieve the objective that the trustees, if there is a disagreement, should not have a power to decide on a rate which is more than adequate for the MFR rate. It is a failsafe. I do not really believe that one could operate a failsafe which set a floor for the failsafe above the level of the minimum funding requirement. That is what the noble Baroness wants me to do. I do not think one should do that. If I were to do that she would accuse me of not looking at the MFR as a safe floor. Therefore, we have to aim at looking at the MFR as the safe floor, in what I think we would both agree is the very unlikely event that the failsafe power is needed.
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A balance has to be struck here. I am sorry that the noble Baroness feels uneasy about it but I can assure her that we believe that this is the right balance. We do not believe that it will be putting members of pension funds at risk. I hope that she can see her way to agreeing with me that it is better that we treat the MFR as the floor in this regard rather than attempt to set another floor above that MFR.
Baroness Hollis of Heigham: My Lords, I do not want to extend this debate but clearly the MFR is the level to which employers must fund the scheme and, above that, to which trustees might or may fund the scheme. Let us remind ourselves that two—thirds of all trustees will be employer appointed—the Government rejected Opposition amendments to the contrary—so it is unlikely that there will be a dispute between the employer and a trustee body in which the employer's interest remains dominant. A dispute will occur only in situations where even the employer's trustees feel that the scheme is at some risk. However, we have expressed our concerns. I do not wish to push the matter further, but I believe that the Government are leaving scheme members unreasonably exposed in the most precarious of situations.
On Question, Motion agreed to.

COMMONS AMENDMENTS
123 Clause 56, page 35, line 27, at beginning insert 'Subject to subsection (4B)'
124 Page 36, line 3, at end insert:
`(4A) References in subsection (4) and sections 57 to 59 to the terms referred to in subsection (2), or the effect of any of those terms, include—

(a) a term which confers on the trustees or managers of an occupational pension scheme, or any other person, a discretion which, in a case within any of paragraphs (a) to (c) of subsection (3)—

(i) may be exercised so as to affect the way in which persons become members of the scheme, or members of the scheme are treated, and

(ii) may (apart from the equal treatment rule) be so exercised in a way less favourable to the woman than to the man, and

(b) the effect of any exercise of such a discretion; and references to the terms on which members of the scheme are treated are to be read accordingly.

(4B) In the case of a term within subsection (4A) (a) the effect of an equal treatment rule is that the term shall be treated as so modified as not to permit the discretion to be exercised in a way less favourable to the woman than to the man.'.
125 Clause 57, page 36, line 6, at end insert 'and the reference in section 56(4A) to the way in which members of a scheme are treated includes the way they are treated as it has effect for the benefit of dependants of members.'.
126 Clause 60, page 37, leave out lines 33 to 41 and insert `subsections (1A) and (2) (exclusion for terms related to death or retirement) there is substituted—
"(1B) An equality clause shall not operate in relation to terms relating to a person's membership of, or rights under, an occupational pension scheme, being terms in relation to which, by reason only of any provision made by or under sections 56 to 58 of the Pensions Act 1995 (equal treatment), an equal treatment rule would not operate if the terms were included in the scheme.

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(1C) In subsection (1B), "occupational pension scheme" has the same meaning as in the Pension Schemes Act 1993 and "equal treatment rule" has the meaning given by section 56 of the Pensions Act 1995".'
127 Page 38, leave out lines 3 to 17 and insert:
'() for subsection (4) there is substituted?—
"(4) Subsections (1) (b) and (2) do not render it unlawful for a person to discriminate against a woman in relation to her membership of, or rights under, an occupational pension scheme in such a way that, were any term of the scheme to provide for discrimination in that way, then, by reason only of any provision made by or under sections 56 to 58 of the Pensions Act 1995 (equal treatment), an equal treatment rule would not operate in relation to that term.
(4A) In subsection (4), "occupational pension scheme" has the same meaning as in the Pension Schemes Act 1993 and "equal treatment rule" has the meaning given by section 56 of the Pensions Act 1995".'
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 123 to 127. At the same time I wish to speak also to Amendments Nos. 278, 316, 320, 321, 324 to 326, 374 and 376 to 380. This group of amendments deals with the extremely complex area of equal treatment. Amendments Nos. 123 to 125 will ensure that the principle of treating men and women equally in their access to and membership of occupational pension schemes is complied with even when scheme rules contain an element of discretion. Any discretion permitted to trustees in trust deeds will have to be exercised in accordance with the equal treatment rule.
Amendments Nos. 126 and 127 ensure that UK legislation on sex equality in employment is brought into line with EU law. They reflect the fact that decisions of the European Court of Justice since 1990 have permitted derogations in limited circumstances from the principle of equal treatment in the field of occupational pensions. Employment law will now reflect exactly what pension law requires. The amendments are structured so that future changes in the relevant pensions legislation will apply equally in the employment provisions.
Amendment No. 278 changes the commencement date of the equal treatment provisions in the Bill. Instead of coming into force immediately on enactment, we have decided that it would be better to bring them into force by commencement order. This is to ensure that the powers under which the present equal access regulations are made and related provisions remain in force until the regulations under the new powers in the Bill can be made, laid before the House and brought into force. We intend that the relevant provisions should be brought into force by commencement order instead of on the day the Bill is enacted. This will ensure continuity of the relevant legislation and not lead to the possibility of there being, so to speak, a hole in the system.
Moved, That the House do agree with the Commons in their Amendments Nos. 123 to 127.—(Lord Mackay of Ardbrecknish.)
Baroness Hollis of Heigham: My Lords, perhaps the Minister can give us some guidance in terms of Amendment No. 278. When does he think the commencement date order might be?
Lord Mackay of Ardbrecknish: My Lords, I am not sure when we intend to do it. However, I can give the noble Baroness a categoric assurance, in the usual words Ministers use, that it will be "As soon as we possibly can".
On Question, Motion agreed to.

COMMONS AMENDMENTS
128 Clause 62, page 39, line 41, at end insert:
'() Regulations may provide that this section does not apply to trust schemes falling within a prescribed class or description.'.
129 Clause 63, page 40, line 29, at end insert 'or'.
130 Page 40, line 31, leave out from 'scheme' to end of line 34.
131 Clause 66, page 41, line 39, after 'made' insert 'in respect of a scheme other than a public service pension scheme'.
132 Clause 67, page 42, line 25, leave out from 'benefits' to first `the' in line 26 and insert 'which, in the opinion of the trustees are derived from'.
133 Page 42, line 27, leave out from 'contributions' to end of line 29.
134 Page 42, line 30, leave out paragraph (b) and insert:
`(b) where a person's entitlement to payment of pension or other benefits has arisen, liability for that pension or benefit and for any pension or other benefit which will be payable to dependants of that person on his death (but excluding increases to pensions)'.
135 Page 42, line 33, after 'accrued' insert 'to or in respect of any member of the scheme (but excluding increases to pensions)'.
136 Clause 68, page 43, line 25, leave out from 'the' to end of line 26 and insert 'member'.
137 Page 43, line 33, leave out 'on account' and insert 'in respect'.
138 Clause 70, page 45, line 7, after 'scheme insert 'in any circumstances'.
139 Page 45, line 11, leave out from beginning to 'to' and insert 'in those circumstances power is conferred on the employer or the trustees'.
140 Page 45, line 13, leave out subsection (2).
141 Page 45, line 16, leave out from '(1) (c)' to 'unless' in line 18 and insert 'cannot be exercised'.
142 Page 45, line 27, leave out paragraph (c).
143 Page 46, line 4, leave out from `(1) (c)' to 'without' in line 5.
144 Clause 71, page 46, line 15, after 'scheme' insert 'in any circumstances'.
145 Page 46, line 25, leave out paragraph (f) and insert:
`() the scheme prohibits the distribution of assets to the employer in those circumstances'.
146 Page 47, line 2, at end insert:
`() Regulations may modify this section as it applies in prescribed circumstances.'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 128 to 146. I have already spoken to the amendments in earlier debates.
Moved, That the House do agree with the Commons in their Amendments Nos. 128 to 146.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

Srebrenica
4.28 p.m.
Baroness Chalker of Wallasey: My Lords, with permission I should like to repeat a Statement being made in another place on events in Srebrenica.
"Srebrenica was established as a safe area by UN Security Council Resolution 819 on 16th April 1993. This was followed by an agreement on its demilitarisation between UNPROFOR, Bosnian Government and Bosnian Serb military commanders signed on 17th April.
"In June 1993, the UN suggested that up to 36,000 troops could be necessary to implement the safe areas concept. The UK, France and the Netherlands responded well, but many others did not. The total committed amounted to only 7,500—a significant shortfall. This has had significant implications for the safe areas policy. A Dutch contingent of UNPROFOR troops was deployed to Srebrenica to replace the original Canadian contingent.
"The reality is that neither side properly observed these provisions on demilitarisation. It is this that lies at the root of events over the past few days. For three months there have been sporadic attacks by each side against the other. Some 450 Dutch troops were in Srebrenica when fighting escalated over last weekend during which one Dutch soldier was killed by Bosnian Government forces on 8th July, and 30 Dutch soldiers were taken by the BSA as they withdrew from outlying OPs to a blocking position l½ kilometres to the south of the town. On the evening of 10th July Bosnian Serb troops launched an infantry attack against this position; the Dutch returned fire and the attack was abandoned.
"At around midday on 11th July, however, Bosnian Serb forces launched a further attack, using mortars and tanks. Srebrenica town came under fire with shells hitting the hospital and the Dutch compound. The Dutch commander requested NATO close air support. Two missions were launched, resulting in the destruction of two Bosnian Serb army tanks. Meanwhile, Dutch troops helped to evacuate the hospital and withdrew from the compound as it was under heavy shelling and undefendable.
"The Dutch blocking position was bypassed and, at around 1800 hours, Dutch UNPROFOR troops withdrew northwards to their compound at Potocari. They took with them some 2,500 displaced persons, and some 80 to 100 are wounded. Latest reports indicate that some 30,000 displaced persons are now in the Potocari area—several thousand of them in and around the Dutch compound—and that Bosnian Serb forces now effectively control the whole of the Srebrenica enclave.
"I have spoken this morning to the Dutch Foreign Minister, Mr. Van Mierlo. He confirmed that the Dutch troops remain in their Potocari compound. He has no reports of casualties. The compound is not presently under attack. But food and water supplies are running low. Dutch commanders are in touch with General Mladic, who is now in Srebrenica, about getting relief to the displaced persons.
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"We are in close touch with our allies and friends about the next steps and I have instructed our chargé in Belgrade to speak today to President Milosevic. Our immediate priorities are to get food, water and medical help to the displaced persons in the Potocari area and to offer any help to the Dutch that they may need; secondly, to safeguard the other enclaves and in particular the British forces in Gorazde; and thirdly, to pursue action in the United Nations Security Council in response to this Bosnian Serb aggression. Our overall objective should remain, despite the difficulties, to restore Srebrenica as a safe area, but on the basis of a genuine implementation of the demilitarisation agreement of April 1993.
"On the humanitarian situation, I spoke to the UN High Commissioner for Refugees last night. I understand that UNHCR are seeking to negotiate access to provide help to the displaced persons and assistance to those who expressly wish to leave. We have offered technical assistance to UNHCR from ODA experts in the area.
"On the position in the other enclaves, there is continued sporadic shelling around Zepa, which is guarded by Ukrainian UNPROFOR forces. There are no reports of increased activity by Bosnian Serb forces around Gorazde. Members of this House will nevertheless share my concern about the safety of British troops there. I can assure the House that we are in constant touch with UNPROFOR commanders on the ground about developments; and we shall take appropriate measures to safeguard the security of our troops. Part of the Rapid Reaction Force is deployed in theatre, where it will be able to support UNPROFOR's political and humanitarian objectives.
"At the UN, we, the United States, France, Germany and Italy are co-sponsoring a draft resolution which was circulated yesterday evening. This condemns the Bosnian Serb offensive; demands that Bosnian Serb forces withdraw immediately from the Srebrenica safe area; that the Bosnian Serbs immediately release all detained UNPROFOR personnel; and that all parties allow unimpeded access for the UN High Commissioner for Refugees and other humanitarian agencies to the safe area to alleviate the plight of the civilian population; and requests the Secretary-General to use the resources available to him to restore the safe area status of Srebrenica. I look to see a resolution along these lines in New York today.
"Beyond these immediate priorities, we have to consider the implications of these events for the political process and for the future of UNPROFOR. I am seeing Carl Bildt, the new EU negotiator, immediately after this Statement. He has already travelled extensively in the region and has had three lengthy negotiating sessions with President Milosevic. I will be discussing with him how he can use his channels to the parties to help stabilise the situation in Srebrenica, as well as his broader objective of a negotiated settlement to the Bosnian conflict and mutual recognition between the republics of former Yugoslavia. Later today, Mr. Bildt will

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meet the contact group of the UK, France, Germany, the United States and Russia to discuss these developments.
"On the future of UNPROFOR, my right honourable friend the Prime Minister told the House yesterday that the continued fighting in Bosnia was putting the future presence of United Nations forces at risk and that the warring parties had to indicate soon that they were prepared to return to the negotiating table to reach a political solution. This remains the position. There is no question about the value of UNPROFOR's work. This is the largest peacekeeping operation in the history of the UN: 40,000 troops are involved, drawn from almost 40 countries. They have saved tens of thousands of lives: casualties in the Bosnian war have fallen from 130,000 dead in 1992 to 2,500 in 1994. They have contained the conflict, which threatened a wider Balkan war. They are providing support for more than 2.7 million people in Bosnia who have been affected by the war.
"But to operate, they require co-operation from the parties. UNPROFOR is not configured to fight a war. We must rely on the judgment of UN commanders on the ground as to whether they remain able to carry out their mandate. So withdrawal must remain an option. The structure for a political solution is there if the parties choose to use it; but they have to recognise that negotiating time is running out".
My Lords, that concludes the Statement.
4.37 p.m.
Baroness Blackstone: My Lords, I thank the Minister for repeating the Statement. The news that the safe haven of Srebrenica fell to the Serbs earlier today is yet another terrible turn of events in Bosnia. The people of Srebrenica can be not only frightened but angry and betrayed by this latest development. Even if their lives are not immediately threatened there are reports of only enough food and water for one day for the 30,000 or more refugees who have been created. If that is true, we need to ensure that urgent action is now taken to alleviate the situation. I was glad to hear the Minister refer to such action.
From the very first day the safe havens' policy was announced, it was never meaningful. Safe for whom? And safe for how long? Those questions were asked in the House when the policy was first announced over two years ago. Despite all the warnings of the deficiencies in the policy, no heed seems to have been taken. As the Government appear to accept, at least implicitly in today's Statement, enough troops and back-up have never been made available to make the enclaves remotely safe. Surely the international community must not continue to make commitments of this kind without providing the necessary resources to fulfil them. The failure to do so, allowing Srebrenica to fall and civilian areas in Sarajevo and elsewhere to be shelled with impunity, is a serious blow to the credibility of the international community.
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At the same time, we on this side of the House join the Government in condemning both sides for failing to observe demilitarisation in Srebrenica and elsewhere. In particular, we condemn the Bosnian Serbs in the strongest terms. Yet again they have refused to accept the authority of the United Nations, wilfully ignoring its resolutions. The aggressive action they have taken in Srebrenica is utterly unacceptable.
Why was no ultimatum issued at the weekend when the Bosnian Serb troops started to move in on the enclave? Should not an ultimatum now be issued demanding their immediate withdrawal? I note that the Minister referred to a draft resolution in New York. Perhaps she will tell the House when that will be discussed in the Security Council. It has also been suggested that the French Government have put forward proposals for the use of UN troops to back an ultimatum. Will the Minister tell the House what consultations have taken place on that proposal? Could we have some more details of the French plans?
Will the Minister also tell the House why the Rapid Reaction Force was not deployed to try to prevent the fall of Srebrenica? Where are those troops? What are they currently doing? Surely their deployment should now be speeded up. What happened in Srebrenica cannot be seen in isolation. The Minister mentioned Gorazde and the British troops in the UN force there. Will the Minister give the House some further reassurances that the RRF will be used to protect them if necessary? The Minister made no reference to Zepa, the other enclave in eastern Bosnia. Perhaps we could hear what is the situation there.
On the wider goals we all share of achieving a political settlement, it is now well over a year since the contact group met the warring parties. What progress is now being made to get them around the table again? I note that contact is now being made with Carl Bildt, the European Union negotiator. But can the Minister throw any more light on his latest discussions with President Milosevic? Is President Milosevic prepared to put pressure on the Bosnian Serbs to withdraw from Srebrenica immediately and to sit down with the contact group and the other parties?
Finally, we share the Government's view that UNPROFOR has saved many lives in Bosnia. We understand also that withdrawal must remain an option. However, no one should underestimate the possible consequences of withdrawal, not just in Bosnia but well beyond it. I hope therefore that everything will be done, first, to reinforce existing UN mandates; and, secondly, to work for a political solution before such action is taken.
Lord Thomson of Monifieth: My Lords, I join in thanking the Minister for repeating the Statement. Perhaps I may apologise for the fact that I have to be on duty as Chairman of one of your Lordships' Committees just after 5 o'clock; so I hope that I will be acquitted of any discourtesy if I have to leave before these exchanges are completed.
In this latest, dangerous example of Bosnian Serb aggression, our prime and immediate concern must be for the suffering civilians, for the UN soldiers, including

1721
our own, and for the relief workers, including those from the ODA in this country, who are risking their lives amid the warring factions. The priority must be to bring immediate relief, as the Minister said, but I would go further than that. Should there not now be some special UN emergency relief effort to force a passage in one way or another for urgent relief, first, to Potocari and then through to Sarajevo. I urge that not just for immediate humanitarian reasons, but because there is a need to restore some kind of credibility to the UN role in the former Yugoslavia. I am glad that UNPROFOR's value was put into proper perspective in the Statement. If at all possible, it must be maintained, reinforced and made more effective.
I echo the words of the noble Baroness, Lady Blackstone, that while withdrawal must remain an option, none of us should be under any illusions about the military risks of withdrawal or the damage that it would do to the UN's future authority and to future prospects for any sensible European Union foreign policy.
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Baroness and to the noble Lord for their comments. The first question the noble Baroness asked me was why no ultimatum was issued at the weekend or why is one not being issued now. On the ground, ultimata were issued over the weekend, but at this very moment a resolution which requests the Secretary General to use all resources available to him to restore the status defined by the agreement of 16th April 1993, as I said in the Statement, and which calls on the parties to co-operate to that end, is being debated.
The resolution was in its semi final form last night. It demands that the Bosnian Serb forces immediately and unconditionally release all detained UNPROFOR personnel—of whom I gather there are 43 Dutchmen at the moment—that the parties respect fully the safety of UNPROFOR personnel; that they ensure their complete freedom of movement, including resupply; and that all the parties allow unimpeded access to the UN High Commissioner for Refugees—all the matters that were indeed in the Statement. The resolution goes on to demand that the Bosnian Serb forces cease their offensive and withdraw immediately from the safe area of Srebrenica.
There has been great pressure on the ground. There has been action on the ground. We understand that it was because of the action on the ground, which took out two Bosnian Serb tanks, that the Dutch UNPROFOR troops were taken. We heard President Chirac's statement yesterday. Consultations are going on with the French Government at this moment. I cannot give the noble Baroness any details of the plans, such as they are, because they are not finalised. I shall be in touch with her when I hear any further news.
The noble Baroness asked about Gorazde. The safety and security of British troops are of course of paramount importance to us all. We are naturally alive to the implications for other enclaves, particularly Gorazde, of any Bosnian Serb attack. We have been in close contact all morning with UNPROFOR commanders on the
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ground. As I said in repeating the Statement, there are no reports at the moment of any increased activity around Gorazde. Long may that continue.
We are also confident that the appropriate planning is in place to safeguard the security of our troops. I know that the noble Baroness will understand that I would not want to go into further detail for operational reasons.
The noble Baroness also asked me about the RRF. It is part of UNPROFOR, operating under UN command and its authority. I understand that there is some belief that the RRF will be active immediately. That just does not happen when deploying troops, but I can assure the noble Baroness and your Lordships that having the RRF, many of whose members are already gathered in theatre, will increase the flexibility of the UNPROFOR commanders' responses because they will have a greater variety of equipment which will strengthen them and enable them to give a graduated response to the warring factions or attacks. The noble Baroness asked why they are not being used per se at present. We must have in mind the fact that there are 43 Dutch troops held at present, against whom severe threats have been made.
We are looking to see what more can he done, and that is the matter under discussion at the moment. I remind your Lordships that the RRF is not an offensive force. It is there to protect UN forces and to undertake missions in support of the UN mandate. In order to operate it requires the strategic consent, as does UNPROFOR, of the warring factions. It cannot engage in peace enforcement. The UN mandate is for peacekeeping and for humanitarian aid. The RRF will operate under that mandate.
The noble Baroness asked about the other enclaves. At the moment we have no bad news from Zepa, but anything could happen in the next hours. Indeed, something may have happened since I left the Foreign Office.
The noble Baroness also asked about contact with Mr. Carl Bildt. A meeting with him is about to start—perhaps the Foreign Secretary has already started the meeting—and only afterwards will I be able to give her any more details.
The noble Baroness asked about the influence of President Milosevic on the Bosnian Serbs. Our chargé is on his way to see President Milosevic today. We hope that the president will again use his influence on Mr. Karadzic and on General Mladic. However, I must tell your Lordships that the situation is not good. As I was coming into the Chamber I heard that General Mladic has gone to Potocari with vehicles. He is seeking to separate the males over the age of 16 from the women and children and take them to Bratunac, presumably for some kind of screening. At the same time, he is offering to take the women and children to Kladanj, which is further to the north east of Srebrenica. I cannot say what the outcome of that will be. It has been agreed that there will be a UN monitor on each truck to monitor human rights for the people who are forced on to those trucks should that happen.
The noble Lord, Lord Thomson of Monifieth, rightly spoke about the suffering people, the UN soldiers and the relief workers and the priority being to bring relief. That is exactly why we are there and why we have been

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able to do as much as I described in the Statement which I repeated to your Lordships. Britain is the third largest donor of humanitarian aid and the only major donor of humanitarian aid to have so many troops on the ground. Neither the US nor Japan, which have given money for humanitarian aid, has any troops on the ground. Therefore, we are playing a major role in trying to resolve this serious situation.
We have the capacity to do more if we can get through. We are ready and have offered to UNHCR our ODA logistics people to provide help wherever we can. That is particularly important should the refugees, who are currently at Potocari, be taken up to Tuzla where there are already 430,000 displaced persons under the feeding and care of UNHCR.
There is a major job to be done. By putting our efforts behind UNPROFOR and behind the discussions that Mr. Carl Bildt and others are carrying on, we hope that we shall get the discussion going again and will stop what is happening. However, there are no easy answers. Certainly, indiscriminate bombing by either side—the Bosnian Serbs or the Bosnian Moslems—will not solve the problem. There is no military solution to the problem, certainly not by getting UNPROFOR into an untenable position, which is what would happen if it went beyond the UN resolutions.
4.54 p.m.
Baroness Thatcher: My Lords, may I thank my noble friend for repeating the Statement and perhaps make a number of comments and ask a number of questions. As I listened to her—and I have listened to other Statements on the subject—I had the impression that so long as this operation is supervised by UNPROFOR, no one will ever get a hold of it and take the requisite decisions and action to bring it to an end and see that the victims win and the aggressors are vanquished. Would she therefore see whether it is possible to put the matter under NATO, which would be much, much more effective?
Secondly, as I listened to the scene that my noble friend described, I was reminded that the right of self-defence is far older than the United Nations. The United Nations did not invent it and the United Nations has no right, in effect, to make it inoperative. Why, then, in view of the scene that she described and the lack of men and equipment, are the Bosnians not allowed to arm themselves effectively with sufficiently strong equipment and sufficient munitions to defeat the Serb aggressor? The Serb is the aggressor; the Bosnians, are the victims. We should not deny them the fundamental right to self-defence. I doubt the legality of doing it, and I have no doubt that it is morally wrong to deny them that right.
Thirdly, my noble friend spoke of the United Nations resolutions and the possibility of there being more. Will she agree that the resolutions on humanitarian aid and on protecting the safe areas are taken under Chapter VII of the United Nations Charter and are enforcement resolutions, and, therefore, the UNPROFOR troops have the right to enforce humanitarian aid getting through and have the right to enforce the safety of safe areas? By
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calling these areas "safe" we have encouraged innocent people to go into them. We should therefore make proper provision for their effective defence. All those resolutions are under Chapter VII. They are not peacekeeping; there is no peace to keep. They are to enforce the resolutions. Those powers are not being used. We have the weapons, we have the quality, the number and the most excellent armed forces, in particular those to whom my noble friend referred. They are not being used to protect the innocent.
Finally, my noble friend spoke of negotiations. There have been negotiations after negotiations after negotiations after negotiations. The last round of negotiations actually gave land to the Serbs from the Bosnians. The Bosnians were prepared to accept that if it would bring peace. We can have no more negotiations. The Serbs must accept the agreement of the contact group. There is no point in more negotiations because each time more are entered into the Serbs are given hope: the Serbs need only have a bit more aggression and there is a bit more land. That will not do. There are many potential aggressors looking at and learning from what is happening in Bosnia, waiting to see whether they would get away with it, in countries of the former Soviet Union and of the Middle East. Please will my noble friend take away the message that soft words will not do? We need stern, calmly calculated, effective action.
Baroness Chalker of Wallasey: My Lords, I am grateful to my noble friend for her comments, which tune in with everything that she has previously said on the tragic situation in the former Yugoslavia. Having been on the ground in Bosnia many times I have some sympathy with her. However, I cannot agree that rearming the Bosnians will bring the conflict to a speedy end. I believe that it would draw many more nations into a war which would spread far beyond the Balkans.
I agree with my noble friend that Chapter VII covers the resolutions. Looking through them today yet again, I realise that it would be highly desirable and would help my humanitarian relief aid very much if one could force the aid through. But on some occasions forcing the aid through will cause a wider conflict. I will not second guess any of the commanders on the ground, British or otherwise, who are doing their best to do the very thing that my noble friend wants; that is, to protect the innocent.
The whole House will know that when the idea went through the United Nations I had great doubts about the safety of the safe areas. I never made any secret of the fact that unless the proposal was enforceable it was not sensible. However, it was passed and we have done our best to give as much help as possible to get help through to the enclaves. For a certain amount of time we were extremely successful in doing so, enabling the people there to build up resources. Those resources are now under pressure and will continue to be.
My noble friend spoke of the contact group plan. That must be implemented. When we have had our discussions with Mr. Carl Bildt and others we will be in a better position to see what next steps to take.
Baroness Williams of Crosby: My Lords, on this occasion it is an honour to follow the noble Baroness, Lady Thatcher, a former Prime Minister, because she has been resolute throughout on the Bosnian issue. She has never veered from her belief that a different approach might have been more successful.
I should like to ask the Minister two questions and then raise one larger issue. First, are any negotiations going ahead with regard to trying to arrange safe passage for the 25,000 civilians now fleeing from Srebrenica, some of whom are not at present in the enclave held by Dutch UNPROFOR troops?
Secondly, will immediate consideration be given to providing air-lifts of food for the other enclaves? In particular, I understand that both Bihac and Tuzla are now suffering from severe shortages and are near starvation. It would be a disaster if they were also to fall.
Thirdly, I raise the larger issue because the Minister has referred, and rightly so, to the dangers of a wider war in the Balkans. We all understand that fear. But in her remarks she referred to the fact that all the parties in Bosnia must agree before any action can be taken by the United Nations. I wonder whether the Minister and her right honourable friends will consider whether, in a situation where one partner fails consistently to agree to United Nations action—those partners being the Bosnian Serbs who have never proved themselves willing to accept any of the norms or understanding of civilized conduct—the United Nations and the United Kingdom Government might now think it fit to move to a stronger position on defending the remaining enclaves and to a stronger approach towards the constant misbehaviour of the Bosnian Serbs.
Baroness Chalker of Wallasey: My Lords, I believe that in relation to the UK Government, I can say that we want stronger action in support of the enclaves. Whether the UN as a whole will agree to that, I cannot tell her at this moment. But we are determined to ensure—and this is why we have put more troops to UNPROFOR—that we are doing all that we can to protect the people and to get resources through to them.
The noble Baroness asked about safe passage for 25,000 people—I believe that it is rather more than that—who are trying to escape from Srebrenica. That is where the plan of allowing them to reach Tuzla is extremely important. I shall return to that point in a moment. But to be quite sincere about this, we are in some difficulty as regards separating the women and children from the men aged over 16. That needs to be handled extremely carefully on the ground. I do not want to say any more at the moment because I do not want to assist politically in any way the Bosnian Serbs. I never have and I never shall.
Perhaps I may now turn to Tuzla and Bihac. In Tuzla at the moment there are already over 430,000 internally displaced persons. Were all those from Srebrenica to join them, that would be an increase in the order of 10 per cent. That could be coped with because we have been getting supplies through to Tuzla by our own efforts. We are already working with the mayor of Tuzla to help should the people decide that they wish to reach 'Tuzla. That is already in hand.
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With regard to Bihac, we obviously condemn the continuing obstruction of relief convoys to Bihac by the Krajina Serbs. The situation is grim but three convoys have reached the pocket in the first week of July so there are supplies both there and in Tuzla. But they are very different situations and they are being coped with well on the ground.
We are in no doubt about the importance of doing all that we can to make sure that food, medicines and other necessary goods reach the people. But we must be advised by those on the ground. As I said earlier, sometimes to fight them through can cause a much wider conflict. We may have to try to proceed by agreement but I believe that if agreement is tried and fails, we may have to take the action which the noble Baroness suggests.
The Earl of Lauderdale: My Lords, first, I thank my noble friend for one good piece of news; namely, that there are to be UNPROFOR monitors on those trucks. That is a considerable achievement in the tenseness of the situation and I am grateful to my noble friend for mentioning that and for giving us that information.
Does the Minister not agree also that in this situation, nothing is gained by either taking sides in a civil war or resorting to rhetoric? Talk of telling the Serbs to go back is meaningless unless it can or will be backed up by overwhelming force which, as we know, would only have the effect of enlarging the conflict. Therefore, does my noble friend not agree that in this matter rhetoric is to be abhorred, as is the taking of sides?
Is my noble friend really happy about the command structure? I believe that we all have a picture of, as it were, Mr. Akashi, on one side and the military commanders on the other. The United Nations Secretary General is to be empowered by a resolution still to be passed to "take all measures open to him". But that means nothing. Therefore, will she tell us about the command structure and any endeavours to improve it. I believe also that words of encouragement should go out from this House to the local commanders who are in a perfectly awful situation.
Baroness Chalker of Wallasey: My Lords, I am grateful to my noble friend for what he said and for underlining the importance of having gained the presence of UNPROFOR monitors on the trucks.
It is easy to condemn rhetoric or those who take sides. It is very much more difficult to see a resolution of these situations which does not draw a wider and greater number of people into the conflict. That is why I am not in the business of condemning anyone, other than those who cause the conflict. I am in the business of finding ways to resolve the situation. That is why I have referred on many occasions to the contact group meeting with Mr. Carl Bildt, which is taking place in London today.
It is right to encourage the commanders on the ground—General Rupert Smith and others—who are doing a first-class job under very difficult circumstances. I understand my noble friend's anxiety about the command structure. I understand also that

1727
the Dutch Government, who have 43 men taken hostage at present, are anxious not to exacerbate the situation. However much some noble Lords may object to my speaking of a negotiated settlement, I still believe that we must redouble or treble our efforts to achieve a lasting solution because there is no other way of preventing the war spreading.
Lord Dubs: My Lords, will the Minister say a little more about what can be done for the safety of the 30,000 or so civilians who have fled from Srebrenica? I appreciate that the situation is difficult and that that it is changing from minute to minute. but it seems to me that an ominous chill is caused by the description which the Minister gave of the separation by the Bosnian Serbs of the men from the women and children. Anything which suggests that there is some action which we or the United Nations could take would be most welcome.
The whole situation has an element of a nightmare. I only wish that there was some way forward. The Minister said that resolutions are being put forward to the United Nations for discussion today which demand that the Bosnian Serbs should withdraw from Srebrenica. Given that we have no power of enforcement if they do not comply, does not the whole process make us seem even more impotent than we were before?
Baroness Chalker of Wallasey: My Lords, the noble Lord, Lord Dubs, puts his finger on the real problem; that is, the preparedness of other nations to implement fully under Chapter VII the resolutions in the UN, whether or not by unanimity. As I described early on in the Statement, when the safe areas were first put forward and there was a call for more support to resolve the matter, we were one of the first contributing nations at every stage to try to resolve the problem. Therefore, in no way can the British nation be blamed. But there are other nations which have spoken loudly and done little. That has been one of the major problems which the UN must face. There are too many who talk but do not do.
I should say also that this is a nightmare scenario. At the moment, we are working to try to look after those who are seeking refuge at Potocari, some of whom may go on to Tuzla. I cannot give the noble Lord any hard or fast advice about what will happen. We have dealt with situations even grimmer than this and have saved a very large number of lives and we have begun to bring back some normality. However bad the situation in Srebrenica about which we are talking today is, perhaps I may assure your Lordships' House that there are some areas in central Bosnia which were not peaceful but which have been made so by the tactics that we have, as the UN, deployed.
Lord Craig of Radley: My Lords, is not one brutal lesson of this whole sorry affair the fact that no resolution or ultimatum is worth the paper it is written on if there are not the forces available to carry out and meet those resolutions or ultimatums? Has not the time come, in the face of reality, to stop allowing the political heart to rule its head and to decide whether
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to commit forces in sufficient weight to achieve the right, overall objectives; or to make resolutions which take account of the realities on the ground and match what is asked of the United Nations and UNPROFOR to the forces that they are provided with, and no more?
Baroness Chalker of Wallasey: My Lords, by his remarks, the noble and gallant Lord expressed far better than I could the real situation and the irony involved. No resolution, no rhetoric and no ultimata will resolve the matter; indeed, the only way we can resolve it is to keep people alive and obtain a solution by discussion. I believe that the noble and gallant Lord would agree with me that it is absolutely vital that UNPROFOR does not become a combatant in the situation. We shall only be able to continue on the ground as long as that does not endanger our men beyond reason. At present, there is a very nasty situation in Srebrenica which has, perhaps, developed over a longer period of time during the cease-fire than we realised. However, we have to continue to try to find a solution which is not the use of military force by UNPROFOR.
Lord Mackie of Benshie: My Lords, while I agree with the Minister that a great deal of humanitarian work has been carried out, does she agree with me that the ineffectiveness ensures that such work must go on and on? Surely the noble and gallant Lord who has just spoken gave the right answer; namely, that forces should be provided to ensure that negotiations succeed, if necessary by Britain and France alone. Further, can the Minister say whether it is true that the air strikes ordered against the attacking forces were stopped once two tanks had been destroyed because the Serbs threatened to kill Dutch hostages? If that threat was acceded to and air strikes stopped, does that not endanger hostages all over the world, but especially in Bosnia, at present? Can the Minister comment on the command structure? Am I right in thinking that the command structure consists of two people; namely, the Commander-in-Chief of the forces and the United Nations representative? Is that not a structure for disaster? One person can be in command, three people may be a command structure; but two is impossible.
Baroness Chalker of Wallasey: My Lords, I understand the attraction of ensuring that the forces are sufficient in number to carry out the task given to them. However, given the fact that Britain and France have contributed far more forces than any other country, I am not sure that we should extend the forces still further beyond the recent extension that we announced.
The noble Lord, Lord Mackie, is absolutely right in what he said about the air strikes. Threats were issued against the 43 Dutch hostages. It was on that basis, presumably, that Mr. Akashi was not prepared to go ahead with further air strikes. I can only agree with the noble Lord as regards his mathematics: two people disagreeing will never resolve a situation; but one or three might take a clear decision. Let us hope that we can soon get to some clearer decision taking.

Pensions Bill [H.L.]
5.15 p.m.
Consideration of Commons Amendments resumed.

COMMONS AMENDMENTS
147 Clause 72, page 47, line 25, leave out from '1987' to end of line 26.
148 Clause 77, page 50, line 37, leave out from 'exceed' to first 'the' in line 4 on page 51.
149 Clause 78, page 51, line 18, after 'may' insert 'except in prescribed circumstances'.
150 Clause 78, page 51, line 21, leave out 'recover the payment. and' and insert 'or'.
151 Clause 78, page 51, line 23, leave out from 'excessive' to end of line 24 and insert:
'recover so much of the payment as they consider appropriate'.
Lord Mackay of Ardbrecknish: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 147 to 151 en bloc. In speaking to those amendments, perhaps I may speak also to Amendments Nos. 173, 181, 182, 248 to 254, 293, 297 to 308, 317, 334 and 383. All the amendments in the group are concerned with the compensation scheme.
Amendment No. 147 makes it clear that, while the compensation board may borrow from institutions authorised under the Banking Act 1987, it cannot borrow from the Bank of England. The Maastricht Treaty does not permit a public body to borrow from the Bank of England.
Amendment No. 148 is designed to ensure that the amount of compensation payable is not unduly restricted. The amount of compensation paid to salary-related schemes will be the lowest of three amounts. It can be 90 per cent. of the loss; it can be the amount required to restore a scheme to a funding level of 90 per cent. on the date when the scheme applied for compensation; and it can be the equivalent amount at the settlement date, which is the date after which the scheme is unlikely to make further recovery.
Amendment No. 148 removes the reference to one of those three amounts—that is, the amount required to restore a scheme to 90 per cent. funding at the application date. During the period between the application date and the settlement date, the trustees will have been taking action to recover lost assets. They will be under statutory duty to do so. If they are successful, the amount of compensation would take account of the recoveries that they have made, which is only reasonable. But if they are unsuccessful and the scheme is left in a worse position, the amount of compensation would not be sufficient to restore the scheme to 90 per cent. funding. We believe that that is inequitable. That is why we have made the amendment.
Amendments Nos. 149 to 151 respond to concerns raised in your Lordships' House, both in Committee and on Report. The compensation board has the power to make payments in anticipation of compensation. The board must be able to do that so that it can act quickly
1730
to help scheme members who may be in financial difficulties by paying interim payments to their schemes.
The compensation board may then decide that compensation was not, after all, appropriate or that it had made excessive payments. The board, therefore, needs the power to recover the payments that it has made. It is obviously right for the board to be able to do that, because all compensation payments are funded through the compensation levy paid by the schemes.
The issues of concern to your Lordships were, first, the possibility that trustees might be held personally liable; and secondly, that recovery might be sought from individual scheme members. There was also concern about the board's powers to make partial recoveries. I assured your Lordships that it was not the intention for the compensation board to hold trustees of schemes personally liable for repayment or to seek to make recoveries directly from scheme members. I also gave a commitment that we would consider the issues further and bring forward amendments if necessary.
On the first two issues, we have received firm legal advice that recoveries can be made only from the assets of the scheme. Payments will form part of the trust estate, which is separate from the trustee's personal estate; nor can the board seek to recover from individual scheme members. So no amendments are required there. But amendments are needed in connection with the board's power to make recoveries. Amendments Nos. 149 to 151 therefore provide for the board to make partial recoveries in all cases if appropriate.
Amendment No. 149 introduces a power to enable the circumstances in which recoveries can be made to be restricted. We envisage using that power to specify that recovery should not be made where it would result in the scheme being in a worse position than if interim payments had not been made. We have in mind here cases where interim payments have been made and payments made to members, but the compensation board subsequently decides that compensation is not after all payable. That could happen, for example, if the loss was due to incompetence rather than dishonesty.
Closely related is the question of partial recoveries. The board may make partial recoveries only where excessive payments of compensation have been made. There is, though, no specific provision for the board to make partial recoveries where it determines that compensation is not after all appropriate. The board's discretion to make recoveries may be sufficient to cover this but to put the matter beyond doubt we have brought forward Amendments Nos. 150 and 151. We believe that the amendments fully address the concerns raised with us.
Amendment No. 317 will bring the compensation board and the regulatory authority under the direct supervision of the Council on Tribunals in dealing with matters by means of a formal hearing as well as when dealing with reviews. They will act in a quasi-judicial manner when conducting a hearing in a way similar to a tribunal. We believe it right that the council should be able to supervise this function. I also gave a commitment that the compensation board would give

1731
written determinations in all cases dealt with by formal hearing or review. That is achieved by Amendment No. 305.
Amendments Nos. 181 and 182 take account of the fact that in the course of investigating whether compensation is payable the compensation board may obtain information relating to tax matters from the Inland Revenue or the commissioners of Customs and Excise. The board will not be able to disclose such information to a third party without being given the authority to do so except for the purposes of criminal proceedings. Amendment No. 182 adds recognised professional bodies, within the meaning of Section 391 of the Insolvency Act 1986, to those the compensation board may disclose information to or receive information from. That is important because compensation will be payable only where the employer is insolvent.
We have also, in Amendments Nos. 248 to 254 and 297, restructured the way in which the levy will work. Amendment No. 251 draws a clearer distinction between the levy to meet the costs of the compensation scheme, and the general levy which will meet the costs of the new regulatory authority as well as existing services such as the pensions ombudsman and the pensions registry.
The compensation levy will not be collected from the same schemes as the general levy. Personal pension schemes and schemes where all the members are trustees will not be covered by the compensation scheme. The amount to be collected will be determined in a different way from the general levy too. This is because it will largely be post event and determined by the number of compensable events. That is why we have decided to separate the compensation levy provisions from those of the general levy. Amendment No. 398 makes specific provision for regulations to impose a levy to cover the expenditure of the compensation board.
These regulations will set a framework for determining the compensation levy, including the maximum amount. The board will determine the rate of the levy because it will be in the best position to set the precise rate. However, we intend to set a maximum amount that can be collected. This will enable us to ensure that schemes liable to pay do not face a particularly high levy in any one year. The amendment also includes provision for one year to be taken with another. This will enable recovery of the board's costs to be spread over a number of years. The compensation levy will be paid direct to the compensation board although we envisage that it will, like the general levy, be collected by the pensions registry.
We are also taking a power to allow us to waive payments of the levy in certain circumstances. We intend this in cases where payment of the levy would adversely affect members' entitlements. We envisage that it will apply to some frozen and paid up schemes. However, there is flexibility to prescribe other circumstances should that become necessary. Amendment No. 301 brings the compensation board within the jurisdiction of the parliamentary commissioner for administration. Therefore the ombudsman will be able to investigate complaints of maladministration against the compensation board. With that explanation I commend the amendments to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 147 to 151.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
152 Clause 81, page 52, line 13, leave out from 'requirements' to end of line 24 and insert:
`(4A) The matters shown in the payment schedule for a scheme—

(a) to the extent that the scheme makes provision for their determination, must be so determined, and

(b) otherwise,

(i) must be matters previously agreed between the employer and the trustees or managers of the scheme, or

(ii) if no such agreement has been made as to all matters shown in the schedule (other than those for whose determination the scheme makes provision), must be matters determined by the trustees or managers of the scheme.'.

153 Clause 82, page 52, line 30, at beginning insert 'Except in prescribed circumstances'.
154 Page 52, line 38, at end insert:
'() Where any amounts payable in accordance with the payment schedule by or on behalf of the employer have not been paid on or before the due date, section 10 applies to the employer'.
155 After Clause 82, insert the following clause:—
Application of further provisions to money purchase schemes
.—(1) In the case of money purchase schemes falling within a prescribed class or description, regulations may—

(a) provide for any of the provisions of sections 50 to 54 to apply, or apply with prescribed modifications, (in spite of anything in those sections), and

(b) provide for any of the provisions of sections 81 and 82 to apply with prescribed modifications or not to apply,

to such extent as may be prescribed.
(2) Regulations may provide for any of the provisions of section 69 to apply, or apply with prescribed modifications, to money purchase schemes to such extent as may be prescribed (in spite of anything in that section), and the power conferred by this subsection includes power to apply section 69 in circumstances other than those in which the scheme is being wound up or a relevant insolvency event occurs (within the meaning of that section).'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 152 to 155. I spoke to these amendments in previous debates.
Moved, That the House do agree with the Commons in their Amendments Nos. 152 to 155.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
156 Clause 84, page 53, line 10, leave out 'pension' and insert `entitlement or right'.
157 Page 53, line 11, leave out 'pension' and insert 'entitlement or right'.
158 Page 53, line 14, leave out from 'unenforceable' to end of line 20 and insert:
`(2A) Where by virtue of this section a person's

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entitlement, or accrued right, to a pension under an occupational pension scheme cannot, apart from subsection (3), be assigned, no order can be made by any court the effect of which would be that he would be restrained from receiving that pension.
(2B) Where a bankruptcy order is made against a person, any entitlement or right of his which by virtue of this section cannot, apart from subsection (3), be assigned is excluded from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986 or the Bankruptcy (Scotland) Act 1985.
(2C) Subsection (2A) does not prevent the making of—

(a) an attachment of earnings order under the Attachment of Earnings Act 1971, or

(b) an income payments order under the Insolvency Act 1986.'.

159 Page 53, line 34, leave out 'at or after normal pension age' and insert 'on or after retirement'.
160 Page 53, line 42, after 'credits' insert 'other than prescribed transfer credits'.
161 Page 53, line 46, at end insert:
'(e) subject to subsection (4), except in prescribed circumstances, a charge or lien on, or set-off against, the person in question's entitlement, or accrued right, to pension, for the purpose of discharging some monetary obligation due from the person in question to the scheme and—

(i) arising out of a criminal, negligent or fraudulent act or omission by him, or

(ii) in the case of a trust scheme of which the person in question is a trustee, arising out of a breach of trust by him.'.

162 Page 53, line 48, after '(3) (d)' insert 'or (e)'.
163 Page 54, line 12, at end insert:
'() This section is subject to section 159 of the Pension Schemes Act 1993 (inalienability of guaranteed minimum pension and protected rights payments).'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 156 to 163. I wish also to speak to Amendments Nos. 165 to 170, 263, 314, 315, 318, 323 and 375. This group of amendments deals with forfeiture. Most of the amendments clarify the clauses themselves or consequential provisions. Amendment No. 160 is of more significance. Clause 84 generally prohibits the exercise of a charge or lien on pension rights or a set-off against those rights except to enable an employer to recover a debt due to him arising from a criminal, negligent or fraudulent act by the person. This is in line with PLRC recommendation 166. It will be subject to certain restrictions and safeguards.
Amendment No. 160 concerns one of the restrictions. It is that the charge, lien or set-off cannot be applied to any proportion of a person's pension rights which consists of transfer credits. This means that an employer cannot recover from pension rights accrued from a previous employment. There are, though, circumstances where we believe that an employer should be able to have access to such transfer credits. These are where the credits are derived from another scheme of the same or an associated employer. At present the Occupational Pensions Board has discretion to deal with these cases. The board will of course be abolished by the Bill. The amendment provides a power to make regulations which will permit an employer to have access to transfer
1734
credits in certain circumstances. However, the general rule will remain. We will use this power in a strictly limited way.
Under trust law a scheme is able to recover debts from a beneficiary's interest in the scheme which he has caused by a breach of trust or a criminal, negligent or fraudulent act or omission. Clauses 84 and 86, by preventing charges and forfeiture, could override these trust law provisions and restrict or prevent what is the proper right of a scheme to recover debts in the circumstances I have explained. This is not our intention. Amendment No. 161 will ensure that the present position is maintained in the Bill. Amendments Nos. 165 to 168 are concerned with an employer's right to recover a debt due to him arising from a criminal, negligent or fraudulent act or omission by means of a charge against a person's pension rights. Such a charge would become effective only when the pension becomes due for payment. In a case where a member died before his pension was paid, the employer would recover nothing under the charge because the pension would never come into payment.
We believe it would be right to allow a scheme to pay money out of a person's accrued rights to the employer to satisfy a debt due to the employer. We also believe it right to allow the scheme to reduce or extinguish pension rights by an amount which is equal to that which has been paid out. That is what these amendments will achieve. They are useful amendments and I commend them to the House.
Moved, That the House do agree with the Commons in their Amendments Nos. 156 to 163. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENT
164 Leave out Clause 85.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 164. I wish also to speak to Amendments Nos. 255 to 262, 264 and 265. We had lively and interesting debates on divorce when we considered the Bill earlier, both in Committee and on Report. There was also considerable debate in the other place. Your Lordships' House adopted amendments introduced by my noble friend Lady Young and by the noble Baroness, Lady Hollis, at Report stage. In the other place my right honourable friend the Secretary of State for Social Security, Mr. Peter Lilley, announced our acceptance of the intentions behind these amendments and gave an assurance that we would revise them to make them workable. The amendments now before your Lordships' House are the result.
We have built on the intentions set out in our debate. Our amendments will emphasise the courts' existing duty to take pension assets into account in divorce settlements. They will also allow a court to direct trustees or managers of an occupational or personal pension scheme to make a maintenance payment to a former spouse from a pension which is due to a scheme member. This could be by way of a lump sum or by periodic payments.

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The courts will have the power to commute benefits to a lump sum. This will mean that a court may well be able to offset this against other assets in the settlement and remove the need for former spouses to maintain contact with their ex-partners.
The courts will be able to vary deferred lump sum orders. The amount of payment which the trustees or managers of the scheme must pay cannot be more than 100 per cent. of the scheme member's pension. The trustees or managers will be protected from claims from the scheme member in respect of the amount the court has asked them to pay. And the scheme member's income tax position will not be affected.
One concern which has arisen in debate has been that an ex-wife could lose access to payments from her ex-husband's scheme should he die. Our amendments give extra powers to the courts so that they will in future be able to order the scheme member to exercise any right of nomination so as to give his ex-wife all or part of any lump sum payment due from a scheme on his death. The court will be able to direct the trustees or managers to pay that sum direct to the ex-wife rather than leave her having to make a claim from the estate or dependants.
We have also addressed concerns about what happens when a scheme member transfers benefit rights from one scheme to another. Where a court order requiring a scheme to pay is enforced, that requirement will transfer automatically to the new scheme if all the pension rights were transferred. If only part of the rights were transferred the court can be asked for further directions.
There are regulation-making powers to deal with who the payments should be made to and who should notify changes of circumstances. Regulations will also deal with valuing pension rights.
We have removed references in the Matrimonial Causes Act to "foreseeable future" so far as they deal with pensions. This term could be construed as putting undue restriction on the courts when considering pensions, which build up over a working life. Therefore, we have removed this restriction.
We have also taken steps to improve the position north of the Border. My right honourable friend the Secretary of State for Scotland has suggested amendments to the Family Law (Scotland) Act 1985 so that we can bring in similar provisions for Scotland so far as it is practicable to do so.
We have, of course, had to have regard to the very different nature of the legislative regimes and procedures in Scotland. But we believe that the measures we are introducing will pave the way for significant improvements in the consistency with which the courts approach the question of pension rights on divorce. They will align the relevant law of Scotland with that of England and Wales to a significant extent.
I hope that the amendments I have outlined will be seen as representing a much improved framework in dealing with pension rights in divorce cases. These amendments build on the existing powers of the courts and improve on the amendments which my noble friend Lady Young and the noble Baroness, Lady Hollis,
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introduced into the Bill. Needless to say, the significant difference between the amendments moved by the noble Baronesses and the ministerial amendments is in the length. My amendments seem to cover a great many more pages than did the original amendments. However, I can assure them, as I am sure they know, that the amendments make certain that the principles behind the amendments accepted by the Government from my noble friend Lady Young and won by the noble Baroness, Lady Hollis, in the Division Lobbies can be enforced.
The effect should be to increase the number of settlements which include pension rights. It would be only right to pay tribute to both my noble friend and the noble Baroness, Lady Hollis, for the tenacity with which they pursued me and this particular objective. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 164.—(Lord Mackay of Ardbrecknish.)
5.30 p.m.
Baroness Seear: My Lords, perhaps I may ask one question for clarification. The Minister mentioned the lump sum payment. That can be important. He said that the husband paying for the pension may nominate the person to receive the share. Can he be required by the court to nominate his divorced wife to receive a share? It is very important that she should receive that share. If it is left to him he could decide not to do that. I was not sure from what the Minister said whether the court could say that he had to allocate so much to his previous wife or whether he was at liberty to do so.
Lord Mackay of Ardbrecknish: My Lords, our amendments give extra powers to the courts so that they will in future be able to order the scheme member to exercise any right of nomination so as to give his ex-wife all or part of any lump sum payment due from a scheme on his death. He must so nominate if the court orders him to do so.
Baroness Hollis of Heigham: My Lords, the Minister would not expect the amendment to be agreed without some comment from this side of the House.
We very much welcome the fact that, in this House and in another place, the Government have accepted the spirit of the amendments agreed by your Lordships and turned them into what I hope will be a workable scheme. That means that in addition to offsetting at the point of divorce the parties also have the option of earmarking assets managed by the pension scheme.
All of us accept that the third option of splitting the pension must follow shortly. We cannot leave the law as it is. We have broken the ice. We have helped a large number of women. That is desirable and useful. However, it is clear that the desirable situation would be that the courts, in conjunction with the partners concerned, should be able to choose between offsetting, earmarking or splitting, according to the resources within the marriage, the age of the parties and their own inclination. If the parties are fairly young they will wish to have a clean break, which can only be achieved by

1737
splitting, whereas where the parties are perhaps in their late 50s and retirement is fairly near, earmarking may make better sense.
I do not accept the figures that the Government offered first here and then again in the other place about the putative cost of splitting the pension. I accept that there may be a modest loss to the Inland Revenue because of the loss of associated revenue when there are two small pensions rather than one larger pension. As to the Government's figure of the cost to public funds of splitting pensions in the case of unfunded or pay-as-you-go public authority schemes, £300 million represented 20 years of divorces all rolled up into one year with in all cases the parties taking the money out of the scheme. That is an absurd method of calculation. Heavyweight firms of actuaries have reduced that figure of £300 million to under £50 million as the realistic cost likely to be faced by the Government. Even then it simply marks a transfer flow and not an actual cash sum. Therefore, the Government's objections on grounds of cost are widely regarded as dubious at best and probably spurious.
However, we all expect that the Queen's Speech may include a matrimonial causes Bill promoted by the Lord Chancellor's Department or the Home Office in association with reform of divorce law. As by that time the Government will have the full research findings that they made much of during the course of debate, we can expect, and have every reason to hope, that we shall see a further progression in the tidying up of pension arrangements on divorce so that in those marriage break-ups where it is appropriate splitting the pension—the clean break situation—will be an option. That must happen. We all know that it must happen.
Finally, I should like to press further the point rightly made by the noble Baroness, Lady Seear, about the lump sum. The problem with earmarking, welcome and highly suitable though it is for women in their late 50s—the former husband is fairly close to drawing a pension—is that her money depends on his outliving her. If he dies before she reaches pension age, she receives no flow of money. If he dies before her, say, in his late 70s or early 80s, between the ages of 60, or 65, and 75 she may have enjoyed an appropriate share of his pension. He may be three or four years older than her and may not have the life expectancy that she has. If he then dies, it means that at the age of 75 or 78 she suddenly, from having an income of perhaps £150 or £200 from the pension, plunges to income support level benefits—the state pension plus a top up. Suddenly her pension will go because he has died. In her declining years, when she is most likely to need money to afford residential care and fees, she will receive no pension. That is the consequence of earmarking.
We have had informal discussions. There is absolutely no reason why in another place the Government should not have added an amendment which allowed that fraction of the pension which went to the first wife at the time of their divorce, say, 25 per cent. or 30 per cent. of the total pension, to continue as a fraction of the widow's pension after the husband's death. The sums may be exactly the same. They may need minor adjustment. That could be a matter for the
1738
courts to resolve. There was no reason on earth why the Government should not have made that modest addendum. I had hoped that they would do so in good faith. I know that there was informal pressure asking the Government to do so. Perhaps it is now too late. But the Government really should take up that last area of problem associated with earmarking until they, I hope, can bring back to the House the option of splitting.
Otherwise, we have to say to elderly women, "Yes, we fought for you. We have now conceded that you may have your due portion of your former husband's pension, but the moment he dies your money stops and down you plummet into income support at just the time when possibly your expenses will increase because you will need nursing care". That problem could have been overcome quite simply within the framework of an earmarking scheme by allowing the ex-wife's portion to continue. Perhaps the Government will comment on that point.
Secondly, do I understand that we are talking only about the lump sum that is paid if the ex-husband dies before he reaches pension age? Let me cite a scheme where the pension is 40/80ths, and 3/80ths of it becomes a lump sum. Such a scheme is not uncommon. One receives 40/80ths as a pension and 2.5 times one's annual salary as a lump sum. That is a fairly standard scheme. The husband then dies. I presume that the former wife would now lose the earmarked flow of money from the 40/80ths. But would she have a right to the 2.5 times the annual salary which would be part of his lump sum at retirement? Will the Minister explain what happens to that lump sum element, not when the former husband dies in service, but when it is part of his subsequent pension entitlement? Is that a claim of the ex-wife on his estate?
Can the Minister help us? We have some real problems which the Government could easily have overcome within the framework of their own scheme so as to ensure that the first wife continues to have a modest pension which is not dependent on the ex-husband outliving her. The Government have chosen not to do so, even though there is quite a lot of pressure on them to make that move. Perhaps we could have the Minister's response to some of those questions.
5.45 p.m.
Lord Mackay of Ardbrecknish: My Lords, perhaps I may try to address the question of the lump sum payment. It is certainly true that we listened to and have responded to concerns in the debate that if the ex-husband dies then the ex-wife could lose access to any payments from her ex-husband's scheme. In future the court will be able to order the scheme member to exercise any right of nomination in order to give his ex-wife all or part of any lump sum payment due from a scheme on his death. The court will have a power to direct the trustees or managers to pay this sum to the ex-wife so that she does not have to claim from his estate or other dependants. The new section also protects the trustees or managers from claims from scheme members with regard to the payments that they have been ordered to make.

1739
It is difficult to decide on my feet; I am trying to read at the same time as answering the noble Baroness. I think that it does not matter when a lump sum is made. The situation will apply if a lump sum is made after retirement as opposed to before retirement. However the question posed in debate was: if the member of a pension fund should die before he retired, what would happen? That is certainly the matter that I understood we addressed. I suspect that there will be no difference in the situation between pre-retirement and post-retirement. I shall confirm that to the noble Baroness as quickly as I am given the opportunity to read what the document says.
Having had my attention drawn to the right place, I am now considering the question of post-retirement death, which is the question the noble Baroness asked. The scheme, of course, will stop paying the ex-husband's pension. The noble Baroness makes the fair point that, therefore, there will be no income to pay continued maintenance. Therefore, as now, any ongoing maintenance will cease.
We have considered the issue carefully and have concluded that we can offer something of a solution. We have introduced a provision that could require a scheme member to nominate his ex-spouse to receive any lump sum that is payable to his estate following his death either in service or after retirement. As I suspected, the answer to the noble Baroness's question is, yes. Where necessary our legislation will override any scheme rules that would limit nomination. There could be limits to nomination in a scheme which might make what we seek to do impossible, but the legislation will overrule that.
I know that this is not a perfect answer. I hope that I have answered the point about the lump sum. Either before or after, the same rule applies: if there is a lump sum the court can order that the scheme member has to exercise the right of nomination either for the whole or part of the amount to the ex-wife.
Baroness Seear: My Lords, in the case of the USS scheme, with which I am most directly familiar because I am a beneficiary, the lump sum is part of your pension. When one retires one receives a pension and a very convenient lump sum. What I ask is this. When the ex-husband retires—he does not have to die for my interest in him—he receives his pension and a very convenient lump sum. Does the ex-wife receive her share of the lump sum as well as her share of the annual pension? That is what I want to know.
Baroness Turner of Camden: My Lords, before the Minister responds, perhaps I may ask another question. We are talking about a situation where there is power to commute. In many schemes there is power to take a half pay pension when you are entitled to two-thirds and one has the remaining part as a lump sum. It is called commutation. It applies in public service schemes as a matter of course. However, it also applies in a good many private schemes where one can agree to commute part of one's pension and receive a lump sum as well as one's pension.
Lord Mackay of Ardbrecknish: My Lords, the trouble with bringing forward amendments to which you think everyone agrees is that one gets into this kind of
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question. I believe that the noble Baroness, Lady Seear, has neatly changed the question she asked. Her original question related to death. I hope that I have answered the question about death before retirement and death after retirement; namely, if there are lump sums due there is no difference.
I am now asked about lump sums that are paid as what is called commutation at the time of retirement when the member of the scheme is still alive. The answer to the question about splitting that lump sum is yes, she can get some or indeed all of the lump sum on commutation. It is for the courts to decide on that matter. The courts could order the ex-husband to take the commutation and to arrange for an amount specified by the court to be paid to the ex-wife. I hope that that answers the three questions about the lump sum.
I turn to the more general point on the case for splitting, to which the noble Baroness returned. As she knows, it is rather like the amendments which we accepted from both her and my noble friend Lady Young which begin as a few lines. However, when we start ensuring that we write in something which will work in law, the few lines expand considerably. I have never given much thought to the issue, but obviously I have had to do so since the turn of the year and the problem is more complicated than the noble Baroness suggests it is in broad principle.
I believe that at some stage of the Bill I conceded that it was not an issue which we could lay to rest through what we propose in the Bill. As I explained, we have commissioned research and look forward to receiving the results. My honourable friend Mr. James Arbuthnot, who has now moved to the Ministry of Defence, said in the other place that we would be prepared to return to the subject once we had received the results of the research which had been commissioned. Therefore, we are prepared to revisit the issue in the future when the research becomes available.
Baroness Hollis of Heigham: My Lords, I thank the Minister. However, he has not so far responded to our third question, if he can. It relates to the flow of earmarked income which ceases when the spouse, the husband, dies. The wife may then find herself in her last 10 years of life living on a pension down to income support level. We hoped that Ministers in the other place would take up the point and remedy the problem.
Given what the Minister said, the courts may require the husband to write into his pension that his first spouse should be the beneficiary of a lump sum, whenever that may be paid. There is no reason why the courts should not require exactly the same procedure to follow that portion of the widow's pension—let us say 50 per cent. of what would fall to the widow—which should be apportioned fairly between the first and the second wife, or however many wives there may be. The matter could be judged in terms of years of marriage, transfer value or whatever, by regulation or whatever the Minister chooses to lay down. That is simple.
Even at this late stage, why should the Minister not extend the principle of the court ordering the husband to have a defined nominee to inherit the lump sum? Why should that principle not apply to a defined nominee

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who would share in the widow's pension? Then the biggest single problem left with earmarking would be overcome.
Lord Mackay of Ardbrecknish: My Lords, perhaps
I was rather more brief than I intended. I indicated that that difficulty would remain, and I accept the point. However, one of the purposes of conferring the power on the courts to order the scheme member to nominate the former spouse as the beneficiary of a lump sum payable on his death is to try—perhaps not as well as the noble Baroness would like—to provide the former spouse with compensation for the loss of the widow's pension. So that possibility exists. However, I am afraid that it is one difficulty more than we felt we could deal with.
As the noble Baroness rightly said, the issue would be dealt with if one went down the road of pension splitting. I believe that I have gone as far as I can at this late stage of the Bill. I suggest that she should accept the benefits that have come in the wake of her amendment and that of my noble friend Lady Young and not try to push me further and further.
On Question, Motion agreed to.

COMMONS AMENDMENTS
165 Clause 86, page 54, line 23, leave out from second 'section' to 'an' in line 24 and insert '(Forfeiture by reference to obligation to the employer)'.
166 Page 55, line 14, after 'section' insert 'and section (Forfeiture by reference to obligation to the employer)'.
167 After Clause 86, insert the following clause: —
Forfeiture by reference to obligation to the employer
.—(1) Subject to subsection (2), section 86(1) does not prevent forfeiture of a person's entitlement, or accrued right, to a pension under an occupational pension scheme by reference to the person having incurred some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by the person.
(2) A person's entitlement or accrued right to a pension may be forfeited by reason of subsection (1) to the extent only that it does not exceed the amount of the monetary obligation in question, or (if less) the value (determined in the prescribed manner) of the person's entitlement or accrued right to a pension under the scheme.
(3) Such forfeiture as is mentioned in subsection (1) must not take effect where there is a dispute as to amount of the monetary obligation in question, unless the obligation has become enforceable under an order of a competent court or in consequence of an award of an arbitrator or, in Scotland, an arbiter to be appointed (failing agreement between the parties) by the sheriff.
(4) Where a person's entitlement or accrued right to a pension is forfeited by reason of subsection (1), the person must be given a certificate showing the amount forfeited and the effect of the forfeiture on his benefits under the scheme.
(5) Where such forfeiture as is mentioned in subsection (1) occurs, an amount not exceeding the amount forfeited may, if the trustees or managers of the scheme so determine, be paid to the employer.'. '
168 Clause 87, page 55, line 17, after & 86' insert 'and (Forfeiture by reference to obligation to the employer)'.
169 Page 55, line 25, at end insert:
'() references to a charge are to be read as references to a right in security or a diligence and "charged" is to be interpreted accordingly,'.
170 Page 55, line 31, leave out from `1980'to end of line 35 and insert:
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'() the reference to an income payments order under the Insolvency Act 1986 is to be read as a reference to an order under section 32(2) of the Bankruptcy (Scotland) Act 1985, and
() the reference to the making of a bankruptcy order is to be read as a reference to the award of sequestration or the making of the appointment of such a judicial factor.'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 165 to 170 en bloc. I have already spoken to them.
Moved, That the House do agree with the Commons in their Amendments Nos. 165 to 170. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENT
171 After Clause 87, insert the following clause: —
Pension rights of individuals adjudged bankrupt etc
'. —(1) After section 342 of the Insolvency Act 1986 (adjustment of certain transactions entered into by individuals subsequently adjudged bankrupt), there is inserted—
"Recovery of excessive pension contributions.
342A.—(1) Where an individual is adjudged bankrupt and—

(a) he has during the relevant period made contributions as a member of an occupational pension scheme, or

(b) contributions have during the relevant period been made to such a scheme on his behalf,

the trustee of the bankrupt's estate may apply to the court for an order under this section.
(2) If, on an application for an order under this section, the court is satisfied that the making of any of the contributions ("the excessive contributions") has unfairly prejudiced the individual's creditors, the court may make such order as it thinks fit for restoring the position to what it would have been if the excessive contributions had not been made.
(3) The court shall, in determining whether it is satisfied under subsection (2), consider in particular—

(a) whether any of the contributions were made by or on behalf of the individual for the purpose of putting assets beyond the reach of his creditors or any of them,

(b) whether the total amount of contributions made by or on behalf of the individual (including contributions made to any other occupational pension scheme) during the relevant period was excessive in view of the individual's circumstances at the time when they were made, and

(c) whether the level of benefits under the scheme, together with benefits under any other occupational pension scheme, to which the individual is entitled, or is likely to become entitled, is excessive in all the circumstances of the case.

Orders under section 342A.
342B.—(1) Without prejudice to the generality of section 342A (2), an order under that section may include provision—

(a) requiring the trustees or managers of the scheme to pay an amount to the individual's trustee in bankruptcy,

1743

(b) reducing the amount of any benefit to which the individual (or his spouse, widow, widower or dependant) is entitled, or to which he has an accrued right, under the scheme,

(c) reducing the amount of any benefit to which, by virtue of any assignment, commutation or surrender of the individual's entitlement (or that of his spouse, widow, widower or dependant) or accrued right under the scheme, another person is entitled or has an accrued right,

(d) otherwise adjusting the liabilities of the scheme in respect of any such person as is mentioned in paragraph (b) or (c).

(2) The maximum amount by which an order under section 342A may require the assets of an occupational pension scheme to be reduced is the lesser of

(a) the amount of the excessive contributions, and

(b) the value (determined in the prescribed manner) of the assets of the scheme which represent contributions made by or on behalf of the individual.

(3) Subject to subsections (4) and (5), an order under section 342A must reduce the amount of the liabilities of the scheme by an amount equal to the amount of the reduction made in the value of the assets of the scheme.
(4) Subsection (3) does not apply where the individual's entitlement or accrued right to benefits under the scheme which he acquired by virtue of the excessive contributions (his "excessive entitlement") has been forfeited.
(5) Where part of the individual's excessive entitlement has been forfeited, the amount of the reduction in the liabilities of the scheme required by subsection (3) is the value of the remaining part of his excessive entitlement.
(6) An order under section 342A in respect of an occupational pension scheme shall be binding on the trustees or managers of the scheme.
Orders under section 342A: supplementary..
342C.—(1) Nothing in—

(a) any provision of section 159 of the Pension Schemes Act 1993 or 84 of the Pensions Act 1995 (which prevent assignment, or orders being made restraining a person from receiving anything which he is prevented from assigning, and make provision in relation to a person's pension on bankruptcy),

(b) any provision of any enactment (whether passed or made before or after the passing of the Pensions Act 1995) corresponding to any of the provisions mentioned in paragraph (a), or

(c) any provision of the scheme in question corresponding to any of those provisions,

applies to a court exercising its powers under section 342A.
(2) Where any sum is required by an order under section 342A to be paid to the trustee in bankruptcy, that sum shall be comprised in the bankrupt's estate.
(3) Where contributions have been made during the relevant period to any occupational pension scheme and the entitlement or accrued right to benefits acquired thereby has been transferred to a second or subsequent occupational pension scheme ("the transferee scheme"), sections 342A and 342B and this section shall apply as though the contributions had been made to the transferee scheme.
(4) For the purposes of this section and sections 342A and 342B—
1744

(a) contributions are made during the relevant period if—

(i) they are made by or on behalf of the individual at any time during the period of 5 years ending with the day of presentation of the bankruptcy petition on which the individual is adjudged bankrupt, or

(ii) they are made on behalf of the individual at any time during the period between the presentation of the petition and the commencement of the bankruptcy, and

(b) the accrued rights of an individual under an occupational pension scheme at any time are the rights which have accrued to or in respect of him at that time to future benefits under the scheme.

(5) In this section and sections 342A and 342B—
"occupational pension scheme" has the meaning given by section 1 of the Pension Schemes Act 1993, and
"trustees or managers", in relation to an occupational pension scheme, means—

(a) in the case of a scheme established under a trust, the trustees of the scheme, and

(b) in any other case, the managers of the scheme."

(2) After section 36 of the Bankruptcy (Scotland) Act 1985 there is inserted—
"Recovery of excessive pension contributions.
36A.—(1) Where a debtor's estate has been sequestrated and—

(a) he has during the relevant period made contributions as a member of an occupational pension scheme; or

(b) contributions have during the relevant period been made to such a scheme on his behalf;

the permanent trustee may apply to the court for an order under this section.
(2) If, on an application for an order under this section, the court is satisfied that the making of any of the contributions ("the excessive contributions") has unfairly prejudiced the debtor's creditors, the court may make such order as it thinks fit for restoring the position to what it would have been if the excessive contributions had not been made.
(3) The court shall, in determining whether it is satisfied under subsection (2) above, consider in particular—

(a) whether any of the contributions were made by or on behalf of the debtor for the purpose of putting assets beyond the reach of his creditors or any of them;

(b) whether the total amount of contributions made by or on behalf of the debtor (including contributions made to any other occupational pension scheme) during the relevant period was excessive in view of the debtor's circumstances at the time when they were made; and

(c) whether the level of benefits under the scheme, together with benefits under any other occupational pension scheme, to which the debtor is entitled, or is likely to become entitled, is excessive in all the circumstances of the case.

Orders under section 36A.
36B.—(1) Without prejudice to the generality of subsection (2) of section 36A of this Act, an order under that section may include provision—

1745

(a) requiring the trustees or managers of the scheme to pay an amount to the permanent trustee;

(b) reducing the amount of any benefit to which the debtor (or his spouse, widow, widower or dependant) is entitled, or to which he has an accrued right, under the scheme;

(c) reducing the amount of any benefit to which, by virtue of any assignation, commutation or surrender of the debtor's entitlement (or that of his spouse, widow, widower or dependant) or accrued right under the scheme, another person is entitled or has an accrued right;

(d) otherwise adjusting the liabilities of the scheme in respect of any such person as is mentioned in paragraph (b) or (c) above.

(2) The maximum amount by which an order under section 36A of this Act may require the assets of an occupational pension scheme to be reduced is the lesser of—

(a) the amount of the excessive contributions; and

(b) the value (determined in the prescribed manner) of the assets of the scheme which represent contributions made by or on behalf of the debtor.

(3) Subject to subsections (4) and (5) below, an order under section 36A of this Act must reduce the amount of the liabilities of the scheme by an amount equal to the amount of the reduction made in the value of the assets of the scheme.
(4) Subsection (3) above does not apply where the debtor's entitlement or accrued right to benefits under the scheme which he acquired by virtue of the excessive contributions (his "excessive entitlement") has been forfeited.
(5) Where part of the debtor's excessive entitlement has been forfeited, the amount of the reduction in the liabilities of the scheme required by subsection (3) above is the value of the remaining part of his excessive entitlement.
(6) An order under section 36A of this Act in respect of an occupational pension scheme shall be binding on the trustees or managers of the scheme.
(7) The court may, on the application of any person having an interest, review, rescind or vary an order under section 36A of this Act.
Orders under section 36A: supplementary.
36C.—(1) Nothing in—

(a) any provision of section 159 of the Pension Schemes Act 1993 or 84 of the Pensions Act 1995 (which prevent assignation, or orders being made restraining a person from receiving anything which he is prevented from assigning, and make provision in relation to a person's pension on sequestration);

(b) any provision of any enactment (whether passed or made before or after the passing of the Pensions Act 1995) corresponding to any of the provisions mentioned in paragraph (a) above; or

(c) any provision of the scheme in question corresponding to any of those provisions,

applies to a court exercising its powers under section 36A of this Act.
(2) Where any sum is required by an order under section 36A of this Act to be paid to the permanent trustee, that sum shall be comprised in the debtor's estate.
(3) Where contributions have been made during the relevant period to any occupational pension scheme and the entitlement or accrued right to benefits acquired
1746
thereby has been transferred to a second or subsequent occupational pension scheme ("the transferee scheme"), sections 36A and 36B of this Act and this section shall apply as though the contributions had been made to the transferee scheme.
(4) For the purposes of this section and sections 36A and 36B of this Act—

(a) contributions are made during the relevant period if they are made at any time during the period of 5 years ending with the date of sequestration; and

(b) the accrued rights of a debtor under an occupational pension scheme at any time are the rights which have accrued to or in respect of him at that time to future benefits under the scheme.

(5) In this section and sections 36A and 36B of this Act—
"occupational pension scheme" has the meaning given by section 1 of the Pension Schemes Act 1993; and
"trustees or managers", in relation to an
occupational pension scheme, means—

(a) in the case of a scheme established under a trust, the trustees of the scheme; and

(b) in any other case, the managers of the scheme." '.

Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 171. With it, I wish also to speak to Amendment No. 313.
This is the smallest group of amendments with which we have to deal, but although there are only two, they still look pretty formidable. Let me try to explain. Amendment No. 171 inserts a new clause into the Bill to deal with pension rights on bankruptcy. It is intended to prevent abuse by a bankrupt of the statutory protection offered to occupational pension rights under Clause 84(2) of the Bill.
The Bill protects all pension rights in occupational schemes from creditors. A trustee in bankruptcy will be able to gain access only by applying to a court for an income payments order against income payable from the pension fund.
It is right that we should protect pension rights in this way. But we must not ignore the possibility that there might be unscrupulous debtors who seek to use the statutory protection to defeat creditors. This long and complicated clause prevents such abuse by inserting provisions into the Insolvency Act 1986 for England and Wales and the Bankruptcy (Scotland) Act 1985 for Scotland. They will enable a court to order recovery of some or all occupational pension contributions paid in the five years before bankruptcy. The court would make such an order only if it believed that the contributions were excessive in that they unfairly prejudiced the interests of creditors.
The amount of the recovery will normally be limited to the amount of the contributions considered to be excessive. The court is required to take account of any fall in the value of contributions to ensure that the pension scheme does not suffer any loss.
We expect that the complexity of the application procedure and the small number of cases in which the bankrupt is likely to have made excessive pension

1747
contributions which have prejudiced creditors' interests will mean that there will be very few cases. The measure is aimed at preventing abuse. We have taken great care to ensure that the relative needs of the creditors, the individual and the pension scheme are balanced equitably.
Amendment No. 313 is designed to avoid inconsistent treatment of debtors north and south of the Border. It inserts provisions into the Bankruptcy (Scotland) Act 1985 which equate to the amendments which this Bill already makes to the Insolvency Act 1986 in relation to England and Wales. I hope that your Lordships will agree that these are useful amendments.
Moved, That the House do agree with the Commons in their Amendment No. 171.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
172 Clause 88, page 56, line 2, after '26(3)' insert 'or (4)'.
173 Page 56, line 30, leave out subsection (7).
174 Clause 93, page 59, line 38, after 'who' insert 'without reasonable excuse'.
175 Clause 94, page 60, line 32, at end insert:
'() Where a person claims a lien on a document, its production under section 90 or 91 shall be without prejudice to the lien.'
176 Clause 99, page 62, line 13, at end insert:

`The Lord Advocate.

Functions under Part I of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.'.

177 Page 63, line 48, leave out 'is permitted in the case of ' and insert 'may be made to'.
178 Clause 100, page 64, line 14, at end insert 'or any proceedings for breach of trust in relation to an occupational pension scheme'.
179 Page 64, line 36, at end insert:
'(3A) Section 96 does not preclude the disclosure by any person mentioned in subsection (1) or (3) of information obtained by the person by virtue of that subsection, if the disclosure is made with the consent of the Authority.
(3B) Section 96 does not preclude the disclosure by any person specified in the first column of the Table in section 99 of information obtained by the person by virtue of that subsection, if the disclosure is made—

(a) with the consent of the Authority, and

(b) for the purpose of enabling or assisting the person to discharge any functions specified in relation to him in the second column of the Table.

(3C) The Authority must, before deciding whether to give their consent to such a disclosure as is mentioned in subsection (3A) or (3B), take account of any representations made to them by the person seeking to make the disclosure as to the desirability of the disclosure or the necessity for it.'.
180 Clause 101, page 64, line 43, leave out 'Section 182 of the Finance Act 1989 does not preclude' and insert 'No obligation as to secrecy imposed by section 182 of the Finance Act 1989 or otherwise shall prevent'.
181 Clause 106, page 66, line 44, at end insert:
'() In the case of any such information as is mentioned
1748
in subsection (2), subsection (3) does not authorise any disclosure of that information by the Compensation Board unless made—

(a) to, or in accordance with authority duly given by, the Commissioners of Inland Revenue or the Commissioners of Customs and Excise, or

(b) with a view to the institution of, or otherwise for the purposes of, criminal proceedings under this Act or the Pension Schemes Act 1993, or any enactment in force in Northern Ireland corresponding to either of them.'.

182 Page 67, line 10, at end insert:
'() a recognised professional body (within the meaning of section 391 of the Insolvency Act 1986)'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 172 to 182 en bloc. I have
already spoken to them in an earlier debate.
Moved, That the House do agree with the Commons in their Amendments Nos. 172 to 182. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
183 Clause 106, page 67, line 18, leave out subsection (7).
184 Clause 110, page 68, line 19, leave out from 'modify' to 'in'
in line 20 and insert 'any provisions of this Part'.
185 After Clause 112, insert the following clause: —
Crown application
'.—(1) This Part applies to an occupational pension scheme managed by or on behalf of the Crown as it applies to other occupational pension schemes; and, accordingly, references in this Part to a person in his capacity as a trustee or manager of an occupational pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.
(2) References in this Part to a person in his capacity as employer in relation to an occupational pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.
(3) This section does not apply to any provision made by or under this Part under which a person may be prosecuted for an offence; but such a provision applies to persons in the public service of the Crown as it applies to other persons.
() This section does not apply to sections 37 to 40 and (Right not to suffer detriment in employment or be unfairly dismissed).
(4) Nothing in this Part applies to Her Majesty in Her private capacity (within the meaning of the Crown Proceedings Act 1947).'.
186 Clause 115, page 69, leave out lines 21 to 24.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 183 to 186 en bloc. I wish to speak also to Amendments Nos. 188 to 195, 197, 204, 268, 269, 274 to 277, 280, 281, 283, 319, 322, 329, 403 and 404.
This is a group of amendments which I can only call miscellaneous. Unkindly, your Lordships may think that they are a bit of a ragbag collection, but they are tidying up and other amendments to ensure that the Bill will work. I shall deal with one or two of the more important ones and I am happy to answer questions about any of the others.

1749
Amendment No. 184 extends the power to modify certain provisions to cover the whole of Part I of the Bill. The reason is so that we can modify the provisions to make it possible for industry-wide schemes to meet them. We discussed industry-wide schemes in previous stages of the Bill.
We always intended to ensure that industry-wide schemes should be able to continue with arrangements which are perfectly sound and sensible. But the schemes have differences that need to be catered for in secondary legislation. It has now become clear that the powers in Clause 110 do not go far enough. One particular problem arises because of features in certain types of scheme, such as the electricity supply pension scheme and the Railways Pension Trustee Company Limited. Because of these features, the existing regulation-making powers would not be sufficient to make the necessary modifications, and the amendment will allow us to achieve what was always our intention.
Amendments Nos. 183, 274 and 275 ensure that there is a definition of the word "enactment" which can apply throughout the Bill. We have a specific definition for the purposes of Clause 106, but no general definition. Amendment No. 183 removes the definition from Clause 106, and the other two amendments insert a general definition at Clause 157.
Amendment No. 269 removes Clause 154 because its purpose is the same as the new clause inserted by Amendment No. 185. This is designed to ensure that the relevant provisions in Part I of the Bill apply in the same way to public service schemes as they do to private sector schemes. Those running public service schemes will be required to comply with the obligations of Part
I which are appropriate to these schemes. They will be liable to sanction by OPRA if they fail to do so.
Amendments Nos. 186, 188, 189 and 191 to 195 clarify a number of definitions of terms used in Part I of the Bill. The most significant of these is the definition of "accrued rights". This matter was raised by my noble friend Lord Buckinghamshire. We acknowledged how important it was to make sure that we had a proper definition of accrued rights. We consulted various pension organisations and we now believe that we have what we need. These amendments provide it.
Amendment No. 268 inserts a new clause to enable public service pension schemes to recover any additional administrative costs that they incur from investment firms as a result of the mis-selling of personal pensions. This will put public service schemes in a comparable position to private sector schemes. We believe that this provision is necessary to ensure that occupational pension schemes run for civil servants, teachers, the NHS and local government employees should be able to recover the costs so that they do not fall on scheme members or taxpayers. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 183 to 186.-—(Lord Mackay of.Ardbrecknish.)
On Question, Motion agreed to.
6 p.m.

COMMONS AMENDMENTS
187 Clause 115, page 69, line 27, leave out 'a trust' and insert 'an occupational pension'.
188 Page 69, line 35, leave out from 'person' to 'who' in line 39 and insert '(other than an active or pensioner member)'.
189 Page 70, leave out lines 7 to 15.
190 Page 70, line 21, at end insert:
"member-nominated director" has the meaning given by section (Corporate trustees: member-nominated directors) (2)'.
191 Page 70, line 31, leave out 'service' and insert `employment'.
192 Page 70, line 33, leave out 'long service benefit' and insert `pension or other benefits'.
193 Page 70, line 36, leave out from 'scheme' to end of line 37 and insert 'or by reason of transfer credits, is entitled to the present payment of pension or other benefits'.
194 Page 71, line 5, leave out from `to' to 'under' in line 7 and insert 'a member'.
195 Page 71, line 18, leave out subsection (2) and insert:
`() For the purposes of this Part—

(a) the accrued rights of a member of an occupational pension scheme at any time are the rights which have accrued to or in respect of him at that time to future benefits under the scheme, and

(b) at any time when the pensionable service of a member of an occupational pension scheme is continuing, his accrued rights are to be determined as if he had opted, immediately before that time, to terminate that service;

and references to accrued pension or accrued benefits are to be interpreted accordingly.'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 187 to 195 en bloc. I spoke to these amendments in earlier debates. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 187 to 195 en bloc.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENT
196 Clause 117, Leave out Clause 117.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 196.
In moving this amendment, I should like to speak also to Amendments Nos. 266, 267 and 279. I am sure that noble Lords will recall the debate in which the noble Lord, Lord Freyberg, successfully moved a new clause providing for the restoration of war widows' pensions which had been withdrawn on remarriage. This gave rise to very strong feelings. The Government agreed that something needed to be done about the current legislation, which provides that the former war widow, having forfeited her war pension on remarriage, may not subsequently become re-entitled to that pension. Amendment No. 196 tidies up the wording of the noble Lord's amendment, and also adds to its scope. I am sure that the noble Lord is perfectly satisfied with that.

1751
The original clause benefited only the former war widow of a member of Her Majesty's Forces. We have now gone further and included the other categories of widow, mainly non-service widows who were awarded a war widow's pension under the wide-ranging war pension schemes. Our amendment ensures that former war widows of merchant seamen—as I recall, a subject raised by one noble Lord opposite during the debate—civilians whose deaths were due to enemy action during World War II (again, raised by noble Lords opposite during the debate) or widows of former members of the Polish forces who served under British command during that war will also benefit from the proposed change.
The amendment also ensures that the change benefits former war widows who become widowed on more than two occasions. It will apply following the termination of any marriage which was subsequently entered into by a former war widow. It will also apply where the parties have been judicially separated. So it goes beyond failure of the second marriage, which was provided for in the original clause.
The amendment will benefit some 16,500 former war widows at a net cost of around £45 million in a full year. Almost 80 per cent. of war widows are aged 70 or over. A former war widow aged, let us say, between 70 and 80 will be entitled to a pension worth at least almost £143. As I believe I explained during the debate, it will be tax free. So they have the same preference as that enjoyed by widows currently receiving a war widow's pension. There will of course be the £10 disregard for income related benefit claims and for those entitled to the supplementary pension for pre-1973 war widows. That amounts currently to £49.77 a week. That will also be disregarded.
I noted that in the other place a great deal was made of the fact that only about 6,000 war widows who were eligible had applied. At the last count, earlier this week, the figure stood at over 8,000 and was rising. As this provision has not yet been enacted, it is quite clear to me that the jungle drums are beating pretty loudly on the war widows circuit. I have every confidence that the figure of 16,500 will be reached shortly after we begin to enact this particular amendment.
That leads me to Amendment No. 279. This amendment ensures that this provision will come into force on the day on which the Bill is enacted. It will therefore be among the first measures in the Bill to be implemented. That could be this month—three months earlier than we had generally expected. I am sure that this will mean that many former war widows will be delighted that the progress we have been able to make on the Bill means that they may receive the payments earlier than expected. These amendments give us all the advantages in the original clause, and add to them.
I turn now to Amendment No. 267. It introduces a new clause to provide an extension of the war pension appeal provision. It will give Polish forces who served under British command during World War II a statutory right of appeal to a war pension appeal tribunal against a decision on a claim to award a pension or war widow's pension. The Polish forces entitled to claim a war pension for death or disablement arising from service
1752
through the special arrangements set up in 1947 were given no right of appeal at that time. Polish forces who are dissatisfied are able to have their cases reviewed by a war pensions committee. But these committees can only make recommendations which are not binding on the War Pensions Agency.
I know from meetings that I have had since I became Minister in charge of war pensions that ex-service organisations feel strongly that the time has come to give the same statutory right of appeal to Polish forces as that enjoyed by British forces. That is a feeling with which I heartily concur. It is most fitting that this change can be introduced during this year of memorable World War II anniversaries. I believe that these amendments make significant improvements in the field of war pensions. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 196. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENT
197 Clause 120, page 74, line 30, leave out 'Administration Act' and insert 'Social Security Administration Act 1992'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 197. I have already spoken to this amendment.
Moved, That the House do agree with the Commons in their Amendment No. 197. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
198 After Clause 121, insert the following clause:
Up-rating of pensions increased under section 52 of the
Social Security Contributions and Benefits Act,
.—(1) For section 156 of the Social Security Administration Act 1992 there is substituted—
"Up-rating under section 150 above of pensions increased under section 52(3) of the Contributions and Benefits Act.
.—(1) This section applies in any case where a person is entitled to a Category A retirement pension with an increase, under section 52(3) of the Contributions and Benefits Act, in the additional pension on account of the contributions of a spouse who has died.
(2) Where in the case of any up-rating order under section 150 above—

(a) the spouse's final relevant year is the tax year preceding the tax year in which the up-rating order comes into force, but

(b) the person's final relevant year was an earlier tax year,

then the up-rating order shall not have effect in relation to that part of the additional pension which is attributable to the spouse's contributions.
(3) Where in the case of any up-rating order under section 150 above—

(a) the person's final relevant year is the tax year preceding the tax year in which the up-rating order comes into force, but

(b) the spouse's final relevant year was an earlier tax year,

then the up-rating order shall not have effect in relation to that part of the additional pension which is attributable to the person's contributions."
(2) In section 151(1) of that Act (effect of up-rating orders on additional pensions), after "and shall apply" there is inserted "subject to section 156 and". '.
199 Insert the following clause:
Graduated retirement benefit
'.—(1) In section 62(1) of the Social Security Contributions and Benefits Act 1992 (graduated retirement benefit), after paragraph (a) there is inserted—
"(aa) for amending section 36(7) of that Act (persons to be treated as receiving nominal retirement pension) so that where a person has claimed a Category A or Category B retirement pension but—

(i) because of an election under section 54(1) above, or

(ii) because he has withdrawn his claim for the pension,

he is not entitled to such a pension, he is not to be treated for the purposes of the preceding provisions of that section as receiving such a pension at a nominal weekly rate;"
(2) In section 150(11) of the Social Security Administration Act 1992 (application of up-rating provisions to graduated retirement benefit) for the words following "provisions of this section" there is substituted—

"(a) to the amount of graduated retirement benefit payable for each unit of graduated contributions,

(b) to increases of such benefit under any provisions made by virtue of section 24(1) (b) of the Social Security Pensions Act 1975 or section 62(1) o (a) of the Contributions and Benefits Act, and

(c) to any addition under section 37(1) of the National Insurance Act 1965 (addition to weekly rate of retirement pension for widows and widowers) to the amount of such benefit."

(3) In section 155(7) of that Act (effect of alteration of rates of graduated retirement benefit) for the words following "provisions of this section" there is substituted—

"(a) to the amount of graduated retirement benefit payable for each unit of graduated contributions,

(b) to increases of such benefit under any provisions made by virtue of section 24(1) (b) of the Social Security Pensions Act 1975 or section 62(1) (a) of the Contributions and Benefits Act, and

(c) to any addition under section 37(1) of the National Insurance Act 1965 (addition to weekly rate of retirement pension for widows and widowers) to the amount of such benefit". '.

200 Insert the following clause:
Extension of Christmas Bonus for pensioners
`.—(1) Section 150 of the Social Security Contributions and Benefits Act 1992 (Christmas bonus: interpretation) is amended as follows.
(2) In subsection (1), after paragraph (k) there is inserted—
"(1) a mobility supplement".
(3) In subsection (2)—

(a) after the definition of "attendance allowance" there is inserted—
1754
"mobility supplement" means a supplement awarded in respect of disablement which affects a person's ability to walk and for which the person is in receipt of war disablement pension;"

(b) in the definition of "retirement pension", "if paid periodically" is omitted,

(c) in paragraph (b) of the definition of "unemployability supplement or allowance", after sub-paragraph (iv) there is inserted "or

(v) under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939."
and accordingly, the "or" immediately following sub-paragraph (iii) is omitted.'.
201 Insert the following clause:
Contributions paid in error
'. After section 61 of the Social Security Contributions and Benefits Act 1992 there is inserted—
"Contributions paid in error
61A.—(1) This section applies in the case of any individual if—

(a) the individual has paid amounts by way of primary Class I contributions which, because the individual was not an employed earner, were paid in error, and

(b) prescribed conditions are satisfied.

(2) Regulations may, where—

(a) this section applies in the case of any individual, and

(b) the Secretary of State is of the opinion that it is appropriate for the regulations to apply to the individual,

provide for entitlement to, and the amount of, additional pension to be determined as if the individual had been an employed earner and, accordingly, those contributions had been properly paid.
(3) The reference in subsection (2) above to additional pension is to additional pension for the individual or the individual's spouse falling to be calculated under section 45 above for the purposes of—

(a) Category A retirement pension,

(b) Category B retirement pension for widows or widowers,

(c) widowed mother's allowance and widow's pension, and

(d) incapacity benefit (except in transitional cases).

(4) Regulations may, where—

(a) this section applies in the case of any individual, and

(b) the Secretary of State is of the opinion that it is appropriate for regulations made by virtue of section 4(8) of the Social Security (Incapacity for Work) Act 1994 (provision during transition from invalidity benefit to incapacity benefit for incapacity benefit to include the additional pension element of invalidity pension) to have the following effect in the case of the individual,

provide for the regulations made by virtue of that section to have effect as if, in relation to the provisions in force before the commencement of that section with respect to that additional pension element, the individual had been an employed earner and, accordingly, the contributions had been properly paid.
(5) Where such provision made by regulations as is mentioned in subsection (2) or (4) above applies in respect of any individual, regulations under paragraph 8(1) (m) of Schedule 1 to this Act may not require the amounts paid by way of primary Class I contributions to be repaid.
(6) Regulations may provide, where—

(a) such provision made by regulations as is mentioned in subsection (2) or (4) above applies in respect of any individual,

(b) prescribed conditions are satisfied, and

(c) any amount calculated by reference to the contributions in question has been paid in respect of that individual by way of minimum contributions under section 43 of the Pension Schemes Act 1993 (contributions to personal pension schemes),

for that individual to be treated for the purposes of that Act as if that individual had been an employed earner and, accordingly, the amount had been properly paid".'.
202 Clause 122, page 75, line 9, at beginning insert:
'() In section 23(1) of the Social Security Contributions and Benefits Act 1992 (contribution conditions: supplemental), for "22(1) (a)" there is substituted "22(1)".
() Section 54(4) of that Act (effect on advance claims for retirement pension of deferral of entitlement) is omitted.
() For section 55 of that Act (deferred entitlement) there is substituted—
"Increase of retirement pension where entitlement is deferred.
55.—(1) Where a person's entitlement to a Category A or Category B retirement pension is deferred, Schedule 5 to this Act shall have effect for increasing the rate of pension.
(2) For the purposes of this Act a person's entitlement to a Category A or Category B retirement pension is 'deferred' if and so long as that person—

(a) does not become entitled to that pension by reason only—

(i) of not satisfying the conditions of section 1 of the Administration Act (entitlement to benefit dependent on claim), or

(ii) in the case of a Category B retirement pension payable by virtue of a spouse's contributions, of the spouse not satisfying those conditions with respect to his Category A retirement pension; or

(b) in consequence of an election under section 54(1) above, falls to be treated as not having become entitled to that pension;

and, in relation to any such pension, 'period of deferment' shall be construed accordingly".'.
203 Page 75, line 9, leave out 'the Social Security Contributions and Benefits Act 1992' and insert 'that Act'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 198 to 203 en bloc. I wish to speak also to Amendments Nos. 236, 327, 328, 330 and 381.
This group of amendments deals with national insurance contributions and benefits. It covers a great deal of ground, although many of these amendments, despite looking extremely complicated, are designed to tidy up existing legislation.
Amendment No. 198 changes a highly technical provision of the benefits uprating legislation which does not fully reflect what is intended. It deals with legislation which is deficient and in which those who went before us did not quite reflect their intention in the legislative provision.
1756
Amendment No. 199 makes changes to the graduated retirement benefit to deal with entitlements where there is no entitlement to retirement pension as such. Perhaps it will suffice for me to reassure your Lordships that this is a tidying-up amendment to validate existing practice and put the matter beyond doubt. It will not affect the way in which we treat anyone in terms of the payments that they receive.
Amendment No. 201 deals with the problem that results from employees and self-employed people paying different rates of national insurance contributions. That is reflected in a slightly narrower range of benefits available to the self-employed. Although they are eligible for the basic state retirement pension, they do not generally qualify for the state earnings related pension, or SERPS as it is more generally known.
It is usually clear into which category a person's employment falls. But difficulties can occur when the contractual arrangements under which an individual works are not clear cut. That can result in someone being treated as an employee and erroneously paying Class 1 contributions. If it is then found that the engagement amounted to self-employment, current legislation requires that a refund of the difference between the contributions paid and the self-employed contributions that should have been paid should be offered. Any benefits awarded to which the individuals would not have been entitled had they paid self-employed contributions must be recovered. Future entitlement to benefit will be based on the revised record.
Someone in that position would lose SERPS rights which they believed that they had accrued. An error that has gone on, say, for some years, would mean that any refund would almost certainly be insufficient to make equivalent private provision to replace the lost rights, and the pension of someone who had retired would be reduced accordingly. Such a situation has arisen in respect of certain workers in the television and film industries.
We decided that it would be right to introduce some additional flexibility and this new clause is designed to achieve that. It would allow individuals to choose not to receive a refund and to keep their SERPS entitlement as if the erroneously paid Class 1 contributions had been properly paid. Contributions made to personal pension schemes will also be able to stand. Nothing will prevent individuals from applying for a refund, if that is what they want. The engager will be able to receive a refund of the contributions that he has paid in the normal way.
Such circumstances do not crop up every day but they cause genuine concern when they do. I believe that this welcome provision will enable us to deal with them.
Amendment No. 202 corrects an error which occurred during the consolidation of legislation on the Social Security Contributions and Benefits Act 1992. Again, I should be prepared to explain this amendment in some detail, but I can assure the House that our proposal simply validates existing practice so that it will not change what is happening in practice.

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Amendment No. 236 amends the provisions so that earnings paid from different employments are aggregated to determine the national insurance contributions that are due. The provision will apply only if an employee with different pensions arrangements has more than one employment with the same or with associated employers and the earnings have to be aggregated for calculating national insurance contributions. That does not happen very often. We estimate that fewer than 100 people a year will he affected. In simple terms, it will mean that people with a personal pension scheme will have contributions paid into it. We intend to bring this provision into effect from April 1996.
The amendment also provides for the rebate to be allocated to contracted-out money purchase scheme pensions ahead of contracted-out salary related schemes. That will maximise the entitlement of the individual in such cases. The change will come into effect from April 1997.
I turn now to Amendment No. 327. This amendment reverses the effect of the amendment which the noble Baroness and noble Lords opposite were successful in inserting into the Bill at Committee stage. Amendment No. 327 returns us to the original intentions.
The amendment which was passed in your Lordships' House would have had effect from the year 2023, when the first contributors who had been in SERPS for 44 years would reach state pension age. It would allow anyone to drop five years of nil or low earnings from their SERPS calculation. Those who stand to gain most would be people who had earnings at the level of the national insurance upper earnings limit for the greater part of their working lives but who had a few years of nil or low earnings. It would particularly help those who retired early.
Amendment No. 327 returns us to the position in which, once SERPS matures, the calculation would be based on reckonable earnings over the whole working life. Our proposals will ensure the continued affordability of the SERPS scheme into the future while protecting the position of vulnerable groups. We have made arrangements to cushion the impact of our reforms on people who would have particular difficulty in building up additional pension provision. We have confirmed that we shall fulfil our commitment to bring in the necessary regulations to extend home responsibilities protection to SERPS. That will allow for up to more than half the working life to be disregarded in the SERPS calculation for those with caring responsibilities and those receiving incapacity benefits. The Bill also introduces a measure to provide help for families and working disabled people with low incomes on family credit and disability working allowance to improve their additional pension entitlements.
The best 44 years provision would have made inroads into the steps that we have already taken to put SERPS on a long-term sustainable basis. It would raise long-term expenditure in a way which I can only describe as poorly targeted, because high earning men would gain as well as low earning women. This amendment puts us back on track and I urge noble Lords to accept it.
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Amendment No. 200 is essentially a tidying-up amendment. There is an anomaly in the legislation because the mobility component of disability living allowance qualifies for a Christmas bonus but the war pensions equivalent does not. That distinction was never intended. Payments have in fact been made to war pensioners on an extra-statutory basis, but we should like to set the matter right in legislation. These amendments will validate existing practice. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 198 to 203.—(Lord Mackay of Ardbrecknish.)
6.15 p.m.
Baroness Hollis of Heigham: My Lords, I should like to speak to Amendment No. 327, which removes the amendment won in your Lordships' House. That would have allowed SERPS to be drawn from the 44 best years rather than 49 years.
I am very sorry that the Government are being so churlish and mean on such an amendment. We pressed this amendment in your Lordships' House in order to save public funds on social security expenditure. The Government were equalising state pension age and retirement age for women, raising it from 60 to 65 years. So women are to work five years longer. But because they work five years longer, and being older and perhaps a little more frail, they are more likely also to suffer reduced earnings. So working five years longer, usually at somewhat lower rates, meant that they were working five years longer for a lower pension than they would have had if they had retired five years earlier at age 60, as the scheme would be now.
We argued that by floating off those five weakest years—not necessarily at nil or even low earnings, but at somewhat lower than the optimal earnings—women, though working five years longer, would not be the poorer as a result. It was at least some well targeted, modest compensation for the fact that women are working longer.
The Government now seek to remove that amendment—I am sure that their Motion will go through—by saying that it was poorly targeted and would benefit highly paid men as well as low paid women. That is nonsense. I do not know any highly paid men who are in SERPS as opposed to having opted out into an occupational pension or private scheme. It is absurd to think that highly paid men are in SERPS. We know that those who remain in SERPS are precisely those who do not have access to occupational pensions or private pension provision. They are low paid women and low paid men.
The problem with the amendment is that, far from being poorly targeted, it was targeted all too well. It was targeted at women who were being asked to work longer for less, and targeted at men in such low paid work that they never merited moving into an occupational scheme. Because it was targeted all too well and because it did something to mitigate the effect of this Bill on low paid women and low paid men, the Government have chosen to overturn it. That is churlish and ungenerous. When we look at the increasing division in society in terms of

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incomes, as substantiated by the Rowntree Report and the like, the Government are parachuting all the worst features of growing insecurity and poverty among women and low paid men in the world of work into the world of retirement as well.
I have to say, "Shame on the Government" for overturning an amendment that we could have afforded; that was well targeted; and that would have stopped women at least from having to work longer for less. The Government's behaviour on this issue is churlish and mean. I hope the signal will go out that, for all their talk about a society at ease with itself, as soon as we try to do something to give that legislative impact the Government overturn it as speedily and as quietly as they can. That is deplorable.
On Question, Motion agreed to.

COMMONS AMENDMENT
204 Clause 124, page 75, line 39, leave out 'Chapter' and insert 'Part'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 204. I have already spoken to this amendment. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 204.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
205 Clause 124, page 76, line 28, after 'which' insert:
'(i)'.
206 Page 76, line 29, after 'scheme' insert 'and
(ii) may include a requirement that, if the only members of the scheme were those falling within any prescribed class or description, the scheme would comply with section 12A'
207 Page 76, line 36, at end insert:
'() In subsection (3) of that section (requirement for protected rights, etc.) after "case" in paragraph (a) there is inserted—
"(aa) the Secretary of State is satisfied that the scheme does not fall within a prescribed class or description".'.
208 Page 76, line 44, at beginning insert 'Subject to regulations made by virtue of section 9(2B) (c) (ii)'.
209 Page 77, line 10, leave out 'the' and insert 'a'.
210 Page 77, line 15, leave out 'the' and insert 'a'.
211 Page 77, line 23, leave out first 'the' and insert 'a'.
212 Page 77, line 23, leave out 'the actuary of the scheme' and insert 'an actuary (who, except in prescribed circumstances, must be the actuary appointed for the scheme in pursuance of section 41 of the Pensions Act 1995).'
213 Page 79, line 2, after 'pensions' insert:
'() the discharge of any liability to provide pensions under a relevant scheme'.
214 Clause 125, page 81, line 5, after 'week' insert 'in respect of that employment'.
215 Page 81, line 11, after 'shall' insert 'except in prescribed circumstances or in respect of prescribed periods'.
216 Page 81, line 13, after 'scheme' insert 'or, in prescribed circumstances, to a prescribed person'.
217 Page 81, line 19, after 'provision' insert '(a)'.
218 Page 81, line 21, at end insert:
'(b) for the adjustment of the amount which would otherwise be payable under that subsection so as to avoid the payment of trivial or fractional amounts,
(c) for earnings to be calculated or estimated in such manner and on such basis as may be prescribed for the purpose of determining whether any, and if so what, payments under subsection (3) are to be made'.
219 Page 81, line 23, after 'pay' insert 'or is not required to pay to the person to whom, or in respect of whom, he pays it'.
220 Page 81, line 34, leave out 'subsection (2)' and insert 'this section'.
221 Clause 126, page 83, line 18, after 'week' insert '(other than earnings in respect of contracted-out employment)'.
222 Page 83, line 21, at end insert:
'() In subsection (3) (e), the words following "prescribed period" are omitted'.
223 Clause 127, page 84, line 24, leave out 'minimum payments' and insert 'payments under section 42A (3)'.
224 Clause 128, page 84, line 42, at end insert 'and section 45A of that Act did not apply (where it would, apart from this subsection, apply)'.
225 Page 85, leave out lines 10 to 16.
226 Page 85, line 23, at beginning insert 'In'.
227 Page 85, line 25, after 'benefits)' insert 'in subsection (2), paragraph (b) is omitted and, in paragraph (c), "if the earner dies before reaching pensionable age" is omitted.
() Section 48 of that Act'.
228 Clause 129, page 86, line 47, at end insert 'including provision requiring the Secretary of State to apply whichever prescribed actuarial table in force at the appropriate time is applicable'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 205 to 228 en bloc. In doing so I should like to speak also to Amendments Nos 237, 270, 272, 282, 331 to 333, 336, 338, 340 to 352, 354 to 369, 372, 373, 382, 385 to 390 and 392 to 402. We now come to a group of amendments dealing with contracting out. I confess that I find these particularly difficult to follow since, for the most part, they amend existing legislation rather than stand alone, as did many of the previous amendments.
Amendments Nos. 205, 206 and 207 amend Clause 124 which introduces the new contracting-out system for salary-related schemes. The scheme actuary will carry out detailed actuarial calculations to certify that a scheme satisfies the new test of overall scheme quality. The Bill specifies the minimum statutory benefits required under the reference scheme and the actuary will certify, with the aid of a professional guidance note, that a scheme delivers pensions which are broadly equivalent to, or better than, those provided under the reference scheme. These amendments help in the definition of the concept of "broad equivalence" and will add to the protection for members under the new test.
Amendments Nos. 205 and 206 are needed to allow regulations to prescribe which members in occupational pension schemes should be taken into account when considering whether a scheme meets the statutory

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standards. We intend to use this power to deal with schemes comprising different sections with different benefit packages.
Perhaps I can say a word at this stage about an amendment that is not needed. We have given further consideration to the potential risk which must exist in any scheme-based test that an employer might skew his scheme. Some members could receive very large pensions and others very little, but the scheme could still pass the test on an overall basis. We have consulted key groups on this issue, including the Institute of Actuaries, the Faculty of Actuaries, the Occupational Pensions Board, the TUC and the Occupational Pension Schemes Joint Working Group.
We intend to bring forward regulations which will set out the criteria for determining whether pensions are broadly equivalent to, or better than, the reference scheme. We propose to prescribe that an actuary could not certify unless 90 per cent. of members could expect to receive pensions as good as the reference scheme level. That should achieve our objective to protect scheme members by preventing any deliberate skewing of benefits in order to manipulate the level of the test. Some concern was expressed in the other place as to whether this was an appropriate use of the powers in new Section 12A. We are satisfied that regulations such as we propose can indeed be made under the powers provided in Section 12A (4).
The fundamental point about the new contracting-out arrangements is that additional pensions under SERPS will no longer accrue for periods during which people are in contracted-out employment. Amendment No. 224 is designed to put beyond doubt that payments of family credit or disability working allowance should not be treated as qualifying earnings for the purpose of calculating SERPS.
Amendment No. 215 provides two new powers in relation to payment of the top-up part of the age-related rebate for contracted-out money purchase schemes, which the man on the Clapham omnibus knows as COMPS. It allows payment of the top-up to be withheld in prescribed circumstances, and in respect of prescribed periods.
The power will be used in cases where the pension rights have been transferred from the COMPS to another scheme before payment of the top-up can be made. Although the top-up will be offered to the new scheme, in some cases the new scheme may refuse to accept the payment. To minimise the chances of an individual losing some rebate in these circumstances, we will be introducing two measures. First, there will be a fast-track payment system for anyone taking a transfer from a COMPS to a salary-related scheme. That will ensure that most, if not all, of the rebate will be included in the transfer payment.
Secondly, we will ensure that anyone considering a transfer of this kind is advised of what may happen should a further payment of top-up rebate arise. The power to withhold the top-up in respect of prescribed periods will be used in respect of the tax year in which state pension age is reached. In that year no SERPS accrues. Since age-related rebates are designed to replace the SERPS given up by contracting out in each
1762
particular year, the actuarially "correct" level of rebate would be zero. That would cause some difficulty because a zero rate of rebate would mean increasing employees' and employers' national insurance liability that year. That would be administratively complicated. We have decided therefore that COMPS members and their employers should continue to receive the flat rate portion of the rebate up to the time they reach state pension age. Amendment No. 216 ensures that people transferring from a COMPS to another contracted-out scheme do not suffer a delay in receiving their rebate. The amendment provides a power to prescribe situations in which the top-up shall be paid to a party other than the scheme to which the earner belonged at the time the entitlement to that payment arose. It will ensure that no extra burdens are placed on schemes by requiring them to pass on further payments following a transfer.
To some extent Amendment No. 348 mirrors Amendment No. 215. It provides a power to prescribe periods in respect of which no appropriate personal pension rebate will be payable. This power will be used to provide that no rebate will be paid in respect of the year in which state pension age is attained since no SERPS accrues in that year. The difference is that this measure will have no effect on the take-home pay of the individuals concerned since they pay full rate national insurance contributions and the rebate is paid directly by the DSS. The administrative problems which arise with COMPS do not therefore arise in this case.
Amendments Nos. 237, 272 and 273 will increase the flexibility for "hybrid" occupational pension schemes to contract out of SERPS. They allow occupational pension schemes to contract out while holding both defined benefits and defined contribution contracted-out benefits. Hybrid schemes will be able to offer a number of different benefit patterns. They will allow different members to be contracted out by different routes within the same scheme, and the same member to be contracted out under a scheme by different routes in respect of different periods.
6.30 p.m.
Baroness Hollis of Heigham: My Lords, the Minister referred to Amendment No. 273. That is not in this group.
Lord Mackay of Ardbrecknish: My Lords, I did say Amendment No. 273. The noble Baroness is quite right. Clearly, she is listening. I was performing a little test to see whether everyone was listening. I should not have said Amendment No. 273. I should have said Amendment No. 237. This will probably not be the first time I get my numbers mixed up—and a great number there are.
I was talking about hybrid schemes. The new clause inserted by the amendment is a positive response to points raised during consultation and which arose in the other place. It will allow considerable scope for prescribing conditions in regulations to allow us to consider the consequential amendments which may be needed to make this work properly. This is a wide-ranging regulation-making power and we have

1763
therefore concluded that any regulations made under it should be exercised by the affirmative resolution procedure. Amendment No. 237 achieves that.
Amendments Nos. 338, 341, 354 to 359, 361 to 369, 372, 373, 385, 392 to 397 and 399 to 401 are designed to simplify the legislation. That may not at first sight appear to be apparent. However, they concern the legislation relating to determining and reviewing procedures covering contracted out matters. They will allow the contributions agency to deal with administrative matters such as the issue, variation and withdrawal of contracting out certificates. Our intention is broadly to mirror in regulations the arrangements currently followed by the Occupational Pensions Board. Other areas where there may be disputes, such as the questions about whether an employment is or should be treated as contracted out, will follow the established procedures which are set out in Section 17 of the Social Security Administration Act 1992. We believe that this will provide a more streamlined and logical structure to the legislation covering determination and reviews.
I have attempted to give a very brief but magical mystery tour along the motorway of contracting out. There are some byways which I have not gone down. But if some noble Lords wish me to go down a byway, I shall do my best to deal with any points that arise. Perhaps I may say a word for clarification. Amendment No. 273 is not in this group. I should have said Amendment No. 237. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 205 to 228.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
229 Clause 130, page 87, line 20, after 'rights' insert '(a)'.
230 Page 87, line 22, after 'which' insert '(i)'.
231 Page 87, line 22, at end insert:
'(ii) satisfies such conditions as may be prescribed, and
(b) at the end of the interim period, in such of the ways permitted by the following subsections as the rules of the scheme may specify." '.
232 Page 87, line 27, leave out '(1A)' and insert '(OA) (a)'.
233 After Clause 132, insert the following clause:
Extension of interim arrangements to occupational pension Schemes
'. Regulations made by the Secretary of State may provide that sections 130 to 132 shall have effect, subject to prescribed modifications, in relation to protected rights under an occupational pension scheme as they have effect in relation to protected rights under a personal pension scheme.'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 229 to 233. This time I am happy to tell the House that I have no other amendments to speak to in this group.
This group of amendments deal with flexible annuities. Amendments Nos. 229 to 232 are about interim arrangements which will allow people to withdraw income from their personal pension fund
1764
before committing it to buying an annuity. They deal with situations where someone dies without leaving a widow or widower during the period when they are withdrawing income in this way or where a widow or widower dies. The Association of British Insurers has alerted us to the fact that the Bill does not deal adequately with these situations. We intend that the residual fund of protected rights should pass to the estate of the deceased. These amendments will provide the power to make regulations so that we can set these arrangements out in more detail.
The new clause inserted into the Bill by Amendment No. 233 builds on the arrangements in the Bill to permit income withdrawal from protected rights in a personal pension. These are the rights built up from contracted out national insurance contribution rebates. The purpose of the new clause is to pave the way for regulations which will allow members of contracted out money purchase occupational pension schemes to enjoy a similar facility at some point in the future.
There has been a wide welcome for flexible annuities. A number of people in the pensions world and elsewhere have asked why the arrangements do not also extend to money purchase occupational pension schemes. That point was made by the noble Lord, Lord Haskel, on 21st February. I explained then that there was a very different tax regime for occupational schemes but that we were prepared to consider ideas for introducing more flexibility. We have listened carefully to the debate. We recognise the strength of the argument for treating money purchase occupational schemes in a similar way to personal pensions. The Inland Revenue is even now working on this. Discussions on the detailed arrangements for money purchase occupational pension schemes are being held with the occupational pensions scheme joint working group. We shall then consult about the precise arrangements for dealing with protected rights. This will include when any new arrangements should start. So the powers in this new clause will allow us to bring forward regulations to extend flexible annuities to money purchase occupational schemes. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 229 to 233.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
234 After Clause 132, insert the following clause:
Discharge of protected rights on winding up: insurance Policies
'.—(1) After section 32 of the Pension Schemes Act 1993 there is inserted—
"Discharge of protected rights on winding up: insurance policies.
32A.—(1) Where an occupational pension scheme is being wound up and such conditions as may be prescribed are satisfied, effect may be given to the protected rights of a member of the scheme (in spite of section 28) by—

(a) taking out an appropriate policy of insurance, or a number of such policies, under which the member is the beneficiary, or

1765

(b) assuring the benefits of a policy of insurance, or a number of such policies, to the member, where the policy assured is an appropriate policy.

(2) A policy of insurance is appropriate for the purposes of this section if—

(a) the insurance company with which it is or was taken out or entered into—

(i) is, or was at the time when the policy was taken out or (as the case may be) the benefit of it was assured, carrying on ordinary long-term insurance business (within the meaning of the Insurance Companies Act 1982) in the United Kingdom or any other member State, and

(ii) satisfies, or at that time satisfied, prescribed requirements, and

(b) it may not be assigned or surrendered except on conditions which satisfy such requirements as may be prescribed, and

(c) it contains or is endorsed with terms whose effect is that the amount secured by it may not be commuted except on conditions which satisfy such requirements as may be prescribed, and

(d) it satisfies such other requirements as may be prescribed".

(2) At the end of section 28 of that Act, as amended by this Act, (ways of giving effect to protected rights) there is inserted—
"(9) This section is subject to section 32A".'.
235 After Clause 132, page 90, line 4, leave out 'the' and insert 'an'.
236 After Clause 133, insert the following clause:—
Earner employed in more than one employment
'.—(1) Paragraph 1 of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (Class 1 contributions where earner in more than one employment) is amended as follows.
(2) For sub-paragraph (3) there is substituted—
"(3) The amount of the primary Class 1 contribution shall be the aggregate of the amounts determined under the following paragraphs (applying earlier paragraphs before later ones)—

(a) if the aggregated earnings are paid to or for the benefit of an earner in respect of whom minimum contributions are payable under section 43(1) of the Pension Schemes Act 1993 (contributions to personal pension schemes), the amount obtained by applying the rate of primary Class 1 contributions that would apply if all the aggregated earnings were attributable to employments which are not contracted-out to such part of the aggregated earnings so attributable as does not exceed the current upper earnings limit (referred to in this paragraph as "the APPS earnings"),

(b) if some of the aggregated earnings are attributable to COMPS service, the amount obtained by applying the rate of primary Class 1 contributions that would apply if all the aggregated earnings were attributable to COMPS service—

(i) to such part of the aggregated earnings attributable to COMPS service as does not exceed the current upper earnings limit, or

1766

(ii) if paragraph (a) applies, to such part of the earnings attributable to COMPS service as, when added to the APPS earnings, does not exceed the current upper earnings limit,

(c) if some of the aggregated earnings are attributable to COSRS service, the amount obtained by applying the rate of primary Class 1 contributions that would apply if all the aggregated earnings were attributable to COSRS service—

(i) to such part of the aggregated earnings attributable to COSRS service as does not exceed the current upper earnings limit, or

(ii) if paragraph (a) or (b) applies, to such part of the earnings attributable to COSRS service as, when added to the APPS earnings or the part attributable to COMPS service (or both), does not exceed the current upper earnings limit,

(d) the amount obtained by applying the rate of primary Class I contributions that would apply if all the aggregated earnings were attributable to employments which are not contracted-out to such part of the aggregated earnings as, when added to the part or parts attributable to COMPS or COSRS service, does not exceed the current upper earnings limit".

(3) For sub-paragraph (6) there is substituted—
"(6) The amount of the secondary Class I contribution shall be the aggregate of the amounts determined under the following paragraphs (applying earlier paragraphs before later ones)—

(a) if the aggregated earnings are paid to or for the benefit of an earner in respect of whom minimum contributions are payable under section 43(1) of the Pension Schemes Act 1993, the amount obtained by applying the rate of secondary Class 1 contributions that would apply if all the aggregated earnings were attributable to employments which are not contracted-out to the APPS earnings,

(b) if some of the aggregated earnings are attributable to COMPS service, the amount obtained by applying the rate of secondary Class 1 contributions that would apply if all the aggregated earnings were attributable to COMPS service to the part of the aggregated earnings attributable to such service,

(c) if some of the aggregated earnings are attributable to COSRS service, the amount obtained by applying the rate of secondary Class 1 contributions that would apply if all the aggregated earnings were attributable to COSRS service to the part of the aggregated earnings attributable to such service,

(d) the amount obtained by applying the rate of secondary Class 1 contributions that would apply if all the aggregated earnings were attributable to employments which are not contracted-out to the remainder of the aggregated earnings".

(4) At the end of that paragraph there is added—
"(9) In this paragraph—
"COMPS service" means service in employment in respect of which minimum payments are made to a money purchase contracted-out scheme,

1767
"COSRS service" means service in employment which qualifies the earner for a pension provided by a salary related contracted-out scheme".
(5) Until the principal appointed day, that paragraph, as amended by this section, shall have effect as if—

(a) for sub-paragraph (3) (b) there were substituted—

"(b) if some of the aggregated earnings are attributable to service in contracted-out employment, the amount obtained by applying the rate of primary Class 1 contributions that would apply if all the aggregated earnings were attributable to such service—

(i) to such part of the aggregated earnings attributable to such service as does not exceed the current upper earnings limit, or

(ii) if paragraph (a) applies, to such part of the earnings attributable to such service as, when added to the APPS earnings, does not exceed the current upper earnings limit",

(b) sub-paragraph (3) (c) were omitted,

(c) in sub-paragraph (3) (d), for "COMPS or COSRS service" there were substituted "service in contracted-out employment",

(d) for sub-paragraph (6) (b) there were substituted—

"(b) if some of the aggregated earnings are attributable to service in contracted-out employment, the amount obtained by applying the rate of secondary Class 1 contributions that would apply if all the aggregated earnings were attributable to such service to the part of the aggregated earnings attributable to such service",

(e) sub-paragraph (6) (c) were omitted, and

(f) in sub-paragraph (9) the definitions of "COMPS service" and "COSRS service" were omitted.'.

237 After Clause 133, insert the following clause:
Hybrid occupational pension schemes
'.—(1) In spite of anything in sections 9 and 12 of the Pension Schemes Act 1993 (requirements for certification and determination of basis on which scheme is contracted-out), the Secretary of State may by regulations provide, where the pensions provided by an occupational pension scheme include both—

(a) such pensions that, if the scheme provided only those pensions, it would satisfy section 9(2) of that Act, and

(b) such other pensions that, if the scheme provided only those other pensions, it would satisfy section 9(3) of that Act,

for Part III of that Act to have effect as if the scheme were two separate schemes providing, respectively, the pensions referred to in paragraphs (a) and (b).
(2) Regulations made by the Secretary of State may, in connection with any provision made by virtue of subsection (1), make such modifications of the following Acts, and the instruments made or having effect as if made under them, as appear to the Secretary of State desirable: the Social Security Contributions and Benefits Act 1992, the Pension Schemes Act 1993 and Part I of this Act.'.
238 Clause 139, page 93, line 12, leave out 'a prescribed amount' and insert 'an amount specified in the regulations; and the regulations must specify different amounts in the case of individuals from those specified in other cases and any amount so specified may not exceed the amount for the
1768
time being specified in the case of individuals or, as the case may be, others in section 10(1A) (a) of the Pensions Act 1995.
() Regulations made by virtue of subsection (4) do not affect the amount of any penalty recoverable under that subsection by reason of an act or omission occurring before the regulations are made.'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 234 to 238. I have already spoken to these amendments. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 234 to 238.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
239 Clause 140, page 94, line 35, leave out 'and the Treasury'.
240 Page 94, line 38, leave out 'and the Treasury'.
241 Clause 142, page 97, leave out lines 21 and 22 and insert:
'(c) for the payment by the Ombudsman of such travelling and other allowances (including compensation for loss of remunerative time) as the Secretary of State may determine, to—

(i) actual or potential beneficiaries of a scheme to which a complaint or reference relates, or

(ii) persons appearing and being heard on behalf of such actual or potential beneficiaries,

who attend at the request of the Ombudsman any oral hearing held in connection with an investigation into the complaint or dispute.", and'.
242 Clause 144, page 98, line 22, leave out 'the trustees or managers' and insert 'a person responsible for the management'.
243 Page 98, line 26, leave out 'for the prescribed period'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 239 to 243. At the same time I wish to speak also to Amendments Nos. 370 and 371. This group contains amendments which, I hope your Lordships will agree, improve the provisions for the pensions ombudsman. Amendment No. 241 will allow rules to be made providing for the ombudsman to pay travelling and other allowances to individuals when they are invited to attend oral hearings. Amendment No. 242 replaces the reference to the trustees or managers of an occupational or personal pension scheme with a reference to those responsible for the management of the scheme. This brings Clause 144 into line with the changes made by Clause 141 to the ombudsman provisions in Section 146 of the Pension Schemes Act. It will ensure that the ombudsman can include interest in any direction he makes involving late payment of benefits.
Amendment No. 243 removes the power to make regulations to specify the period for which interest should be awarded. The ombudsman is best able to decide the period for which interest should be paid. This amendment will ensure that he has discretion to do so.

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Amendment No. 371 will simplify the procedures in Scotland by which a complainant can enforce a determination of the pensions ombudsman. It will ensure that the enforcement procedures in Scotland are as simple and as straightforward as those already provided for in England and Wales. Although these may seem to he comparatively minor amendments, they are nevertheless useful.
This may be the last time that I shall be on my feet this afternoon on the Pensions Bill. Perhaps I may thank all those noble Lords who have taken a close interest in the Bill, especially for their co-operation this afternoon in moving all the Commons amendments. Although we disagree on one or two parts of the Bill, by and large I think your Lordships will agree that we are giving to the pensions world a much improved situation for looking after the position of all those people who have made pension provision for their retirement. In addition, there are the other matters we have dealt with, such as the war widow's pension. I hope that those of your Lordships who are, as I have described you before, the "season ticket holders" feel that the season ticket has been well worth it. Perhaps I may say that after today the season ticket can be returned. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 239 to 243.—(Lord Mackay of Ardbrecknish.)
Baroness Hollis of Heigham: My Lords, obviously we have no objection to these amendments. They are among the very many that we welcome. On behalf of these Benches we thank the Minister for the clarity with which he was able to take us through the very extensive business today. Obviously, we regret that in some areas he has been unable to go as far as we would wish. We are sorry about the SERPS amendment, which has tarnished somewhat the nature of the Bill which, for the most part, we welcome. As regards the return of the season ticket, my noble friend Lord Macaulay asks what arrangements is the Minister proposing to make for Friday when we have a rail strike?
Baroness Seear: My Lords, I pay tribute to the Minister for his determination and staying power. He has had three absolutely appalling Bills to put through this House. There are still some to come. He has had business piled on him pretty heavily. We appreciate his staying power and good temper. There are changes in the Bill which we very much welcome. We would have liked to have had others, but no doubt they will come in the future.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to both Baronesses. While of course I admire my own staying power, I equally admire the staying power of the noble Baronesses, Lady Hollis and Lady Seear; especially that of the noble Baroness, Lady Hollis. She has burned the midnight oil with me on this Bill as indeed on the others. Therefore, I believe that the plaudits about my stamina should be widened to include others in your Lordships' House.
On Question, Motion agreed to.

COMMONS AMENDMENTS
244 Clause 146, page 98, line 42, leave out 'made' and insert 'in respect of employment carried on'.
245 Page 99, line 2, leave out 'made' and insert 'in respect of employment carried on'.
246 Clause 147, page 99, line 22, leave out from second 'the' to end of line 25 and insert 'revaluation percentage for the revaluation period the reference period for which ends with the last preceding 30th September before the increase is made (expressions used in this definition having the same meaning as in paragraph 2 of Schedule 3 to the Pension Schemes Act 1993 (methods of revaluing accrued pension benefits)'.
247 Page 99, leave out lines 30 to 34.
248 Clause 149, page 100, line 6, at end insert 'or'.
249 Page 100, line 11, leave out from 'Registrar)' to end of line 13.
250 Page 100, line 17, leave out 'this section' and insert 'subsection (1)'.
251 Page 100, line 40, leave out subsection (4) and insert:
'(3A) Regulations may make provision for imposing a levy in respect of prescribed occupational pension schemes for the purpose of meeting expenditure of the Pensions Compensation Board (including the establishment of the Board).
(3B) Any levy imposed under subsection (3A) is payable to the Board by or on behalf of—

(a) the trustees of any prescribed occupational pension scheme, or

(b) any other prescribed person,

at prescribed times and at a rate, not exceeding the prescribed rate, determined by the Board.
(3C) In determining the amount of expenditure in respect of which any levy under subsection (3A) is to be imposed, the Board, and regulations made by virtue of subsection (3B), may take one year with another and, accordingly, may have regard to expenditure estimated to be incurred in current or future periods and to actual expenditure incurred in previous periods (including periods ending before the coming into force of this subsection).
(3D) Notice of the rates determined by the Board under subsection (3B) must be given to prescribed persons in the prescribed manner.
(4) An amount payable by a person on account of a levy imposed under this section shall be a debt due from him to the appropriate person, that is—

(a) if the levy is imposed under subsection (1), the Secretary of State, and

(b) if the levy is imposed under subsection (3A), the Board,

and an amount so payable shall be recoverable by the appropriate person accordingly or, if the appropriate person so determines, be recoverable by the Registrar on behalf of the appropriate person.'.
252 Page 100, line 43, leave out 'subsection (1)' and insert 'subsections (1) and (3A)'.
253 Page 100, line 45, after 'to' insert '(a)'.
254 Page 100, line 46, at end insert 'or
(b) the circumstances in which any such amount may be waived'.
255 Clause 150, page 101, line 8, leave out 'in the foreseeable future'.
256 Page 101, line 14, at end insert:
'and, accordingly, in relation to benefits under a pension scheme, section 25(2) (a) above shall have effect as if "in the foreseeable future" were omitted'.
257 Page 101, line 17, leave out 'in the foreseeable future'.
258 Page 101, line 28, leave out from 'such' to 'section' in line 29 and insert:
'matter.
(3) The following provisions apply where, having regard to any benefits under a pension scheme, the court determines to make an order under section 23 above.
(4) To the extent to which the order is made having regard to any benefits under a pension scheme, the order may require the trustees or managers of the pension scheme in question, if at any time any payment in respect of any benefits under the scheme becomes due to the party with pension rights, to make a payment for the benefit of the other party.
(5) The amount of any payment which, by virtue of subsection (4) above, the trustees or managers are required to make under the order at any time shall not exceed the amount of the payment which is due at that time to the party with pension rights.
(6) Any such payment by the trustees or managers—

(a) shall discharge so much of the trustees or managers liability to the party with pension rights as corresponds to the amount of the payment, and

(b) shall be treated for all purposes as a payment made by the party with pension rights in or towards the discharge of his liability under the order.

(7) Where the party with pension rights may require any benefits which he has or is likely to have under the scheme to be commuted, the order may require him to commute the whole or part of those benefits; and this section applies to the payment of any amount commuted in pursuance of the order as it applies to other payments in respect of benefits under the scheme.
Pensions: lump sums.
25C.—(1) The power of the court under section 23 above to order a party to a marriage to pay a lump sum to the other party includes, where the benefits which the party with pension rights has or is likely to have under a pension scheme include any lump sum payable in respect of his death, power to make any of the following provision by the order.
(2) The court may—

(a) if the trustees or managers of the pension scheme in question have power to determine the person to whom the sum, or any part of it, is to be paid, require them to pay the whole or part of that sum, when it becomes due, to the other party,

(b) if the party with pension rights has power to nominate the person to whom the sum, or any part of it, is to be paid, require the party with pension rights to nominate the other party in respect of the whole or part of that sum,

(c) in any other case, require the trustees or managers of the pension scheme in question to pay the whole or part of that sum, when it becomes due, for the benefit of the other party instead of to the person to whom, apart from the order, it would be paid.

(3) Any payment by the trustees or managers under an order made under section 23 above by virtue of this section shall discharge so much of the trustees or managers liability in respect of the party with pension rights as corresponds to the amount of the payment.
Pensions: supplementary.
25D.—(1) Where—

(a) an order made under section 23 above by virtue of section 25B or 25C above imposes any requirement on the trustees or managers of a pension scheme ("the first scheme") and the party with pension rights acquires transfer
1772
credits under another pension scheme ("the new scheme") which are derived (directly or indirectly) from a transfer from the first scheme of all his accrued rights under that scheme (including transfer credits allowed by that scheme), and

(b) the trustees or managers of the new scheme have been given notice in accordance with regulations,

the order shall have effect as if it has been made instead in respect of the trustees or managers of the new scheme; and in this subsection "transfer credits" has the same meaning as in the Pension Schemes Act 1993.
(2) Regulations may—

(a) in relation to any provision of sections 25B or 25C above which authorises the court making an order under section 23 above to require the trustees or managers of a pension scheme to make a payment for the benefit of the other party, make provision as to the person to whom, and the terms on which, the payment is to be made,

(b) require notices to be given in respect of changes of circumstances relevant to such orders which include provision made by virtue of sections 25B and 25C,

(c) make provision for the trustees or managers of any pension scheme to provide, for the purposes of orders under section 23 above, information as to the value of any benefits under the scheme,

(d) make provision for the recovery of the administrative expenses of—

(i) complying with such orders, so far as they include provision made by virtue of sections 25B and 25C, and

(ii) providing such information,

from the party with pension rights or the other party,
(e) make provision for the value of any benefits under a pension scheme to be calculated and verified, for the purposes of orders under section 23 above, in a prescribed manner,
and regulations made by virtue of paragraph (e) above may provide for that value to be calculated and verified in accordance with guidance which is prepared and from time to time revised by a prescribed person and approved by the Secretary of State.
(3) In this section and sections 25B and 25C—

(a) references to a pension scheme include—

(i) a retirement annuity contract, or

(ii) an annuity, or insurance policy, purchased or transferred for the purpose of giving effect to rights under a pension scheme,

(b) in relation to such a contract or annuity, references to the trustees or managers shall be read as references to the provider of the annuity,

(c) in relation to such a policy, references to the trustees or managers shall be read as references to the insurer,

and in section 25B (1) and (2) above, references to benefits under a pension scheme include any benefits by way of pension, whether under a pension scheme or not.
(4) In this section and sections 25B and 25C above—
"the party with pension rights" means the party to the marriage who has or is likely to have benefits under a pension scheme and "the other party" means the other party to the marriage,

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"pension scheme" means an occupational pension scheme or a personal pension scheme (applying the definitions in section 1 of the Pension Schemes Act 1993, but as if the reference to employed earners in the definition of "personal pension scheme" were to any earners),

"prescribed" means prescribed by regulations, and

"regulations" means regulations made by the Lord Chancellor;

and the power to make regulations under this section shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.".
() In'.
259 Page 101, line 30 at end insert:
'() In section 31 of that Act (variation, discharge, etc. of orders)—

(a) in subsection (2), after paragraph (d) there is inserted—
"(dd) any deferred order made by virtue of section 23(1) (c) (lump sums) which includes provision made by virtue of—

(i) section 25B (4), or

(ii) section 25C,

(provision in respect of pension rights)", and

(b) after subsection (2A) there is inserted—
"(2B) Where the court has made an order referred to in subsection (2) (dd) (ii) above, this section shall cease to apply to the order on the death of either of the parties to the marriage." '.

260 Page 101, line 31, leave out subsection (2).
261 Page 101, line 38, after 'scheme' insert '(within the meaning of section 25B (1) of the Matrimonial Causes Act 1973)'.
262 Page 101, line 39, leave out 'in the foreseeable future'.
263 Page 101, line 43, leave out '159(4)' and insert '159(4) and (4A)'.
264 Page 101, line 50, at end insert 'corresponding to any of those enactments.
() Subsections (3) to (7) of section 25B and section 25C of the Matrimonial Causes Act 1973, as inserted by this section, do not affect the powers of the court under section 31 of that Act (variation, discharge, etc.) in relation to any order made before the commencement of this section'.
265 After Clause 150, insert the following clause:—
Pensions on divorce, etc: Scotland
'.—(1) In section 8(1) (orders for financial provision) of the Family Law (Scotland) Act 1985 ("the 1985 Act"), after paragraph (b) there is inserted—
"(ba) an order under section 12A (2) or (3) of this Act;".
(2) In section 10 of the 1985 Act (sharing of value of matrimonial property)—

(a) in subsection (5)—

(i) after "party" there is inserted "(a)"; and

(ii) for "or occupational pension scheme or similar arrangement" there is substituted—

"or similar arrangement; and

(b) in any benefits under a pension scheme which either party has or may have (including such benefits payable in respect of the death of either party),

which is"; and
(b) after subsection (7) there is inserted—
"(8) The Secretary of State may by regulations make provision—

(a) for the value of any benefits under a pension scheme to be calculated and verified, for the purposes of this Act, in a prescribed manner;

(b) for the trustees or managers of any pension scheme to provide, for the purposes of this Act, information as to that value, and for the recovery of the administrative expenses of providing such information from either party,

and regulations made by virtue of paragraph (a) above may provide for that value to be calculated and verified in accordance with guidance which is prepared and from time to time revised by a prescribed body and approved by the Secretary of State.
(9) Regulations under subsection (8) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(10) In this section—

"benefits under a pension scheme" includes any benefits by way of pension, whether under a pension scheme or not;

"pension scheme" means—

(a) an occupational pension scheme or a personal pension scheme (applying the definitions in section 1 of the Pension Schemes Act 1993, but as if the reference to employed earners in the definition of "personal pension scheme" were to any earners);

(b) a retirement annuity contract; or

(c) an annuity, or insurance policy, purchased or transferred for the purpose of giving effect to rights under a pension scheme falling within paragraph (a) above; and

"prescribed" means prescribed by regulations.

(11) In this section, references to the trustees or managers of a pension scheme—

(a) in relation to a contract or annuity referred to in paragraph (b) or (c) of the definition of "pension scheme" in subsection (10) above, shall be read as references to the provider of the annuity;

(b) in relation to an insurance policy referred to in paragraph (c) of that definition, shall be read as a reference to the insurer.".

(3) After section 12 of the 1985 Act there is inserted—
"Orders for payment of capital sum: pensions lump sums.
12A.&(1) This section applies where the court makes an order under section 8(2) of this Act for payment of a capital sum (a "capital sum order") by a party to the marriage ("the liable party") in circumstances where—

(a) the matrimonial property within the meaning of section 10 of this Act includes any rights or interests in benefits under a pension scheme which the liable party has or may have (whether such benefits are payable to him or in respect of his death); and

(b) those benefits include a lump sum payable to him or in respect of his death.

(2) Where the benefits referred to in subsection (1) above include a lump sum payable to the liable party, the court, on making the capital sum order, may make an order requiring the trustees or managers of the pension scheme in question to pay the whole or part of that sum, when it becomes due, to the other party to the marriage ("the other party").
(3) Where the benefits referred to in subsection (1) above include a lump sum payable in respect of the death of the liable party, the court, on making the capital sum order, may make an order

(a) if the trustees or managers of the pension scheme in question have power to determine the person to whom the sum, or any part of it, is to be paid, requiring them to pay the whole or part of that sum, when it becomes due, to the other party;

(b) if the liable party has power to nominate the person to whom the sum, or any part of it, is to be paid, requiring the liable party to nominate the other party in respect of the whole or part of that sum;

(c) in any other case, requiring the trustees or managers of the pension scheme in question to pay the whole or part of that sum, when it becomes due, to the other party instead of to the person to whom, apart from the order, it would be paid.

(4) Any payment by the trustees or managers under an order under subsection (2) or (3) above—

(a) shall discharge so much of the trustees' or managers' liability to or in respect of the liable party as corresponds to the amount of the payment; and

(b) shall be treated for all purposes as a payment made by the liable party in or towards the discharge of his liability under the capital sum order.

(5) Where the liability of the liable party under the capital sum order has been discharged in whole or in part, other than by a payment by the trustees or managers under an order under subsection (2) or (3) above, the court may, on an application by any person having an interest, recall any order under either of those subsections or vary the amount specified in such an order, as appears to the court appropriate in the circumstances.
(6) Where—

(a) an order under subsection (2) or (3) above imposes any requirement on the trustees or managers of a pension scheme ("the first scheme") and the liable party acquires transfer credits under another scheme ("the new scheme") which are derived (directly or indirectly) from a transfer from the first scheme of all his accrued rights under that scheme; and

(b) the trustees or managers of the new scheme have been given notice in accordance with regulations under subsection (8) below,

the order shall have effect as if it had been made instead in respect of the trustees or managers of the new scheme; and in this subsection "transfer credits" has the same meaning as in the Pension Schemes Act 1993.
(7) Without prejudice to subsection (6) above, the court may, on an application by any person having an interest, vary an order under subsection (2) or (3) above by substituting for the trustees or managers specified in the order the trustees or managers of any other pension scheme under which any lump sum referred to in subsection (1) above is payable to the liable party or in respect of his death.
(8) The Secretary of State may by regulations—

(a) require notices to be given in respect of changes of circumstances relevant to orders under subsection (2) or (3) above;

(b) make provision for the recovery of the administrative expenses of complying with such orders from the liable party or the other party.

(9) Regulations under subsection (8) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(10) Subsection (10) (other than the definition of "benefits under a pension scheme") and subsection (11) of section 10 of this Act shall apply for the purposes of this section as those subsections apply for the purposes of that section.".
(4) Nothing in the provisions mentioned in section 150(4) above applies to a court exercising its powers under section 8 (orders for financial provision on divorce, etc.) or 12A (orders for payment of capital sum: pensions lump sums) of the 1985 Act in respect of any benefits under a pension scheme which fall within subsection (5) (b) of section 10 of that Act ("pension scheme" having the meaning given in subsection (10) of that section).'.
266 Insert the following clause:
War pensions for widows: effect of remarriage
'.—(1) In determining whether a pension is payable to a person as a widow under any of the enactments mentioned in subsection (3) in respect of any period beginning on or after the commencement of this section, no account may be taken of the fact that the widow has married another if, before the beginning of that period, the marriage has been terminated or the parties have been judicially separated.
(2) For the purposes of this section—

(a) the reference to the termination of a marriage is to the termination of the marriage by death, dissolution or annulment, and

(b) the reference to judicial separation includes any legal separation obtained in a country or territory outside the British Islands and recognised in the United Kingdom;

and for those purposes a divorce, annulment or legal separation obtained in a country or territory outside the British Islands must, if the Secretary of State so determines, be treated as recognised in the United Kingdom even though no declaration as to its validity has been made by any court in the United Kingdom.
(3) The enactments referred to in subsection (1) are—

(a) The Naval, Military and Air Forces Etc. (Disablement and Death) Service Pensions Order 1983, and any order re-enacting the provisions of that order,

(b) The Personal Injuries (Civilians) Scheme 1983, and any subsequent scheme made under the Personal Injuries (Emergency Provisions) Act 1939,

(c) any scheme made under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939 or the Polish Resettlement Act 1947 applying the provisions of any such order as is referred to in paragraph (a),

(d) the order made under section 1(5) of the Ulster Defence Regiment Act 1969 concerning pensions and other grants in respect of disablement or death due to service in the Ulster Defence Regiment.'.

267 Insert the following clause:
Extension of Pensions Appeal Tribunals Act 1943
'.—(1) The Pensions Appeal Tribunals Act 1943 is amended as follows.
(2) In section 1 (appeals against rejection of war pension claims made in respect of members of armed forces)—

(a) in subsection (1), after "administered by the Minister" there is inserted "or under a scheme made under section 1 of the Polish Resettlement Act 1947", and

(b) in subsections (3) and (3A), for "or Order of His Majesty" there is substituted ", Order of Her Majesty or scheme".

(3) In section 7 (application of Act to past decisions and assessments)—

(a) in subsection (2), at the beginning there is inserted "Subject to subsection (2A) of this section,", and

(b) after that subsection, there is inserted—

"(2A) Subsection (2) of this section shall not apply in relation to any decision given by the Minister before the passing of this Act which corresponds, apart from any difference of the kind referred to in that subsection, with such a decision as is referred to in section 1 of this Act in respect of claims made under the scheme referred to in that section."
(4) In section 10 (power to modify sections 1 to 4 by Order in Council), in subsections (1) and (2), for "or Order of His Majesty" there is substituted ", Order of Her Majesty or scheme".
(5) In section 12 (interpretation), in the definition of "relevant service"—

(a) for "or Order of His Majesty" there is substituted ", Order of Her Majesty or scheme", and

(b) for "or Order" there is substituted ", Order or scheme".

(6) In the Schedule (constitution, jurisdiction and procedure of Pensions Appeal Tribunals), in paragraph 3(2), after paragraph (b) there is inserted—

"(ba) if the claim was made under the scheme referred to in section 1 of this Act in respect of a person who is treated under the scheme as an officer, shall be a retired or demobilised officer of Her Majesty's naval, military or air forces;

(bb) if the claim was made under the aforesaid scheme in respect of a person who is treated under the scheme as a soldier, shall be a discharged or demobilised member of any of the said forces who was not at the time of his discharge or demobilisation an officer;".'.

268 Insert the following clause:
Information about public service schemes
'.—(1) In prescribed circumstances, the Secretary of State may provide information to any prescribed person in connection with the following questions—

(a) whether an individual who during any period—

(i) has been eligible to be an active member of an occupational pension scheme under the Superannuation Act 1972, but

(ii) has instead made contributions to a personal pension scheme,

has suffered loss as a result of a contravention which is actionable under section 62 of the Financial Services Act 1986 (actions for damages in respect of contravention of rules etc. made under the Act), and

(b) if so, what payment would need to be made to the occupational scheme in respect of the individual to restore the position to what it would have been if the individual had been an active member of the occupational scheme throughout the period in question,

and may impose on that person reasonable fees in respect of administrative expenses incurred in providing that information.
(2) Where—

(a) such an individual as is mentioned in subsection (1) is admitted or readmitted as an active member of an occupational pension scheme under the Superannuation Act 1972, or

(b) a payment is made to the Secretary of State in respect of such an individual for the purpose mentioned in paragraph (b) of that subsection,

1778
the Secretary of State may impose on any prescribed person reasonable fees in respect of administrative expenses incurred in connection with the admission, readmission or payment.
(3) In the case of an occupational pension scheme under section 1 of the Superannuation Act 1972 (superannuation of civil servants), the references in subsections (1) and (2) to the Secretary of State shall be read as references to the Minister for the Civil Service, or such person as may be prescribed.
(4) In the case of an occupational pension scheme under section 7 of the Superannuation Act 1972 (superannuation of persons employed in local government etc.), the references in subsections (1) and (2) to the Secretary of State shall be read as references to a prescribed person.
(5) In this section—
"prescribed" means—

(i) in the case of a scheme made under section 1 of the Superannuation Act 1972, prescribed by a scheme made by the Minister for the Civil Service, or

(ii) in any other case, prescribed by regulations made by the Secretary of State, and

"active member", in relation to an occupational pension scheme, has the same meaning as in Part I.'.
269 Clause 154, leave out Clause 154.
270 Clause 155, page 104, line 14, at end insert:
'() Regulations made by the Secretary of State may, for the purposes of or in connection with the coming into force of any provisions of this Act, make any such provision as could be made, by virtue of subsection (4A) of section 161, by an order bringing those provisions into force.'.
271 Clause 156, page 104, line 16, leave out 'by the Secretary of State'.
272 Page 104, line 22, leave out 'or'.
273 Page 104, line 23, at end insert:
'() section (Hybrid occupational pension schemes), or order under section 10(1A)'.
274 Clause 157, page 104, line 28, after 'Ace insert:
"enactment" includes an enactment comprised in subordinate legislation (within the meaning of the Interpretation Act 1978)'.
275 Page 104, line 30, at end insert:
'and the definition of "enactment" shall apply for the purposes of section 106 as if "Act" in section 21(1) of the Interpretation Act 1978 included any enactment'.
276 Clause 159, page 104, line 35, after '134' insert '(War pensions for widows: effect of remarriage), (Information about public service schemes)'.
277 Page 104, line 35, leave out 'and 151(4) to (7)' and insert '151(4) to (7) and 160'.
278 Clause 161, page 105, line 9, leave out paragraph (a).
279 Page 105, line 10, at end insert:
'() section (War pensions for widows: effect of remarriage)'.
280 Page 105, line 11, at end insert:
'() section 160 and any repeal in Schedule 7 for which there is a note shall come into force in accordance with that note'.
281 Page 105, line 13, at end insert 'and different days may be appointed for different purposes'.
282 Page 105, line 14, leave out subsection (4) and insert:
'(4A) Without prejudice to section 155(3), the power to make an order under this section includes power—

(a) to make transitional adaptations or modifications—

(i) of the provisions brought into force by the order, or

1779

(ii) in connection with those provisions, of any provisions of this Act, or the Pension Schemes Act 1993, then in force, or

(b) to save the effect of any of the repealed provisions of that Act, or those provisions as adapted or modified by the order,

as it appears to the Secretary of State expedient, including different adaptations or modifications for different periods.'.
283 Clause 162, page 105, line 18, leave out subsection (2).
284 Schedule 1, page 106, line 40, leave out 'with the approval of the Treasury'.
285 Page 107, line 2, leave out 'with the approval of the Treasury'.
286 Page 107, line 6, leave out 'with the approval of the Treasury'.
287 Page 107, line 7, leave out 'with the approval of the Treasury'.
288 Page 107, line 22, leave out 'and the Treasury'.
289 Page 107, line 28, leave out 'and the Treasury'.
290 Page 107, line 30, leave out 'and the Treasury'.
291 Page 107, line 33, leave out 'and the Treasury'.
292 Page 107, line 33, at end insert:
'() The Secretary of State may, on such terms as to payment by the Authority as he thinks fit, make available to the Authority such additional staff and such other facilities as he thinks fit.
The Superannuation Act 1972 (c. 11)
.—(1) Employment with the Authority shall be included among the kinds of employment to which a scheme under section 1 of the Superannuation Act 1972 can apply, and accordingly in Schedule 1 to that Act (in which those kinds of employment are listed), at the end of the list of Other Bodies there is inserted—
"The Occupational Pensions Regulatory Authority".
(2) The Authority must pay to the Treasury, at such times as the Treasury may direct, such sums as the Treasury may determine in respect of the increase attributable to this paragraph in the sums payable out of money provided by Parliament under the Superannuation Act 1972.'.
293 Page 108, leave out lines 19 to 28.
294 Page 109, line 22, leave out sub-paragraph (2)
295 Page 109, line 32, at beginning insert '(1).
296 Page 109, line 34, at end insert:
'(2) Sub-paragraph (1) does not apply in relation to any document which is or is to be signed in accordance with the law of Scotland.'.
297 Schedule 2, page 110, leave out lines 21 and 22.
298 Page 110, line 26, leave out 'with the approval of the Treasury'.
299 Page 110, line 30, leave out 'with the approval of the Treasury'.
300 Page 110, line 32, leave out 'with the approval of the Treasury'.
301 Page 110, line 37, at end insert:
'The Ombudsman
In the Parliamentary Commissioner Act 1967, in Schedule 2 (departments and authorities subject to investigation), there is inserted at the appropriate place—
"The Pensions Compensation Board".'
302 Page 110, line 39, leave out 'Treasury' and insert 'Secretary of State'.
303 Page 110, line 42, leave out 'Treasury' and insert 'Secretary of State'.
304 Page 111, line 2, at end insert:
'The Superannuation Act 1972 (c. 11)
.—(1) Employment with the Compensation Board shall be included among the kinds of employment to which a scheme under section 1 of the Superannuation Act 1972 can apply, and accordingly in Schedule 1 to that Act (in which those kinds of employment are listed), at the end of the list of Other Bodies there is inserted—
"The Pensions Compensation Board".
(2) The Compensation Board must pay to the Treasury, at such times as the Treasury may direct, such sums as the Treasury may determine in respect of the increase attributable to this paragraph in the sums payable out of money provided by Parliament under the Superannuation Act 1972.'.
305 Page 111, line 26, at end insert:
'.—(1) Where the Compensation Board notify any person of a decision on any matter dealt with by them by means of a formal hearing, or on review, they shall furnish a written statement of the reasons for the decision.
(2) Any statement by the Compensation Board of their reasons for a decision, whether the statement is given by them in pursuance of this paragraph or otherwise, shall be taken to form part of the decision, and accordingly to be incorporated in the record.'.
306 Page 112, line 23, leave out 'Treasury' and insert 'Secretary of State'
307 Page 112, line 25, at beginning insert '(1)'.
308 Page 112, line 27, at end insert:
'(2) Sub-paragraph (1) above does not apply in relation to any document which is or is to be signed in accordance with the law of Scotland.'.
309 Schedule 3, page 112, line 38, leave out 'and 38' and insert & 38 and (Right not to suffer detriment in employment or be unfairly dismissed)'.
310 Page 112, line 39, at end insert:
In section 71(2B) (compensation award for failure to comply with section 69 not to be made), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
.In section 72(3) (special award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
. In section 73(6B) (calculation of basic award), at the end there is added "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995."
. In section 77(1) (interim relief), after "57A (1) (a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".
. In section 77A (1) (procedure on application for interim relief), after "57A (1) (a) and (b)" there is inserted "of this Act or section (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995".'
311 Page 112, line 43, leave out 'or 38' and insert & 38 or (Right not to suffer detriment in employment or be unfairly dismissed)'.
312 Page 113, line 3, at end insert:
In section 138 (Application of Act to Crown employment), in subsection (1), after "and section 53" there is inserted "of this Act and sections 37 to 40 and (Right not to suffer detriment in employment or be unfairly dismissed) of the Pensions Act 1995." '.
313 Page 113, line 30, at end insert:
'The Bankruptcy (Scotland) Act 1985 (c. 66)
. In section 31(1) of the Bankruptcy (Scotland) Act 1985 (vesting in permanent trustee of debtor's estate on sequestration), after "Act" there is inserted "and section 84(2B) of the Pensions Act 1995".
. In section 32 of that Act (vesting of estate, and dealings of debtor, after sequestration), after subsection (2) there shall be inserted—
"(2A) The amount allowed for the purposes specified in paragraphs (a) and (b) of subsection (2) above shall not be less than the total amount of any income received by the debtor—

(a) by way of guaranteed minimum pension; and

(b) in respect of his protected rights as a member of a pension scheme,

"guaranteed minimum pension" and "protected rights" having the same meanings as in the Pension Schemes Act 1993.".'.
314 Page 113, line 32, after 'orders)' insert:
'(a) in subsection (2), after "income of the bankrupt" there is inserted "when taken together with any payments to which subsection (8) applies", and (b)".
315 Page 113, line 34, leave out from second 'any' to end of line 40 and insert 'payment to which subsection (8) applies.
(8) This subsection applies to—

(a) payments by way of guaranteed minimum pension; and

(b) payments giving effect to the bankrupt's protected rights as a member of a pension scheme.

(9) In this section, "guaranteed minimum pension" and "protected rights" have the same meaning as in the Pension Schemes Act 1993."'.
316 Page 114, line 30, leave out paragraph 11.
317 Page 115, line 7, at end insert:
'The Tribunals and Inquiries Act 1992 (c. 53)
. The Tribunals and Inquiries Act 1992 shall be amended as follows—

(a) in section 7(2) (concurrence required for removal of tribunal members), after "(e)" there is inserted "(g) or (h)",

(b) in section 10 (reasons to be given on request), at the end of subsection (5) there is added—
"(ba) to decisions of the Pensions Compensation Board referred to in paragraph 35(h) of Schedule 1",

(c) in section 14 (restricted application of the Act in relation to certain tribunals), after subsection (1) there is inserted—

"(1A) In this Act—

(a) references to the working of the Occupational Pensions Regulatory Authority referred to in paragraph 35(g) of Schedule 1 are references to their working so far as relating to matters dealt with by them by means of a formal hearing or on review, and

(b) references to procedural rules for the Authority are references to regulations under—

(i) section 88(5) of the Pensions Act 1995 (procedure to be adopted with respect to reviews), or

(ii) paragraph 12 of Schedule 1 to that Act (procedure of the Authority), so far as the regulations relate to procedure on any formal hearing by the Authority.", and

(d) in paragraph 35 of Schedule 1 (tribunals under the direct supervision of the Council on Tribunals: pensions), after paragraph (f) there is inserted—

1782

"(g) the Occupational Pensions Regulatory Authority established by section 1 of the Pensions Act 1995;

(h) the Pensions Compensation Board established by section 72 of that Act".'.

318 Page 115, line 17, leave out paragraph 16.
319 Page 115, line 18, leave out paragraph 17.
320 Page 115, line 35, at end insert:
'25A. In section 132 (conformity of schemes with requirements), "the equal access requirements" is omitted.
25B. In section 133(1) (advice of the Board), "the equal access requirements" is omitted.
25C. In section 134 (determination of questions)—

(a) in subsection (3), "the equal access requirements", and

(b) in subsection (4), "or the equal access requirements" and "or, as the case may be, section 118(1)", are omitted.

25D. In section 136(2) (e) (iv) (applications to modify schemes), "or the equal access requirements" is omitted.
25E. In section 139(2) (functions of the Board), "the equal access requirements" is omitted.
25F. In section 140(4) (effect of orders), paragraph (c) and the "and" immediately preceding it are omitted.'.
321 Page 115, line 39, at end insert:
'(aa) subsections (3) and (4) are omitted.'.
322 Page 116, line 8, leave out paragraph 29.
323 Page 116, line 18, leave out paragraph 30 and insert:
'.In section 159 (inalienability of certain pensions), after subsection (4) there is inserted—
"(4A) Where a person—

(a) is entitled or prospectively entitled as is mentioned in subsection (1), or

(b) is entitled to such rights or to such a payment as is mentioned in subsection (4),

no order shall be made by any court the effect of which would be that he would be restrained from receiving anything the assignment of which is or would be made void by either of those subsections.
(4B) Subsection (4A) does not prevent the making of an attachment of earnings order under the Attachment of Earnings Act 1971."'.
324 Page 116, line 18, at end insert:
'30A. In section 170 (determination of questions by Secretary of State), subsections (5) and (6) are omitted.'.
325 Page 116, line 24, after '(1)' insert:

'(i) the definition of "equal access requirements" is omitted, and

(ii)''

326 Page 116, line 33, at end insert:
'34A. In Schedule 7 (re-enactment or amendment of certain provisions not in force), paragraphs 1 and 3 are omitted.'.
327 Schedule 4, page 122, leave out lines 35 to 37.
328 Page 123, line 14, at end insert:
'Christmas bonus for pensioners
. In section 149(4) of that Act (Christmas bonus: supplementary), for "70 in the case of a man or 65 in the case of a woman" there is substituted "65".'.
329 Page 123, line 29, leave out 'within' the meaning'.
330 Page 126, line 6, leave out sub-paragraph (9).
331 Schedule 5, page 129, line 2, at end insert:
'The Public Records Act 1958 (c. 51)
. In Schedule 1 to the Public Records Act 1958 (definition of "Public Record"), in the Table—

1783

(a) in Part I, the entry relating to the Occupational Pensions Board is omitted, and

(b) in Part II—

(i) after the entry relating to the Nature Conservancy Council for England, there is inserted—

"Occupational Pensions Regulatory Authority.", and
(ii) after the entry relating to the Office of the Director General of Fair Trading, there is inserted—
"Pensions Compensation Board."
The Administration of Justice Act 1970 (c. 31)
. In Schedule 4 to the Administration of Justice Act 1970 (taxes, social insurance contributions, etc subject to special enforcement provisions), in paragraph 3, for "State scheme premiums" there is substituted "Contributions equivalent premiums".
The Attachment of Earnings Act 1971 (c. 31)
. In Schedule 2 to the Attachment of Earnings Act 1971 (taxes, social security contributions etc relevant for purposes of section 3(6)), in paragraph 3, for "State scheme premiums" there is substituted "Contributions equivalent premiums".
The House of Commons Disqualification Act 1975 (c. 24)
. In Part II of Schedule 1 to the House of Commons Disqualification Act 1975 (bodies of which all members are disqualified), the entry relating to the Occupational Pensions Board is omitted.
The Northern Ireland Assembly Disqualification Act 1975 (c. 25)
. In Part II of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (bodies of which all members are disqualified), the entry relating to the Occupational Pensions Board is omitted.
The Social Security Pensions Act 1975 (c. 60)
.—(1) In section 61 of the Social Security Pensions Act 1975 (consultation about regulations) for the words from "refer the proposals" in subsection (2) to the end of subsection (3) there is substituted "consult such persons as he may consider appropriate".
(2) In section 61B (1) of that Act (orders and regulations: general provisions), "except any power of the Occupational Pensions Board to make orders" is omitted.
() In section 64(3) of that Act (expenses and receipts), for "state scheme premium" there is substituted "contributions equivalent premium".
The European Parliament (Pay and Pensions) Act 1979 (c. 50)
. In section 6(4) of the European Parliament (Pay and Pensions) Act 1979 (provision for payment of block transfer value into another pension scheme), "and the Occupational Pensions Board" is omitted.
The Justices of the Peace Act 1979 (c. 55)
. In section 55(6) (b) (ii) of the Justices of the Peace Act 1979 (duties of local authorities), for "state scheme premiums" there is substituted "contributions equivalent premiums".
The Judicial Pensions Act 1981 (c. 20)
. In section 14A (2) of the Judicial Pensions Act 1981 (modifications of that Act in relation to personal pensions), in the definition of "personal pension scheme", for the words from "by" to the end there is substituted "in accordance with section 7 of the Pension Schemes Act 1993;".
The Insurance Companies Act 1982 (c. 50)
. In the Table in paragraph 3(1) of Schedule 2B to the Insurance Companies Act 1982 (restriction on disclosure of information), the entry relating to the Occupational Pensions Board is omitted.
The Companies Act 1985 (c. 6)
. In Schedule 2 to the Companies Act 1985 (interpretation of references to "beneficial interest"), in paragraphs 3(2) (b) and 7(2) (b), for "state scheme premium" there is substituted "contributions equivalent premium".
The Income and Corporation Taxes Act 1988 (c. 1)
.—(1) In section 649 of the Income and Corporation Taxes Act 1988 (minimum contributions towards approved personal pension schemes), in subsection (2), for the definition of "the employee's share" there is substituted—
"the employee's share' of minimum contributions is the amount that would be the minimum contributions if, for the reference in section 45(1) of the Pension Schemes Act 1993 to the appropriate age-related percentage, there were substituted a reference to the percentage mentioned in section 41(1A) (a) of that Act".
(2) This paragraph does not extend to Northern Ireland.
The Social Security Act 1989 (c. 24)
.—(1) Section 29(7) of the Social Security Act 1989 (regulations and orders) is omitted.
(2) In Schedule 5 to that Act (equal treatment in employment related schemes for pensions etc.), paragraph 4 is omitted.
The Social Security Contributions and Benefits Act 1992 (c.4)
. In Schedule 1 to the Social Security Contributions and Benefits Act 1992 (supplementary provisions), in paragraph 8(1) (g), for "state scheme premium" there is substituted "contributions equivalent premium".'.
332 Page 129, line 4, after '1.' insert:
'—() The Social Security Administration Act 1992 is amended as follows.
() In section 110 (appointment and powers of inspectors)—

(a) in subsections (2) (c) (ii) and (6) (a) (ii), for "state scheme premium" there is substituted "contributions equivalent premium", and

(b) in subsection (7) (e) (i), for "state scheme premiums" there is substituted "contributions equivalent premiums".

() In section 120 (proof of previous offences), in subsections (3) and (4), for "state scheme premiums" there is substituted "contributions equivalent premiums".
()'
333 Page 129, line 4, leave out 'the Social Security Administration Act 1992' and insert 'that Act'.
334 Page 129, line 12, leave out from '(c)' to end of line 13 and insert 'is omitted'.
335 Page 129, leave out line 37.
336 Page 130, leave out lines 22 to 43.
337 Page 130, line 46, at end insert:
'Section 163 (rule against In subsection (6), for perpetuities). "consider" there is substituted "considers" '.
338 Page 130, line 47, leave out from beginning to end of line 6 on page 131.
339 Page 131, line 6, at end insert:
'. In section 7—

(a) in subsections (1) and (6), for "Board" there is substituted "Secretary of State", and

(b) in subsection (4), "by the Board" is omitted.'.

340 Page 131, line 11, leave out '42A (3)' and insert '42A (2)'.
341 Page 131, leave out lines 12 to 17 and insert:
'() subsection (5) is omitted.'.
342 Page 131, line 19, at end insert:
'. In section 10 (protected rights), in subsection (2) (a), after "minimum payments" there is inserted "and payments under section 42A (3)"
343 Page 131, line 26, after 'factors)' insert:
'() in subsection (3), for the words following "at least" there is substituted "the prescribed percentage for each relevant year after the last service tax year; and the provisions included by virtue of this subsection may also conform with such additional requirements as may be prescribed", and
()'.
344 Page 131, line 33, leave out from 'benefits)' to 'not' in line 34 and insert:
'() subsections (1) and (5) are omitted,
() in subsection (4), for "(1) to (3)" there is substituted "(2) and (3)";
and subsections (2) and (3) of that section do'.
345 Page 132, line 14, after 'omitted' insert:
'() in subsection (3) (a), after "minimum payments" there is inserted "and payments under section 42A (3)"'.
346 Page 132, leave out line 33 and insert:
'() subsection (6) is omitted, and
() for subsection (7) there is substituted—
"(7) Without prejudice to the previous provisions of this section, failure of a scheme to comply with any requirements prescribed by virtue of section 25(2) shall be a ground on which the Secretary of State may, in respect of any employment to which the scheme relates, cancel a contracting-out certificate".'.
347 Page 132, line 36, leave out paragraph 23 and insert:
'. For section 37 (alteration of rules of contracted-out schemes) there is substituted—
"Alteration of rules of contracted-out schemes.
37.—(1) Except in prescribed circumstances, the rules of a contracted-out scheme cannot be altered unless the alteration is of a prescribed description.
(2) Regulations made by virtue of subsection (1) may operate so as to validate with retrospective effect any alteration of the rules which would otherwise be void under this section.
(3) References in this section to a contracted-out scheme include a scheme which has ceased to be contracted-out so long as any person is entitled to receive, or has accrued rights to, any benefits under the scheme attributable to a period when the scheme was contracted-out.
(4) The reference in subsection (3) to a person entitled to receive benefits under a scheme includes a person so entitled by virtue of being the widower of an earner only in such cases as may be prescribed.'.
348 Page 133, line 16, at end insert:
'. In section 43 (payment of minimum contributions), in subsection (1), after "circumstances" there is inserted "or in respect of such periods".'.
349 Page 133, line 18, at end insert:
'. In section 46(1) (effect of entitlement to guaranteed minimum pensions on payment of social security benefits), for sub-paragraph (i) there is substituted—
"(i) to that part of its additional pension which is attributable to earnings factors for any tax years ending before the principal appointed day".'.
350 Page 133, line 18, at end insert:
'. In section 50 (powers to approve arrangements for scheme ceasing to be certified)—
(a) in subsection (1) (a)—

(i) at the end of sub-paragraph (i) there is inserted "or accrued rights to pensions under the scheme attributable to their service on or after the principal appointed day", and

(ii) in sub-paragraph (ii), for "guaranteed minimum pensions under the scheme" there is substituted "such pensions",

(b) after subsection (1) there is inserted—
"(1A) The power of the Secretary of State to approve arrangements under this section—

(a) includes power to approve arrangements subject to conditions, and

(b) may be exercised either generally or in relation to a particular scheme.

(1B) Arrangements may not be approved under this section unless any prescribed conditions are met",
(c) subsection (7) is omitted.
. In section 51 (calculation of GMPs preserved under approved arrangements), in subsection (1) (a), for "are subject to approved arrangements" there is substituted "satisfy prescribed conditions".
. In section 52 (supervision of schemes which have ceased to be certified)—
(a) in subsection (2), for paragraphs (a) and (b) there is substituted—
"(a) the scheme has ceased to be a contracted-out scheme, and
(b) any persons remain who fall within any of the following categories.
(2A) Those categories are—
(a) any persons entitled to receive, or having accrued rights to—

(i) guaranteed minimum pensions, or

(ii) pensions under the scheme attributable to service on or after the principal appointed day but before the scheme ceased to be contracted-out,

(b) any persons who have protected rights under the scheme or are entitled to any benefit giving effect to protected rights under it",
(b) in subsection (3), for paragraphs (a) and (b) there is substituted—

"(a) the scheme has ceased to be an appropriate scheme, and

(b) any persons remain who have protected rights under the scheme or are entitled to any benefit giving effect to protected rights under it", and

(c) subsections (4) to (6) are omitted.

. In section 53 (supervision: former contracted-out schemes)—
(a) for subsection (1) there is substituted—
"(1) The Secretary of State may direct the trustees or managers of the scheme, or the employer, to take or refrain from taking such steps as the Secretary of State may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.
(1A) An appeal on a point of law shall lie to the High Court or, in Scotland, the Court of Session from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.
(1B) A direction under subsection (1) shall be enforceable—

1787

(a) in England and Wales, in a county court as if it were an order of that court, and

(b) in Scotland, by the sheriff, as if it were an order of the sheriff and whether or not the sheriff could himself have given such an order",

(b) subsection (2) is omitted,
(c) for subsection (3) there is substituted—
"(3) If a certificate has been issued under subsection (2) of section 50 and has not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 52(2A) (a) or (b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the Secretary of State may allow",
(d) subsections (4) and (5) are omitted.
In section 54 (supervision: former appropriate personal pension schemes)—
(a) for subsections (1) and (2) there is substituted—
"(1) The Secretary of State may direct the trustees or managers of the scheme to take or refrain from taking such steps as the Secretary of State may specify in writing; and such a direction shall be final and binding on the person directed and any person claiming under him.
(1A) An appeal on a point of law shall lie to the High Court or, in Scotland, the Court of Session from a direction under subsection (1) at the instance of the trustees or managers or the employer, or any person claiming under them.
(1B) A direction under subsection (1) shall be enforceable—

(a) in England and Wales, in a county court as if it were an order of that court, and

(b) in Scotland, by the sheriff, as if it were an order of the sheriff and whether or not the sheriff could himself have given such an order.

(2) If a certificate has been issued under subsection (2) of section 50 and has not been cancelled under subsection (3) of that section, any liabilities in respect of such entitlement or rights as are referred to in section 52(3) (b) must, except in prescribed circumstances, be discharged (subject to any directions under subsection (1)) in a prescribed manner and within a prescribed period or such longer period as the Secretary of State may allow",
(b) subsection (3) is omitted.'.
351 Page 133, line 45, after "'55(2A) (c)"' insert 'and after
"widow" there is added "or widower" '.
352 Page 134, line 38, at end insert:
' In section 96 (right to cash equivalent: exercise of options)—

(a) in subsection (2) (a), after "guaranteed minimum pensions" there is inserted "his accrued rights so far as attributable to service in contracted-out employment on or after the principal appointed day", and

1788

(b) in subsection (3) (a), for "guaranteed minimum pensions" there is substituted "pensions, being guaranteed minimum pensions or pensions so far as attributable to service in contracted-out employment on or after the principal appointed day".'.

353 Page 135, line 17, leave out paragraph 43.
354 Page 135, line 19, after '5"' insert '"172, 173"'.
355 Page 135, line 24, after '5"' insert '"172, 173"'.
356 Page 135, line 29, leave out from 'premium"' to end of line 30 and insert:
'() the "and" at the end of paragraph (c) is omitted, and
() for the words following paragraph (d) there is substituted "and
(e) any question whether an employment is, or is to be treated, for the purposes of the Pension Schemes Act 1993 as contracted-out employment or as to the persons in relation to whom, or the period for which, an employment is, or is to be treated, for the purposes of that Act as such employment",'.
357 Page 135, line 31, at end insert 'and
() at the end of that section there is added—
"(7) Sections 18 and 19 of the Social Security Administration Act 1992 (appeals and reviews) shall have effect as if the questions mentioned in subsection (1) of section 17 of that Act included—

(a) any question arising in connection with the issue, cancellation or variation of contracting-out certificates or appropriate scheme certificates, not being a question mentioned in subsection (1) (e) above, and

(b) any other question arising under this Act which falls to be determined by the Secretary of State. not being a question mentioned in that subsection.

(8) Regulations may make provision with respect to the procedure to be adopted on any application for a review made under section 19 of that Act by virtue of subsection (7) above and generally with respect to such applications and reviews, but may not prevent such a review being entered upon without an application being made".
. In section 171 (questions arising in proceedings), in subsection (1) (b), for "state scheme premium" there is substituted "contributions equivalent premium".
. Sections 172 and 173 (reviews and appeals) are repealed.'.
358 Page 135, line 37, leave out '(3) (b) (ii)' and insert '(3) (b)—

(i) in sub-paragraph (i), "sections 2 to 5", "172, 173" and "and Schedule 1" are omitted, and

(ii) in sub-paragraph (ii)'.

359 Page 135, line 40, at end insert "172,173"'.
360 Page 136, line 2, leave out 'the definition of "the Board" is omitted' and insert '—

(i) the definitions of "accrued rights premium", "the Board", "contracted-out protected rights premium", "limited revaluation premium", "pensioner's rights premium", "personal pension protected rights premium", "state scheme premium" and "transfer premium" are omitted, and

(ii) in the definition of "contributions equivalent premium", for "section 55(6) (e)" there is substituted "section 55(2)".'

361 Page 136, line 4, leave out from beginning to 'omitted' and insert "172,173" and "and Schedule 1" are'.
362 Page 136, line 7, after '5- insert '"172,173"'.
363 Page 136, line 24, leave out 'and'.
364 Page 136, line 25, at end insert 'and
() in subsection (8), for "172(4)" there is substituted "170(8)"'.
365 Page 136, line 29, at end insert 'and "section 172(4) and (5)" is omitted'.
366 Page 136, line 42, leave out "'64- and insert "'63"'.
367 Page 136, line 43, leave out 'for "65" there is substituted "64- and insert "'to 65" is omitted'.
368 Page 136, line 43, at end insert:
'() in paragraph 9, for sub-paragraphs (3) to (5) there is substituted—
"(2A) Sub-paragraphs (3) and (4) shall be omitted".'
369 Schedule 6, page 137, line 6, at end insert:
'The Public Records Act 1958 (c. 51)
. In Schedule 1 to the Public Records Act 1958 (definition of "Public Record"), in Part II of the Table, there is inserted at the appropriate place—
"Pensions Ombudsman."
The Pension Schemes Act 1993 (c. 48)'
370 Page 138, line 37, at end insert:
In section 145 (Pensions Ombudsman), in subsection (5), "with the approval of the Treasury" is omitted'.
371 Page 138, line 37, at end insert:
In section 151(5) (b) (enforcement in Scotland of Pensions Ombudsman's determinations), for the words from "Scotland," to the end there is substituted "in like manner as an extract registered decree arbitral bearing warrant for execution issued by the sheriff court of any sheriffdom in Scotland.".'.
372 Page 138, line 37, at end insert:
After section 158, there is inserted—
"Other disclosures by the Secretary of State.
.—(1) The Secretary of State may, in spite of any obligation as to secrecy or confidentiality imposed by statute or otherwise on him or on persons employed in the Department of Social Security, disclose any information received by him in connection with his functions under this Act or the Pensions Act 1995 to any person specified in the first column of the following Table if he considers that the disclosure would enable or assist the person to discharge the functions specified in relation to the person in the second column of the Table.

TABLE

Persons

Functions

The Treasury.

Functions under the Financial Services Act 1986.

The Bank of England.

Functions under the Banking Act 1987 or any other functions.

The Regulatory Authority.

Functions under this Act or the Pensions Act 1995, or any enactment in forcing Northern Ireland corresponding to either of them.

The Pensions Compensation Board.

Functions under the Pensions Act 1995 or any corresponding enactment in force in Northern Ireland.

The Friendly Societies Commission.

Functions under the enactments relating to friendly societies

Persons

Functions

The Building Societies Commission.

Functions under the Building Societies Act 1986.

An inspector appointed by the Secretary of State.

Functions under section 94 or 177 of the Financial Services Act 1986.

A person authorised to exercise powers under section 106 of the Financial Services Act 1986.

Functions under that section.

A designated agency or transferee body or the competent authority (within the meaning of the Financial Services Act 1986).

Functions under the Financial Services Act 1986.

A recognised self-regulating organisation, recognised professional body, recognised investment exchange or recognised clearing house (within the meaning of the Financial Services Act 1986)

Functions in its capacity as an organisation, body, exchange or clearing house recognised under the Financial Services Act 1986.

(2) The Secretary of State may by order—
(a) amend the Table in subsection (1) by—

(i) adding any person exercising regulatory functions and specifying functions in relation to that person,

(ii) removing any person for the time being specified in the Table, or

(iii) altering the functions for the time being specified in the Table in relation to any person, or

(b) restrict the circumstances in which, or impose conditions subject to which, disclosure may be made to any person for the time being specified in the Table".'.
373 Page 138, leave out line 42.
374 Schedule 7, page 139, line 26, leave out '13' and insert '14'.
375 Page 139, column 3, leave out line 28.
376 Page 139, column 3, line 44, at end insert:
'In section 132, "the equal access requirements".In section 133(1), "the equal access requirements".In section 134, in subsection (3), "the equal access requirements" and, in subsection (4), "or the equal access requirements" and "or, as the case may be, section 118(1)".In section 136(2) (e) (iv), "or the equal access requirements".In section 139(2), "the equal access requirements".In section 140(4), paragraph (c) and the "and" immediately preceding it.'.
377 Page 140, line 4, after '108)"' insert 'subsections (3) and (4)'.
378 Page 140, column 3, leave out line 9 and insert:
'In section 170, subsections (5) and (6)'.
379 Page 140, column 3, line 11, at end insert:
'In section 181(1), the definition of "equal access requirements"'.
380 Page 140, line 20, leave out 'paragraph 1' and insert:
'paragraphs 1 and 3.In Schedule 8, paragraph 3'.
381 Page 140, line 29, column 3, leave out 'the words from "but" to "70"' and insert:
'in subsection (1) (a), the words from "but" to "70", and subsection (4)'.
382 Page 140, line 47, at end insert:
'1958 c. 51. The Public Records Act 1958. In Schedule 1, in the Table, the entry relating to the Occupational Pensions Board.
1975 c. 24. The House of Commons Disqualification Act 1975. In Part II of Schedule 1, the entry relating to the Occupational Pensions Board.
1975 c. 25. The Northern Ireland Assembly Disqualification Act 1975. In Part II of Schedule 1, the entry relating to the Occupational Pensions Board.
1975 c. 60. The Social Security Pensions Act 1975. In section 61B (1), "except any power of the Occupational Pensions Board to make orders".
1979 c. 50. The European Parliament (Pay and Pensions) Act 1979. In section 6(4), "and the Occupational Pensions Board".
1982 c. 50. The Insurance Companies Act 1982. In Schedule 2B, in paragraph 3(1), in the Table, the entry relating to the Occupational Pensions Board.
1989 c. 24. The Social Security Act 1989. Section 29(7).In Schedule 5, paragraph 4.'.
383 Page 141, line 7, column 3, leave out from '(c)' to end of line 8.
384 Page 141, line 19, column 3, at end insert:
'In section 7(4), "by the Board"'.
385 Page 141, line 19, column 3, at end insert:
'Section 8(5)'.
386 Page 141, column 3, leave out lines 25 to 31 and insert:
'Section 22.In section 23, subsections (1) and (5).Section 24.In section 25, subsections (1) and (3). Section 28(7).Section 31(1).Section 34(6).'.
387 Page 141, column 3, leave out lines 33 to 35.
388 Page 141, line 44, column 3, at end insert 'and, in paragraph
(e), the words following "prescribed period'".
389 Page 141, line 44, column 3, at end insert:
'In section 48(2), paragraph (b) and, in paragraph (c), "if the earner dies before reaching pensionable age".'.
390 Page 141, line 44, column 3, at end insert:
'Section 50(7).In section 52, subsections (4) to (6).In section 53, subsections (2), (4) and (5).Section 54(3).'.
391 Page 142, leave out lines 24 to 26.
392 Page 142, line 28, after '5'" insert '"172,173'".
393 Page 142, line 30, after '5" insert '"172,173"'.
394 Page 142, line 33, leave out from '(1)' to 'and' in line 34 and insert 'the "and" at the end of paragraph (c)'.
395 Page 142, column 3, line 35, at end insert:
'Sections 172 and 173.'.
396 Page 142, line 36, after '177' insert 'in subsection (3) (b) (i), "sections 2 to 5", "172, 173" and "and Schedule 1"'.
397 Page 142, line 43, after '5''' insert "172, 173"'.
398 Page 142, line 46, column 3, leave out 'definition of "the Board"' and insert 'definitions of "accrued rights premium,", "the Board", "contracted-out protected rights premium", "limited revaluation premium", "pensioner's rights premium", "personal pension protected rights premium", "state scheme premium" and "transfer premium"'.
399 Page 142, line 47 at end insert "'172, 173" and'.
400 Page 142, line 54, after '5"' insert "'172, 173"'.
401 Page 142, column 3, line 60, at end insert:
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In section 192(2), "section 172(4) and (5)".'.
402 Page 143, line 6, column 3, after 'Board"' insert 'in sub-paragraph (2) "to 65"'.
403 Page 143, line 21, column 3, at end insert 'In section 145, "with the approval of the Treasury".'.
404 Page 143, line 48, leave out from '1971' to end of line 49 and insert 'shall come into force on the day this Act is passed'.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 244 to 404. I have already spoken to these amendments in various debates.
Moved, That the House do agree with the Commons in their Amendments Nos. 244 to 404. —(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.

Children (Scotland) Bill
6.42 p.m.
Read a third time.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 1:
After Clause 2, insert the following new clause:
("Award of parental responsibilities and parental rights to father
.—(1) Where a child's father does not have parental responsibilities or parental rights in relation to him and the mother and father have not agreed to provide for the father to have such responsibilities or rights, the father may apply to the court for such rights, provided that, unless there are exceptional circumstances he does so—

(a) no earlier than three months from the date of the child's birth; and

(b) no later than a maximum number of years to be prescribed by the Secretary of State from the date of the child's birth if during the intervening time he had no active part in providing for or caring for the child.

(2) Before awarding parental responsibilities and parental rights under subsection (1) above, the court shall satisfy itself that arrangements are made for these rights to be exercised in such a manner as to avoid the father having knowledge of the address of the mother if she does not wish him to have such information.
(3) Where a father awarded parental responsibilities or parental rights under subsection (1) above is subsequently convicted of any offence involving violence or of any offences mentioned in Schedule 1 to the Criminal Procedure (Scotland) Act 1975 (offences against children to which special provisions apply) or in sections 2A to 2C of the Sexual Offences (Scotland) Act 1976 (incest and intercourse with a child by step-parent or person in position of trust), or has had a protection order enforced against him, his parental responsibilities and parental rights will terminate, pending any further application by him to the court for the restoration of such responsibilities and rights.".).
The noble Lord said: My Lords, before moving this amendment, perhaps I may welcome the noble Earl, Lord Lindsay, to his new-found eminence, if that is the correct word, within the Government's structure, and the noble Earl, Lord Courtown, in the particular task which he has to perform on behalf of the Government. It seems a long time ago, but we seem to say every year that, while we wish both noble Earls well, we trust that their period in office will not be too long. Apart from that, I know from the dealings I have had with the noble Earl, Lord Lindsay, in connection with this particular Bill, which is a non-party Bill, that, like his predecessor, the

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noble and learned Lord, Lord Fraser of Carmyllie, we have all, I hope, approached this Bill in your Lordships' House in a constructive and understanding way because children are probably the most important element in our society. Parents fade away, but children grow up. We are trying to give children a decent way of life. This Bill deals with children who are unfortunate and who have to be looked after.
Amendment No. 1 was moved in another place. It was responded to by the then Minister, Lord James Douglas-Hamilton, who has moved to other pastures. The reason why the amendment is tabled is that in the course of the debate on these matters there were indications that the Government would take the amendment back and consider it and perhaps come up with their own amendment to deal with this particular issue.
Perhaps I may quote from Hansard of the other place for 1st May 1995, col. 84. The Minister then said:
"This has been a useful debate. First, I shall answer the point made by the hon. Member for Glasgow, Maryhill, (Mrs. Fyfe,) about legal aid. Any party to an action to obtain parental responsibilities and rights can apply for legal aid, and will obtain it if he or she satisfies the usual tests. The most important point raised in the debate was concern over the safety of women, especially battered women, in refuges. Although I shall oppose new clause 2"—
which is the clause now before your Lordships' House—
"on technical grounds, we shall consider an amendment to allow a mother to apply to the court to have her details kept confidential".
In fairness to the Minister then dealing with these matters, he made an important point at col. 85. He said that it may be practically impossible to keep the mother's address confidential because, if it follows from the fact that the father is gaining access to the child, then in some cases the child will tell the father where she is living. It is a difficult situation.
The Minister said:
"In any event, it would not be practicable for the court to be satisfied that the mother's address would not become known to the father. The court could not necessarily control all the circumstances in which such information might be made known to the father, including by innocent third parties such as the children themselves. I have said that we will look at this issue with a view to considering it further at the next stage of the Bill, although I do not think that subsection 2 is appropriately expressed in its present form".
I took the opportunity of speaking to the noble Earl, Lord Lindsay, to see whether there was some response to this particularly sensitive subject. One of the problems in life which we males know, is that we do not have responsibilities and rights forced on us. The very act of childbirth begins the responsibility and care which is imposed on the woman. The social ethic, if I may put it that way, behind this amendment is that where a woman gives birth to a child she should not be under any particular pressure until all matters surrounding the birth, such as perhaps having a distressful birth and the sudden calamities which sometimes happen, which I shall not go into, have been dealt with. Before the mother makes any agreement of any kind with the man who claims to be the father, she should be given the opportunity of "getting herself together", if I may put it that way without being too pejorative about it. That is the reason behind the amendment.
Subsection 1(3) refers to offences which have been committed against a child. The right of access should be withdrawn. It should,
"terminate, pending any further application by him to the court for the restoration of such responsibilities and rights".
I declare an interest as a member of the Criminal Injuries Compensation Board. The number of claims coming in as a result of child abuse, and the amount of money which is being paid out through the board's system, are monumental. There is a real social basis for this.
I accept the difficulties as regards subsection 1(2), in that the child may tell the father where the mother is living. Where the father is convicted of an offence within subsection 1(3), access should be withdrawn because inevitably, as life is at the moment, any offence covered by subsection 1(3) would lead to a claim against the state in terms of the Criminal Injuries Compensation Board. I understand that this subject is to be debated in your Lordships' House on 19th of this month. I am not going through the minutiae of the debate which took place in the other place, because I am sure that the noble Earl has read the discussions on this particular issue. On that foundation, I beg to move.
The Earl of Balfour: My Lords, I am worried about the amendment because according to my interpretation of the Bill, particularly Clause 3, the mother has the primary responsibility for the child. I believe that the Bill is correct in that. I fear that the first few words of the proposed new clause would weaken that position. That is one of the main reasons why I am unhappy about the amendment.
The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay): My Lords, first, on behalf of my noble friend Lord Courtown and myself, I should like to say how grateful we are to the noble Lord for his kind thoughts. As regards the proposed new clause, I stress that my right honourable friend the Minister of State made it clear when this clause was first considered in another place that, while the Government recognise the motives of the noble Lord in proposing such a clause, they are not convinced that such an amendment is necessary.
Under the terms of Clause 11, any person claiming an interest in the child can apply to the court for parental responsibilities and rights. In considering whether to make such an order, the court will have regard to the welfare of the child as its paramount consideration.
Subsection (1) of the new clause would restrict the circumstances in which a father who is not and has not been married to the child's mother can apply to the courts for an order conferring upon him parental responsibilities and rights. We consider, however, that the only cases where a genetic father and mother should be prevented from having access to the courts for that purpose are in the circumstances described by the House of Lords in its decision In re D and another (minors) on 9th March 1995 and in analogous circumstances where the parental rights and responsibilities of a parent have been extinguished by a court. In other cases we consider that it would be difficult, having regard to our international obligations, to have a provision which

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prevents a genetic parent from applying for such an order at any time in view of the variety of different circumstances which can arise. Therefore we think that it would be preferable to allow the genetic parent to apply but to leave it to the court to determine whether to make the order in all the circumstances of the case, having regard to the welfare of the child as its paramount consideration.
The Government remain to be persuaded that there should be a provision along the lines of subsection (2) of the new clause. It would not be practicable for the court to be satisfied that the mother's address would not become known to the father in the exercise of his parental responsibilities and rights. The court could not control all the circumstances in which such information might be made known to the father, including, as the noble Lord said, by innocent third parties such as the children themselves. It was for those reasons that the Government rejected the earlier proposal to make specific provision in legislation for the court to satisfy itself on a matter on which satisfaction may be simply impracticable to obtain. It appears paradoxical, moreover, to empower the court to satisfy itself on that matter when awarding parental responsibilities and rights when there is no provision for the court to prevent the father knowing the address of the mother in cases where it does not award such parental responsibilities and rights.
However, I recognise that my honourable friend the Minister of State agreed in another place, as the noble Lord pointed out, to examine whether an amendment might be brought forward to alleviate concerns over the safety of women, especially battered women in refuges. He undertook to consider an amendment which would allow the mother to apply to the court to have her details kept confidential.
As I have already said, the court could not be expected to control all the circumstances under which information could be made known to the father. However, it is our view that, in the preparation of rules of court, provisions might be made which, upon her application to the court, would allow the details of the mother to be kept confidential in relation to those parts of the process over which the courts have control. I would hope that the Sheriff Courts Rules Council and the noble and learned Lord, Lord Hope of Craighead, will take note of the noble Lord's concerns in the preparation of rules for the sheriff courts and the Court of Session. I understand that the Sheriff Court Rules Council has already begun work on the Sheriff Court Rules for Part I of the Bill.
Finally, in relation to subsection (3) of the new clause it seems discriminatory to deprive the unmarried father automatically of parental responsibilities and rights in the event of a conviction as described but to make no such provision in relation to the married father or indeed the mother. Arguably, any person with parental responsibilities and rights should be treated equally in relation to the possible risk to the child should he or she incur such a conviction.
The proposed new clause moved in another place and here is thought-provoking. I am grateful to the noble Lord for bringing these issues up. In answer to his
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concern that a mother who has just given birth may be vulnerable, she may be in a vulnerable state at any stage during the early years of her child's life. We have always stressed that any parent embarking upon an arrangement for parental responsibilities should, if they are unmarried, seek advice. For that reason and the other reasons I have given, I would ask the noble Lord to withdraw the amendment.
Baroness Carnegy of Lour: My Lords, before my noble friend sits down, can he tell the House whether rules of court are published so that noble Lords and others can obtain them? We have heard a great deal on this Bill about rules of court. Noble Lords are interested in how they come out in the end. I should be grateful to know whether that is possible.
The Earl of Lindsay: My Lords, it is my understanding that they are published, but if I have anything to add I shall write to my noble friend.
Lord Macaulay of Bragar: My Lords, it is probably my fault but I did not understand the point that the noble Earl, Lord Balfour, was making. If he wishes to reiterate it, I might understand it better, but it is probably my fault.
Subsection (1) of the amendment is not designed for the protection of the child—on one view of the matter this should not be in the Children (Scotland) Bill—but for the protection of the mother. I wonder whether the Government might consider accepting subsection (1) (a) because it has been carefully framed. It provides:
"the father may apply to the court for such rights, provided that, unless there are exceptional circumstances he does so—
(a) no earlier than three months from the date of the child's birth".
It is a protective device for the mother. As I understand it, in England there is the Infanticide Act which protects the mother within six months of the child's birth from anything she may do to a child, including killing it.
It appears to be a reasonable proposition in the circumstances outlined in the amendment that the mother, who may for a variety of reasons have the emotional and other pressures put upon her which I mentioned when I moved the amendment, should be protected at least for three months, subject to the father being able to go to the court to say, "I want to see my child"—provided of course that the mother accepts that the person who wants to see the child is the father of the child, but that is another matter.
On subsection (2) of the proposed new clause, I am basically at one with the Minister as to the difficulty of keeping knowledge of the mother's address away from the father. The provision is carefully worded. It says only that the court should not divulge the address to the father. As the Minister will have noted from the debate in another place, when the amendment was being debated on 1st May (col. 77 of Hansard) a case was quoted:
"Sadly we learned while the Committee was sitting of a mother who killed her ex-husband while the young son hid in fear. The husband had obtained the address from the report of the children's hearing on three separate occasions".
So subsection (2) is merely an admonition to the court not to reveal the mother's address. The address may come out otherwise, and if the father is sufficiently

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determined to find out where his child is living he will do so. It is like burglars breaking into one's house; if they want to get in they will do so.
The amendment is carefully framed because it provides that the court shall satisfy itself and so forth. As regards subsection (3), I take the point about the unmarried father. Nevertheless, the point of principle is worthy of consideration. Having heard the Minister's reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Clause 16 [Welfare of child and consideration of his views]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 2:
Page 14, line 8, after ("order;") insert:
("(iia) whether to grant a warrant under section 66 of this Act:").
The noble Earl said: My Lords, during the Report stage an amendment was introduced which empowered the sheriff to issue a warrant under Clause 66 requiring a child to be detained in a place of safety. The amendment applies to the provisions of Clause 16(2) and (3) to the sheriff's consideration. I beg to move.
On Question, amendment agreed to.
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 3:
Page 14, line 19, after ("decision") insert (", provided that the best interests of the child concerned shall remain a primary consideration of the children's hearing").
The noble Earl said: My Lords, in moving Amendment No. 3 I shall speak also to Amendments Nos. 4 and 5, which are related. This is not a new amendment but it involves a most fundamental principle that has not yet been addressed. The amendments would definitely resolve the anxiety about the suspension of the paramountcy of the child's interests in Clauses 16 and 17. All three amendments propose the inclusion of the words:
"provided that the best interests of the child concerned shall remain a primary consideration of",
the children's hearing, the court or the local authority. That inclusion would resolve the concern or fear that members of the children's hearing, the Bench or the local authority may view the child in a totally different light.
The exceptional circumstances are that the child has acted against other people or their property. While such actions certainly require to be dealt with firmly, and secure accommodation may well be necessary, I cannot accept that the paramountcy of the child's interests can be suspended completely. I strongly recommend that the reduced status of a primary consideration should be spelt out to measure and quantify the suspension.
The justification is clear. Although the child may have been a considerable nuisance, possibly committing several offences, that is only one aspect of his or her life. The whole child and all his or her relationships, attributes, character and interests are being considered for placement in a special situation.
While the child is being considered on account of his or her offending behaviour, he or she retains all the other aspects of character and life. Those other aspects
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do not merit complete suspension of the paramountcy of the child's interests. A qualified suspension is necessary to keep that in balance. The child is more than, for example, a house breaker.
The three amendments would clarify the extent to which the paramountcy was being suspended. The legislation must not go forward with such a procedural error within it. I beg to move.
The Earl of Balfour: My Lords, the amendment reminds me of an occasion when a children's reporter was explaining to the members of my old county council what their functions were. The headmaster of a school asked the reporter, "What procedures would you take to welcome back into the school the boy who had burnt it down?" I believe that the provisions of the Bill set an example as regards the welfare of the child coming first. However, as regards an arsonist, other steps must be taken because one cannot necessarily put the child first.
Lord Macaulay of Bragar: My Lords, during earlier stages of the Bill we agreed that to a certain extent we were dealing with semantics as regards the use of the word "paramountcy". I do not know where the word came from, but it is in the Bill and in earlier legislation. I am not sure what it means.
The noble Earl, Lord Mar and Kellie, is trying to focus attention on the child. That is what the Bill is all about. The example of an arsonist is extreme. Obviously, such a child would not be welcomed back into the school because the school would no longer be there. But the child must be dealt with. I understand that the philosophy behind the Bill is to rescue children from their evil doings. If a child has burnt down the school or whatever, the amendments tabled by the noble Earl will remind those dealing with him that while paramountcy is a provision of the Bill at the end of the day there must be a rescue operation in order to get the child back on to the straight track.
The three amendments would not harm the Bill. Indeed, it would be useful to accept them so that persons dealing with children can be reminded that the issue is not the evil that was done but whether we make the child who has done wrong a better child and a better person to live with in a civilised society. I support the amendments.
The Earl of Lindsay: My Lords, the exception to the paramountcy principle in Clause 16 (for the courts and children's hearings) and also in Clause 17 (for local authorities) has already been discussed at great length. It was discussed most recently when the noble Earl moved and subsequently withdrew the same amendments during the Report stage. As the noble Earl said, the amendment is not new. Perhaps I may remind him that at that time my noble and learned friend the Lord Advocate comprehensively set out the Government's firm view that the specification in the amendment was unnecessary. We are not talking about a complete suspension of paramountcy, to which the noble Earl referred. Nor are we suddenly taking the focus away from the child, as the noble Lord, Lord Macaulay, suggested. The focus remains on the child; we are looking at the response.
My noble friend Lord Balfour summed up our objection to the amendments. The Bill is essentially about the welfare and protection of children and it

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clearly establishes the paramountcy of the child's welfare. It makes only one exception—to protect members of the public from serious harm. That is a protection the public have every right to expect.
The key point is that Clause 16(5) is not about giving hearings and courts powers to take specific action in relation to a child; rather it provides hearings and courts with a power to do something which would not put the welfare of the child as the paramount concern. That in itself is not a separate power to send a child to secure accommodation or to place the child under a supervision requirement. It opens the way to their exercising functions for which succeeding provisions of the Bill provide specific authority.
It is important to see Clause 16(5) in its context. It does not stand on its own; it provides flexibility for a sheriff or a hearing to make appropriate decisions under the relevant legislation where children threaten members of the public with harm. This is not some draconian measure which will allow local authorities, hearings and courts carte blanche to deal with children as they see fit. They would have to exercise their powers in accordance with the legislative provisions, and in doing so they would continue to have regard to the welfare of the child as an important consideration but not the paramount one. I hope that, with this further reassurance, the noble Earl will agree to withdraw his amendments.
The Earl of Mar and Kellie: My Lords, I have listened carefully to what the noble Earl said, and I am reassured. A point of principle was involved. I felt that there should be a reduced status. I believe that the noble Earl has told me that that is implicit in the Bill. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
Clause 17 [Duty of local authority to child looked after by them]:
[Amendment No. 5 not moved.]
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 6:
After Clause 17, insert the following new clause:
("Duty of persons with parental responsibilities to notify change of address to local authority looking after child.
.—(1) Where a child is being looked after by a local authority, each natural person who has parental responsibilities in relation to the child shall, without unreasonable delay, inform that authority whenever the person changes his address.
(2) A person who knowingly fails to comply with the requirement imposed by subsection (1) above shall be liable on summary conviction to a fine of level 1 on the standard scale; but in any proceedings under this section it shall be a defence that—

(a) the change was to the same address as that to which another person who at that time had parental responsibilities in relation to the child was changing; and

(b) the accused had reasonable cause to believe that the other person had informed the authority of the change of address of them both.").

The noble Earl said: My Lords, in speaking to this amendment, I shall speak also to Amendments Nos. 32 and 62. These amendments apparently bring in a new clause but it is of course a transfer of the provisions from the 1968 Act. It is right that there should be a duty
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placed on people with parental responsibilities to notify their change of address to any local authority looking after their child or children. It is possible to imagine circumstances in which the local authority could lose touch with parents. Whether the child can be reunited with the family is not material; it is simply appropriate that the local authority should be able to reach the parent for so long as the authority looks after the child and the parent has the parental responsibilities.
While the duty is on the adult to notify any change of address, the clause is as much related to the child and the child's needs. It is certainly appropriate to have it in the Children (Scotland) Bill, and the amendment brings in the necessary substantive clause. The other amendments make appropriate references in Schedule 5 to effect the necessary repeal in the 1968 Act and in Clause 104, making clear that it extends to England, Wales and Northern Ireland.
These amendments offer a further enhancement of the Bill. It is preferable that provision of this type should be in the Bill rather than the 1968 Act. I beg to move.
On Question, amendment agreed to.
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 7:
After Clause 17, insert the following new clause:
("Welfare of child and local authority's consideration of his views
.—(1) Without prejudice to the provisions of section 17 above, where under or by virtue of this Part of this Act, a local authority decides any matter with respect to a child, the welfare of that child throughout his childhood shall be their paramount consideration.
(2) In making any such decision a local authority shall have regard so far as practicable to the views (if he wishes to express them) of the child concerned, taking account of his age and maturity; and without prejudice to the generality of this subsection a child twelve years of age or more shall be presumed to be of sufficient age and maturity to form a view.").
The noble Earl said: My Lords, Amendment No. 7 is not new. I am returning to it because I believe that the Bill will be weakened without it. A clear statement is needed about how the local authorities shall approach the needs of children who live in their area but are not being looked after by them.
In Scotland we are bound by the UN Convention on the Rights of the Child. Therefore, I cannot see why the Minister has so far resisted the amendment. It would confirm what local authorities must do as they comply with that convention. Acceptance of the amendment would effectively cross-reference the convention and this new social work legislation. If the proposed clause is not included, social work practitioners who have a good grip of the legislative base will wonder why it is not included, especially as the convention must be complied with in any event. I beg to move.
The Earl of Balfour: My Lords, I am rather surprised by this amendment because the welfare of the child is very clearly specified in Clauses 16, 17, 21, 34 and 35 and there is even a provision for a review of it in Clause 30. I feel that the welfare of the child could not be emphasised more strongly in the Bill.
7.15 p.m.
The Earl of Lindsay: My Lords, this familiar amendment was moved by the noble Earl, Lord Mar and

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Kellie, on Report, when I gave him a full explanation of the Government's position on this matter. The UN convention does not place a duty of paramountcy in respect of all children. That may clarify the noble Earl's position.
I think that we have to differentiate rather carefully between public intervention in the life of a child or family and the simple provision of support services. The noble Earl's clause would bite wherever and whenever a local authority were considering any action under Part II. I believe that writing such a sweeping provision into primary legislation would run a very serious risk of creating such a heavy and onerous requirement on local authorities that they would find real difficulty in meeting its terms and delivering their services—and in meeting priority needs. It is too prescriptive and would require a degree of consultation and interaction between the authorities and individuals which would probably prove impracticable.
I believe that the best of what the noble Earl seeks will be obtained through good practice, with guidance wherever necessary, but these are not matters for the Bill and I hope that he will agree to withdraw his amendment.
The Earl of Mar and Kellie: My Lords, once again I am grateful to the noble Earl for his explanation. This was a point of principle. I am reassured that local authorities will be able to proceed in the way that I would like them to. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 [Manner of provision of accommodation to child looked after by local authority]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 8:
Page 20, line 8, after first ("or) insert ("the definition of that expression in").
The noble Earl said: My Lords, this is essentially a drafting amendment to clarify the definition of the families with whom a local authority would not place a child they are looking after. It puts beyond doubt that families where the persons have parental responsibilities for the child or with whom the child has been living would not come within the scope of Clause 25. I beg to move.
On Question, amendment agreed to.
Clause 34 [Welfare of children in accommodation provided for purposes of school attendance]:
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 9:
Page 25, line 30, at end insert ("and to ensure that strategies to prevent bullying and abuse are in place").
The noble Earl said: My Lords, this amendment is concerned with the purpose of the inspection of independent and private schools.
During the passage of the Bill through this House, I received communications from nine parents concerning independent schools throughout the UK with which they have been involved. Two letters were from parents who were very happy with the performance of the schools which they had selected. The other seven were written by parents who were far from happy with the schools.
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In every case the child or children had been removed from the schools in question and most were settled elsewhere.
I have tried to draw some useful conclusions from that sad exercise. The first must be a personal conclusion. As a prep school boy in Dunbar and an average pupil at Eton, I do not recall the kind of incidents which parents have recounted. I know that the memory is selective but there is determined recall, perhaps through the initial layer of happy memories. At the risk of whitewashing Eton, I believe that its system of having a well-constituted housemaster who is effectively in charge of the whole life of the pupil and a work tutor who is continuously responsible for the boy's academic work provides the type of supervision necessary to ensure that an unhappy child is identified and assisted quickly before the problem becomes out of hand.
Similarly, arranging for each pupil to have a room of his own has enormous merit. It makes routine conversations with the authorities easy and natural. The provision of a broad range of leisure and recreational opportunities is also a great help.
These schools are total institutions and they must provide an active programme and supervision for each of the 168 hours per week. In similar vein, the Scottish prison service has addressed that problem by introducing a personal officer scheme.
Secondly, parents who wrote to me have complained about bullying, lack of supervision, lack of a full programme, initiation ceremonies, harsh interrogation and lack of ability to meet the needs of overseas pupils, in particular for those for whom English is not a first language.
Thirdly, some parents complain that they have not been treated as equal partners in the upbringing of their children. It is as though they had been disenfranchised as parents when they handed over their children to the school in loco parentis. I wonder whether that is not inevitable. I have to say here that, as each school offers a unique system, parents have to be careful about what they are buying because they are in fact buying a specific product. Perhaps there is a need for less optimistic advertising.
Fourthly, parents have complained about the lack of an effective complaints system, both internally and externally. Recourse to the school's lawyers seems to come early on in the process at present. Perhaps there is also a deficiency in the record-keeping systems of some schools. Fifthly, some parents have complained that the board of governors or its equivalent rarely seems willing to do anything other than back the headmaster and protect the good name of the school. Perhaps such people should review their own role.
Sixthly, I would comment that not all children are suited to boarding school life, especially dormitory life, and that parents must be realistic about their child's likelihood of survival in a boarding school. Seventhly, I am surprised to a degree by the call from parents for greater state control in the independent sector in education. On the face of it, I thought that they had selected such schools because they were outside the

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state system. In conclusion, this sorry state of affairs requires close liaison and inspection by Her Majesty's inspectors. I beg to move.
The Earl of Lindsay: My Lords, I have to confess at the outset that we are bound to reject the amendment moved by the noble Earl. However, perhaps I may try to reassure him. Her Majesty's inspectors of schools are currently developing detailed operational guidelines for their future inspections of the welfare of residential pupils. Welfare provisions at three independent schools in Scotland have recently been inspected in pilot inspections—with satisfactory results, I may add—to test the thoroughness of those guidelines. Further fine-tuning is being made to ensure that from school session 1995–96, Her Majesty's inspectors of schools can start a rolling programme of such welfare inspections in line with the provisions of Clause 34. Those guidelines include references to schools' strategies on child protection to combat bullying and abuse. I can assure the noble Earl that his point is already covered in planning currently under way for those welfare inspections.
Child protection guidelines for independent schools are currently being drawn up by Professor Kathleen Marshall, of Glasgow University, in consultation with a number of interested and expert parties, including Her Majesty's inspectors of schools and the social work services inspectorate, for use by the independent schools in meeting their welfare duty under the clause. Those guidelines will cover, for example, the responsibilities of schools, the appointment and training of staff, the designation of a senior member of staff with special responsibility for co-ordinating child protection within the school, and detailed guidance on action required in specific cases.
Clause 34 as presently worded will provide an effective means of ensuring that appropriate welfare standards are in place in independent schools.
I hope that the noble Earl can derive considerable comfort from what I have said. I should also point out that although he may have received nine letters, I believe that there are 100,000 or so children in private residential schools. So there is a silent majority out there reasonably satisfied with the education their children are receiving.
I was a little surprised that the noble Earl should think that one disenfranchises one's child when one sends him or her to school. In most cases, the parents make a positive choice in sending the child to a particular school. If there is any dissatisfaction, there is very often the option of changing the child's school. I hope that the noble Earl will accept those reassurances.
Lord Macaulay of Bragar: My Lords, before the Minister sits down, can he say whether he distinguishes between welfare and rights? I ask that question because the debate that has taken place to date during the course of the Bill's passage has established that it is all right for the inspectors to go in and ensure that the welfare of the child is all right, that the rooms are all right, and
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so on, as mentioned by the noble Earl. However, as I understand it, the focus of the amendment is the right of the child within the school system.
Parents who have to go abroad and who cannot perhaps take their children with them often choose to put them into the independent school system. The whole issue which has been debated throughout the various stages of the Bill is not a question of welfare—in other words, it is not a question of welfare or whether the children are well fed and have clean bedsheets, and so on—it is a question of whether the child has reasonable access to a complaints procedure if he is capable of making up his mind on the matter and seeks such access.
The noble Earl referred to the prison system, but you cannot have a protracted procedure of complaint about bullying and such matters that happen in any school. Bullying is not unique to independent schools; indeed, it is something which takes place in every school throughout the land. I wonder whether we have grasped the purpose of what we have been discussing during the passage of the Bill. We are talking about the child who has been in an independent school for whatever reason—because his parents have gone abroad; because they do not fancy having him about the house; or because they want to lead a better social life as they see it and therefore, as they can afford it, have put him into the independent system. I wonder whether we are looking at the real issue involved as regards this particular focus of the Bill. I apologise to the noble Earl, Lord Mar and Kellie, if I have misrepresented him in any way, but that seems to me to be the real issue.
The Earl of Lindsay: My Lords, I am sure that I can reassure the noble Lord, Lord Macaulay. The detailed operational guidelines currently being developed by Her Majesty's inspectors of schools and also the child protection guidelines for independent schools being drawn up by Professor Kathleen Marshall, of Glasgow University, cover welfare duties in their widest sense. Therefore, the rights of the child as enshrined in the Bill will be consistently co-ordinated with the detailed investigation of the welfare of the child pursued by those two groups. I can also tell the noble Lord that complaints procedures and their operation will be reviewed in the course of inspections. On that basis, I hope that the noble Lord will feel reassured.
The Earl of Mar and Kellie: My Lords, we have had a very good debate about independent schools and their relationship to the future of the Children (Scotland) Bill. I do not believe that we intended to do so when we began, but certain parents made sure that the debate was brought to the Floor of the House. It is important to qualify press reports which suggested that I had received a dossier of correspondence. I do not know how many letters a dossier is supposed to contain, but I have established that I received nine from different sources.
Finally, although bullying happens in every school, one of the different features of a boarding school is that one cannot go home. It is a total institution from which one cannot escape in the way that is possible if one goes home in the evening. I should like to draw that distinction. It is most important that schools should have effective anti-bullying strategies. I am most grateful to

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the noble Earl for detailing how Her Majesty's inspectors will be dealing with independent schools in the future. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 [Short-term refuges for children at risk of harm]:
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 10:
Page 27, line 39, leave out ("seven") and insert ("fourteen").
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendment No. 11. This is an amendment to Clause 37 which involves the question of a child at his own hands seeking the help of the local authority where he is at risk of harm. As noble Lords will see from Clause 37(1) (a):
"Where a child appears to a local authority to be at risk of harm, they may at the child's request provide him with refuge",
and so on.
I would hope that the Government might take this amendment on board. It seeks to amend Clause 37(5) to allow a little more time to deal with the problem of a child who seeks help from a local authority. It goes without saying that if any child is in a situation where he has to leave home and seek help from the local authority, there must be something badly wrong either with the child or with the home. The Minister will no doubt be familiar by now with these amendments which relate to the whole concept of the Bill, which is to help children. For example, if a child turns up at a local authority home, the first thing that must be done is to find out who the child is. The child may claim that he is called John Smith or Jimmy Brown but the local authority staff must find out his identity, where he lives, his age and the school that he attends.
The philosophy—if that is the correct word—behind this amendment is to give a local authority time to find out what the problem is. If the relevant period is restricted to the period mentioned in Clause 37(5), the child can be thrown out of a refuge without his problem having been solved, if there is a problem. All that that will achieve will be to create the situation where the child will return to the refuge. I cannot see that it would constitute a great imposition on a local authority to keep a child for 14 or 21 days, as my amendments propose. I am the first person to recognise that keeping children in a refuge may be considered by some people to be an infringement of civil liberties. However, the Government have provided in the Bill that a local authority,
"may at the child's request provide him with refuge".
It is not a question of a child being apprehended and put into a home, but rather of a child seeking help. If local authorities are to help these children they must have the time to do so. Once a child has been identified under its correct name, one then has to find his mother or father, if the father is on the scene at all, but all that requires time. I am advised by people who are involved in these matters that the experience in England has been that the timescale we are discussing is far too short and that a longer timescale is better suited to the interests of the
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child who is seeking refuge and in terms of solving whatever problems may have caused the child to seek help from the local authority. I beg to move.
7.30 p.m.
The Earl of Balfour: My Lords, before my noble friend the Minister replies, I hope I may ask him a question at this stage. Even if the local authority manages to find out nothing more than a child's name, from my reading of the legislation I do not think that the child could be thrown out on the street at the end of seven days, which is rather the impression I obtained from the remarks of the noble Lord, Lord Macaulay. I accept that the noble Lord referred to that as the worst case that could befall a child. I want to make quite certain that under no circumstances would a child be thrown out on to the street because a local authority could not find out anything about him, or who his parents were and whether, for example, they had disappeared off on holiday. However, from my reading of the legislation, I do not think that is the case.
The Earl of Mar and Kellie: My Lords, perhaps I may help the noble Earl, Lord Balfour, on this matter. I obviously wish to support the amendment. In Scotland we are blessed with our welfare-driven children's panel system. I can see that the noble Earl, Lord Lindsay, may want to resist these amendments because the matter can be referred to a children's hearing at any time. That is technically correct, but I want to refer to the situation where a child has arrived at a refuge and he is completely unknown to the welfare authorities; that is, social work, education or health authorities.
There will be much information to gather and many factors to be assessed before any long-term plan can be formulated, let alone agreed upon, and seven or 14 days will be woefully inadequate as a timescale. An early children's hearing may not assist the process in the eyes and, more particularly, the emotions of the child in question. The experiences that led up to the decision to run away from home will constitute depths which will not easily be plumbed. Only good can come from building sufficient flexibility into the Bill.
The Earl of Lindsay: My Lords, let me reiterate to noble Lords that we see refuges as a comparatively small but important service which will be relevant to a limited number of children who are in danger of harm. The refuge provision responds to a need. It is a short-term response to a short-term need. We must resist any temptation to turn the refuge into something different or to allow children to stay there for longer periods without proper decisions being made as to their future. Children ask for "time-out" or a "breathing space" to be available in certain circumstances. The refuge provides for that. It means that seven days are available for the child and workers in the refuge to get to grips with the underlying problems and to consider how best to plan for their resolution. It may mean the child going home or it could mean the local authority thinking seriously about what statutory steps it should take to protect the child; for example, a child protection order or an exclusion order.

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What it certainly does not mean is what the noble Lord, Lord Macaulay, referred to—and what my noble friend Lord Balfour quite rightly doubted—and that is that a child would be thrown out of a refuge on to the streets, as it were. I have spoken about the two statutory steps which might be available and there are other options. Furthermore, if a local authority feels that the assessment has not been sufficient, it can always apply to the Secretary of State for an extension. However, the period of seven days for which the clause provides at present should in most circumstances be quite sufficient for the local authority and the child to reach decisions. The refuges are aimed at providing expert and swift assessment, and we do not want to prolong that. I cannot see that allowing a longer period in a refuge would encourage timely and purposeful assessment and action to assist vulnerable young people.
To accept the noble Lord's amendment would alter this provision to such an extent that consideration would have to be given to matters more appropriate to long-term care; for example, education, the transfer of parental rights and responsibilities and other matters well beyond the initial purpose of the refuge. I believe that the noble Lord, Lord Macaulay, was incorrect when he said rather glibly that it was no problem for local authorities to keep these children in their care for, let us say, 14 days. As I have said, providing education and the sort of services associated with longer term residence would be a burden on local authorities.
In Committee I drew an analogy with an emergency casualty ward at a hospital. If, instead of carrying out a swift assessment of a patient and then transferring that patient to the part of the hospital where he could best be treated, one allowed the patient to spend twice or thrice as long in the emergency casualty ward, one would tie up resources and be unable to accommodate the next batch of those in need of the emergency services. I hope that the noble Lord is assured that the refuge provision is designed to provide purposeful assistance so that responsible decisions about a child's future can be made without delay. With that explanation and with the assurances that I have given, I hope that the noble Lord will feel able to withdraw his amendments.
Lord Macaulay of Bragar: My Lords, I am grateful for that explanation by the Minister. However, I return to my basic point, that the situation described in Clause 37(1) is not sparked off by the local authority but rather by a child. I accept that there may be some clever children who will think that the refuge is a great place in which to spend seven days, after which they will return home and then return to the refuge for another seven days and make a nuisance of themselves. We must be realistic about this, and within the context of this Bill we have tried to be realistic.
I would say in answer to the query of the noble Earl, Lord Balfour, that Clause 37(1) (a) (ii) states that a child can be kept in a refuge,
"for a period which does not exceed the relevant period".
The relevant period is then defined in Clause 37(5). It is seven days or 14 days. Therefore, in answer to the noble Earl, Lord Balfour, as I read the Bill, although I
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may be completely wrong, the child is thrown out after the maximum of 14 days. Whatever other processes may take place in the intervening period is another matter.
I would be the last one to impose further financial burdens on local authorities, because they have plenty to deal with already. However, I wonder whether the timescale is too short to deal with the case of a child who has a real problem. I do not mean a child who was doing this for fun and has perhaps heard from his pals that he can go along to a refuge and will be kept there for a week and then be thrown out. This Bill is concerned with problem children, but in the way it is presently framed local authorities are not being given sufficient time.
The amendment does not mean that a child would have to stay in a refuge for 14 or 21 days. The child could be released after two days. The purpose of the amendment is to give the local authority, the child, social workers and everyone else involved an opportunity to get together to try to solve the problem which is bothering the child within a reasonable period.
I hope that the Government will take note of what I say and have another look at the timescale. I am not sure whether consultation has taken place between the Scottish Office and the Home Office in relation to the operation of the Children Act 1989 in England. It is my understanding, although I have not researched the matter, that the operation of the Children Act 1989 is running into problems. This may well be one of the problems. Certainly it is my information that in England that period is not considered realistic. With those words, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11 not moved.]
Clause 40 [Safeguarding child's interests in proceedings]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 12:
Page 29, line 27, leave out ("before") and insert ("at").
The noble Earl said: My Lords, in moving Amendment No. 12 I wish to speak also to Amendments Nos. 22 to 24, 29, 30 and 55. All these amendments make minor textual changes to a number of provisions in the Bill but do not alter their effects. I beg to move.
On Question, amendment agreed to.
Clause 53 [Reference to the Principal Reporter by court]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 13:
Page 39, line 29, leave out ("and").
The noble Earl said: My Lords, in moving Amendment No. 13 I should also like to speak to Amendments Nos. 14, 45, 46 and 67.
Clause 53 deals with various situations in which a court may refer matters relating to a child to the principal reporter. The Education (Scotland) Act 1980 also provides for such referrals, although at present it is to a reporter in terms of the Social Work (Scotland) Act 1968. Those requirements need to be suitably updated and brought together with the new arrangements under the Bill.
The substantive change is in Clause 53, which is amended to ensure that proceedings under the Education (Scotland) Act will be able to trigger a referral to the principal reporter where the court thought it appropriate. The particular matters would be where action was being taken under Section 35 of the 1980 Act in relation to a failure by a parent to secure regular attendance by a child at a public school, Section 41 in respect of a failure to comply with an attendance order or Section 42(3) in respect of a failure to permit examination of a child.
I also draw your Lordships' attention to the consequential changes to the 1980 Act brought about through Amendments Nos. 45 and 46 in Schedule 4 and the repeals effected through Amendment No. 67 in Schedule 5.
This group of amendments represents a helpful tidying up of the links between the Education (Scotland) Act and the Bill. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 14:
Page 39, line 32, at end insert ("; and
(d) proceedings for an offence against section 35 (failure by parent to secure regular attendance by his child at a public school), 41 (failure to comply with attendance order) or 42(3) (failure to permit examination of child) of the Education (Scotland) Act 1980.").
On Question, amendment agreed to.
Clause 56 [Child protection orders]:
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 15:
Page 42, line 17, at end insert:
("(2A) Where a child seeks protection in a place of safety, he shall be treated as wishing to make an application in terms of subsection (1) above, and the officer in charge of the place of safety shall provide the child with all advice and assistance to prepare and make such an application.
(2B) Where a child has sought protection in a place of safety in terms of subsection (2A) above, he shall be entitled to remain in that place of safety, or in any other such place of safety, until the sheriff has disposed of the said application in terms of subsection (1) above.
(2C) For the purposes of subsections (2A) and (2B) above, 'place of safety' shall only be given the meanings listed as (a), (b) and (c) in the definition provided in section 90 of this Act.").
The noble Earl said: My Lords, the amendment seeks to extend the Bill by permitting a child to seek a place of safety on his or her own behalf. The child would then be able to initiate an application for a child protection order.
I believe that there is an omission from the Bill. Section 37(2) of the Social Work (Scotland) Act 1968 states:
"any child who has taken refuge in a place of safety may be detained there until arrangements can be made for him to be brought before a children's hearing".
The amendment proposes that the act of seeking his or her own place of safety will automatically trigger child protection measures. It also avoids the use of the word "detention", preferring the more positive and empowering phrase "entitled to remain".
The amendment does not automatically grant a child protection order, but it ensures that the matter will definitely go before the sheriff. That will prevent any high-handed action by parents who are in difficulties with their teenage children.
There is an alternative. It lies in the wording of Clause 56(1), which reads:
"Where the sheriff, on an application by any person, is satisfied that".
I do not believe that Clause 56(1), which deals with applications for child protection orders, is the most appropriate way for a child to initiate him or herself. I suggest that it is aimed at the professionals.
The amendment is focused on the child who has found life at home intolerable and has run to a place of safety. The provision would he published in the wee booklet that the local authorities will be producing to explain their services to children. I beg to move.
7.45 p.m.
The Earl of Lindsay: My Lords, I expressed some sympathy with the noble Earl's amendment when he moved it at Report stage. I express the same sympathy today. Nonetheless, I can still foresee a number of difficulties with the provision as drafted.
Most significantly, the amendment empowers a child to remain in a place of safety until the sheriff has disposed of a child protection order application made by that child, but no obligation is placed on the child to make such an application. It would therefore be possible for the child to remain indefinitely in a place of safety where he chose not to make such an application. That would clearly be inappropriate.
As I indicated in my earlier response at Report stage, there is no simple answer to this issue. Where a child has reasonable cause to run away from home we believe that the appropriate course of action would be for an application for a child protection order to be made. That way the responsibilities and rights of all concerned will be recognised and subject to judicial scrutiny.
As I said, we have sympathy with the underlying intention of the amendment but we have serious doubts as to how it would operate in practice. For those reasons, I ask the noble Earl to withdraw the amendment.
The Earl of Mar and Kellie: My Lords, I like the amendment because it guarantees judicial scrutiny. However, having listened to the noble Earl, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 59 [Duration, recall or variation of child protection order]:
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 16 to 18:
Page 45, line 37, leave out (", or continued under section 58(4),").
Page 45, line 38, after ("Act,") insert ("or such an order or direction continued (whether with or without variation) under section 58(4) of this Act,").
Page 46, line 5, after ("continued") insert ("(whether with or without variation)").
The noble Earl said: My Lords, Amendments Nos. 16, 17 and 18 are consequential to a change made at Report stage. Clause 58(4) now empowers a children's

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hearing to vary a child protection order or any direction in relation to the exercise of parental responsibilities or parental rights made by a sheriff. The amendments ensure that the order or direction so varied may be the subject of an application of the sheriff under subsection (7) of Clause 59. I beg to move.
On Question, amendments agreed to.
Clause 64 [Referral to, and proceedings at, children's hearing]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 19:
Page 50, line 17, at end insert:
("(2A) Where a referral is made in respect of a child who is subject to a supervision requirement, the children's hearing shall, before disposing of the referral in accordance with section 68(1) (b) or (c) of this Act, review that requirement in accordance with subsections (9) to (12) of section 72 of this Act.").
The noble Earl said: My Lords this is a small but, as with all our amendments, a useful proposal. It requires a children's hearing before disposing of a referral in accordance with paragraphs (b) or (c) of Clause 68(1) to review any existing supervision requirements. This will ensure that the needs of the child will be considered in their entirety rather than in relation to the most recent referral. I beg to move.
On Question, amendment agreed to.
Clause 65 [Warrant to keep child where children's hearing unable to dispose of case]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 20:
Page 51, line 28, at beginning insert ("to find and to keep or, as the case may be,").
The noble Earl said: My Lords, Amendments Nos. 20 and 21 provide for a warrant made by a children's hearing under Clause 65 (1) to include the power to find the child, in addition to the existing power to keep the child in, a place of safety; and it clarifies that the period of a warrant runs from the date of granting it. It meets the intentions of amendments withdrawn by the noble Earl, Lord Mar and Kellie, following our undertaking to consider the matter further. I beg to move.
The Earl of Mar and Kellie: My Lords, I am grateful to the noble Earl for bringing forward the amendment. I thought that I recognised the provision from an earlier occasion.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 21:
Page 51, line 29, at end insert ("after the warrant is granted").
On Question, amendment agreed to.
Clause 68 [Continuation or disposal of referral by children's hearing]:
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 22 to 24:
Page 55, line 12, leave out ("from the warrant being issued") and insert ("after the warrant is granted").
Page 55, line 25, leave out ("issued") and insert ("granted").
Page 55, line 46, leave out ("worker") and insert ("work officer").
The noble Earl said: My Lords, I spoke to Amendments Nos. 22 to 24 when moving Amendment No. 12. I beg to move them en bloc.
On Question, amendments agreed to.
Clause 69 [Disposal of referral by children's hearing: supervision requirements, including residence in secure accommodation]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 25:
Page 56, line 30, at end insert ("so specified").
The noble Earl said: My Lords, this minor amendment adds the words "so specified" to be consistent with the earlier terminology in the subsection. I beg to move.
On Question, amendment agreed to.
Clause 85 [Parental responsibilities order: general]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 26:
Page 71, line 23, leave out from ("1976") to end of line 25 and insert (", under section 18 or 49 of the said Act of 1978 or under Article 17, 18 or 57 of the Adoption (Northern Ireland) Order 1987 (corresponding provision for Scotland and Northern Ireland);").
The noble Earl said: My Lords, Clause 85 enables a local authority, on application to a sheriff, to seek parental rights and responsibilities in relation to a child. Subsection (6) ensures that a parental responsibilities order will terminate under various circumstances including those where the child becomes subject to an adoption order or an order freeing the child for adoption. At present subsection (6) attracts the relevant adoption provisions for England and Wales from the Adoption Act 1976 and the amendment simply secures that the relevant provisions for Northern Ireland are also brought into the picture. I beg to move.
On Question, amendment agreed to.
Clause 89 [Consent of child to certain procedures]:
The Earl of Mar and Kellie The Earl of Mar and Kellie moved Amendment No. 27:
Page 73, line 18, after ("a") insert ("direction or a").
The noble Earl said: My Lords, in moving Amendment No. 27, I speak also to Amendment No. 28. The amendments aim to ensure that children subject to a child protection order will only be subject to a medical examination if they consent or if they are judged incapable of giving that consent.
Clause 89, in conjunction with Clause 15(5), clarifies that a child who is considered capable of giving consent to a medical examination is also capable of refusing a medical examination. There has been confusion about that with court cases occurring over similar legislation in England. In Committee, a government amendment sought to clarify and safeguard the child's right to refuse in those circumstances. However, there remains a doubt among social workers as to whether a child can refuse to consent to a medical examination in the face of a direction on a child protection order.
It would be doubly abusive to subject an abused child to an intimate examination against his or her will. I hope that the noble Earl will be able to confirm that the child's right to refuse will be made clear. I beg to move.
The Earl of Lindsay: My Lords, I appreciate the intention underlying the amendments which would extend the provisions specifically mentioned in Clause 89 to include a direction made in a child protection order. I would suggest, however, that they are not necessary.

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A direction under Clause 57 only empowers a sheriff to make a direction in relation to the exercise or fulfilment of any parental responsibilities or parental rights in respect of the child concerned. Where a child is of sufficient understanding to consent to surgical, medical or dental procedure or treatment by virtue of Section 2(4) of the Age of Legal Capacity (Scotland) Act 1991, then the child is enabled to make such decisions in his own right. In such circumstances, the right to consent to medical examination is not a parental responsibility or right and so cannot be the subject of a direction given by a sheriff under Clause 57.
The wording of the provisions specifically mentioned in Clause 89 do not relate to the exercise of parental responsibilities and as such might have been seen as overriding the general provision in Clause 89. Hence the proviso that these provisions are subject to the child's capacity to consent. Such a clarification is not, however, necessary in respect of directions attached to child protection orders.
I hope that I have answered the noble Earl and that on that basis he will feel able to withdraw the amendment.
The Earl of Mar and Kellie: My Lords, the noble Earl has certainly answered my question. I am extremely grateful to him and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Clause 90 [Procedural rules in relation to certain applications etc.]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 29:
Page 73, line 33, leave out ("by virtue of subsection (1) above") and insert ("under the said section 32").
The noble Earl said: My Lords, I spoke to Amendment No. 29 when I moved Amendment No. 12. I beg to move.
On Question, amendment agreed to.
Clause 92 [Interpretation of Part II]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 30:
Page 78, line 12, at end insert ("granted the warrant or").
On Question, amendment agreed to.
Clause 104 [Extent, short title, minor and consequential amendments, repeals and commencement]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 31:
Page 85, line 8, after ("transitional") insert ("and consequential").
The noble Earl said: Amendments Nos. 31 and 35 to 38 are small, clarifying, technical amendments. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 32:
Page 85, line 27, after ("Sections") insert ("Duty of persons with parental responsibilities to notify change of address to local authority looking after child").
The noble Earl said: My Lords, I spoke to Amendment No. 32 when I moved Amendment No. 6. I beg to move.
On Question, amendment agreed to.
Schedule 2 [Amendments of the Adoption (Scotland) Act 1978]:
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 33:
Page 90, leave out line 15 and insert:
("(a) in subsection (1), the words from "Subject" to "certain cases)" shall cease to have effect; and").
The noble Earl said: My Lords, in moving Amendment No. 33, I speak also to Amendment No. 34 and related consequential amendments, Amendments Nos. 44 and 64 to 66. The amendments represent our promised response to the matters raised on Report by the noble Lord, Lord Macaulay of Bragar, about adoption and custody.
Amendments Nos. 33 and 34 seek to delete references to Section 53(1) of the Children Act 1975 from Sections 14 and 15 of the Adoption (Scotland) Act 1978. In a sense they are consequential amendments to the repeal of Section 53 which is given effect by Amendments Nos. 64 and 65.
Section 53 of the 1975 Act provides that a court, in considering the adoption of a child, may make a custody order should that appear to be more appropriate. The Bill allows for a range of orders to be made through Clause 11 and the Section 53 provision in the 1975 Act is therefore spent. The amendments effect the repeal and make the necessary consequential changes elsewhere. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 34:
Page 90, leave out line 22 and insert:
("(a) in subsection (1), the words from "Subject" to "certain cases)" shall cease to have effect; and").
On Question, amendment agreed to.
8 p.m.
Schedule 4 [Minor and Consequential Amendments]:
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 35 to 38:
Page 107, line 7, at end insert:
("() In section 59(1) (provision and maintenance of residential and other establishments) after the word "Act,", where it occurs for the second time, insert "or under Part II of the Children (Scotland) Act 1995,").
Page 109, line 3, leave out ("and").
Page 109, line 6, at end insert ("; and
(k) for the definition of "training school" substitute-""training school" has the meaning assigned to it by section 180(1) of the Children and Young Persons Act (Northern Ireland) 1968;").
Page 109, line 7, leave out ("97(1)") and insert ("97").
On Question, amendments agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 39 and 40:
Page 109, line 22, at beginning insert:
("—(1) The Chronically Sick and Disabled Persons Act 1970 shall be amended in accordance with this paragraph.
(2) In section 18(2) (information as to accommodation of younger with older persons), for the words "having functions under the Social Work (Scotland) Act 1968" substitute ", in respect of their functions both under the Social Work (Scotland) Act 1968 and under the Children (Scotland) Act 1995,".
(3)").
Page 109, line 22, leave out ("of the Chronically Sick and Disabled Persons Act 1970").
The noble Earl said: Amendments Nos. 39 and 40 will amend Section 18(2) of the Chronically Sick and Disabled Persons Act 1970. That section deals with information to be provided by local authorities where younger people suffering from certain specified illnesses or mental disorder are accommodated in accommodation with persons over the age of 65. The amendment recognises that local authorities may provide residential accommodation for children under Part II of the Bill. While it is thought unlikely that such children would be provided with accommodation in the same premises as persons over 65 years, that cannot be ruled out completely and the amendment would take account of that possibility for purposes of the information that local authorities would provide in terms of Section 18(2) of the 1970 Act. These are essentially consequential amendments and I commend them to your Lordships. I beg to move.
On Question, amendments agreed to.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 41:
Page 109, line 43, after ("solicitor") insert ("but who satisfies the requirements set out in an Act of Sederunt in respect of —

(i) standards of training;

(ii) indemnification of loss suffered by any child represented by him; and

(iii) compliance with a code of conduct").

The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendment No. 58, which has the same effect. The amendment is put down to ensure that within the area of representation of the child there is a structure which can be dealt with by the courts. The amendment is not in any way self-seeking because I happen to be an advocate-and probably still a solicitor, although I am not sure. It is not a case of special pleading on behalf of the legal profession.
The reasoning behind the amendments is that, within the procedure in the relevant section, first, there should be a solid structure for representation on behalf of the child by people who are able to present the child's views. Secondly, within that structure there should be an indemnification policy which the person representing the child would take out. There should also be a code of conduct.
If that does not take place, then let us take the example of a child of 12 who is presumed on the basis of the legislation to understand what he or she is doing. If that child is represented by someone who does not fall within a reasonably structured representation system, what happens when the child reaches 16? What happens to him between the ages of 12 and 16 because of the representations made on his behalf? Those representations made on his behalf and with his understanding may have deprived him of the enjoyment of his youth. He may have been taken away from his home. At the age of 16 he may return to the court and say: "I did not tell that woman to say that on my behalf. I did not realise what was going on".
These are two mirror amendments to reflect what should happen under Section 25 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990, which refers to solicitor advocates. There are detailed provisions for training, a code of practice, for indemnification and for investigation of complaints. The Law Society of Scotland supports the proposal, not out of self-interest but to prevent disasters taking place. Unless there is some structure for representation, who in the end will be the representative of the child? It could be his mother, father, grandfather, Auntie Nelly, or Uncle Willie in Scotland, anybody. Where do we stop? Six people could come in, all saying: "We represent the child". Considerable argument could take place as to whether what is being said is a true representation of the child's views. I am not being facetious, because it is important that, when major decisions are made about a child's future, there should be properly structured representations to the court on the child's behalf. The two amendments are put before your Lordships' House for those reasons. I beg to move.
The Earl of Lindsay: My Lords, there may have been some misunderstanding of this part of the Bill. The provision in the Bill is not about representation of the child: that is a separate matter. I stress that the child can be represented by a solicitor or advocate, as the noble Lord knows.
We have every sympathy with the noble Lord's intentions. During Report stage my noble and learned friend the Lord Advocate stressed the importance of providing suitable machinery for taking the views of the child into account in relevant proceedings. However, he stressed that the procedures for ascertaining a child's views were more properly and effectively a matter of court procedure and practice. It is accordingly appropriate that those procedures be prescribed not by primary legislation but by rules of court.
The amendments seek to prescribe to a substantial extent the matters which may be contained in the relevant rules. That is excessively constricting. The rules councils, with their expertise in matters relating to children and family law generally, are undoubtedly best placed not only to identify the most appropriate means of taking and transmitting the views of a child to the sheriff but also to assess the extent, if any, to which such matters as are contained in the amendment require to be prescribed. We understand what the noble Lord seeks to achieve but we are convinced that it is better achieved through the rules of court.
Lord Macaulay of Bragar: My Lords, I am grateful to the Minister for that explanation. I hope that I can take an implied indication that, when the rules of court are being structured, at least the spirit of the two amendments will be taken into account on behalf of the children. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 42:
Page 110, line 38, at end insert:
("Land Compensation (Scotland) Act 1973 (c.56)
—(1) The Land Compensation (Scotland) Act 1973 shall be amended in accordance with this paragraph.
(2) In section 35(3) (disturbance payments where modification of dwelling required for disabled person), in paragraph (a), after "1968" insert "or section 22 of the Children (Scotland) Act 1995".
(3) In section 80(1) (interpretation), in the definition of "disabled person"—

(a) after "means" insert"—

(a)"; and

(b) after "1972" insert "; and

(b) a child in need within the meaning of section 92(4) (a) (iii) of the Children (Scotland) Act 1995".").

The noble Earl said: My Lords, this amendment will amend the Land Compensation (Scotland) Act 1973 so that it takes account of the new definition of a disabled child provided for in the Bill for purposes of disturbance payments where modifications of the dwelling are required for disabled persons. The amendment will mean that a disabled adult and a disabled child are defined separately, the latter by reference to the definition in the Bill. The second part of the amendment adds to the interpretation of the 1973 Act in consequence of the first part of the amendment. I commend these necessary changes to your Lordships and beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 43:
Page 111, line 2, leave out from beginning to ("for") in line 4 and insert:
("—(1) The Rehabilitation of Offenders Act 1974 shall be amended in accordance with this paragraph.
(2) In section 3 (special provision with respect to certain disposals by children's hearings)—

(a) for the words "Social Work (Scotland) Act 1968 is that mentioned in section 32(2) (g)" substitute "Children (Scotland) Act 1995 is that mentioned in section 51(2) (i)"; and

(b) for the words "to the satisfaction of the sheriff under section 42 of that Act, the acceptance or establishment" substitute "(or deemed established) to the satisfaction of the sheriff under section 67 or 84 of that Act, the acceptance, establishment (or deemed establishment)".

(3) In section 5 (rehabilitation periods for particular sentences)—

(a) in subsection (3) (b), for the words "43(2) of the Social Work (Scotland) Act 1968" substitute "68(1) (b) and (12) of the Children (Scotland) Act 1995";

(b) in subsection (5) (f), for the words "Social Work (Scotland) Act 1968" substitute "Children (Scotland) Act 1995";

(c) in subsection (10), for the words "Social Work (Scotland) Act 1968" substitute "Children (Scotland) Act 1995"; and

(d) subsection (10A) shall cease to have effect.

(4) In section 7(2) (limitations on rehabilitation)—
(a)")
The noble Earl said: My Lords, with Amendment No. 43, I wish to speak also to Amendments Nos. 47, 48, 57, 61, 63, 68, 69 and 70. This group of amendments introduces consequential amendments in the list of enactments set out in Schedule 4 to the Bill. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 44 to 48:
Page 115, leave out lines 7 to 29 and insert:
("(6) Section 53 (custody order on application for adoption in Scotland) shall cease to have effect.").
Page 116, line 2, leave out ("In section 135(1) of the Education (Scotland) Act 1980 (interpretation),") and insert:
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(".—(1) The Education (Scotland) Act 1980 shall be amended in accordance with this paragraph.
(2) In section 36(3) (referral to reporter of case of irregular school attendance), for the words from "may" to the end substitute ", where no requirement arises under section 52(1) of the Children (Scotland) Act 1995 to give information about the child to the Principal Reporter, may under this subsection provide the Principal Reporter with such information.".
(3) In section 44 —

(a) subsection (1) (referral by court to Principal Reporter of case involving offence against section 35) shall cease to have effect; and

(b) in subsection (2) (powers of court where no referral to Principal Reporter), for the words "subsection (1) above, make a direction" substitute "section 53(1) of the Children (Scotland) Act 1995, refer the matter to the Principal Reporter".

(4) In section 65B (6) (sending of report in relation to recorded child)—

(a) paragraph (a) shall cease to have effect; and

(b) at the end add—

"and the local authority as education authority shall also ensure that the local authority for the purposes of Part II of the Children (Scotland) Act 1995 receive such a copy.".
(5) In section 135(1) (interpretation)—
(a)").
Page 116, line 5, at end insert:
("(b) the definition of "reporter of the appropriate local authority" shall cease to have effect;
(c) for the definition of "residential establishment substitute —
""residential establishment" has the meaning given by paragraph (a) of the definition of that expression in section 92(1) of the Children (Scotland) Act 1995;"; and
(d) for the definition of "supervision requirement" substitute—
""supervision requirement" has the meaning given by section 69(1) of the said Act of 1995;".").
Page 118, line 36, at end insert:
("() In section 9 (suspension of court's powers in cases of wrongful removal), for paragraph (d) substitute—
"(d) making, varying or discharging an order under section 85 of the Children (Scotland) Act 1995;".
() In section 20 (further provision as regards suspension of court's powers)—
(a) for paragraph (d) substitute—
"(d) in the case of proceedings for, or for the variation or discharge of, a parental responsibilities order under section 85 of the Children (Scotland) Act 1995, make, vary or discharge any such order;"; and
(b) in subsection (5), for the words "within the meaning of Part III of the Social Work (Scotland) Act 1968" substitute "(as defined in section 92(1) of the Children (Scotland) Act 1995)".
() In section 25 (termination of existing custody orders etc.), subsection (6) shall cease to have effect.").
Page 118, leave out lines 39 to 43 and insert:
("(3) In Schedule 3 (custody orders)—
(a) in paragraph 5—

(i) for the words "custody, care or control of a child or" substitute "residence, custody, care or control of a child or contact with, or";

(ii) in sub-paragraph (iii), for the words "tutory or curatory" substitute "guardianship";

(iii) in sub-paragraph (iv), for the words "16(8), 16A (3) or 18(3) of the Social Work (Scotland) Act 1968" substitute "85 of the Children (Scotland) Act 1995"; and

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(iv) for sub-paragraph (v), substitute—

"(v) an order made, or warrant or authorisation granted, under or by virtue of Chapter 2 or 3 of Part II of the Children (Scotland) Act 1995 to remove the child to a place of safety or to secure accommodation, to keep him at such a place or in such accommodation, or to prevent his removal from a place where he is being accommodated (or an order varying or discharging any order, warrant or authorisation so made or granted);";

(b) for paragraph 6 substitute—
"(6) A supervision requirement made by a children's hearing under section 69 of the Children (Scotland) Act 1995 (whether or not continued under section 72 of that Act) or made by the sheriff under section 50(5) (c) (iii) of that Act and any order made by a court in England and Wales or in Northern Ireland if it is an order which, by virtue of section 32(1) of that Act, has effect as if it were such a supervision requirement."; and
(c) paragraph 7 shall cease to have effect.").
The noble Earl said: My Lords, I beg to move these amendments en bloc.
On Question, amendments agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 49:
Page 119, line 12, after ("persons)") insert ("—(a)").
The noble Earl said: My Lords, in moving this amendment I should also like to speak to Amendments Nos. 50 to 54. These amendments will further amend the Disabled Persons (Services, Consultation and Representation) Act 1986 by introducing some of the new terminology used in the Bill. I commend the amendments to the House.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 50 to 54:
Page 119, line 22, at end insert ("; and
(b) in paragraph (b), for the words "in the care of substitute "looked after by").
Page 119, line 27, at beginning insert (""for").
Page 119, line 44, leave out ("person in need") and insert ("relevant person for the purposes of section 12 of the Social Work (Scotland) Act 1968").
Page 119, line 49, leave out ("and").
Page 120, line 4, at end insert ("; and
(d) the existing provisions as so amended shall be subsection (1) of the section and at the end of the section there shall be added—
"(2A) In this Act as it applies in relation to Scotland, any reference to a child who is looked after by a local authority shall be construed in accordance with section 17(6) of the Children (Scotland) Act 1995.".").
On Question, amendments agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 55:
Page 120, line 6, leave out from beginning to ("(interpretation)") in line 8 and insert:
(". In section 41 of the Legal Aid (Scotland) Act 1986").
The noble Earl said: My Lords, I spoke to this amendment when I moved Amendment No. 12. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 56:
Page 121, line 19, at end insert:
("Housing (Scotland) Act 1987 (c. 26)
. In section 61 of the Housing (Scotland) Act 1987 (exemption from secure tenant's right to purchase)—

(a) in subsection (4) (f) (iii), for the words "have left the care of substitute "as children have been looked after by"; and

(b) after subsection (4) add

"(4A) The reference in subsection (4) (f) (iii) above to children looked after by a local authority shall be construed in accordance with section 17(6) of the Children (Scotland) Act 1995.".").
The noble Earl said: My Lords, this is another simple consequential amendment to take account of the changes in terminology brought about by the Bill. It makes appropriate changes in the Housing (Scotland) Act 1987. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 57:
Page 121, line 23, at end insert:
("Civil Evidence (Scotland) Act 1988 (c.32)
. In paragraph (a) of the definition of "civil proceedings" in section 9 of the Civil Evidence (Scotland) Act 1988 (interpretation)—

(a) the words "under section 42 of the Social Work (Scotland) Act 1968" shall cease to have effect;

(b) after the word "application" where it first occurs insert "under section 64(6) or (8) of the Children (Scotland) Act 1995";

(c) after the word "established," insert "or of an application for a review of such a finding under section 84 of that Act";

(d) after the word "application" where it occurs for the second time insert "or, as the case may be, the review"; and

(e) for the words "32(2) (g)" substitute "51(2) (i)".").

On Question, amendment agreed to.
[Amendment No. 58 not moved.]
The Earl of Lindsay The Earl of Lindsay moved Amendment No. 59:
Page 121, line 44, at end insert:
("() In section 31(7) (b) (iii) (restriction on applications for care and supervision orders), for the words "the Social Work (Scotland) Act 1968" substitute "Part II of the Children (Scotland) Act 1995".").
The noble Earl said: My Lords, in moving this amendment I shall also speak to Amendment No. 60. These are technical amendments which will amend the Children Act 1989 so that references to "supervision requirement" in that Act are drawn from the definition in the Bill rather than from the Social Work (Scotland) Act 1968. I commend the amendments to the House. I beg to move.
On Question, amendment agreed to.
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 60 and 61:
Page 122, line 7, at end insert:
("() In Schedule 8 (privately fostered children), in paragraph 3(b), for the words "the Social Work (Scotland) Act 1968" substitute "Part II of the Children (Scotland) Act 1995".").
Page 125, line 6, leave out from second ("proceedings"") to end of line 8 and insert ("—

(a) the words "under section 42 of the Social Work (Scotland) Act 1968" shall cease to have effect;

(b) after the word "application" where it appears for the first time insert "under section 64(6) or (8) of the Children (Scotland) Act 1995";

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(c) after the word "established" insert "or for a review of such a finding under section 84 of that Act"; and

(d) after the word "application" where it appears for the second time insert "or, as the case may be, the review".").

On Question, amendments agreed to.
Schedule 5 [Repeals]:
The Earl of Lindsay The Earl of Lindsay moved Amendments Nos. 62 to 70:
Page 127, line 48, column 3, at end insert:
("Section 88.").
Page 128, line 25, column 3, at beginning insert ("Section 5(10A).").
Page 129, line 7, column 3, at end insert ("Section 53.").
Page 129, line 33, column 3, at end insert ("In section 14(1), the words from "Subject" to "certain cases)"").
Page 129, line 34, column 3, leave out ("15(3)") and insert ("15, in subsection (1), the words from "Subject" to "certain cases)"; and in subsection (3),").
Page 129, line 55, at end insert:

("1980 c.44.

Education (Scotland) Act 1980.

Section 44(1). In section 65B (6), paragraph (a).

In section 135(1), the definition of "reporter of the appropriate local authority".")

Page 130, line 30, column 3, at end insert ("In Schedule 3, paragraph 7.").
Page 130, line 48, at end insert:

("1988 c.32.

Civil Evidence (Scotland) Act 1988.

In section 9, in the definition of "civil proceedings", in paragraph (a), the words "under section 42 of the Social Work (Scotland) Act 1968".").

Page 131, line 14, at end insert:

("1993 c.9.

Prisoners and Criminal Proceedings (Scotland) Act 1993.

In paragraph 8 of Schedule 3, the definition of "criminal proceedings", the words "under section 42 of the Social Work (Scotland) Act 1968".")

On Question, amendments agreed to.
8.13 p.m.
The Earl of Lindsay: My Lords, I beg to move that this Bill do now pass.
The Children (Scotland) Bill which, as amended, is before your Lordships' House for a Third Reading today is a significant step forward in Scottish children's legislation. It is no exaggeration to say that it represents a historic advance on the Social Work (Scotland) Act 1968 and other legislation, which has in its time served us well.
The Bill defines the responsibilities and rights of parents. It promotes the welfare of children. It improves the protection of children. It brings adoption law up to date. The Bill implements the undertaking to legislate
1822
which we made in our White Paper, Scotland's Children in 1993. It also implements important parts of the Scottish Law Commission's report on family law.
This Bill has been the subject of careful and helpful consideration in this House. In procedural terms, the Bill has followed an unusual course which, I think, noble Lords have found useful. In particular, the Committee stage of the Bill took place off the Floor of the House. This released it from some of the usual constraints on time and enabled us to consider the extensive and complex issues raised by it more fully. I am very grateful to noble Lords for the amount of time and care which they have devoted to the Bill, in particular at the Committee stage. As the noble Lord, Lord Macaulay, said, debate was carried out in a spirit of constructive and understanding cross-party consensus.
I am particularly indebted to my noble and learned friend Lord Fraser, who was involved with this Bill from its very early stages when it was being drafted in consultation with various groups in Scotland, and all the way through to just a few days ago. I am also indebted to my noble and learned friend the Lord Advocate who, at comparatively short notice last week, lent us his wisdom and guidance on certain crucial matters. I must also thank my noble friend Lord Balfour, who is assiduous in his reading of the legislation, both for his comments on its substance and in making sure that the draftsmen have got it right. Once again, I will pass on the compliment paid to him behind his back by one of the officials, who remarked that he has a higher scoring rate than Gavin Hastings. The accuracy with which he managed to spot certain drafting matters continues to impress.
The noble Baroness, Lady Saltoun, was indefatigable in her efforts to bring this Bill forward and improve it during its passage. I would say the same of the noble Earl, Lord Mar and Kellie and the noble Lord, Lord Macaulay. They all spent a considerable amount of their own time and interest in seeking to make sure that this Bill leaves the House in as good as state as it possibly can.
My noble friend Lady Carnegy, who made a tremendous contribution at Second Reading, was, sadly, not with us for all the intervening stages. However, she has still contributed to the final shape of the Bill. I must also mention the memorable maiden speech at Second Reading from the noble and learned Lord, Lord Hope, the Lord President, and the wisdom that he brought to our debate on the report on corporal punishment.
As noble Lords will know, we have considered a substantial number of amendments to this Bill while it has been before the House. Over 300 amendments have been made. This reflects the careful attention that has been given by noble Lords to the detail of the Bill in ensuring that it works well to the benefit of Scotland's children.
Major improvements have been made as a result. I would mention in particular the amendments which now make it possible to exclude an abuser from the family home on an emergency basis while still retaining the safeguards of a very early hearing before a sheriff on whether or not to confirm the original emergency exclusion.

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A new clause has also been added to provide a proper procedure by which new evidence can be considered. This amendment to the Bill arose out of the difficulties which had arisen over the case of the South Ayrshire children. It removes the need to make use of the nobile officium, which was considered an unsatisfactory way of considering new evidence. It is important in issues of the welfare of children to ensure that, if there is significant new evidence which needs to be considered, there is a clear procedure for doing this.
As a result of amendments brought forward by noble Lords, we have also added to the Bill a clear right for the child to attend his or her own hearing. This is in keeping with the greater emphasis on the rights of children. Important and useful amendments have also been made to the arrangements for warrants arising from child protection orders. These clarify procedures and provide safeguards for children.
Many other helpful changes have been made and, without wanting to single out any noble Lord in particular, I would express special thanks to all who have taken part. We now have before us a Bill which I consider to be substantially improved and one which will contribute significantly to promoting the welfare and protection of Scotland's children.
We now need to look forward to the major process of implementation. This will involve regulations and rules of court; guidance and training for all those involved in implementing the Act; information for children and their parents in a readily understood form; and information for the general public.
The Bill has been well described as setting a challenging agenda for the future in the interests of Scotland's children. It is certainly an extensive agenda and we shall be planning its implementation with great care so that all the parts are prepared and in place to ensure successful implementation. We still have to make decisions on exactly when the Bill's provisions are to be implemented, but we need to be realistic and follow an adequate timescale.
It is only right that we take account of the capacity and readiness of the new councils to assume their responsibilities under the Bill. At the same time we wish to ensure that the implementation programme has the benefit of responsible and informed opinion. This means that there will be wide consultation on important aspects of implementation—including rules of court—and we look to all those concerned with the Bill to make positive contributions to that process.
The Bill is a valuable statement of children's law based on clear principles. It is designed to benefit all the children of Scotland and their families. I am grateful to noble Lords for the close and co-operative interest they have taken in it. I commend the Bill to the House.
Moved, That the Bill do now pass.—(The Earl of Lindsay.)
Lady Saltoun of Abernethy: My Lords, I warmly welcome the noble Earl, Lord Lindsay, to his new job. I know that he will not take it as any reflection on him when I say that I am very sorry that the noble and learned Lord, Lord Fraser of Carmyllie, is not present
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this evening to see this Bill safely through its penultimate stage. But I now see him entering the Chamber, and I am so glad because the Bill is his baby. Scotland owes him a considerable debt of gratitude for its conception and birth.
First, the noble and learned Lord consulted representatives from various children's organisations about the content of the Bill before it was finally drafted. Next, I am sure that he fought hard to persuade the Government to make time for it and played a great part in formulating the new, experimental procedures which took place at Second Reading in the Scottish Grand Committee in Edinburgh; later before the Committee stage when the Standing Committee took evidence; again in Edinburgh, from many of the children's organisations which were interested; and when having the Committee stage off the Floor of the House. Our thanks are due to him for ensuring that the Bill has reached this stage. I certainly hope that he is very proud and happy about it. To all those noble Lords, whether or not Members of the Scottish All-Party Parliamentary Group for Children, and to those who assisted us, I extend my warmest thanks as Lords' Convenor.
I know that some noble Lords still have concerns—that became quite clear this evening—and some would have liked further amendments. But I hope that they will recognise that there is a balance to be maintained between the interests of children and those of the general public, between what is ideal and what is practical and between the extent of provision which we would all like to see and what can be afforded.
Before we finish, I wonder whether the noble Earl, Lord Lindsay, could tell us when the guidelines on interviewing children are to be published. Some of us would very much like to know that. Meanwhile, we shall see how the legislation works. If problems arise—we hope that they will not—we shall see then what can be done. I hope to see the Bill receive Royal Assent before we rise next week.
The Earl of Mar and Kellie: My Lords, I should like to thank the noble and learned Lord, Lord Fraser of Carmyllie, and the noble Earl, Lord Lindsay, for their help, patience and reassurance throughout the passage of the Bill through your Lordships' House. I also welcome the noble Earl, Lord Courtown, as the new Scottish Whip. I hope that he will enjoy dealing with Scottish business.
As the Bill has been classified as non-controversial and enjoys all-party support, so there has been a greater need to clarify at the margins and seek reassurance that any loophole spotted will be plugged, at least in guidance.
I pay considerable tribute to the help and advice that I have received from the Consortium for the Children (Scotland) Bill, serviced by Children in Scotland and the Scottish Child Law Centre, representing 80 childcare organisations in Scotland. In particular, I pay tribute to the outstanding contribution of Dr. Kay Tisdall, whose new employers, Glasgow University, will be pleased to gain her full attention. I should also like to thank parents for raising the relationship between independent schools and the Children (Scotland) Bill.

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Perhaps I may comment on the use of the Moses Room for the Committee stage of the Bill. The advantages were considerable in that the Ministers and their advisers were seated together and could confer speedily. Moreover, there was room for everyone to spread their papers on the tables in front of them. The downside of using that location was that apparently the acoustics below Bar are very poor. Considering that there were a number of well-paid advisers present, that was perhaps a pity.
Finally, I wish this Bill well as it proceeds to the Statute Book. I look forward to its early implementation.
Lord Macaulay of Bragar: My Lords, I echo the words of the noble Lady, Lady Saltoun, about the progress of the Bill. It started off on a pretty shaky foundation—not, that is, the Bill itself, but the All-Party Parliamentary Group for Children. We were very fortunate to find a slot in the legislative procedure. I shall not go into the reasons for that. This is not the time to make any political points.
The Bill has taken a fairly protracted way through the legislative procedure. We join with the noble Earl, Lord Mar and Kellie, in paying tribute to the people who briefed us. We must be frank about the matter. One cannot use one's imagination on Bills such as this except to a limited extent. We must be instructed by the people who deal with children and know the problems. As the noble Earl, Lord Lindsay, said, we now have a better Bill than when it came into your Lordships' House.
I should like to pay tribute to the noble and learned Lord, Lord Fraser, who, as I said, has been very co-operative from the beginning. It was pointed out to me that he now appears to have taken a seat on the Bishops' Benches. I wonder whether he has been elevated to one of their posts. He keeps moving upward all the time. But perhaps his choice of seat was just accidental and he will take his place on the Government Benches in due course. I am sure that, as yet, he has not become a Bishop.
We are very grateful to him. Everyone involved in the consultation process is grateful to him for his consideration of the issues which were raised. He did not agree with some of them but agreed with others. That is his privilege. But everyone recognises his unfailing courtesy towards those who raised the points. His successor, the noble Earl, Lord Lindsay, has had an opportunity for a short time to take part in the debates and he echoed the approach of the noble and learned Lord, Lord Fraser, to the Bill.
This is the moment when we all congratulate one another and say what fine fellows and ladies we are. I shall not shrink from that. We have done a lot of hard work on this Bill. Everyone in your Lordships' House who has contributed to it has done a lot of hard work on this Bill. I pay tribute to the noble Earl, Lord Balfour, as one who really makes the Government think. I have never met his equal as a scrutineer of legislation. There is a parallel with Long John Silver and the parrot. I am sure that some Ministers might have felt at times that the noble Earl, Lord Balfour, was like Long John
1826
Silver's parrot, pointing out deficiencies in the legislation. It is always a pleasure to hear his contribution to debates.
We on this side of your Lordships' House have views about the continuation of this House in its present form. I wish that some of the detractors of your Lordships' House who speak without knowledge of what happens in this Chamber could come here for a few days to see the work done to get legislation through. This Bill is one of the better examples which demonstrates the purpose of the House of Lords from the legislative point of view; namely, to take a Bill, grab it by the throat, make it a little better and send it back to where it came from in the hope that it will be accepted in the other place. We have had many examples of that in the various matters that have been considered.
I make only one further point. The noble Earl, Lord Mar and Kellie, spoke about the Moses Room. There is one problem about that room, which is that it can become a little too cosy. Because this was an all-party Bill, we got over that problem. But I am not sure that it is the proper place to hold discussions on a more controversial Bill. Until the noble Earl told me this morning, I did not realise that the people sitting in the seats at the far end of the Moses Room who were interested in the Bill could not in fact hear what was going on because the microphones were only used for reporting the proceedings. I may be wrong about that, but I believe some of them felt rather deprived, having come all the way to hear the debate and not being able to take part.
The second point made to me is that the reports of what happened in the Moses Room are not officially recorded in Hansard. They are separate reports. If we are to use those proceedings, it may be an idea that the reporting should be part of the Official Report. People buy the Official Report in the hope of seeing what has happened and find that there is no sign of the debates. Perhaps that is something which the House authorities can consider.
In any event, it has been an enjoyable experience and I join with other Members of your Lordships' House in thanking everyone for the pleasure of dealing with this Bill.
8.30 p.m.
The Earl of Balfour: My Lords, at this stage I join with what the noble Lord, Lord Macaulay, said. If another Bill is taken off the Floor of the House, its proceedings should be attached to the daily Hansard that comes out of the proceedings of the Whole House. It is a good point and I am grateful to the noble Lord for making it.
Of all the legislation I have followed through your Lordships' House, none has ever had the care and attention to detail that this Children (Scotland) Bill has received from my noble and learned friend Lord Fraser and my noble friend Lord Lindsay and the Scottish Office. More than half of the clauses and schedules of this Bill are introducing new ideas to protect the youngest members of our society.

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In its passage through Parliament this Bill has been practically rewritten to meet proposals from all sides of this House and of the political spectrum. It seems a pity to me that the electorate of Scotland are not aware of how much the laws and general welfare of Scotland have been improved by this Conservative Government.
Finally, I wish my noble and learned friend Lord Fraser of Carmyllie every success in his new position as the Minister for trade and industry, and my noble friend Lord Lindsay every success in the Scottish Office.
The Earl of Lindsay: My Lords, the noble Lord, Lord Macaulay, told us how important it was to be instructed by people who deal with children. I should like to say what a pleasure it was to instruct him on this matter. As the father of five children I have had considerable dealings with them and that may be why he listened so thoughtfully to everything I said from the Dispatch Box today.
He mentioned also that the passage of this Bill would be enlightening to the detractors of this House. He may ponder on the fact that his party are generating quite a lot of detraction of this House. When we think of the contribution to this Bill from the noble Earl, Lord Mar
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and Kellie, the noble Lady, Lady Saltoun, my noble friend Lord Balfour and others, some of the plans that his party has for this Chamber would have robbed this House of that calibre of scrutiny.
I can say to the noble Lady, Lady Saltoun, that the guidelines will be published shortly—and that is "shortly" in the dictionary sense of the word rather than in the shut-out sense that is sometimes used. I am especially glad that my noble and learned friends Lord Fraser and the Lord Advocate, if not in their normal seats, are in their places. I shall not repeat what I said about them both in their absence. My noble and learned friend Lord Fraser heard the noble Lady, Lady Saltoun, give him just praise for the quality of the Bill. It is perhaps fitting that they should sit on the Bishops' Bench; their guidance in spiritual and other matters is undoubted.
I can but reiterate that this Bill is a valuable statement on children's law based on clear principles. It is designed to benefit all the children of Scotland and their families. On that basis, I commend the Bill to your Lordships.
On Question, Bill passed and returned to the Commons with amendments.
House adjourned at twenty-six minutes before nine o'clock.