Lords Sitting of 14 March 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 Ripon

LEAs: Syllabus Conference and SACRE Funding
The Lord Bishop of Ripon asked Her Majesty's Government:
What steps they are taking to ensure that new unitary authorities will provide adequate resources for syllabus conferences and SACREs.
Lord Lucas: My Lords, all local education authorities are under a statutory duty to establish a SACRE and an agreed syllabus conference, which implies a duty to fund those bodies satisfactorily.
The Lord Bishop of Ripon: My Lords, I am grateful to the noble Lord for his reply. Does he agree that there is wide variation in the level of resourcing which local education authorities give to SACREs? Does he agree also that the new unitary authorities may be tempted to pitch their level of resourcing at the lower end? Will he therefore undertake to collect information on the provision of resources by LEAs and to make that information publicly available?.
Lord Lucas: My Lords, local education authorities have discretion as to how they should satisfy the requirements of legislation. I am sure that, in the specific circumstances in which they find themselves, their solutions may vary. We would not wish to interfere with that discretion.
Lord Morris of Castle Morris: My Lords, can the Minister tell the House how the Government arrived at their estimates of the cost of the syllabus conferences and SACREs which they use in standard spending assessments, if indeed standard spending assessments include such estimates? Can he further inform us precisely what advice the Government are giving to new LEAs in regard to their RE responsibilities?
Lord Lucas: My Lords, as I understand it, the SSA system does not address the specific cost of specific elements in the way that the noble Lord suggests. If there is anything helpful that I can find out from the department to answer the noble Lord's question, I shall write to him. I shall write also with an answer in relation to the second part of his question because I do not have the information with me.
Lord Mackie of Benshie: My Lords, can the Minister explain exactly what a SACRE is?
Lord Lucas: My Lords, a "SACRE" is a Standing Advisory Council for Religious Education. It is a permanent body which advises the LEA on matters
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concerned with the provision of religious education and collective worship. I believe that that is to be contrasted with a "SACRE BLEU" which has to do with sex education.

Police Patrol Messages: Visual Display
2.39 p.m.
Lord Campbell of Croy asked Her Majesty's Government:
Whether they are encouraging police forces to introduce systems for conveying visual messages in words from patrol cars to the drivers of vehicles while travelling on motorways and roads.
The Minister of State, Home Office (Baroness Blatch): My Lords, the use of this equipment appears to be a good idea which has road safety advantages. My department is aware that message sign systems such as this are being evaluated by two police forces, the West Mercia Constabulary and the West Midlands Police, on behalf of the Midlands Regional Motorway Police Group. Any recommendations to encourage the wider use of these signs by police forces will be made by the National Motorway Conference of the Association of Chief Police Officers.
Lord Campbell of Croy: My Lords, I thank my noble friend for her reply. I am glad that the Government approve of the scheme. Does the Minister agree that it could prove to be an effective way of improving traffic flows, especially if the messages are used to guide vehicles into appropriate lanes? As there appears to be provision for 50 prepared messages in each police car, reflecting the usual courtesy of the police perhaps there may be an introductory message such as, "Hello, hello, hello!", and a concluding message for excessive speeding of, "You are nicked!"
Baroness Blatch: My Lords, I agree with my noble friend that the system appears to have positive road safety advantages. That is the real import behind the use of the equipment. It will help police to convey messages to drivers without the need to stop them. That is important. The equipment is also being used by the two police forces in a month-long campaign aimed at motorway safety and it will be fully evaluated. The hope is that the recommendations will be positive, not only for those police forces but also with a view to wider use by the police as a whole. In relation to specific messages, for one or two who are caught it could be, "On your bike!".
Lord Stoddart of Swindon: My Lords, further to my Question of last week in relation to car telephones, can we have a message on the backs of those police cars saying, "Put that damn telephone down; it is dangerous; it is against the law and you are liable for a large fine"?
Baroness Blatch: My Lords, 50 messages have been predetermined. I do not know whether there is to be any

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elaboration on that. We may need to be careful that other road users do not produce replies to some of the messages suggested.
The Countess of Mar: My Lords, is the noble Baroness aware that the West Midlands Constabulary does have a sign saying "Put your phone down"?
Baroness Blatch: My Lords, I was planning to go through all 50 signs. However, the noble Countess is absolutely right.
Lord Mclntosh of Haringey: My Lords, bearing in mind the need for brevity in these messages, would it not be better if they tended to emulate the old Clause Four rather than the new one? More seriously, does not the supplementary question of the noble Lord, Lord Campbell of Croy, indicate the need for collaboration between different police forces in the effective use of these devices? If that is the case, how is it that different police forces supervising the M.25 have still not reached agreement about the radio messages to be used on that road?
Baroness Blatch: My Lords, as regards the noble Lord's first point, it is absolutely true that a longer message does not necessarily lead to greater clarity. As to the second point, that is an operational matter for the police. If they take some time agreeing the matter, the decision made at the end may be a better one.

EC: Harmonised Consumer Price Indices
2.43 p.m.
Lord Bruce of Donington asked Her Majesty's Government:
Whether they propose to support the Commission Proposal (4258/95) for a Council regulation providing for harmonised consumer price indices (CPI's) within the European Community.
Lord Inglewood: My Lords, Her Majesty's Government support the proposed Council regulation, subject to satisfactory negotiation on a number of detailed points.
Under the Maastricht Treaty agreed by Parliament, the construction of harmonised consumer price indices is now required for the monitoring of economic convergence. This index will be additional to existing indices such as the retail prices index (RPI).
Lord Bruce of Donington: My Lords, can the noble Lord tell the House whether the Government themselves propose to use that particular index bearing in mind that they are already using five different ones as the occasion suits them? There are the taxes and prices index; the all items index; the all items excluding mortgage interest index and the all items excluding housing index. There is also the RPIY index which includes other interests. Finally, there is the small-user index designed to meet the position of pensioners and people on very small
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incomes. That makes five or six indices at the most. Can the noble Lord say on which index the Government propose to place reliance bearing in mind that approval in this particular instance on behalf of Her Majesty's Government will be delivered by qualified majority voting not at Ministerial level but at COREPER level?
Lord Inglewood: My Lords, it is important that we are clear on the basic purpose of this particular index. Noble Lords will know that under the Maastricht Treaty in respect of Stage 3 of economic and monetary union, various convergence criteria are set out, one of which relates to the achievement of a high degree of price stability. That is obviously to be measured by reference to the measurement of inflation. It is stated in Protocol 6 to the treaty that inflation should be measured by means of a consumer price index on a comparable basis taking into account differences in national definitions. That is the reason for the index that we are talking about. If it is an index which proves useful to other people no doubt they will use it.
Lord Boardman: My Lords, will not a harmonised price index mean a harmonised tax regime? You cannot have one without the other.
Lord Inglewood: No, my Lords, I do not believe that it will.
Lord Cockfield: My Lords, is not the most important index of all the GDP deflater which unfortunately was not mentioned by the noble Lord, Lord Bruce of Donington?
Lord Inglewood: My Lords, I thank my noble friend for his expertise in this very recondite area.
Lord Eatwell: My Lords, is the Minister aware that on this side of the House we entirely support the construction of these harmonising indices which can only be valuable in international economic comparisons? Can he also tell us what role the Retail Prices Index Committee will play in the harmonisation procedure? It is overseeing the construction of our own retail prices index and has protected it against the unwarranted advances of successive Conservative Chancellors. Can he also tell us how the procedure is to deal with different structures of expenditures in different countries such as the different composition of housing expenditures?
Lord Inglewood: My Lords, I am reassured to hear that at least in this respect the noble Lord, Lord Eatwell, is in favour of government policies concerning European economic matters. As regards the point made by the noble Lord about the different elements in the index, the important thing to realise is that the proposed index is to be developed in three stages. The difficult problems to which the noble Lord, Lord Eatwell, alludes are to be dealt with at Stages 2 and 3. As of now, the detail of how that will be achieved has not yet been decided.
Lord Eatwell: My Lords, can the Minister tell me what role the Retail Prices Index Committee is to play in the exercise?
Lord Inglewood: My Lords, the proposals which we are currently discussing have been drawn up inter alia

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in consultation with the Central Statistical Office. I understand that the Retail Prices Index Committee reports to that office.
Lord Bruce of Donington: My Lords, will the noble Lord convey to his noble friend Lord Cockfield my great appreciation for his having directed my activities into another small, specialised area in connection with this matter? Will the Minister tell the House how the Government themselves will deal with the detailed requirements of Annex 1 to this particular directive? That sets out in very considerable detail the information that is required. Within the context of the changeover in the obtaining of statistics which is taking place after January and the swop to a new private enterprise firm, as distinct from the Department of Employment whose spare-time employees have previously been engaged in compiling the index, how is the Minister to provide the information which is required in Annex 1? If he has not already done so, will he please now do so?
Lord Inglewood: My Lords, I can assure the noble Lord that I have examined Annex 1 to the proposal. As he points out, it is a complicated document. It is because of the complications inherent in doing what the noble Lord describes that, as I mentioned earlier, the detail of Stages 2 and 3 have not been agreed. Stage 1 of the proposal essentially involves taking certain items out of the retail consumer price indices—the items differ depending on the member state involved. The discussions in which the Government are currently involved relate to the later stages and deal with the points to which the noble Lord referred.
Lord Clark of Kempston: My Lords, does my noble friend agree that the harmonisation of consumer price indices must depend on the harmonisation of the VAT on consumer goods?
Lord Inglewood: My Lords, no. I do not agree with my noble friend on that.

Scottish Whisky: Euro Legislation
2.50 p.m.
Lord Pearson of Rannoch asked Her Majesty's Government:
Whether they consider that current and anticipated European legislation is helpful to the Scottish whisky industry.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, not in all cases. The Government give a high priority to avoiding unnecessary legislative burdens on British industry.
Lord Pearson of Rannoch: My Lords, I thank my noble friend for that reply and hope that it brings some comfort to the Scottish whisky industry which is, after all, our fifth most successful exporter and which is suffering from at least five pieces of unwanted and unnecessary Euro legislation at the moment. For instance, is my noble friend aware of the proposed
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directive on the circulation of animal feeds which requires the used barley or draff to be analysed in a laboratory at a cost of some £22 million per annum, thereby killing off the brewers' and distillers' grain trade which has a turnover of only £20 million per annum? Secondly, would my noble friend agree that some 53 per cent, of all Scottish milk cows are fed on draff and that cattle have been eating draff for hundreds of years without any noticeable ill effects?
Earl Howe: My Lords, my noble friend is right to emphasise the importance of the Scotch whisky industry for UK exports. With regard the proposed directive that he mentioned, the Government fully understand and support the concerns of the Scotch whisky industry. As the proposal stands, it could involve significant additional costs for the industry. In the Commission's expert group, UK officials have argued strongly against the over-prescriptive and potentially burdensome requirements of the proposal and have sought an exemption for moist feeds. The UK has also written formally to the Commission which has responded sympathetically. We hope that the exemption can be achieved in the Council working group.
Lord Bruce of Donington: My Lords, is the Minister aware that it is proposed—I do not know on whose authority—to enforce the freshwater fisheries directive of 1978, the provisions of which are entirely irrelevant to the interests of all concerned, including the environment? Will the Minister undertake to ensure that this extremely onerous regulation, which is agreed to be completely unnecessary, is not enforced?
Earl Howe: My Lords, the Government are aware of the concerns raised by the noble Lord. The freshwater fisheries directive of 1978 sets quality standards in order to protect fish. Clearly, that is an important matter. The standards include temperature standards, but there are specific provisions under which, in certain circumstances, the Government may make derogations from the temperature limits. If a distiller wishes to obtain a derogation, he simply needs to approach his river purification authority and ask it to consider making an approach to the Government for a derogation.
Baroness Carnegy of Lour: My Lords, may I ask my noble friend about the draft Council directive on the control of major accident hazards involving dangerous substances? Does my noble friend agree that the chemical composition of maturing whisky, how and where it is stored, and our own well enforced safety arrangements mean that the storage sites of maturing Scotch whisky simply cannot present a major accident hazard within the meaning of the draft directive? If that is so, does my noble friend know how it has come about that the Council has drafted the directive so as to catch those sites, and that it is now being backed by the Parliament, which wants to leave the draft directive as a blanket measure and expects the United Kingdom to seek a derogation? Where is the subsidiarity in all that, and where is the common sense?
Earl Howe: My Lords, my noble friend raises an important issue. The proposed directive to which she refers will include whisky along with other substances

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with a particular flashpoint. The Scotch Whisky Association has made a sound technical case for the exclusion of whisky from the scope of the proposed directive. The Government will argue for an exclusion for the storage of whisky.
Lord Mackie of Bensbie: My Lords, returning to the Question—
Lord Stoddart of Swindon: My Lords—
Noble Lords: Order!
Lord Stoddart of Swindon: My Lords, as the noble Lord comes from a whisky-making country, I shall allow him to go first.
Lord Mackie of Benshie: My Lords, returning to the Question, the noble Lord, Lord Pearson, is absolutely right that the byproduct is extremely important to the Scottish whisky industry and to the fanners who buy it. If all the efforts to prevent the application of such provisions do not succeed and some form of regulation is produced which is burdensome, will the Minister ensure that his department and his staff do not make matters worse as they did in the case of the regulations governing slaughterhouses, resulting in the closure of many?
Earl Howe: My Lords, with respect to the noble Lord, he is leaping ahead of himself. The UK's aim is to preserve the status quo which requires analytical declarations only for the most commonly traded materials. That strikes a sensible balance between supplier and consumer interests. There is no evidence that farmers require the additional analytical information which is the subject of the proposed directive. In that sense I am entirely in sympathy with the noble Lord's comments.
The Earl of Onslow: My Lords, what happens if the European Commission takes not a blind bit of notice of Her Majesty's Government?
Earl Howe: My Lords, I would go so far as to say that it would be a nonsense if the provisions became law. The Government will take all measures to ensure that they do not.
Lord Stoddart of Swindon: My Lords, why is it that this House and another place continually have to deal with such absurdities? Is it not intolerable that an organisation should be trying to impose ridiculous restrictions on substances that we have used over hundreds—indeed, thousands—of years? When was a fire or explosion last caused by Scotch whisky? When was anybody killed because it is a corrosive substance? I understood that it was good for us. The Scots are always telling us that their whisky is good for us. Can the Minister justify the fact that the Scotch whisky industry has to pay at least £2 million for relabelling barrels so that they can be transported from place to place?
Earl Howe: My Lords, the noble Lord raises a number of points. I should like to address his last point, particularly as that is a substantive one. The fact is that whisky is a flammable liquid. It is transported in
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unmarked vehicles which display, I am told, only an orange placard to indicate that they carry dangerous goods. The Customs lock cannot readily be seen in an emergency. Hazard warning labels can therefore play an important part in identifying the nature of the hazard. There have been some unfortunate incidents and both the health and safety inspectorate and the Scottish fire services inspectorate support the need for labelling.
Lord Carter: My Lords, have the Government made any attempt to calculate the effect on jobs in the whisky industry if all five of the directives were accepted? Would the effect on jobs be greater or less than the loss of jobs resulting from the Government's increase in the duty on whisky which they had to apply because they lost the argument on VAT on fuel?
Earl Howe: My Lords, approximately 15,000 people are employed in the Scotch whisky industry. The Government have made no specific calculation with regard to the directives because we hope that at least two of them will not apply to the Scotch whisky industry. The excise duty rates are a matter for my right honourable friend the Chancellor of the Exchequer. The Government have listened carefully to what has been said by those in the industry and we will not seek measures which cause a switch away from spirits or an overall fall in consumption.
Baroness Strange: My Lords, is my noble friend aware that whisky is the water of life to us Scots and that we do not take kindly to silly Sassenach stipulations from over the water?
Earl Howe: My Lords, I should be more than happy to discuss this matter later with my noble friend, preferably over some liquid refreshment emanating from north of the Border.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware that Welsh whisky is inflammable but safe? Will he give an assurance that no one will interfere with it?
Earl Howe: My Lords, I should also be delighted to discuss this at a suitable moment after these proceedings.
Lord Monson: My Lords, following the Minister's reply to the noble Lord, Lord Stoddart, does he agree that the transportation of whisky within the United Kingdom cannot possibly affect the people of Portugal, Greece, Belgium or France in any way? Therefore, is it not unmistakably a matter where the principle of subsidiarity should apply?
Earl Howe: My Lords, this is an issue which our own health and safety inspectorate supports, together with the Scottish fire services inspectorate. In that sense, it is a matter for us to resolve and we believe that it is an important measure.
Lord Stallard: My Lords, the Minister said that the regulation applies to Scotch whisky because it is inflammable. Does it also apply to brandy?
Earl Howe: My Lords, I have no doubt that it applies to brandy. I am advised that Scotch whisky has a similar flashpoint to various petroleum and ethanol products.
Lord Pearson of Rannoch: My Lords, will my noble friend go further than the answer he gave to my noble friend Lady Carnegy? She referred to what is normally known as the Seveso II directive. Will my noble friend prevail upon our partners in Europe not to go further with the Seveso II directive until the Greeks have done something to carry out Seveso I?
Earl Howe: My Lords, my noble friend makes an important point. The Commission is aware that several member states have not implemented the first directive and it has indicated that it is anxious to remedy that situation.
Lord Peston: My Lords, am I correct in saying that alcoholic beverages of this kind are now included because the flashpoint criteria have been raised? Is not the number now so high that it is extremely unlikely that an explosion will involve whisky? I am a supporter of the Union but I am bound to say that the situation sounds crazy and bureaucratic because one starts with an article at one end of the scale connected with genuine dangerous chemicals and someone is sitting in his office thinking, "What can I add?", and one has ended up with whisky. The situation sounds weird. Will the Minister clarify it?
Earl Howe: My Lords, the Government and the Scotch whisky industry are in agreement that, with regard to the storage of whisky, there is a sound technical case for not including whisky in the proposed directive on hazards involving dangerous substances. On the other hand, with regard to the transport of whisky, it must be said that there have been some unfortunate incidents involving transporter lorries and so forth. That has led to the Health and Safety Executive coming down on the side of recommending hazard warnings.

Delegated Powers Scrutiny Committee
3.4 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper. In doing so, perhaps I may seek your Lordships' indulgence to say that we were most sorry to hear of the illness of the noble Lord, Lord Rippon of Hexham, and we look forward to news of his progress. I wish to take this opportunity of thanking him most warmly for his distinguished and pioneering chairmanship of the committee. In fact, he championed the cause of this development in our procedures, which has further enhanced the reputation of your Lordships' House, in particular in its scrutiny work.
I also wish to thank the acting chairman, the noble Lord, Lord Elton, for the most able way in which he has chaired the committee and for his willingness to do so. He has enabled the committee to continue its
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work uninterrupted. Finally, I thank the noble Lord, Lord Alexander of Weedon, for allowing his name to be put before your Lordships tod
Moved, on behalf of the Committee, of Selection, That the Lord Alexander of Weedon be appointed chairman of the Select Committee in the place of the Lord Rippon of Hexham resigned.—(The Chairman of Committees.)
The Lord Privy Seal (Viscount Cranborne): My Lords, perhaps your Lordships will allow me to echo the remarks made by the noble Lord the Chairman of Committees. All of us were most distressed to hear of the illness that has afflicted my noble friend Lord Rippon of Hexham. I am sure that I take the House with me in saying that we wish him the speediest of recoveries not only because of the respect and affection with which he is regarded in this House but, as the noble Lord the Chairman of Committees said, because of the pioneering work which my noble friend undertook not only in the Delegated Powers Scrutiny Committee but in a number of tasks which the House asked him to undertake. He has acted in the highest traditions of elder statesman—and I use that phrase advisedly—in your Lordships' House. I suggest that all noble Lords owe my noble friend a great debt of gratitude.
Noble Lords: Hear, hear!
On Question, Motion agreed to.

Pensions Bill [H.L.]
3.6 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.
Clause 79 [Schedules of payments to money purchase schemes]:
Lord Lucas Lord Lucas moved Amendment No. 172:
Page 48, line 20, leave out (" 3") and insert ("(Prohibition orders)").
The noble Lord said: My Lords, I spoke to Amendments Nos. 172 and 173 with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
Clause 80 [Schedules of payments to money purchase schemes: supplementary]:
Lord Lucas Lord Lucas moved Amendment No. 173:
Page 48, line 35, leave out (" 3") and insert ("(Prohibition orders)").
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 174:
After Clause 82, insert the following new clause:
("Pensions adjustment order
.—(1) A matrimonial court may make a pensions adjustment order (referred to in this section as "an order") in the course of adjudicating upon or disposing of any matrimonial proceedings where to make such an order would in all the circumstances be reasonable.
(2) In deciding what is reasonable a matrimonial court shall have regard to any agreement reached between the parties but where no such agreement exists may make an order where it is requested by either party.
(3) An order may be made in such terms as the matrimonial court shall consider to be appropriate and in particular the matrimonial court may provide for:

(a) the off-setting of the value of the pension assets against any current assets which exist in the marriage; or

(b) the division of the pension assets between the parties so as to provide a separate pension asset for each party; or

(c) an income to be paid by the scheme to each party once the member reaches retirement age, the proportion to be determined by the matrimonial court at the time of the matrimonial proceedings.

(4) Where an order is made in the terms set out at (3) (c), the order shall also provide for arrangements to be made for the other party in the event of the member's death.
(5) The Secretary of State shall prescribe in regulations the method of valuation to be applied to pension assets by the matrimonial court to be used in determining what order to make.
(6) The matrimonial court may in making an order have regard to the position of the administrator and may take into account any administrative complexity in deciding whether such an order is appropriate in all the circumstances.
(7) The making of an order shall in no circumstances form the basis of any decision made by the Commissioners of the Inland Revenue to remove the exempt approved status or to alter the tax status of a scheme provided that the spouse or former spouse in whose favour an order has been made shall be treated for the purpose of the retention of benefits the same as the member.
(8) in this section—
"administrator" means the trustees of an occupational pension scheme or the administrators or managers of such a scheme in the absence of trustees or the administrators or managers of a personal pension plan;
"matrimonial court" means the Family Division of the High Court or a county court exercising jurisdiction in relation to matrimonial proceedings;
"member" means a member of an occupational pension scheme or a person having a personal pension plan or retirement benefit plan or other arrangement whereby benefits are to be provided to that person on retirement;
"scheme" means an occupational pension scheme or personal pension plan or retirement benefit plan or other arrangement whereby benefits are to be provided to a person on retirement.").
The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 175, 225, 226 and 247 which deal with the issue of pensions and divorce. In the light of the Committee debate, I am sure that all noble Lords wish us to address that issue. I pay tribute in particular to the noble Baroness, Lady Young, who has worked so hard—especially on the Minister. The fact that today we are discussing how and not whether we introduce the measure is, I am sure, due to the strength of opinion that your Lordships voiced in Committee. If now within the framework of the Bill we get it broadly right we shall together have done something truly worth while.
We all agree that the pension asset belongs to the family and not just to the scheme member, who is usually the husband. The wife, whether by contributing her earnings to the joint income or by supporting her husband, bringing up the children and moving with him from job to job, has contributed to that pension. It belongs to them both. Yet legally it cannot be divided; legally it belongs only to him. Therefore, on divorce, if there are not enough offsetting assets, she will not receive her fair share of her joint matrimonial resources. She faces an old age of loneliness, poverty and increasing desperation.
I suspect that we have all received heart-wrenching letters. We have received letters from husbands who wish to assign part of their pension in order to keep some of their current assets and letters from wives who have lived their lives through, and for, their families and who find themselves abandoned in their late 50s.
I wish to quote briefly from two letters. The first is from Mrs. B. from Wiltshire, who says:
"My own case is typical. I was left after 26 years of marriage looking after two daughters who both have incurable medical conditions. After eight house moves to further my husband's career, I am now left aged 50 still looking after my ill daughters with little or no prospect of finding employment, let alone making pension provision for my old age".
The second letter is from Mrs. C. of Birmingham, who says:
"We had been married for 30 years with my part-time earnings going into a joint income from which my husband paid out as much as we could afford in AVCs to bolster his pension. I was not entitled to a pension but was told by my husband that I would not need one".
In other words, the wife's financing of the husband's AVCs would provide for both of them. In consequence, he built up a very considerable pension. She has now—I use her words—
"been traded in for a younger model. All my saving and doing without is going to make his new wife quite comfortably off whereas I, the totally innocent party, am left with only a state pension of £57 a week to look forward to".
She paid quite literally for a considerable part of her husband's pension and she receives nothing. That is why I am sure that we all welcome the Minister's assurance in Committee that in future courts "must" and not merely "may" take into account pension assets. How the courts will do so is what we are discussing today.
As I am sure your Lordships are aware, there are three ways in which it can be done: first, by offsetting the pension against other assets where there are enough other assets to do so; secondly, by assessing the cash transfer value of the pension value so far accrued at the time of divorce and splitting it so that the two portions then twin-track either within the same scheme or in a different scheme and the husband and wife each have a separate part of the pension on which they can build; or, thirdly, earmarking, by which the first wife receives an appropriate share of the pension but not until retirement. That is a form of deferred maintenance.
Our preferred solution is reflected in Amendment No. 174; namely, that at the point of divorce, the courts should have the power to determine which of those three

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powers—offsetting, splitting or earmarking—is most appropriate and which best suits the circumstance and wishes of the spouses involved. That surely makes sense.
Offsetting may be entirely acceptable where there are ample assets. Splitting makes good sense when both parties are younger—perhaps in their forties—and have the ability to build up a core pension. Sorting out the matter once and for all at the time of divorce is a civilised way in which to ensure a clean break. However, earmarking, or deferred maintenance, may be appropriate where retirement is imminent.
Every family situation is different. The choice of pension provision may differ. I believe that the courts, which will build up a great deal of expertise, should have full discretion to do what is best.
Instead, the Government are proposing to allow the courts two rather than three of the powers, which is less than full discretion. As the Minister indicated in Committee, the courts will be able to offset. There is no problem about that. They will be able to earmark a flow of income on retirement if the amendment to be moved later today by the noble Baroness, Lady Young, is accepted, as I am sure it will be. But the courts will not be able to split the pension at the point of divorce. We should prefer them to have that power. Instead, the Government believe that the courts should have the more limited discretion.
Although the Government, in the form of the amendment in the name of the noble Baroness, Lady Young, and their own commitments, are not going as far as we should wish, they have nevertheless made a considerable and welcome advance on the current situation. The Government are to be commended although the way in which they are proposing to earmark—to defer maintenance—as reflected in the amendment of the noble Baroness, Lady Young, is, I believe, misguided. We have therefore tabled Amendment No. 175 which is effectively an addendum to—not a replacement of—the amendment of the noble Baroness, Lady Young.
Why do we think that that is necessary? The amendment in the name of the noble Baroness, Lady Young, means that at the time of divorce, courts will determine that when the man retires the wife would receive the appropriate portion of the pension assets so far accumulated. He may remarry and 20 years later, when he receives his monthly pension cheque, he is expected to post off a cheque each month to his first wife.
Many men will honour the agreement. But what if they do not? As I have been reminded helpfully by a former Lord Chancellor, the two great problems of family law are women who refuse access to their children and men who refuse to pay maintenance. I ask your Lordships to think of the wreckage of the Child Support Agency. Second wives may well resent a portion of their monthly portion income flowing back to the first wife. They may encourage their husbands to delay or resist paying it. First wives who have had no contact with their former husbands will be forced back into a financial relationship and financial dependence on him, which neither party wants. Under that system, they
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will both have to keep track of each other's lives—where he lives; where she lives; whether he is going away for a few months; whether he is going into hospital; moving house; or perhaps even marrying for a third time. He may default on maintenance payments or he may pay late. He may pay one month but not the next if he suddenly faces an unexpected bill. He may move to Spain. He may die. I presume that the first wife will then be dependent upon the second wife continuing to forward the cheques. What will happen if she does not?
I suggest that although the amendment in the name of the noble Baroness, Lady Young, is well intentioned and we support the direction of it, the procedures by which it is delivered will ensure, hassle, uncertainty and distress. Do we really wish to put first wives, by now elderly women, through all that? Do we really wish to turn a 75 year-old woman pensioner into a litigant endlessly chasing through the courts a former pensioner husband from whom she divorced decades ago? That will clog up the legal system and will make considerable demands on the legal aid fund. Let us think of the emotional, administrative and financial costs involved.
In practice, family courts are already creaking under the strain. Families have to wait a long time before their cases are heard. The courts rightly give priority to urgent cases. Maintenance is not often regarded as urgent and those cases will end up at the back of the queue. The first wife may simply give up and remain permanently dependent on state benefits. Let us think of the cost of that.
There is another way of delivering what the noble Baroness, Lady Young, proposes. I hope to persuade your Lordships of it. Instead of the pension fund sending a cheque to the husband each month, from which he is supposed to forward a cheque to his first wife, the pension scheme should do that. Let us enable the pension fund to be the agent for the payment of maintenance. Let it send out two cheques; one to the husband, and the other to the first wife. In this age of computers, that is relatively straightforward. The scheme members' records are flagged with court orders in just the same way as records now are flagged with such details as the requirement to pay the guaranteed minimum pension. Those flagged records transfer with him and the commitment passes from one set of trustees to another. I was told this morning by the pensions section within Arthur Andersen & Co. that that is an entirely manageable arrangement.
If we make that arrangement, the first wife gets paid by the fund and not by the former husband. That is the only difference between the amendment tabled in the name of the noble Baroness, Lady Young, and my addition to it. The first wife would receive exactly the same sum; but she would be sure of receiving it. She would not have to pursue her former husband, and virtually all the problems associated with the Child Support Agency would be avoided. We would also avoid the situation where second marriages are in financial contest with first marriages, with first wives chasing errant husbands through the courts for pension income. A large bill for legal aid would also be avoided.
If the man does not remarry and dies before his former wife, there is no reason why she should not be regarded as the named beneficiary and receive her earmarked portion. In other words, if the pension scheme pays the cheque and not the husband, her fate would not depend on his fortunes. Above all, it would permit the clean break to continue. It would not force on both first wife and former husband an unwelcome continuity of the financial relationship. It respects the fact that we are not really talking about spousal maintenance at all, with its notions of dependency; we are talking about the first wife receiving as income a share of the capital asset that she helped build up while married to her former husband.
I repeat, we would prefer the courts to have full discretion as to which way they go; for example, offsetting, splitting or earmarking. But, if that is not acceptable to your Lordships, and if we are to go down the path of earmarking as suggested in the amendment of the noble Baroness, Lady Young, then I ask the House to support the version of earmarking by which the scheme rather than the former husband sends out the monthly cheque. We all dread a repeat of what happened with the CSA. By requiring the pension fund rather than the husband to deliver the divorce agreement, we would avoid most of those problems and achieve what we all want: greater fairness at the point of divorce. I beg your Lordships to press the Government to accept the addition that I propose to the welcome amendment tabled in the name of the noble Baroness, Lady Young. I beg to move.
3.30 p.m.
Baroness Young: My Lords, it may for the convenience of the House if I speak now to Amendment No. 225. In doing so, perhaps I may say at the outset how grateful I am both to my noble and learned friend the Lord Chancellor and to my noble friend Lord Mackay of Ardbrecknish for their help over the amendment and their sympathetic understanding of the problem. I should also like to say how pleased I am that the noble Baroness, Lady Hollis, and I have been able to work together on the amendment. I am especially pleased to hear that the noble Baroness will support my amendment which I believe marks a considerable advance in dealing with a very real problem.
When we last debated the matter, there was an incredible unanimity of view that something needed to be done to right an obvious injustice. Pensions are often the most valuable asset of a couple and, unless they are taken into account on divorce, the first wife can, and often does, find herself in a tragic situation, not infrequently dependent on social security in her old age or, should I say, after her retirement.
In that respect, I entirely agree with the noble Baroness, Lady Hollis of Heigham. In my entire public life I do not think that I have received quite so many absolutely tragic letters from women who have usually been left after 30 or 40 years of marriage and who find themselves on their retirement, if not on social security, in very straitened circumstances indeed; in fact, in circumstances which they never expected to experience.
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I have also received a number of letters from men. I should like to make it quite clear that anything I have said as regards this amendment, or previously, is not intended in any way to be an attack on men. They have said that, of course, there are cases where the wife goes off with a richer man and, therefore, why should they contribute. I hope that the amendment tabled in my name will be as fair as possible to both parties to a divorce.
However, there is just so much money to go round. Whereas the pension before divorce would have been for two people, now in all probability it will be for three. That is a fundamental fact that we have to face. As I understand it, under present law the courts are already under a duty to take loss of pensions rights into account on divorce settlements and have a wide range of powers available to them to compensate the party which loses such rights. But it is quite clear from my correspondence—and, I believe, that received by all your Lordships—and, I gather, from the early indications of the research being carried out by the Department of Social Security, that there is a wide difference between the law and the practice of it. In fact, what the law was meant to do is not actually happening.
I turn now to look at the amendment tabled in my name. It is an amendment to the Matrimonial Causes Act 1973 and would ensure that, where one or both parties to a divorce have pension rights, the court must consider their value. It would mean that the legal advisers for both parties to the divorce, as well as the couple themselves, would also have to consider pension rights. I believe that that marks a great step forward.
The proposed new Section 25B(1) specifies more fully the duty of the court to take into account pension rights when considering financial provision on divorce. The court would have to take into account any benefits under a pension scheme which a party to a marriage has or is likely to have in the foreseeable future. In addition, the court would also have to take into account any benefits under a scheme which a party would lose the chance of acquiring on divorce.
The proposed new subsection (2) clarifies what orders the court can make against the financial benefits which a party will receive or has received from a pension. In particular, it highlights the court's powers to make deferred maintenance orders and deferred lump-sum orders: deferred maintenance against the former spouse who has the pension rights (described as "the husband" for present purposes, although, of course, it may be the husband or the wife)—the husband's obligation to pay maintenance would come into effect when the pension was actually paid; periodical payments against a pension in payment or periodical payments (perhaps nominal only) which could be varied when the pension came into payment; deferred lump sums—the husband's obligation to pay the lump sum would come into effect when he received a lump sum or other financial benefit from the pension fund.
The court's powers in relation to pensions would be exercised in the context of its other powers regarding financial provision on divorce contained in Sections 21 to 27 of the Matrimonial Causes Act 1973. Apart from the proposed amendments relating to pensions, the

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discretion on making orders for financial provision will remain. That is important because it enables the court to reach an equitable solution in individual cases.
The court's duty to consider whether it would be appropriate for the parties' financial obligations to be terminated as soon after the divorce as the court considers just and reasonable—the so-called clean break principle—would remain. Where the court considers that compensation for loss of pension rights is appropriate in a particular case, it would consider whether a clean break could be achieved by, for example, ordering one party to transfer property or a lump sum to offset the loss. Where that was not possible, the court would have sufficient flexibility to decide that the clean break was inappropriate.
The proposed new subsection (3) refers to a related but separate point. At present, the Armed Forces legislation provides in effect that no order should be made by any court the effect of which would be to restrain the serviceman from receiving his service pension. Accordingly, there is considerable doubt as to whether a deferred lump sum or periodical payments order could be made against the serviceman's pension when it comes into payment. This anomaly is removed by the new Section 25B(3) in my amendment. It does this by making the powers given to the courts by the 1973 Act override the statutory provisions of the Army Act 1955, Sections 203(1) and (2) and similar legislative provisions in relation to the other Armed Forces which prevent court orders being made restraining a serviceman or woman from receiving pension benefits which he or she cannot assign.
Perhaps I may just add two or three other points. One point which must not be forgotten, which my amendment preserves, is the power of the court to vary financial provision orders under Section 31 of the Matrimonial Causes Act 1973. I think that this is very important. This power enables the court to vary an order for periodical payments, including payments which are secured. It means that if a wife—or a husband, whichever is the case—is concerned about the level of payments she is receiving, or will receive, perhaps because the pension is higher than was originally expected, she can apply to the court for the order to be varied. In exercising its powers the court is required to have regard to all the circumstances of the case, including all the factors mentioned in Section 25 of the 1973 Act. It will also therefore be under a duty to consider the pension rights as my proposed new Section 25B(1) will apply.
The circumstances of the case include any change in any of the matters to which the court was required to have regard when making the order to which the application relates. I think this flexible arrangement is valuable. It is not quite what is being proposed by the noble Baroness, Lady Hollis, but it means that the courts can take into account all the circumstances of individual cases, which are almost bound to vary in almost every case, and the changes which might take place in the pension of an individual person as he or she progresses through life. Therefore there may be a larger pension than was expected at the time of the divorce.
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I also wish to underline that this proposal is not retrospective. A number of people have written to me on this point. Of course it is a great sadness that those who have written these tragic letters will not be helped by the provision, but it will have the merit of helping people in the future. I believe we run ourselves into great difficulty as regards retrospective legislation and I would not wish to see that happen.
I also wish to make it clear—this has clearly not been quite straightforward to some of my correspondents—that the measure applies equally to men or to women. If the woman is the principal wage earner in the family and accumulates the pension, the same principles would apply to her as apply to the man in the case. I believe that there is one other merit of this provision. I have been in public life long enough to know that quite frequently when legislation is made it does not always work out entirely as was intended. None of us can be sure about that. This is a new field and there is great merit in proceeding one step at a time to see how it works before going further into matters. I would be the first to accept that in some respects this provision does not go as far as I would have liked, but it is a real step forward and I am grateful to my noble friends for the help that I have received on it.
While I am on my feet I should comment on the moving speech of the noble Baroness, Lady Hollis, when she spoke of how she would like to amend my amendment. I wish to answer one or two of the points that she has raised. As regards the Child Support Agency, I believe that its two weaknesses—there may have been others, but I have come across at least two—were, first, that its provisions were retrospective, which I think was a serious mistake, and, secondly, that the court did not have the freedom to take into account the individual circumstances of a case. Rules were laid down as to what someone had to pay and then it was found that the rules did not fit the case. Naturally enough people felt that the agency's provisions were unfair on both counts. I believe that is one of the difficulties which my amendment overcomes by giving the courts the opportunity to consider the different circumstances of the couple as life proceeds. A further difficulty concerns flexibility and the difficulties concerned with what has come to be called the "earmarking option". This would involve a pension scheme in identifying a portion of the husband's or wife's pension, as the case may be, calculated by use of the transfer value as if he were leaving the scheme and ring-fencing the amount for future payment via the scheme to the wife. In effect, pension rights would be regarded as deferred income.
I believe that my amendment offers a much greater flexibility of treatment by allowing the divorced couple to benefit from the wide-ranging powers of the courts which include, as I have already indicated, a clean break settlement by offsetting pension rights against other assets, a lump sum, compensatory payment or deferred maintenance order. The earmarking of pension rights, as described, would offer considerably less flexibility and could act to the detriment of both parties. For example, under the earmarking option, the ex-wife would effectively be in the position of greater dependency as

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the pension rights would continue to be in her former husband's name. She would have no say in any decisions taken by the former husband in respect of those pension rights and it would be open to him to make a transfer to another pension scheme, or a personal pension, without her agreement. She therefore might find herself in a worse position than she was at the beginning because by earmarking a portion of the accrued rights the eventual pension income for the former wife is effectively fixed, although it would be revalued within the normal rules of inflation proofing.
There is one other important point. The Government have made it quite clear that they will not agree to the splitting of SERPS or SERPS replacement benefits; namely, GMPs. As so many pension schemes are contracted out of SERPS, that would in any case mean that only a small amount of excess pension could be split. I understand that because of that the National Association of Pension Funds supports the amendment that I am moving which would avoid complicating still further the administration of pension schemes while making it clear to the courts that as part of the divorce settlement they should take into account future payments from the pension scheme once the husband has retired.
I do not wish to labour a number of points. I hope that the whole House will support the amendment that I have put down. I believe it marks a real advance. I believe that it will benefit many couples in the future and in particular the tragic cases of wives which I have mentioned. The more I have considered the matter, the more I think there are disadvantages in the amendment that the noble Baroness, Lady Hollis, has put down to my amendment, although I accept her sincerity in doing it. I beg to move.
The Chairman of Committees: My Lords, perhaps I should just indicate to your Lordships that although the noble Baroness, Lady Young, has perfectly properly spoken to her amendment—it is grouped with Amendment No. 174—and to the amendment to her amendment, I shall call it in the order in which it appears on the Marshalled List. I thought I should make that clear to the noble Baroness so that she would not feel it was being overlooked. It will be called.
Baroness Seear: My Lords, first, I wish to say from these Benches how glad we are that the Government have agreed to go some distance at any rate in redressing the genuine grievances of many divorced women. In the debate on Second Reading there was no doubt that throughout your Lordships' House there was a determination that something had to be done to relieve the real hardship and unfairness of the present system. Therefore, whatever happens as a result of today's debate, we shall at least be a step forward. That is something for which we shall all be grateful. It will have made the turmoil of the debate on this very long Bill well worth while even if nothing else were to come out of it, although we still live in hope that more will come out of it.
There have been two different approaches to the question today. I have put my name down to the amendment which was explained so fully and expertly by the noble Baroness, Lady Hollis. I do not intend to repeat
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the arguments she deployed. However, I should like to raise one or two major points and to emphasise some others.
The amendment in the name of the noble Baroness, Lady Young, lays down that the courts must take into account certain matters. Here I ask for clarification. It has been put to me that requiring the courts to take into account certain factors does not guarantee the extent to which the divorced wife may benefit. The court may take such matters into account but that does not tell us what the divorced wife can reasonably expect. I believe that rather stronger wording is required if there is to be any guarantee that the divorced wife will get a fair deal in old age. I am sure that when the Minister comments on the amendments, he will be able to clarify that point for us.
The other point that I want to stress is my agreement with what the noble Baroness, Lady Hollis, said about the desirability that the courts should have the maximum flexibility in deciding how the resources are to be allocated to the divorced parties. No two cases are alike. It is extremely difficult to lay down any hard and fast rules as to how a settlement should be arrived at or what the final decision should be. Surely it is for the courts, in their knowledge and their ability to establish the details of particular cases, to come to a decision as to what is the fairest and most appropriate way in which a settlement can be reached.
Therefore, I hope that your Lordships' House, having listened to the powerful arguments put forward by the noble Baroness, Lady Young, and the noble Baroness, Lady Hollis, will bear in mind the great variety of cases that will be dealt with, the experience that the courts build up in these matters and the wisdom that they have acquired and continue to acquire as more and more of these sad cases come forward. I hope that your Lordships will want to leave the maximum amount of decision making to the courts rather than laying down rules in advance.
The third point that I want to stress in emphasising what the noble Baroness, Lady Hollis, said, is the extreme desirability that the position of the divorced wife in relation to the pension should be independent of what she can screw out of her former husband. We hope that the law will lay down what she will receive. But if it is left for her to make sure that her former husband pays and the payment to her comes through her ex spouse, then I can foresee endless difficulties arising and endless confusion, quarrels and bad blood. That is the very thing that we all want to avoid. We are all agreed on the importance of the concept of the clean break. If divorce has to happen—and it happens all the time—one hopes that after the divorce is over the two parties can lead satisfactory lives and can have a civilized relationship with each other afterwards. But if there is always the potential for continuing wrangling over money the possibility of that happening is greatly reduced.
Surely it is not beyond the wit of the legislators and of the courts to arrange matters in such a way that the flow of income from the pension to the divorced wife goes directly from the pension fund itself and not through the spouse. It takes very little imagination to envisage the troubles that will be caused if it has to go through the ex spouse.

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I know that it will be said that under the law of the land it is not possible to split a pension and that the law would have to be changed. We have changed laws before. We are changing laws all the time. What else do we do in this House except change laws or invent new ones which subsequently have to be changed? Why should we jib at changing this particular law when so much hangs on getting it right? It must be apparent to all Members of your Lordships' House that it is far more satisfactory both for the divorced wife and the divorced husband if he does not have to deal with his former wife. He also has to deal with his existing wife, because I have no doubt that she will also have views on the matter. I have no knowledge of these things myself. More and more I think how sensible I am!
Surely it is obvious that the matter should be clear cut, in the hands of the courts, with payments made direct from the pension fund to the divorced wife and no further need for dealings between former spouses. In my observation of these matters, nothing brings out the worst in people more than divorce. We want to get the whole question dealt with and out of the way and make sure that the money is made available when the time comes and is paid directly, as of right, to the ex wife. I very much hope that your Lordships will support the amendment.
3.45 p.m.
Lord Mishcon: My Lords, if there is one thing that this House treasures it is an atmosphere in which your Lordships do not have to decide an issue on political lines but can decide on grounds of common sense and humanity. This is such an opportunity.
I was very interested by the speech of the noble Baroness, Lady Young. She pointed out that two main problems have been experienced in regard to the Child Support Agency. Perhaps I may remind her, if she does not remember, because she played an important part in the debate on the Bill that set up the agency, that both those weaknesses were pointed out in your Lordships' House before that Bill became law. I am very anxious, as I believe your Lordships will be, to ensure that we do not make the error of neglecting the arguments that have been advanced in your Lordships' House previously in regard to matrimonial matters.
Before the Matrimonial and Family Proceedings Act 1984 was passed there was much discussion about how we could handle divorce proceedings with humanity in order to ensure that the parties to divorce could live fresh lives. We thought also, as we should always think, of the children in a divorce. Therefore, that Act asked the courts to take into account the advantages of a clean break. Speaking as a practitioner, I can say that the courts have welcomed that opportunity. Experience has shown that the clean break provisions of that Act have led to amity where there might otherwise have been continued litigation and hostility.
When considering the amendments, and in particular the defect in the amendment to be moved by the noble Baroness, Lady Young, and to which she has spoken, we should remember this point. The noble Baroness, Lady Seear, has already referred to the matter. Can your
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Lordships imagine in practical human terms the atmosphere in the average second marriage, which may be newly-created, where this question of the portion of the pension is dealt with every month in the new matrimonial home? Every month the new wife sees the husband having to send off a remittance to the former wife. There would be no question of a sentimental attachment, which might be useful, just a continuous financial attachment.
Can your Lordships imagine the embarrassment of the husband in this continuing obligation? Can your Lordships imagine the litigation that follows when the husband is persuaded by the new wife, or however it may be, not to send off a remittance? A solicitor's letter arrives on behalf of the former wife stating, "Unless this is paid within the next seven days, an application will be made to the court". Take it for granted, my Lords, that an application is made immediately to the court on behalf of the wife for legal aid, as my noble friend Lady Hollis pointed out.
I should have thought that the Lord Chancellor might have a view on this, especially because he has had to bring before this House, in terms that we understood, this growing mass of funds which have to be supplied for legal aid. Many of us, including the noble and learned Lord the Lord Chancellor, have brought to this House the need of other people so deserving of legal aid who do not now receive it. Equality of justice hardly exists in this land. It exists for the very rich and for the very poor, but the people in the middle who cannot obtain legal aid do not find it easy to obtain justice, however much we value the phrase "equality of justice". Another group of people will be added to the applicants for legal aid.
I thought that what my noble friend and the noble Baroness, Lady Seear, said was quite right. Bravo Government for having conceded what you have conceded, having heard this House debate the matter; and bravo the noble Baroness, Lady Young, for her arduous work in pursuing this very proper clause. But do not let us walk into another error on a matter which is not in the slightest a political issue but a human, common sense matter. Please let us arrange for this portion of the pension to be paid directly by a third party, the pension fund; and do not let us add to the miseries of divorce—it is miserable enough—by passing the amendment of the noble Baroness, Lady Young, without passing the amendment moved by my noble friend Lady Hollis. Let us see which is the most humane way of dealing with the matter. I believe that the most humane way undoubtedly is to support the amendment in the name of my noble friend Lady Hollis.
Lord Bridges: My Lords, when we last debated the matter in Committee I supported the amendment moved by the noble Baroness, Lady Young, because I had some specific knowledge of the position of divorced wives of Crown servants living abroad who had not been able to make any provision for their own retirement. I am glad to be able to support her further amendment this afternoon. I am particularly happy that we have been able to move forward and at this stage of the

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proceedings have some real prospect of making provision to prevent such situations from occurring again.
I am much attracted by the logic of the amendment moved by the noble Baroness, Lady Hollis. At first sight it seems to provide a more complete answer to the difficulties that we face. In deciding which of the amendments to vote for, I shall certainly vote for that moved by the noble Baroness, Lady Young. I shall pay particular attention to whatever the noble Lord, Lord Mackay of Ardbrecknish, can tell us on some of the matters referred to today. For example, will it really be impossible for the Government to allow any of the benefits accruing under SERFS to be attached? That seems to be a material matter. Should we pay attention to the different legal language used in the three amendments? Amendment No. 174 states that:
"A matrimonial court may make a pensions adjustment order".
Amendment No. 175 states that:
"a court may take into account".
Amendment No. 225 states that:
"the court is to have regard".
Those of us who are not learned in the law would be grateful to have some guidance as to which of those legal expressions is more binding or more useful.
This is an important moment. Although we are not able to apply the provisions retrospectively—that would be wrong—and thus are unable to prevent the distress which is already occurring, we have a real opportunity today to prevent further misery. That is an issue on which I, like other noble Lords, have received most moving letters. I am anxious to do what we can to avoid that distress in future.
4 p.m.
Lord Simon of Glaisdale: My Lords, I confess that I am diffident in intervening in the debate. In the first place it is many years since I had the responsibility of presiding over the matrimonial jurisdiction of the High Court, and incidentally thereby presiding over the appellate jurisdiction from lower courts in matrimonial matters.
The second reason is that I am generally used to agreeing with the noble Baroness, Lady Hollis, and the noble Baroness, Lady Young. However, on this occasion I am impressed by the criticisms that have been made of both amendments. In my view, in addition they are far too complicated. I venture to agree with what was said by the noble Baroness, Lady Seear. We want to give the courts the widest jurisdiction to intervene with the utmost flexibility so to arrange the pension right as to work out equitably in the circumstances of the break-up of the marriage.
The crucial situation is where the pension right is virtually the sole major asset of the family. Some of the amendments tinker with the power to make a financial provision or to make a property adjustment order. But the difficulty really arises where there is no current income and no substantial property. Everything then turns on how the pension shall be dealt with.
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Before I go further, I should like to say at the outset how strongly I agree with what was said by the noble Baroness, Lady Hollis, the noble Baroness, Lady Seear, and the noble Lord, Lord Mishcon, that it is essential that the payment should be made direct to the wife by the administrators of the pension fund. As was pointed out, it is asking for trouble if the payment is channelled through the husband, and it is quite unnecessary. I venture to suggest that the amendments should be withdrawn and a much simpler amendment worked out for a later stage, giving the courts the widest power to do what they think right with the pension and, above all, to ensure that any adjustment of the pension is operated on behalf of the administrators so that it goes directly to the wife. To my mind that is far the most important point to arise from the debate.
The amendments have been moved in admirable speeches and they go right back to indicating the economic background to a marriage. A marriage is much more than an economy; it is a co-operative division of labour between husband and wife. In bearing the child, the wife inevitably suffers prejudice. Over and above the months of nausea and fatigue, over and above the hours of pain and peril, she inevitably suffers economically and financially. When that happens, she thereby frees her husband to seek economic advantage, and that is right and proper. However, where there is a division of co-operative labour in such circumstances, there arises the right or duty to ensure that the fruits of that labour are equitably delivered to the two parties. That is simple enough in current income.
I confess that I am in favour of community of property between husband and wife and, as he is a Scotsman, I fancy that the Minister may not be entirely inimical to that situation. But it is unnecessary to go so far. If we can deal equitably with the matrimonial home and its contents as well as with the pension rights, we will have tackled 95 per cent, or more of the problems that arise.
The other point on which the amendments focus is the inequity of the Divorce Reform Act 1969 which is now consolidated in the Matrimonial Causes Act 1973 before your Lordships. It is valuable to remember how the disastrous 1969 Act was sold to the public. We were told that it was a "Kiss and make up" Bill. Its predecessor was called the "Strengthening of marriage" Bill. If we look at what happened before the 1969 Act came into force, there were 62,000 decrees nisi; in 1991 there were 153,000 decrees nisi. That happened because at every stage the Act preferred facilitating divorce to giving justice to the married woman.
I am glad that my noble and learned friend Lord Hailsham of Saint Marylebone is in his place because he was spokesman in the other place on the Bill. He recognised at once the inequity, particularly that which arises from the provision that a husband could repudiate his wife after five years' separation, no matter what the balance of conduct was between them. In doing so, he could thereby deprive his wife of the pension, when one was in question and where it was the only asset.
Despite the warning, the Act went blindly on and has had the result not only of the break-up of marriages but the injustice to women that I ventured to describe. I

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should like to see all the amendments withdrawn and a much simpler scheme worked out for the Third Reading or to be taken in the other place.
However, there are other matters. I agree with all the detailed criticisms that have been made of each amendment. Another point is that the trustees, the administrators of the pension scheme, are intimately affected under any of the amendments and, above all, under the proposal that they should pay any moneys direct to the wife. However, there is no provision for their representation before the court, and that is essential. No doubt the details can be worked out by rules of court, but the omission cannot be passed.
Further, there is the question not only of the second or former wife, but there might be more than one former wife and their interests might be in conflict. There could be great differences according to when the marriage took place in relation to the accrual of the pension rights.
Admiring, as I presume to do, the features that have been urged, I very much hope that the amendments will be withdrawn. Whatever happens, it is essential that Amendment No. 225 in the name of the noble Baroness, Lady Hollis, should be passed so that the pension right is reallocated and given directly to the wife by the administrators of the pension fund and not channelled through the husband for the reasons that have been so powerfully and cogently expressed.
The Lord Bishop of Ripon: My Lords, the noble Baroness, Lady Seear, referred to the variety of circumstances surrounding divorce and the need for flexibility in the courts. I should like to illustrate that from a particular standpoint—that of the clergy of the Church of England. I believe that this may have some relevance also for other groups.
I listened with great attention to the noble Baronesses, Lady Hollis and Lady Young, and was grateful for their powerful arguments, on the basis of natural justice, for a change in the law. I wish to add one further argument to those which they put forward. It is that in the case of clergy and their wives, it may not be so much a matter of financial contribution to an accruing pension but rather the contribution which a wife sometimes makes to the work of clergy in parishes. Some wives—perhaps a decreasing number these days—support their husbands considerably in the work they do in a parish. Therefore, when sadly they reach the point of divorce, as occasionally happens, they feel profoundly aggrieved that after having given so much by way of energy, care and time to supporting their husband, there is nothing for them by way of pension provision. Sometimes there is a particular bitterness in the voices which I have detected in the letters that they have written.
I have listened carefully to the speeches that have been made by the noble Baronesses, Lady Hollis and Lady Young, to try to discern which of the amendments will meet the case of clergy and their divorced wives. I was particularly struck by the point made by the noble and learned Lord, Lord Simon of Glaisdale. If we are to go for a clean-break solution—and, like other noble Lords, I believe that to be right—it may be that in a clergy family there are no assets to set against the
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pension. As I understand it, the proposal of the noble Baroness, Lady Young, requires that if a clean-break solution is to be looked for it is to be done by offsetting other assets against future pension provision. However, clergy often have no other assets. They live in tied houses, their stipends are small and they may have nothing by way of accrued bank balances. Therefore, under the amendment proposed by the noble Baroness, Lady Young, I can see no way in which a clean-break solution can be arrived at. I am attracted by the amendment put forward by the noble Baroness, Lady Hollis.
Having spoken to the secretary of the Church of England pension scheme, I understand his preferred solution is that an opportunity be given for a matrimonial court to determine that accrued pension rights up to a particular moment can be divided as seems best to the court, that those should be kept separate and from that moment onwards a certain proportion should by right belong to the divorced wife. There will be no difficulty about the later allocation of money. The pension will be paid directly to the wife in due course, and in that way a clean break can be achieved. I very much hope that some kind of solution along the lines advocated by the noble Baroness, Lady Hollis, will be found.
4.15 p.m.
Lord Meston: My Lords, I hope that the House will allow another contribution from a practitioner in the field of matrimonial law. I wish to support Amendments Nos. 174 and 175 in the name of the noble Baroness, Lady Hollis, in preference to Amendment No. 225 to be moved by the noble Baroness, Lady Young, even if the valuable Amendment No. 226 is added to it. Although one may have reservations about the drafting of Amendment No. 174, it appears to provide a selection of solutions, including proper pension splitting on divorce. I regret to say that in reality it appears that Amendment No. 225 adds little to the existing law that governs matrimonial finance and property distribution in England and Wales. Under existing law the courts can and will in appropriate cases take account of resources which a party to a dissolved marriage may then have, or may have in the foreseeable future. The courts recognise a pension as such a resource, and their existing powers can be used to try—and I emphasise "try"—to compensate the wife for the disparity in positions in terms of pension rights.
Having read Amendment No. 225 and asked myself and, more importantly, other practitioners whether it will make any difference to the way in which most cases will be decided or settled, the response is: precious little. At best, it tells the court to have a little more regard to pensions on divorce and adds emphasis to the powers which the court already has. The fact is that without proper specific machinery for both evaluating and splitting pensions the loss of an actual or potential pension right or benefit will continue to be an imprecise, makeshift argument in most divorce cases. Alternatively, there will continue to be a temptation to defer orders relating to pension benefits, thus storing up

743
future litigation for the parties who really want certainty and as clean a break as the law now allows and encourages.
It has been said at previous stages of the Bill that the problem has been recognised and the merits and solutions discussed for over 25 years. In May 1993 there was the publication of a most comprehensive report of an independent working group appointed by the Pensions Management Institute. That diverse body of experts was able to produce a unanimous and authoritative report with firm recommendations. It is therefore unfortunate that against that background the noble Baroness, Lady Young, does not feel able to be a little less cautious. It is a great shame that such scant regard has been had by the Government to the detail of the PMI report.
Many other countries have or are introducing pension-splitting. I suggest that the time has come for this country to make a radical change, certainly something more radical than Amendment No. 225. There is no good reason why a sophisticated society should not be able to provide for pensions acquired in the course of a marriage to be fairly divided and for direct access to a pension fund to minimise litigation and manipulation by the other party. There should be a clear power to adjust designated pension rights and benefits.
Having said that, I recognise the concerns that the noble Baroness, Lady Young, has expressed and the benefits of what she proposes. But I hope that the House will prefer the amendment of the noble Baroness, Lady Hollis. The amendment of the noble Baroness, Lady Young, has the advantage, which practitioners will recognise, of dealing for example with the Armed Forces legislation. It is a great shame that there is not to be an express power, as the PMI report recommended, to provide orders that require the other party to the marriage to take out life assurance to cover loss of potential widow's pension. I support what has been said about the amendments to require direct payment from the pension fund rather than to require the wretched husband to continue to make payments long after the marriage has ended. The reaction of wife No. 2 to seeing a monthly cheque stub or standing order in favour of wife No. 1 may well be enough to send him into the arms of wife No. 3.
I hope that before this Bill leaves the House the Government will look again at the PMI Report to see what more can be done.
Lord Boyd-Carpenter: My Lords, I and perhaps most of your Lordships would be grateful if the Minister, at the beginning of his reply, clears up the procedural position in which your Lordships' House now finds itself. As I understand it, if it is moved we will debate Amendment No. 174. If it is carried there will be a case for saying that Amendment No. 225 does not arise. I do not know. I would be grateful to have my noble friend's answer to that. But I believe that we need to be clear as to what it is your Lordships have to decide in a few minutes after the Minister has spoken.
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This is a very important matter. As to the merits, I say only that I fully share the view expressed from all quarters of the House that where a pension is split the pension fund should pay the wife's portion direct to the wife so that the perpetual irritation of a husband having to make an instalment once a month or once a quarter is avoided. Quite obviously, that causes the greatest ill-will on both sides.
So I hope that my noble friend the Minister—I noticed that he listened to the debate with his usual care and attention—will guide us on the procedural position and will indicate also no doubt the views of the Government on the merits of the amendments.
Lord Mackay of Ardbrecknish: My Lords, the extent to which the House has debated this issue both today and in Committee is a measure of the strength of feeling which surrounds the question of how pensions should be treated on divorce. Let me say at once that the Government fully share the concerns voiced in the debates and echoed widely in the media and elsewhere.
I was asked by one noble Lord to give some legal advice. I do not know that I am entirely qualified to do so, given the other lawyers present in the House. I am now asked by my noble friend Lord Boyd-Carpenter to give some procedural advice. It seems to me that we are faced with Amendment No. 174, which is the amendment of the noble Baroness, Lady Hollis of Heigham. That is the one to which we are speaking at the moment. However, because the subject is the same, the amendment has been linked with the amendment of my noble friend Lady Young, Amendment No. 225. I do not feel that we could conceivably accept or have both of them and I hope to persuade your Lordships that the amendment of my noble friend Lady Young should be accepted. I hope that that clarifies that point. Of the other amendments, one is attached to Amendment No. 174 and one to Amendment No. 225.I believe that that is the position.
The three main points to be decided are whether we agree or disagree with Amendment No. 174 in the name of the noble Baroness, Lady Hollis of Heigham. Later we shall be asked to agree or disagree with the amendment of my noble friend Lady Young. There will be the further amendment of the noble Baroness, Lady Hollis of Heigham, about the method of payment and another amendment from my noble friend, which is almost consequential and which I hope that the House will accept. Perhaps, as I speak, the position will become clearer. It may not be absolutely clear at the moment as noble Lords are thumbing through their papers. However, I think that what we are asked is fairly clear.
In Committee, I promised that we would consider carefully all the arguments made for an immediate change in the law to see whether we could bring back at Report stage something which would meet the very real concerns expressed on all sides. Your Lordships will recall that I indicated a great deal of sympathy with those concerns. Discussions have gone on since the Committee stage and we have before us the amendments tabled by my noble friend Lady Young. I am happy to be able to say at the outset that the Government

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wholeheartedly endorse those amendments as drafted. I hope that the House will accept that that shows that the Government have listened, considered and responded in a positive and practical way.
In Amendments Nos. 174 and 175, the ones we shall deal with first, the noble Baroness, Lady Hollis, wishes to give the courts new powers to require pension schemes themselves to divide pensions between divorcing parties. I understand why some might be attracted to that approach. Indeed, the right reverend Prelate and the noble Lord, Lord Meston, have so indicated. While they were speaking, some noble Lords nodded and perhaps agreed. I can understand that some noble Lords might be attracted to that approach; however, it ignores all the complexities involved.
Your Lordships are invited to believe that such complexities are a figment of the Government's imagination. The noble Baroness, Lady Hollis, and I have spent some hours discussing these matters. Occasionally, I suspect she feels that all the complexities of the world and of the law can simply be removed with one wave of the hand. I am afraid that I do not believe that to be the case. Pension splitting of the kind envisaged by subsection (3) (b) of Amendment No. 174 would present the most formidable difficulties. Those difficulties were recognised by the PMI working group, by the Pension Law Review Committee and by many informed commentators. The noble Baroness argues that simple, cost free solutions are readily available. I can assure the House that there is simply no chance of finding simple solutions. Those of us who have spent many happy hours on the Bill—a small group will receive long service medals at the end of it—know, if nobody else does, that anything to do with pensions is far from simple. This is no exception.
Most of the problems arise from the intricate relationship between occupational pensions and other forms of pension provision, including personal pensions and the state earnings related pension scheme. It would be neither wise nor practicable to ignore that relationship.
Women are increasingly coming to enjoy the benefits of the growth in pension provision. By the year 2025, which we will be looking forward to later in our proceedings, virtually all women on reaching the age of 65 will receive a basic state pension, many at the full rate. Over one half of those women will also have an entitlement to their own occupational pension. That means that, as time goes on, more and more women, including those who divorce, will be able to look forward to a worthwhile pension when they retire. Of course, there will remain some women who, for one reason or another, will not have the opportunity to build up pension rights of their own, or who, because they are now in late middle age, will not substantially benefit from the improvements to which I referred. It is those women for whom it is particularly important to ensure that there is a means to derive some benefit from their former husband's pension rights.
But splitting pensions as envisaged is not the right solution. If it were to produce an equitable result, it would involve splitting all the different forms of pension provision. If we were to confine pension splitting to
746
occupational pensions alone, for example, we should rightly be criticised for excluding those whose partners are not able, or who do not choose, to join an occupational scheme and who either remain in SERFS or opt for a personal pension. To quote from the report of the PMI working group:
"It is outside our terms of reference to explore the full implications of all the difficulties in the context of the State scheme and to make recommendations on the changes needed but it would clearly lead to inequities if the courts were able to reallocate GMPs and protected rights but not SERPS pensions".
It is important to bear in mind that the PMI's deliberations, and indeed those of the Pension Law Review Committee, predated decisions on the reform in this Bill of the arrangements by which occupational pension schemes contract out of SERPS. Those reformed arrangements will simplify the future basis on which salary related schemes contract out by abolishing the requirement to provide a guaranteed minimum pension—the GMP—and requiring schemes instead to pass a test of overall scheme quality. That would almost certainly mean that such schemes would need one method for splitting pension rights accrued before 1997 which include a GMP and quite a different method for splitting pension rights accrued after 1997.
Splitting GMPs and the matching provisions which would be needed for splitting SERPS would introduce complexities of fairly nightmarish proportions. Much of that complexity arises from the fact that, until pension age is equalised in the next century, SERPS and GMP entitlements accrue at different rates for men and women. So splitting a man's GMP and SERPS entitlements, which have accrued on the basis of the number of years in his working life, and giving, say, half to the woman, whose working life is shorter, means that the value of the half acquired by the woman is in fact greater than one half of the man's original rights. Exactly the same considerations apply to the protected rights in a contracted out money purchase or personal pension scheme. In stark and simple terms, that means that SERPS would cost more; and that means that it costs the taxpayer more. But the matter becomes more complicated when other variables are added, such as how much SERPS and GMP entitlement the woman might have in her own right.
The problems do not end there. If a man has changed jobs, which he may have done several times in his working life, his GMP or protected rights may well have moved with him; and he may have had periods when he was not in a contracted out scheme at all.
The consequences of that kind of pension splitting would not only increase the costs of SERPS and add administrative costs to the state and private sector. There would be a further burden on the taxpayer through increased tax relief on the pension rights which have been split. That increase in tax relief arises partly from the fact that pension entitlements which are currently offset against one tax allowance would, under pension splitting, be offset against two tax allowances. And because both parties might seek to make additional contributions to enhance the value of their share of the pension rights, there would be a further cost to the taxpayer from the additional tax relief that these

747
contributions would attract. A very rough estimate puts the total potential loss of revenue to the Exchequer at something in the order of £300 million a year.
It has been argued that these costs would be more than offset by savings to be gained from a reduction in income related benefits on the part of the divorced partner who acquires new pension rights by virtue of the split. But it is important to remember that for each partner who gains something there is a corresponding loss for the other—and that loss could result in the loser having to claim income related benefits when they would not otherwise have to do so. Preliminary estimates suggest that the net reduction in income related benefits may be as small as £20 million—only a fraction of the potential costs. Indeed, the PMI working group itself quoted from a paper presented to the Faculty of Actuaries which noted that pension splitting would reduce the tax take for the state by more than the reduction in income support payments.
I hope that what I have said will be enough to convince the House of the formidable and costly administrative burdens on pensions schemes and on the taxpayer that we would be introducing if we were to go down the route of the kind of pension splitting which is referred to in Amendment No. 174.
I now turn to Amendments Nos. 175 and 226 and to paragraph 3(c) of Amendment No. 174. They address a different kind of pension splitting. The amendments would allow the courts to direct pension schemes to pay shares of the pension income which came on stream at retirement to the two different parties to a divorce. I detect that that view has some support in your Lordships' House. This is a form of pension splitting which the PMI working group also considered and which is usually described as "earmarking".
Earmarking would certainly have a less drastic effect than the other form of pension splitting. But it is not by any means straightforward. As I have already explained, people may move jobs quite frequently and have pension entitlements in a number of different pension schemes. The partner—for convenience, let us say the woman—seeking a share of those pension rights would have no say in the decision taken by the man in respect of those pension rights. It would be open to him to take a transfer to another pension scheme or to a personal pension without her knowledge or agreement. That would place administrative burdens on pension schemes. They would also be required to note in their records the wife's interest in the eventual pension to be paid and keep track of both parties. Schemes would be faced with the additional costs of processing two lots of pension payment instead of one. Earmarking is a form of deferred maintenance which would be much more costly and cumbersome to administer than the kind of deferred maintenance orders which the courts would be able to make by virtue of Amendment No. 225 and which offer both fairness and flexibility.
I listened carefully to the noble Lord, Lord Mishcon, who has considerable professional experience in these matters. I really do not think that earmarking is any more of a clean break than deferred maintenance. I understand the argument that the second or third wife
748
may feel aggrieved and nip her husband's ear when he has to send his contribution to his first wife. But I cannot believe that an indication of the contribution being paid to that first wife will not appear monthly in the pay slip which is sent to him from the pension company accompanying his pension. That is the only way in which he could possibly keep a track and make sure that the pension company was paying him the proper amount. So I do believe that neither of the ways we are looking at—the way I am suggesting it should be done or indeed the way the noble Baroness, Lady Hollis, is suggesting—is a clean break and both breach the principle that some people would like to attain of a clean break. But I think we are all agreed that if we are to deal amicably with this business of pensions, that is probably an inevitable conclusion.
Lord Simon of Glaisdale: My Lords, I am by no means enamoured of the concept of a clean break. But without going into any question of the clean break, does not the noble Lord see the social mischiefs, personal embarrassments and conflicts which would arise with the channelling of the pension through the husband?
Lord Mackay of Ardbrecknish: My Lords, I indicated that I understand that argument, but I also think that the argument that the other method will not bring to the attention of either the husband or the second or subsequent wife the fact that some money is going to the first wife is not valid. Somewhere or other the husband will have to have been shown by the pension company that he has been paid the proper amount of money and that the proper deductions have been made from his pay slip, if I may call it that, or his pension slip. Although I do not yet have a pension—I hope to survive today long enough to get one—I am sure that people expect from their pension company some kind of slip showing how much they are due to be paid and what the various deductions are.
Lord Mishcon: My Lords, I thank the noble Lord for giving way. Perhaps I may say on behalf of every member of the Opposition that we hope that he will have a pension very soon. As the Minister knows that he is dealing with a very delicate and important matter, I wonder whether he will comment on the fact that enforceability, which is obviously a problem when one is dealing with payments that are made through the husband to the first wife, just does not arise in a case where it is paid direct by the pension fund.
Lord Mackay of Ardbrecknish: My Lords, I understand that point, but, as I have just said, to go down the route which the noble Lord, Lord Mishcon, seems to favour would pass the buck, so to speak, and the administrative burdens and costs to the pension fund. I am simply saying that I do not think it is reasonable to do so. I cannot imagine what the noble Lord meant by my pension unless he thinks that he can somehow restrict the years between my present age and the current pension age. I cannot think what else he could possibly have meant.
The noble Baroness, Lady Hollis, suggested that pension splitting should not be mandatory; it should merely be an additional option available to the courts

749
for use in cases where the courts consider it appropriate. I have to say to her that making such a highly complicated and potentially costly option available to the courts would result in greater confusion for the divorcing parties and their advisers.
What is needed, and what is delivered by the amendments proposed by my noble friend Lady Young, is a means of ensuring that divorcing couples benefit from the wide range of powers already available to the courts for taking pensions into account. It is clear from most of the anecdotal evidence which has been quoted in the House and in the media that pension rights may not always be taken into account in divorce settlements.
That is borne out by the very recently received preliminary results of the research project which my department has commissioned—research which has quite wrongly been represented as being unnecessary. Interviews with a sample of divorced women whose husbands were in an occupational pension scheme reveal that some two-thirds of the women concerned say that pension rights were simply not discussed during the settlement process. I stress that this is only preliminary information from the research project but it is a very useful pointer to the direction in which we should be travelling.
I was asked to interpret what "taking into account" and various other words in my noble friend's amendment mean. I really think that it is my noble and learned clansman the Lord Chancellor who should have to do that, but I shall make a try at it. There is a duty on the courts, under the amendment proposed by my noble friend, to consider pension rights in the settlement. It is entirely at the courts' discretion—there is a lot of support for this—how they take account of these rights and what they do with them. That is the point of leaving this whole matter to the courts—to allow them to make a decision on the case they have in front of them.
I urge the House to accept Amendments Nos. 225 and 247 which are proposed by my noble friend Lady Young and which the Government are happy to accept. By making it clearer that pension rights must be taken into account in all divorce settlements, it will bring considerable benefits to a significant number of divorced women (and it will apply equally to men where it is the woman who has the pension rights). It will raise the awareness of divorcing couples and their advisers of the options available. It will enhance the flexibility for the courts to decide the most appropriate and equitable form of settlement, having regard to all the circumstances of each individual case. It will leave the courts free to vary the settlement at the request of either party should their financial or family circumstances change before, or after, the pension comes into payment. It will not prevent the courts from deciding on a clean-break settlement if that is feasible and desirable in a particular case. And it will avoid the enormous turbulence involved in disturbing every form of pension provision, which would be the inevitable consequence of pension splitting—with all of the difficulties and costs which I have described.
In short, Amendments Nos. 225 and 247 offer by far the best, quickest and most cost-effective prospect of achieving something really worth while for women. If it
750
is adopted, we shall of course keep the matter under review. And if it appears necessary in the light of experience and of the more comprehensive information that will become available from the research, we shall consider whether there is anything further that we might do. Some noble Lords have suggested that this Bill provides the one and only opportunity. I certainly hope and expect that the Government will not find it necessary to bring forward a pension Bill of this magnitude again in the foreseeable future. I imagine that that is echoed by a number of noble Lords. But pensions are continuing to evolve and develop and experience has shown that legislation in this field cannot stand still. Indeed, the present Bill has been preceded by five Bills in the past six years which have had some impact on pension arrangements of one kind or another. So it is more than likely that other opportunities will present themselves should the need arise.
This is an important and sensitive issue on which many strongly held views have been expressed. I hope that I have succeeded in clarifying some of the issues. I am extremely grateful to my noble friend for bringing forward a very constructive and workable amendment. I hope that the House will join with me in supporting it and that the noble Baroness, Lady Hollis, will feel able to withdraw her amendment.
4.45 p.m.
Baroness Hollis of Heigham: My Lords, first, I should like to thank the Minister for his full and helpful reply, and again thank the noble Baroness, Lady Young, for speaking so fully to her amendment at this stage and making clear what is intended by it. I echo what she said—that this an issue upon which all Members of your Lordships' House are seeking to find the best way of delivering something that is fair, decent and feasible.
In that context, I should like to make my procedural intentions as clear as possible, if that will help noble Lords and if it does not sound too inflated a way of putting it. I am in a dilemma with which I hope your Lordships will sympathise. I prefer Amendment No. 174. Many noble Lords might prefer Amendment No. 174. It would give the courts full discretion as to which path they should use in the light of family circumstances. But I took very seriously the comment of the noble Baroness that we have an opportunity of banking a substantial and worthwhile improvement—perhaps a step at a time. I do not want to lose the good through pressing what in my view—although it may not be shared by your Lordships—is the best.
What I should like to do, if I can persuade your Lordships to support me, is to ask you not to vote on Amendment No. 174, but instead to support Amendment No. 225 so eloquently spoken to by the noble Baroness, Lady Young, and, in addition, to support my Amendment No. 175 which is an addition to the amendment tabled by the noble Baroness; in other words, if there are any minor problems with that procedure, the other place can amend it.
What is the issue? The issue between those two amendments, and why I hope Amendment No. 175 will command your Lordships' support, is that it deals with

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what I call the CSA problem. The noble Baroness said that there were two problems with the CSA and that they are not raised in the Bill. She is right. The first of those problems is retrospection. She is right that, much as I would wish to, we cannot go down that path. Secondly, she said that the problem with the CSA is that it neglects individual circumstances. She is right, but the amendment would allow us to do that
However, there is a third problem with the CSA, which I fear, unless the House accepts my addition, we shall revisit, as my noble friend Lord Mishcon and so many noble Lords have said, and that is enforcing payment. That is the only difference between us. That is why it is so important to add to the amendment tabled by the noble Baroness, which I hope noble Lords will all support. Which provision is more likely to ensure a court's decision to provide a flow of income support to the spouse on retirement—depending upon the first husband or the pension fund? The question for your Lordships to consider is which will be more reliable in delivering the income that we all believe the first wife should have. Will it be if it comes from the fund or from the husband? Noble Lords should trust their experience and judgment. Noble Lords know that a pension fund will ensure a more reliable flow of income.
The Government have said that there are practical difficulties. I am sure that there are. There are practical difficulties in any scheme, otherwise we should have addressed the problem many years ago. We should not exaggerate the practical difficulties associated with the addition that I am asking your Lordships to support.
On divorce, the courts will have in any case to assess the cash value of the pension to make a fair allocation of the matrimonial assets. When that is done, the pension records will be flagged with that as part of the obligations of trustees. That is already done now. Many members' pension records are already flagged as to whether they have to pay the guaranteed minimum pension, with arrangements for named dependants, previous part-time service, backdating of equal pay and so on.
As I said, I talked this morning to a senior partner of the pensions and actuarial services company, Binder Hamlyn, within Arthur Andersen. I was told that what my addition would require is no different in principle from some of things already done by schemes today. He said that an extra flag on the records should be entirely manageable.
With your Lordships' consent, I shall withdraw Amendment No. 174. But I shall ask your Lordships to support Amendment No. 175, bearing in mind that that is an addition to the amendments so eloquently spoken to by the noble Baroness, Lady Young. It would not in any sense alter the apportionment of money between husband and wife, which would be determined by the courts, quite rightly. The addition would ensure that that apportionment of pension rights determined by the courts would flow securely to the wife.
There would be no need to ask an elderly lady of possibly 75 to pursue her husband through the courts, clogging-up the system, demanding legal aid and causing immense unnecessary distress to all parties. The choice is yours, but I hope that, while we cannot suggest
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a clean break, we can at least ensure a cleaner and more civilised way of ensuring that the first wife receives what the courts say is due to her—a flow of spousal income paid by the pension fund. I intend to withdraw Amendment No. 174, with the leave of the House, and hope that your Lordships will support me when I move Amendment No. 175 as an addition to the amendment tabled by the noble Baroness, Lady Young.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 175:
After Clause 82, insert the following new clause:
Pensions on divorce, etc
(" . In the Matrimonial Causes Act 1973, after section 25A there is inserted—
"Pensions.
25B. Notwithstanding the provisions of this or any other enactment, in making a financial provision order under section 23 above a court may take into account benefits under a pension scheme; and where the court so determines its order may bind a person who is not a party to the marriage but who is, or is likely to be in the foreseeable future, liable to pay any benefit under a pension scheme to a party to the marriage.".").
The noble Baroness said: My Lords, I wish to test the opinion of the House. I beg to move.
4.50 p.m.
On Question, Whether the said amendment (No. 175) shall be agreed to?
Their Lordships divided: Contents, 178; Not-Contents, 173.

Division No. 1

CONTENTS

Ackner, L.

Cox, B.

Acton, L.

Croham, L

Aldington, L.

Dahrendorf, L.

Airedale, L.

Darcy (de Knayth), B.

Allen of Abbeydale, L.

David, B.

Archer of Sandwell, L.

Davies, L.

Ashley of Stoke, L.

Dean of Beswick, L.

Attenborough, L.

Desai, L.

Avebury, L.

Diamond, L.

Bancroft, L.

Donaldson of Kingsbridge, L.

Barnett, L.

Donoughue, L.

Beaumont of Whitley, L.

Dormand of Easington, L.

Blackstone, B.

Dubs, L.

Bledisloe, V.

Eatwell, L.

Bottomley, L.

Elis-Thomas, L.

Braine of Wheatley, L.

Ennals, L.

Bridges, L.

Ezra, L.

Brightman, L.

Falkender, B.

Broadbridge, L.

Falkland, V.

Brookes, L.

Farrington of Ribbleton, B.

Bruce of Donington, L.

Fisher of Rednal, B.

Butterfield, L.

Foot, L.

Callaghan of Cardiff, L.

Freyberg, L.

Carmichael of Kelvingrove, L.

Gallacher, L.

Carter, L.

Geraint, L.

Castle of Blackburn, B.

Gibson, L.

Chapple, L.

Gisborough, L.

Charteris of Amisfield, L.

Gladwin of Clee, L. [Teller.]

Chorley, L.

Gladwyn, L.

Cledwyn of Penrhos, L.

Gould of Potternewton, B.

Clinton-Davis, L.

Graham of Edmonton, L.

Cocks of Hartcliffe, L.

Gregson, L.

Congleton, L.

Grey, E.

753

Halsbury, E.

Onslow, E.

Hamwee, B.

Oxford, Bp.

Harding of Petherton, L.

Perry of Walton, L.

Hardinge of Penshurst, L.

Perth, E.

Harris of Greenwich, L.

Peston, L.

Haskel, L.

Phillips of Ellesmere, L.

Hayter, L.

Plant of Highfield, L.

Healey, L.

Ponsonby of Shulbrede, L.

Henniker, L.

Porter of Luddenham, L.

Hilton of Eggardon, B.

Portland, E.

Hollick, L.

Prys-Davies, L.

Hollis of Heigham, B.

Raglan, L.

Holme of Cheltenham, L.

Rea, L.

Hooson, L.

Redesdale, L.

Houghton of Sowerby, L.

Richard, L.

Howie of Troon, L.

Ripon, Bp.

Hughes, L.

Ritchie of Dundee, L.

Hutchinson of Lullington, L.

Rix, L.

Hylton-Foster, B.

Robson of Kiddington, B.

Iddesleigh, E.

Rochester, L.

Inchyra, L.

Rodgers of Quarry Bank, L.

Irvine of Lairg, L.

Russell, E.

Jay of Paddington, B.

Sainsbury, L.

Jeger, B.

Seear, B. [Teller.]

Jenkins of Hillhead, L.

Serota, B.

Jenkins of Putney, L.

Shaughnessy, L.

Judd, L.

Simon of Glaisdale, L.

Kilbracken, L.

Simon, V.

Kinloss, Ly.

Slim, V.

Kirkhill, L.

Smith, L.

Lawrence, L.

Stallard, L.

Listowel, E.

Stedman, B.

Longford, E.

Stoddart of Swindon, L.

Lovell-Davis, L.

Strabolgi, L.

Macaulay of Bragar, L.

Taylor of Gryfe, L.

Mackie of Benshie, L.

Temple of Stowe, E.

Mar and Kellie, E.

Tenby, V.

Mason of Barnsley, L.

Thomas of Walliswood, B.

Mayhew, L.

Thomson of Monifieth, L.

McCarthy, L.

Thurlow, L.

McGregor of Durris, L.

Tope, L.

Mclntosh of Haringey, L.

Tordoff, L.

McNair, L.

Turner of Camden, B.

Merlyn-Rees, L.

Varley, L.

Meston, L.

Wallace of Coslany, L.

Milne, L.

Wedderburn of Charlton, L.

Milner of Leeds, L.

Whaddon, L.

Milverton, L.

Wharton, B.

Mishcon, L.

White, B.

Monkswell, L.

Wigoder, L.

Moore of Wolvercote, L.

Wilberforce, L.

Morris of Castle Morris, L.

Williams of Crosby, B.

Morris of Kenwood, L.

Williams of Elvel, L.

Mulley, L.

Williams of Mostyn, L.

Nicol, B.

Winchilsea and Nottingham, E.

Ogmore, L.

Wright of Richmond, L.

NOT-CONTENTS

Aberdare, L.

Blatch, B.

Abinger, L.

Blyth, L.

Addison, V.

Boardman, L.

Ailsa, M.

Borthwick, L.

Aldington, L.

Boyd-Carpenter, L.

Alexander of Tunis, E.

Brabazon of Tare, L.

Alexander of Weedon, L.

Brigstocke, B.

Allenby of Megiddo, V.

Brougham and Vaux, L.

Archer of Weston-Super-Mare, L.

Bruntisfield, L.

Buchan, E.

Ashbourne, L.

Buckinghamshire, E.

Astor of Hever, L.

Butterworth, L.

Astor, V.

Cadman, L.

Belhaven and Stenton, L.

Caithness, E.

Biddulph, L.

Campbell of Alloway, L.

Birdwood, L.

Carnegy of Lour, B.

Blake, L.

Carr of Hadley, L.

Blaker, L.

Cawley, L.

754

Chalker of Wallasey, B.

Merrivale, L.

Chelmsford, V.

Mersey, V.

Chcsham, L.

Miller of Hendon, B.

Chilver, L.

Mills, V.

Clanwilliam, E.

Monckton of Brenchley, V.

Clark of Kempston, L.

Monteagle of Brandon, L.

Cockfield, L.

Morris, L.

Coleridge, L.

Mottistone, L.

Cornwallis, L.

Mowbray and Stourton, L.

Courtown, E.

Munster, E.

Cranborne, V. [Lord Privy Seal.]

Murton of Lindisfarne, L.

Nelson, E.

Cullen of Ashbourne, L.

Noel-Buxton, L.

Cumberlege, B.

Norrie, L.

Davidson, V.

Northbourne, L.

Dean of Harptree, L.

Northbrook, L.

Dixon-Smith, L.

Northesk, E.

Dundee, E.

O'Cathain, B.

Eccles of Moulton, B.

Oppenheim-Barnes, B.

Eden of Winton, L.

Orr-Ewing, L.

Elliott of Morpeth, L.

Oxfuird, V.

Elton, L.

Pearson of Rannoch, L.

Falmouth, V.

Pender, L.

Fanshawe of Richmond, L.

Peyton of Yeovil, L.

Ferrers, E.

Platt of Writtle, B.

Fraser of Carmyllie, L.

Plummer of St. Marylebone, L.

Fraser of Kilmorack, L.

Prentice, L.

Gage, V.

Pym, L.

Geddes, L.

Quinton, L.

Goschen, V.

Rankeillour, L.

Gowrie, E.

Rawlings, B.

Gray of Contin, L.

Reay, L.

Gridley, L.

Renfrew of Kaimsthorn, L.

Haddington, E.

Renton, L.

Hailsham of Saint Marylebone, L.

Renwick, L.

Rodger of Earlsferry, L.

Hampden, V.

Rodney L.

Harmar-Nicholls, L.

Romney, E.

Harmsworth, L.

Salisbury, M.

Harrowby, E.

Savile, L.

Hayhoe, L.

Seccombe, B.

Headfort, M.

Selborne, E.

Henley, L.

Shannon, E.

Hives, L.

Shaw of Northstead, L.

Hogg, B.

Skelmersdale L.

Holderness, L.

Skidelsky, L.

HolmPatrick, L.

St. John of Fawsley, L.

Hood, V.

Stewartby, L.

Hooper, B.

Stodart of Leaston, L.

Howe, E.

Strange, B.

Inglewood, L. [Teller.]

Strathcarron, L.

Johnston of Rockport, L.

Strathclyde, L. [Teller.]

Killearn, L.

Strathcona and Mount Royal, L.

Kingsland, L.

Kitchener, E.

Sudeley, L.

Laing of Dunphail, L.

Swinfen, L.

Lane of Horsell, L.

Tebbit, L.

Lauderdale, E.

Terrington, L.

Lindsay, E.

Teviot, L.

Lindsey and Abingdon, E.

Thomas of Gwydir, L.

Long, V.

Trefgarne, L.

Lucas of Chilwoith, L.

Trumpington, B.

Lucas, L.

Ullswater, V.

Lyell, L.

Vaux of Harrowden, L.

Mackay of Ardbrecknish, L.

Vivian, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Wedgwood, L.

MacLehose of Beoch, L.

Whitelaw, V.

Macleod of Borve, B.

Willoughby de Broke, L.

Marlesford, L.

Wynford, L.

McColl of Dulwich, L.

Young, B.

McConnell, L.

Resolved in the affirmative, and amendment agreed to accordingly.
5.1 p.m.
Clause 103 [Disclosure of information]:
Lord Lucas Lord Lucas moved Amendment No. 176:
Page 62, line 28, after ("Schemes") insert:
("() the Official Receiver, or, in Northern Ireland, the Official Receiver for Northern Ireland,").
The noble Lord said: My Lords, this amendment adds the Official Receiver and the Official Receiver in Northern Ireland to the list of bodies with whom the Compensation Board may exchange information. This will enable the board to exchange information with the Official Receiver. I beg to move.
On Question, amendment agreed to.
Clause 105 [Breach of regulations]:
Lord Lucas Lord Lucas moved Amendment No. 177:
Page 63, line 12, at end insert:
("() Where by reason of the contravention of any provision contained in regulations made by virtue of this Part—

(a) a person is convicted of an offence under this Part, or

(b) a person pays a penalty under section 9,

then, in respect of that contravention, he shall not, in a case within paragraph (a), be liable to pay such a penalty or, in a case within paragraph (b), be convicted of such an offence.").
The noble Lord said: My Lords, in moving this amendment, I shall speak at the same time to Amendment No. 216. These amendments introduce changes to Clauses 105 and 135. Amendment No. 177 is concerned with breaches under Part I of the Bill and Amendment No. 216 with breaches under the Pension Schemes Act 1993.
These amendments provide that where a breach under Part I of the Bill, or the Pension Schemes Act 1993, attracts both a civil penalty and a criminal penalty, then someone who is required to pay a civil penalty fine in respect of such a breach cannot be prosecuted and convicted for the same breach. It also means that a person who is prosecuted and convicted of such a breach cannot also be required to pay a civil penalty fine in respect of it.
These amendments introduce a common sense clarification that is in line with natural justice and ensures that a person cannot be penalised twice in respect of the same breach. I beg to move.
On Question, amendment agreed to.
Clause 107 [Powers to modify this Part]:
Lord Lucas Lord Lucas moved Amendment No. 178:
Page 63, line 35, leave out subsection (3).
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 151.I beg to move.
On Question, amendment agreed to.
Clause 109 [Consultations about regulations]:
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 179:
Page 63, line 42, after ("consult") insert ("organisations representative of employers and").
The noble Earl said: My Lords, at Committee stage my noble friend the Minister moved similar amendments. That was most welcome. I invite him to move a little further forward.
If the Government intend to consult all interested parties on the minimum funding requirement, then it seems sensible to put on the face of the Bill the employer as an interested party. This amendment requires the Secretary of State to take account of the employer's view modifying the minimum funding requirement. It requires him to consider the effect on employers in varying the prescriptions governing time periods and method of calculation and to seek the agreement of both Houses of Parliament. It also requires him to publish the reasons for his decisions.
The amendment takes account of the need to re-examine the operation of the minimum funding regulations following experience of its operation. As such, it retains the proposed security for scheme members while minimising the danger of damaging error by providing a means of quickly rectifying unnecessarily stringent regulations. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, we firmly believe that there should be a statutory duty on the Secretary of State to consult about regulations. That is why we introduced Clause 109 during Committee stage. That clause requires the Secretary of State to consult people he considers appropriate. This will ensure that he consults those who have the relevant expertise, knowledge and experience to provide informed analysis and comment.
Current legislation requires my right honourable friend to consult the Occupational Pensions Board on all regulations to do with pension matters. But it does not require him to consult .anyone else. In practice, the Government have traditionally consulted widely on pensions legislation, both primary and secondary, and we shall continue to do so.
We recognise that these are complex, technical matters and that it is sensible to draw on the vast fund of knowledge built up over many years by professionals and practitioners. Indeed, it is largely due to the extensive formal and informal consultation which has taken place since the PLRC published its report that we have been able to fine-tune many of the provisions in this Bill. Perhaps I might take this opportunity to express my gratitude to the many individuals and organisations who have contributed so constructively to our deliberations. I look forward to their continuing contribution, both as the Bill proceeds through Parliament and when we turn to secondary legislation.
Listing organisations which should be consulted carries significant risks. Once one type of organisation is specified on the face of the Bill, it would be necessary to list all types of organisations that it might be appropriate to consult. As noble Lords will appreciate, any such list is unlikely to be exhaustive. Rather than get drawn into such a debate, it seems infinitely preferable not to start any list at all.
As I have said, it has always been our practice to consult widely on occupational pensions issues, including with employers' and employees' organisations. We will continue to do so in the future. This clause already allows for effective consultation to take place and I hope that this, with our already

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excellent record in this area and what I have just said will persuade my noble friend to withdraw his amendment.
The Earl of Buckinghamshire: My Lords, I thank my noble friend the Minister for his very full reply to my amendment. The Government have an exemplary record as regards consultation over these issues. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 [Amendments consequential on Part I]:
Lord Lucas Lord Lucas moved Amendment No. 180:
Page 105, line 32, leave out from ("1987,") to ("Occupational") in column 1, line 34 and insert ("at the end there is added— "20. The").
The noble Lord said: My Lords, this amendment revises the format of the insertion into the table in subsection (1) of the Banking Act 1987 to fit in with the rest of that table. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 181:
Page 107, line 43, leave out paragraph 35.
The noble Lord said: My Lords, in moving this amendment, I shall speak at the same time to Amendments Nos. 214, 227, 228 and 237. Although not commenced, there is provision in existing legislation to require salary-related occupational pension schemes to increase the part of the pension in excess of the guaranteed minimum pension by the rate of price inflation to a limit of 5 per cent.
This provision is no longer required. Your Lordships will be well aware that this Bill requires all occupational pension schemes to index pensions in this way. Amendment No. 228 makes the necessary change to the legislation and Amendments Nos. 181, 214 and 237 simply make consequential amendments that are necessary as a result.
Amendment No. 227 is needed to make it clear that Schedule 6 covers general and minor consequential amendments. Originally, Schedule 6 made amendments consequential on Part IV of the Bill, but the schedule needs to go wider than that so that Amendment No. 228 can be included. I beg to move.
On Question, amendment agreed to.
Clause 112 [Interpretation of Part I]:
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 182:
Page 64, line 30, leave out from ("means") to end of line 32 and insert (", where pensionable service has not terminated, the entitlement under the scheme had pensionable service terminated, and, where pensionable service has terminated, the actual entitlement under the scheme.").
The noble Earl said: My Lords, this amendment deals with the definition of "accrued rights" in the Bill. I do not understand from the Bill—perhaps more importantly nor do some sections of the pensions industry—how we would ascertain what are accrued rights within defined benefit schemes and how they should be determined. To put it another way, the definition of accrued rights in the Bill is meaningless in the context of a defined benefit scheme because, in my opinion, it lacks a point
758
in time by reference to which the rights are defined. As a result, it is not possible to ascertain under Clause 60, which deals with the powers to alter schemes, what rights have been acquired before the power is exercised. The amendment seeks to remedy that defect. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, I have no objection in principle to what my noble friend Lord Buckinghamshire has proposed. Indeed, I will go further—I welcome his contribution on this matter. Since the Bill was published, we have ourselves realised that the definition of accrued rights, especially the use of the term "prospective rights", is not as precise and clear as we should like it to be. But while I readily acknowledge that the definition of accrued rights contained in Clause 112 may not be correct, I fear that the one contained in the amendment is also flawed.
Our aim is to provide a definition which will apply whenever the term accrued rights is mentioned or implied in the Bill. This occurs in relation to the minimum funding requirement; in the definition of cash equivalent transfer values; in the calculation of preferential liabilities on scheme wind-up; in assignment and loss; and in alterations to scheme rules. So the definition needs to be able to encompass all rights under the terms of a pension scheme to which a person would have been entitled on a given date had pensionable service terminated on that date. Such rights will include contingent benefits such as ill-health benefits and widow's benefits, but not discretionary benefits. I do not think that the amendment deals with all those matters.
We recognise how important it is to get an accurate and all-embracing definition. We want to get it right, and to this end we have invited various pensions organisations with the right expertise to help us. They include the Association of Pension Lawyers, the Association of British Insurers, the Society of Pension Consultants, the Institute of Actuaries, the Faculty of Actuaries and the National Association of Pension Funds, who together make up the Occupational Pension Scheme Joint Working Group. They all have day-to-day experience of dealing with these matters, and I am sure that they have a valuable contribution to make. We shall of course carefully consider any suggestions that they put forward. I hope that we can then introduce a suitable government amendment in another place which will give the required definition.
While I am grateful to my noble friend for his helpful amendment, I hope that he will feel able to withdraw it on the understanding that we have to put forward our own amendment for consideration once we have completed the consultations that I have mentioned.
The Earl of Buckinghamshire: My Lords, I thank my noble friend for his reply to this crucial amendment. I wish him all success in his consultations with so many different bodies, and I hope that they come up with one answer. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 183:
Page 65, line 27, leave out ("solvency") and insert ("funding").
The noble Lord said: My Lords, this amendment was spoken to with Amendment No. 103. I beg to move.
On Question, amendment agreed to.
5.15 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 184:
After Clause 113, insert the following new clause:
Entitlement to share in occupational pension
(".—(1) If a resident of residential accommodation (other than a temporary resident) being a member of an occupational pension scheme, has a spouse (referred to in this section as "the remaining spouse") living other than in residential accommodation, the remaining spouse shall be entitled on application to the trustees of the scheme to receive one-half of the gross occupational pension which the resident would, apart from this section, be entitled to receive.
(2) Any payment made to the remaining spouse under subsection (1) of this section shall not be treated as the resident's income but shall be treated as the remaining spouse's income for all purposes.
(3) In this section—
"residential accommodation" means either accommodation provided under Part III of the National Assistance Act 1948 or accommodation in a nursing home or residential care home as defined in Regulation 19 of the Income Support (General) Regulations 1987 if such accommodation is not provided under Part III of the National Assistance Act 1948;
"resident" means a person provided with residential accommodation;
"temporary resident" has the same meaning as in the National Assistance (Assessment of Resources) Regulations 1992; and
"gross occupational pension" means the amount of occupational pension to which the resident is entitled before deducting any income tax which would, apart from this section, be payable on that pension.").
The noble Baroness said: My Lords, this amendment relates to the problems that face more and more elderly people who need to go into residential care. In moving Amendment No. 184, which deals with the treatment of the occupational pension in that situation, I should like to speak also to Amendment No. 195, which relates to the state pension in that situation.
Both amendments seek to respond to the distressing situation where one partner—usually the husband—goes into long-term residential care, possibly with Alzheimer's disease. Unless the husband has a very generous occupational pension, all his occupational pension will be taken to pay for his nursing fees, leaving his wife without any of the pension. She is then reduced to the state pension. However, she receives only the dependent wife's pension, a category B pension of £35 per week—that is the point which Amendment No. 195 seeks to address—as though she were living in a household of two people, rather than the £57 per week that she would receive if she were unmarried, divorced or widowed. The wife is left nearly destitute twice over—by the loss of her share of the occupational pension (the point that is covered by Amendment No. 184) and by receiving only the dependent wife's state pension rather than the full pension that she might otherwise have received in her own right. As I have said, that point is covered by Amendment No. 195.
Amendment No. 184 would allow such a wife, on application to the trustees, to retain half of the occupational pension, exactly as if she were widowed. Amendment No. 195 would allow such a wife to claim the full old age pension rather than the dependent wife's pension—again, exactly as if she were widowed.
In later old age, when health declines, husband and wife seek to care for each other. The burden often becomes too great. A spouse may have such poor physical health that he or she requires almost 24-hour nursing care with turning, toileting, feeding and general caring. The health of the other elderly spouse may then break down. The situation may be even worse if one party develops Alzheimer's. The spouse may struggle for years, seeking to provide care, until he or she can care no longer and residential care is inevitable. It is a very distressing time for both. The carer's health may be worn down. He or she will be exhausted. That spouse then finds that because of the cost of residential and nursing care, it is likely that the entire occupational pension (except for £13 per week) will be taken for the fees. The spouse—usually the wife—is left not only without half of the occupational pension on which she has been living, but also with a reduced state old age pension. From sharing with her husband an income of, say, £350 or £400 per week, the wife's income can fall to one-tenth of that—to, say, £35 per week. Yes, such a wife will be eligible for income support, but only if her savings amount to less than £8,000.
Everything that such a wife has done—her care for her husband which may have cost her her own health; their savings in the occupational pension for security in their old age; her modest cash savings of, say, £10,000—will be taken. She has lost her husband to Alzheimer's; she may have lost her health in caring for him, and she has lost virtually all of her income. It is not possible for her to live on £35 per week and keep up their home. However, if she sells the home to release some of the equity, half of it will be taken to pay the fees. She may not have enough to provide a home of her own. The situation is desperate.
I refer to Mrs. H. who is one of many who have written to me about this. She has cared for her husband, who has dementia, for the past 10 years. He is in a nursing home where the fees are well over £200 per week. The whole of his estate and all his occupational pension are used to pay for his care. Mrs. H. has no pension of her own—most elderly women do not have their own pension. She has had to apply for income support. Her social worker tried to argue that she should have a share of the occupational pension but, by law, she cannot. The wife, Mrs. H., asks:
"How else am I to pay the bills? We both have some money saved [less than £8,000] but this won't cover the repairs needed to the house … I am at my wits' end".
If I sound somewhat distressed about the matter I make no apology. These are some of the most distressing family situations that I have come across. She would be financially better off if he were dead. While he lingers, she is near destitute.
The Minister said in Committee that he had no evidence that there was a problem. Subsequently, he was kind enough to write to me to accept that, on the basis

761
of the evidence submitted to him by the Alzheimer's Disease Society and Age Concern, there was. Some 10,000 men and 5,000 women with occupational pensions are in residential care. Many have left their spouses behind at home in deep financial distress.
The Government said that the amendments would not necessarily benefit everyone, and I agree. It is clear that many people will not have occupational pensions sufficiently large, when split, to lift their partners above income support. That is true; but the fact that we cannot help everyone is not an argument for not helping those whom we can, provided that unfairness does not result. The Minister has never claimed that the measure is unfair.
The Minister said that it would be unfair if the remaining spouse had a large pension of his or her own and large savings. In that case, under the liable relative proceedings the spouse could still be required to continue to contribute to spousal maintenance.
Finally, in Committee the Minister said that such an amendment was not necessary because local authorities already have the power or the discretion to waive part of the cost of residential fees. Two points arise. They may have the power but they almost never exercise it because, on the part of the local authority, not to take the whole of the husband's pension would be a voluntary forgoing of income. And that at a time when the financial situation for social services, given the pressure of care in the community, is already so tight that local authorities are not only abandoning discretionary services but are having a hard time maintaining the statutory services that they must. When local authorities are having to make an economic charge of £8 per hour for a home help, one cannot reasonably expect them voluntarily to forgo a discretionary charge.
In any case, the estimate for the income coming from these charges has been built into local authorities' standard spending assessments. The Government expect local authorities to raise that money whatever the cost to the families concerned. Therefore, they cannot forgo. The Alzheimer's Disease Society and Age Concern have trawled local authorities and discovered that virtually none can allow the spouse at home to keep more than, say, £5 or £10. The wife is left near destitute.
I hope that the Government will ask us to remit the amendment to them in order that they can consider it further. If not, I ask your Lordships whether it is reasonable, decent and just that a spouse who has cared for a partner in declining health and then loses him to Alzheimer's disease and to residential care, should then lose all the family income associated with that.
There is an alternative which is provided by Amendment No. 184. It is that in such circumstances the wife would have recourse to the trustees to receive that share of the pension that would be the equivalent of her being widowed. I hope that your Lordships will agree that that is a decent and humane way to proceed. I beg to move.
Baroness Seear: My Lords, I apologise that I was not in my seat when the noble Baroness began to speak to the amendment to which I too have attached my name. There is little to add; the case is self evident.
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Surely, it cannot have been anyone's intention that the pension should disappear when a spouse goes into a residential home. After all, one allows one's closest partners and relations to go into a residential home only when the situation has become grim. That could never have been the Government's intention and this is an opportunity to correct a situation that badly needs correcting. The case has been powerfully made out by the noble Baroness, and we strongly support it.
Lord Mackay of Ardbrecknish: My Lords, we discussed the matter at length in Committee. As I said then, I believe that the underlying issue relates to the provision of the national assistance charging regulations and the way in which local authorities use their discretion under those regulations when one member of a couple has an occupational pension and moves into residential accommodation. As I promised, I passed on the anxieties raised by the noble Baroness, Lady Hollis, and other noble Lords to my right honourable friend, Mrs. Bottomley, the Secretary of State for Health. I assure your Lordships that the issue is being considered most carefully.
As I explained in Committee, at present it is left to the local authorities, using Department of Health guidance, to decide whether it will be beneficial to a particular resident spouse—and each individual case may be judged on its merit—as to how much they take from a pension. We expect local authorities to take into account the individual circumstances of each case; for instance, the previous living standards or particularly high outgoings. Anyone who is not satisfied with the way in which a local authority has exercised its discretion has recourse to the local authority complaints procedure, which all local authorities must operate in relation to their social services.
Since the previous debate, I have written to the noble Baroness apologising for the misunderstanding that occurred regarding evidence that local authorities were refusing to exercise their discretion in cases where a resident's entire occupational pension is taken into account towards the charge for his accommodation. From what I said a moment ago about the Department of Health circular, your Lordships will realise that that is certainly not our intention. We have now seen the briefing material from Age Concern. I must say that while of course the cases quoted and those quoted today by the noble Baroness are tragic, they do not actually show that local authorities have refused to exercise their discretion to allow residents to make a proportion of their occupational pensions available to their wives. Indeed, I invited Members of the Committee to produce hard evidence of examples where authorities had not exercised their discretion reasonably. Apart from the briefing note from Age Concern, I have not received any further material. If I receive any such material, I shall pass that evidence on to my right honourable friend.
I note that the noble Baroness said that local authorities are not exercising their discretion in that area. But the fact is that they have the discretion and before believing that we can proceed, I should like evidence that there is a widespread failure to use the

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discretion in a sensible and sympathetic way. Certainly, we expect local authorities to do that, as does the Department of Health in its circular.
The second amendment seeks to extend the scope of what are known as the "substitution provisions" in the state pension scheme to married couples where one member is in residential accommodation. As I explained in Committee, the substitution provisions allow people whose marriages have ended by death, divorce or annulment and who do not remarry before reaching pension age to improve their basic pension entitlement by substituting their former spouse's contribution record for their own for the period up to the termination of the marriage. Separated couples do not come within the scope of the substitution provisions because where a couple are not residing together the woman is still able to claim a married woman's pension. The married woman's pension is paid at a lower rate than the standard basic pension and I can understand the noble Baroness's reasons for wanting to improve the position of people in the circumstances that she has described.
However, amending the legislation in the way proposed by these amendments would not necessarily benefit everyone concerned, in particular in cases where the remaining spouse receives an income-related benefit—commonly income support. All income-related benefits must take pensions fully into account. In these cases, the spouse at home would benefit only if the amount of pension that she received was substantial enough to lift her entirely above the level of income-related benefit that she received.
On the other hand, the spouse at home may have very substantial resources. It could not be considered to be an appropriate use of the limited public funds available if people in those situations were allowed to retain a share of the occupational pension while the spouse in care was having to be supported by the local authority or through the benefit system.
However, as I hope I made clear in Committee, I have a great deal of sympathy for what is being said, but I believe that the issue goes a good deal further than the question of rights in pension schemes. As I said earlier, I have referred the matter of residential charges to my right honourable friend the Secretary of State for Health and I can only reiterate that she is considering the issue very carefully indeed. Once again, I shall pass on the points made in this afternoon's debate to my right honourable friend so that she can take them into consideration.
In the light of the assurance that we are not unmindful of the problem and that it is being looked into, I hope that the noble Baroness will withdraw the amendment.
Baroness Hollis of Heigham: My Lords, I thank the Minister for that conciliatory and sympathetic reply. But the problem is that we are no further forward. The Government have one basic argument; namely, that local authorities have the power to exercise discretion. The Minister is not aware whether or not that discretion is being exercised, and until he has evidence of that he is not willing to move. I do not believe that that is a travesty of what he said.
764
First, both Age Concern and the Alzheimer's Disease Society have carried out a trawl of a number of local authorities and have reached two conclusions. First, there is wide variation in practice; but, secondly, even within a region or within a county with metropolitan authorities responsible for social services, very few local authorities exceed by more than £5 or £10 per week the £13 which they are required to recycle back to the home.
I am surprised that the Minister has not received the material that I have received from Age Concern and the Alzheimer's Disease Society. One of its county officers told Age Concern that although at one time the local authority had regularly used the discretion, it rarely did so now because of its financial situation. We know that from our own experience. All local authorities are having to cut back on every discretionary service in order to provide the statutory services to which they quite rightly give precedence, particularly when the Department of the Environment not only actively expects local authorities to charge but penalises them through the standard spending assessment if they do not. Those are the facts.
It is because of that that I wish to pursue the amendment. The amendment provides that, if some authorities are following that course but a few are not, we shall bring bad practice up to good. If most authorities are not exercising their discretion, which appears to me to be the case, there is an even bigger problem of acute emotional and financial distress which we need to address. This amendment will ensure that, wherever you live, the response of local authorities when someone is taken into residential care will be broadly the same. It is the equivalent of national guidelines. We need this provision now and I am going to ask the House to support the amendment.
5.33 p.m.
On Question, Whether the said amendment (No. 184) shall be agreed to?
Their Lordships divided: Contents, 159; Not-Contents, 183.

Division No. 2

CONTENTS

Ackner, L.

Chorley, L.

Acton, L.

Cledwyn of Penrhos, L.

Addington, L.

Clinton-Davis, L.

Airedale, L.

Combermere, V.

Alanbrooke, V.

Congleton, L.

Allenby of Megiddo, V.

Cornwallis, L.

Archer of Sandwell, L.

Craigavon, V.

Attenborough, L.

Croham, L.

Avebury, L.

Dahrendorf, L.

Balfour of Burleigh, L.

Davies, L.

Bancroft, L.

Dean of Beswick, L.

Barnett, L.

Desai, L.

Beaumont of Whitley, L.

Diamond, L.

Birkett, L.

Donaldson of Kingsbridge, L.

Blackstonc, B.

Dubs, L.

Bottomley, L.

Eatwell, L.

Broadbridge, L.

Elis-Thomas, L.

Brookes, L.

Ennals, L.

Bruce of Donington, L.

Ezra,L.

Carmichael of Kelvingrove, L.

Falkender, B.

Castle of Blackburn, B.

Falkland, V.

Chapple, L.

Farrington of Ribbleton, B.

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Fisher of Rednal, B.

Mishcon, L.

Fitt, L.

Monkswell, L.

Foot, L.

Moore of Wolvercote, L.

Freyberg, L.

Morris of Castle Morris, L.

Gallacher, L.

Morris of Kenwood, L.

Geraint, L.

Mulley, L.

Gibson, L.

Nelson, E.

Gladwin of Clee, L.

Nicol, B.

Gladwyn, L.

Ogmore, L.

Gould of Potternewton, B. [Teller.]

Oxford, Bp.

Park of Monmouth, B.

Graham of Edmonton, L.

Perry of Walton, L.

Gregson, L.

Peston, L.

Grey, E.

Phillips of Ellesmere, L.

Halsbury, E.

Plant of Highfield, L.

Hamwee, B.

Portland, E.

Harris of Greenwich, L.

Prys-Davies, L.

Haskel, L. [Teller.]

Rea, L.

Hayter, L.

Redesdale, L.

Healey, L.

Richard, L.

Henniker, L.

Ripon, Bp.

Hilton of Eggardon, B.

Ritchie of Dundee, L.

Hollick, L.

Robson of Kiddington, B.

Hollis of Heigham, B.

Rochester, L.

Holme of Cheltenham, L.

Rodgers of Quarry Bank, L.

Hooson, L.

Roskill, L.

Houghton of Sowerby, L.

Runciman of Doxford, V.

Howie of Troon, L.

Russell, E.

Hughes, L.

Saltoun of Abernethy, Ly.

Hylton-Foster, B.

Seear, B.

Iddesleigh, E.

Sefton of Garston, L.

Inchyra, L.

Serota, B.

Irvine of Lairg, L.

Shaughnessy, L.

Jay of Paddington, B.

Smith, L.

Jeger, B.

Stallard, L.

Jenkins of Hillhead, L.

Stedman, B.

Jenkins of Putney, L.

Stoddart of Swindon, L.

Judd, L.

Strabolgi, L.

Kilbracken, L.

Strafford, E.

Kirkhill, L.

Swinfen, L.

Lawrence, L.

Taylor of Gryfe, L.

Listowel, E.

Temple of Stowe, E.

Longford, E.

Tenby, V.

Lovell-Davis, L.

Thomas of Walliswood, B.

Macaulay of Bragar, L.

Thomson of Monifieth, L.

Mackie of Benshie, L.

Tope, L.

Mar and Kellie, E.

Tordoff, L.

Mason of Barnsley, L.

Turner of Camden, B.

Mayhew, L.

Varley, L.

McCarthy, L.

Wallace of Coslany, L.

McConnell, L.

Wedderburn of Charlton, L.

McGregor of Durris, L.

Westmorland, E.

Mclntosh of Haringey, L.

Whaddon, L.

McNair, L.

Wharton, B.

Merlyn-Rees, L.

White, B.

Meston, L.

Williams of Elvel, L.

Milne, L.

Williams of Mostyn, L.

Milner of Leeds, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Aberdare, L.

Biddulph, L.

Abinger, L.

Birdwood, L.

Addison, V.

Blake, L.

Ailsa, M.

Blaker, L.

Aldenham, L.

Blatch, B.

Aldington, L.

Bledisloe, V.

Alexander of Tunis, E.

Blyth, L.

Alexander of Weedon, L.

Boardman, L.

Annaly, L.

Borthwick, L.

Ashbourne, L.

Boyd-Carpenter, L.

Astor of Hever, L.

Brabazon of Tara, L.

Aslor, V.

Braine of Wheatley, L.

Barber, L.

Brougham and Vaux, L.

Belhaven and Stenton, L.

Bruntisfield, L.

Belstead, L.

Buchan, E.

Bethell, L.

Buckinghamshire, E.

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Butterfield, L.

Lucas of Chilworth, L.

Butterworth, L.

Lucas, L.

Cadman, L.

Lyell, L.

Caithness, E.

Mackay of Ardbrecknish, L.

Campbell of Alloway, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Carlisle of Bucklow, L.

Carnegy of Lour, B.

Macleod of Borve, B.

Carnock, L.

Marlesford, L.

Carr of Hadley, L.

McColl of Dulwich, L.

Chalker of Wallasey, B.

Merrivale, L.

Charteris of Amisfield, L.

Mersey, V.

Chelmsford, V.

Miller of Hendon, B.

Chesham, L.

Mills, V.

Chilver, L.

Milverton, L.

Clanwilliam, E.

Monckton of Brenchley, V.

Clark of Kempston, L.

Monteagle of Brandon, L.

Coleraine, L.

Montgomery of Alamein, V.

Coleridge, L.

Morris, L.

Courtown, E.

Mottistone, L.

Cranboroe, V. [Lord Privy Seal.]

Mowbray and Stourton, L.

Munster, E.

Cumberlege, B.

Murton of Lindisfarne, L.

Davidson, V.

Noel-Buxton, L.

Dean of Harptree, L.

Norrie, L.

Dixon-Smith, L.

Northbrook, L.

Dormer, L.

Northesk, E.

Dundee, E.

O'Cathain, B.

Dundonald, E.

Onslow, E.

Eccles of Moulton, B.

Oppenheim-Barnes, B.

Eccles, V.

Orkney, E.

Eden of Winton, L.

Orr-Ewing, L.

Elliott of Morpeth, L.

Oxfuird, V.

Elton, L.

Parkinson, L.

Falmouth, V.

Peyton of Yeovil, L.

Ferrers, E.

Plummer of St. Marylebone, L.

Fraser of Carmyllie, L.

Gage, V.

Prentice, L.

Gisborough, L.

Pym, L.

Glenarthur, L.

Quinton, L.

Goschen, V.

Rankeillour, L.

Gowrie, E.

Rawlings, B.

Gray of Contin, L.

Reay, L.

Haddington, E.

Rees, L.

Hailsham of Saint Marylebone, L.

Renfrew of Kaimsthorn, L.

Renton, L.

Hambro, L.

Renwick, L.

Hardinge of Penshurst, L.

Rodger of Earlsferry, L.

Harmar-Nicholls, L.

Romney, E.

Harmsworth, L.

Salisbury, M.

Harrowby, E.

Savile, L.

Hayhoe, L.

Seccombe, B.

Henley, L.

Selborne, E.

Hives, L.

Shannon, E.

Hogg, B.

Shaw of Northstead, L.

Holderness, L.

Simon of Glaisdale, L.

HolmPatrick, L.

Skelmersdale, L.

Hood,V.

Skidelsky, L.

Hooper, B.

Slim, V.

Hothfield, L.

St. John of Fawsley, L.

Howe, E.

Stevens of Ludgate, L.

Inglewood, L. [Teller.]

Stewartby, L.

Jellicoe, E.

Stodart of Leaston, L.

Jenkin of Roding, L.

Strange, B.

Johnston of Rockport, L.

Strathclyde, L. [Teller.]

Killearn, L.

Strathcona and Mount Royal, L.

Kimball, L.

Kingsland, L.

Sudeley, L.

Kinnoull, E.

Swansea, L.

Kitchener, E.

Teviot, L.

Laing of Dunphail, L.

Thomas of Gwydir, L.

Lane of Horsell, L.

Trefgarne, L.

Lauderdale, E.

Trumpington, B.

Leigh, L.

Ullswater, V.

Lindsay, E.

Vaux of Harrowden, L.

Lindsey and Abingdon, E.

Whitelaw, V.

Long, V.

Willoughby de Broke, L.

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Wise, L.

Wynford, L.

Wolfson, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.45 p.m.
Lord Freyberg Lord Freyberg moved Amendment No. 185:
Before Clause 114, insert the following new clause:
("DSS War Widows pensions
. A widow of a member of Her Majesty's forces whose death in service or retirement was adjudged to be attributable to service, who presently loses or has lost her War Widows pension on remarriage, shall on second bereavement or failure of the second marriage have her DSS War Widows Pension (and in the case of a widow of a deceased member of Her Majesty's forces who retired or died in service before 31st March 1973 also her DSS ex gratia supplement) restored automatically.").
The noble Lord said: My Lords, this new clause stems from an earlier one which was narrowly defeated in Committee. It proposes a cheaper option in that it seeks not a pension for life but to alleviate the severe need of war widows who have remarried, been widowed again or divorced. While many war widows receive a more than adequate pension, these have no pension at all, let alone an adequate one. They are mostly older war widows, and many are in severe financial difficulties simply because they sought the security of marriage.
The proposed new clause asks that a war widow who remarries and loses her husband a second time should be granted the automatic restoration of the DSS element of her war widow's pension. Presently, there is no provision whatever for the restoration, let alone the guaranteed restoration, of the DSS war widow's pension. It would be more in line with the lowest provision throughout Europe—that is, in comparable armed forces pension schemes—though still far beneath the provisions of the vast majority of occupational pension schemes, where a pension for life is the norm.
Today there are around 48,000 war widows who receive a war widow's pension. Twenty five years ago, there were about 112,000—more than double that figure. Ten years later—fifteen years ago—that number of 112,000 had dropped to 74,000. That was because during the 1970s most First World War widows reached their seventies and eighties. In the next 10 years we can expect a similarly dramatic reduction in the number of war widows because today's 48,000 war widows, the vast majority of whose husbands served in the Second World War, have also reached their seventies and eighties. About 80 per cent, of them, almost 40,000, are over 70 years old, and about 40 per cent, are over 80 years of age. As they die at an inevitably ever increasing rate, the cost of war widows' pensions will also sharply decrease.
The Minister quite correctly stated that once a war widow remarries she ceases to be a widow. He also said on 2nd March in reply to a Starred Question that he assumed that the second husbands of war widows would make some provision for them. Underlying those statements, and the pension provisions themselves, is the dangerous assumption that a war widow's remarriage will last and that she will not be bereaved again for a considerable period of time. That lays a heavy burden
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on the widow considering remarriage. She has already suffered a profound trauma in losing her husband, usually in violent circumstances; but now she is expected to choose between the possibility of future happiness and the certainty of pension'earned by her husband's death. That is a cruel pressure to put on anyone. Such are the uncertainties of personal relationships that it is impossible for her to know whether she is making the right decision.
Sadly, a large number of remarried war widows will be widowed again, some after only a short time. Most of the former war widows about whom we are speaking are from a generation who stayed at home and relied on their husbands for their financial well-being. Who can be assumed to look after them when they are on their own, if the Government have taken away their first, prematurely-dead husband's legitimate pension? On the other hand, in other allied and European countries with comparable war pension schemes that problem does not arise. Britain, alone, refuses to make any provision for the guaranteed restoration of the basic DSS war widows pension for the remarried war widow should she divorce or be widowed a second time.
Of the 14 comparable pension schemes, eight countries—Australia, Belgium, Canada, Denmark, Holland, Italy, New Zealand and South Africa—give their war widows a pension for life. Five others—Spain, France, Germany, Israel and Norway—automatically restore their war widows' pensions after second bereavement or divorce. Those countries, quite properly, recognise the special nature of what those war widows have endured.
Perhaps this is a good moment to remind ourselves why members of the Armed Forces are in such a unique position. First, a serviceman's liability is unlimited in that he is routinely expected to put his life on the line. With the risks so high, it is only reasonable that the safeguards should be too. Instead, at the moment, a war widow enjoys less security than the widow of anyone with an ordinary occupational pension. The reason is that 84 per cent, of occupational pension schemes grant a widow a pension for life regardless of marital status. There is no such provision for the war widow under either the DSS war widows' pension or the MoD occupational pension scheme.
Furthermore, the serviceman is required to adhere to a special discipline code which produces restrictions on personal liberty. He cannot leave his job at will by giving a month's notice. He cannot take part in an active trade union and has no right to strike. He is subject to postings at short notice every few years, and in practice these last for 18 months or less. This poses enormous strains on wives and families, with long periods of compulsory separation. Indeed, the life of a service wife is governed far more by the restrictions on her husband than in any other profession and in this way she herself contributes to her husband's pension.
Moreover, thanks to the constant moving that her husband's profession requires—26 times in 30 years is not untypical—service wives do not have the freedom to pursue their own careers and secure their own pension rights—something most civilians take for granted. This is particularly the case for overseas postings, which

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were far more numerous 25 years ago than today, and which affect members of all branches of the Armed Forces. Not only was it hard for wives to find work locally but even those who did would not have been able to make the normal national insurance contributions. It is this generation of war and service widows with whom we are primarily concerned today.
The Minister has described at length the generosity of most war widows' pensions. This is not, and has never been, in doubt since the Government were obliged by parliamentary and public pressure to improve the pensions for older service war widows in 1989. Pre-1973 war widows had to wait 44 years after the end of the Second World War for a rise to an acceptable amount. Prior to 1989 such widows received only £62.80 a week. The inadequacy of this amount was recognised and put right thanks to a powerful public campaign orchestrated by the Officers Pension Society.
Since 1989 war widows have been able to enjoy an old age without fear of poverty but only as long as they remain single and do not remarry. It is time for us to recognise the plight of the bereaved and the divorced widows who attempt to rebuild their lives by remarrying in order to find a family unit and a father figure for their children. The present legislation cruelly discourages war widows from remarrying. The vast majority of them are too frightened even to contemplate it, such is their concern at losing all control over their financial well-being. If they remarry, they have to be completely dependent on their new husband. Incidentally, if the Minister were to suggest that automatic restoration should be means tested—a contradiction in terms—I have to tell him that this would be wholly unacceptable to war widows of all ages. By definition, the provision would no longer be automatic and it is precisely the uncertainty that means testing introduces which persuades war widows not to take the risk of remarrying.
The Government therefore condemn a war widow to a life of solitude. I am sure that this was not the purpose of the legislation but, sadly, it is the result. In 1989 only 22 war widows remarried; in 1990 there were 60; in 1991 there were 48; in 1992 there were 23, and in 1993 there were 34. This is out of a total of 48,776 war widows. This clause seeks for a war widow who has lost her husband a second time the chance to live with dignity. Restoring part of the war widows' pension is normal practice for all our European and allied counterparts. Does Britain really think so much less of those who fought and died in her name that she will not protect their widows? I beg to move.
Baroness Nicol: My Lords, I am glad to support the amendment of the noble Lord, Lord Freyberg. Even if there were no special reasons for recognising the situation of these widows, there would still be the comparisons with other countries which the noble Lord has spelt out. Many of those countries were our allies in war-time, and indeed are our allies still. But there are special reasons for this provision. We are all here today able to speak freely because of the sacrifices made by our servicemen and their families—sacrifices which are still being made year by year. The least we can do to repay the debt is to make sure that, in addition to their
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damaged lives, the widows of those who were lost do not have to remain lonely for the rest of their lives because of the risk of financial need.
I understand that cohabitation as well as remarriage leads to the loss of the pension. The principle behind this amendment is already accepted in the United Kingdom in relation to other pensions. I understand that, without any question of a means test, the widows of police officers and firemen who have their pensions removed on remarriage invariably have them restored if the marriage ends. Surely we should not do any less than that for these war widows. I am glad to support the amendment.
Lord Peyton of Yeovil: My Lords, I wish briefly to support the amendment which has been so ably moved by the noble Lord, Lord Freyberg. There is a proposition that all widows are more or less to be placed together and treated similarly. I dissent very strongly from that notion. I believe, if I can use for a moment some rather old-fashioned language, that there is a special obligation of honour to those who lose their lives in war. It is simply no good our saying year after year, parrot fashion, "We will remember them", if we do not remember the obligations which we undertook, not just to their dependants, but to them before they died.
I believe that there are two questions which should be asked here. I have a great deal of sympathy with my noble friend, who has a difficult problem here, but I believe there are two questions which he has to answer. One is: is it possible for a widow by her action to extinguish an obligation which has been undertaken to someone else by the state? My second question is really just a reflection of the first one. Is the state excused from further observation of an undertaking which it itself undertook to someone who has been killed in this country's cause? I do not think I have any more to say, but I think those questions, and our attitude to what I regard—I repeat the phrase—as an obligation of honour, ought not to be dodged.
6p.m.
Lord Dean of Harptree: My Lords, although we are debating Amendment No. 185 I suggest to your Lordships that the four amendments hang together and that the same principles are involved. Were your Lordships to accept the first amendment, it would follow logically that the others should be accepted too. We have been here before, and not only during the Committee stage. I had some responsibility for these matters over 20 years ago. The arguments are exactly the same as they were then. Why is it then that successive governments, both Conservative and Labour, have found it impossible to accept amendments of this character? Is it the case that when they become Ministers, whatever their political colour, they suddenly become hard hearted and iron enters into their soul, or is it perhaps that when they become Ministers they recognise that they have a responsibility to use their heads as well as their hearts?
In Committee my noble friend the Minister used what I considered were powerful arguments in a courageous speech. I do not propose to repeat those arguments today

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because his authority is a great deal better than mine. But I would like briefly to focus on three points which seem to me to be of fundamental importance.
The point is retrospection. If all improvements led to retrospection there would be very few improvements in occupational pension schemes or public service schemes because of the anomalies that would be created and the cost involved. In my judgment, it is no accident that it is the general rule that improvements count only for service after their introduction. On occasion there are buy-in provisions, but they apply only to those who are serving at the time and they have to be paid for. In my view, the amendment is contrary to the fundamental principle of non-retrospection. If conceded it would lead to irresistible pressure for the following amendments to be accepted.
My second point concerns equity and fairness as between pensioners. We very rightly give preference to war widows. I believe that everybody accepts that that should be so. As a consequence of that preference, war widows receive more than double the national insurance widows' pension and they receive it tax free. The preference has been increased by governments of both political colours over the years, and quite rightly so.
But I believe that different arguments apply when we consider the amendment. What about merchant seamen and lifeboatmen? Many of them gave their lives during the war to ensure that essential supplies got through to this country so that we could eventually win the war. There is no mention of them in the amendment. What about air raid wardens, police and firemen? They were very much in the front rank during those war years. There is no mention of their widows in the amendment. What about those who gave their lives through industrial injury or industrial disease while keeping weapons coming forward satisfactorily? I represented a constituency in another place which included the North Somerset coalfield. I have vivid memories of men gasping for breath, suffering from emphysema and ghastly diseases of that kind. Their wives went through agonies, and when eventually those men died their widows went through equal agonies. There is no mention of them in the amendment. I suggest to your Lordships that in this case it is neither equitable nor fair to single out war widows for further preferential treatment.
My final point relates to the cost. No doubt my noble friend will be able to enlighten the House about the cost of the amendments, but there is no doubt in my mind from my previous experience that the cost will be substantial. There would be a knock-on effect on all public service pension schemes and on the amendments which are to be considered soon. That additional cost would be on top of the uprating of pensions and benefits which is to come into operation next month at an additional cost to the taxpayer of approximately £1.5 billion. Are we really justified in sending to another place an additional bill on top of that, particularly bearing in mind our constitutional restraints with regard to finance?
I suggest that for those reasons the amendment and those which follow are badly flawed.
Lord Brookes: My Lords, it will be in the greatest traditions of your Lordships' House if, with that instinct
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for that which is right, for that which is just and for that which satisfies the great history of this great nation and this great House, party lines are set aside tonight together with any commitments other than those of conscience, a debt of honour —to which I referred at Committee stage—and an obligation which cannot and must not be eroded with time.
Those obligations attached to the men of the armed services who had to go to action stations when attacked by the enemy and who had to attack the enemy. Therefore, there are no relativities attaching to civilian or industrial casualties. These were different. These were the men of our Armed Forces who had no choice, who made no other choice than to give of themselves for King and country, believing that, if they were lost, King and country would look after those who were left behind.
I do not intend to speak at length. Had the chaps who were worked, starved and beaten to death on the Burma railway asked, "What's going to happen to the missus?", they would not have thought that this great House of Lords would have hesitated and been parsimonious with the widow's mite. Nor would the men of the Battle of Britain, of Bomber Command and Transport Command or of the Navy, who fed us by escorting convoys, all those great men of 50 years or so ago. Today their elderly widows need the dignity of a few years of old age. Tonight this House has the power to set that right. I believe that we have the will, because this is not a matter of politics or a matter of purse; it is a matter of conscience.
Lord Boyd-Carpenter: My Lords, my noble friend Lord Dean appeared to criticise the idea of giving preference to war widows. But that preference has been accepted ever since the war. Like him, I was responsible for administration of the war pensions scheme for a number of years. I openly provided a considerably larger pension for war widows and for the war disabled than other people obtained, and I was supported fully in both Houses. Therefore, it is a false point, and a bad point, to argue that, because this proposal involves a considerable preference for the war widow, it should be rejected.
There is also the question of timing. When we discussed this matter on the previous occasion, several of us indicated that the 50th anniversary of VE Day was a particularly appropriate time to commemorate in this way and express gratitude to the widows of those who died in the defence of their country. Here I very much reject what my noble friend said. It has always been accepted that there should be a substantial preference for those who died fighting for their country. That has always been the policy. It is therefore now a question only of whether in the circumstances of today we should make some further improvement for this particular category of person.
We discussed the matter at considerable length at an earlier stage. There was a great body of opinion in this House that we should make an improvement and that there could not be a more appropriate moment for so doing than as part of the celebrations of the 50th anniversary of our victory. Therefore I hope that the amendments in the name of the noble Lord, Lord Freyberg, will be accepted. I believe that it is the right

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thing to do. I believe that in this way we can acknowledge the tremendous debt that we owe those who died to give us victory; those who died in this sad war, the end of which 50 years ago we now celebrate.
I very much hope that your Lordships' House—it is very much a matter for your Lordships' House—will support the proposal of the noble Lord, Lord Freyberg. I agree with every word he said. Some of us remember with great admiration the maiden speech that he made not very long ago during which he touched upon this subject. It would be a good decision of this House to carry these amendments.
Lord Ennals: My Lords, I have not taken part in the debate; nor had I intended so to do. Like the noble Lord, Lord Boyd-Carpenter, when I was Secretary of State for Social Services I had responsibility for pensions which covered widows' pensions. I was inspired by the noble Lord, Lord Freyberg, and a little horrified by the noble Lord, Lord Dean of Harptree. One can always say that many other people deserve what we suggest in the amendment. We are not talking about those other people. Perhaps another time will come for those people. But, as the noble Lord, Lord Boyd-Carpenter, said, the time for war widows has come; it is now. If we do not make this provision this year, I doubt whether we shall ever do so. The spirit conveyed by the noble Lord, Lord Freyberg, seemed to me to be well above party politics. He was speaking from his heart. I, having been one of those who fought in the Second World War as so many people in this House did, would feel that the House was not standing by its great traditions if we did not support this amendment. I urge us so to do.
6.15 p.m.
Baroness Seear: My Lords, we on these Benches made it quite clear at Committee stage that we support the amendments. I do not wish to prolong the debate tonight. As the noble Lord, Lord Boyd-Carpenter, said, the crux of the matter is whether or not one draws a distinction in favour of ex-service people. Quite clearly they are a different category and therefore we give them wholehearted support. We support the amendments of the noble Lord, Lord Freyberg.
Baroness Strange: My Lords, as President of the War Widows Association of Great Britain, I apologise to your Lordships that I was not present in Committee. However, the noble Lord, Lord Freyberg, moved the amendment so very powerfully. With his speech today he has just achieved a treble in notable speeches. His amendment in Committee was lost by seven votes. If the noble Lord has to move the amendment again today, I shall hope to reduce that figure to six. I hope that there may be more than six noble Lords here who will change their minds due to the logic and deep felt emotion of all noble Lords who have spoken.
I speak especially for the plight of the older ladies who have remarried, seeking the help, society and comfort which are among the true purposes for which matrimony was ordained. If the second marriage ends in death or divorce, those ladies are not only without the spiritual benefits, they have also lost their pensions.
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When one thinks of all the brave young men who went off to war hoping that they would come back, but knowing in their hearts that if they did not a grateful country would provide for their wives and not leave them comfortless in their old age, it' makes one's conscience curl up in shame.
I have had so many pitiful letters from widows in this situation. One wrote:
"I am so used to living 'thin', as they say in the north that I can get by, but I don't go to the hairdresser, I haven't a TV or a washing machine, I don't take a newspaper".
Another wrote:
"If I come to London for a meeting, I come by bus, because it is cheaper than train and I walk rather than use the Underground".
Another wrote that her second marriage having failed she now had only a partial DSS pension, and she was old, ill and often very cold as well. One wrote of how 50 years on she can only think back to her two year-old son asking where his daddy was. He had been blown to smithereens on his ship.
Among the rejoicing and parties of this memorable year, let us show our gratitude, our mercy and our compassion. Let us right this wrong for the sake of those who died.
Baroness Young: My Lords, we have all listened with great care to what the noble Lord, Lord Freyberg, said in his very moving speech when moving the amendment—the other amendments are linked to it—just as we listened to him at Committee stage. I clearly recall his maiden speech because I spoke immediately following him. He raised the matter then.
I appreciate the strong feelings of the House. No one could listen to what has been said without being moved. My noble friend Lady Strange has quoted many tragic circumstances. It is therefore hard to have to say that I hope very much that the noble Lord, Lord Freyberg, will not press his amendments, in particular when he has listened to what has been said.
Lord Boyd-Carpenter: My Lords, I hope that he will.
Baroness Young: My Lords, I listened to my noble friend Lord Boyd-Carpenter without interrupting. I hope that he will do the same for me.
I, too, have a serious point to make. I am old enough to remember the Second World War. I am old enough to have lost people I loved in the Second World War. It is therefore not a theoretical matter. However, I believe that one has to consider the role of the House of Lords—a point that my noble friend Lord Dean touched on, and an important one. If I may say so, it is not simply that this is a House of Lords' issue that we should pass. We have already attained agreement on one major issue. But in this specific case there are two reasons why we should be careful. First, it is retrospective legislation. I do not need to rehearse all the arguments about that because one gets into great difficulties. Secondly, such a provision amounts to quite a lot of money.
I have re-read what my noble friend Lord Mackay said at Committee stage. With considerable understanding he set out the cost. I can see that no one wishes to hear that. But the truth of the matter is that if

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the amendment were to be carried, the cost would simply come off someone else's budget. We can all have our own ideas as to what could be cut with impunity. But if one has been a government Minister, if one has had to take responsibility for policies across the board, it is difficult to say, "We have decided to add this provision on this occasion, and we shall definitely take the cost off someone else's budget". We know how unpleasant that is. We have had a recent illustration of the problems which arise over VAT on fuel. I agree that that is a separate issue but it leads to incredible complications.
That is not to say that one is not sympathetic. Quite properly war widows receive better treatment; and I believe that they should. However, it would be wrong for the House of Lords, occupying the constitutional position that it does, and able to undertake a great number of measures of great value, to decide this afternoon to commit the Government to considerably more expenditure.
Some people have said that that does not matter: that we are always spending money. It is a very different proposition as regards a Bill which has a price-tag attached to it under the provisions. Everyone knows the cost, and one debates an issue within those parameters. I suggest that it is a different proposition which unexpectedly adds a considerable sum, great though our sympathy may be for the cause. For that reason, I hope that the noble Lord, Lord Freyberg, will think carefully before pressing his amendment.
Lord Clark of Kempston: My Lords, I wish to support my noble friend Lady Young. She has hit the nail on the head that this is an emotive subject and it has been so for many years. As my noble friend Lord Dean said, successive governments, including that of my noble friend Lord Boyd-Carpenter, who had responsibility for pensions, have set their face against extending the concessions to war widows.
Lord Boyd-Carpenter: My Lords, perhaps my noble friend will allow me to intervene since he referred to me. When I was Minister responsible for pensions I made two substantial increases in pensions.
Lord Clark of Kempston: Yes, my Lords. I congratulate my noble friend on his generosity. However, the tax concessions and the increase in pensions for war widows have been carried through successive governments. I am delighted that my noble friend Lord Boyd-Carpenter reminded me and the House of the increases that he made.
The point to the taxpayer about the amendment is that the giving of the pensions and concessions to war widows ceases on remarriage. That is what we are arguing about today, not the pensions. I was in the Army during the war. I quite agree that the loss and death of a loved one is very emotive and tragic, but we must also remember that not only are war widows' pensions paid to the widows of soldiers or other servicemen who die on active service; there are also payments if there is an accident, for disability while the person is in service or if through some disease they have to leave the service. We must get the issue in perspective.
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As my noble friend Lord Dean said, if we go down this road—and we are not arguing about the basic pension; we are talking only about remarriage—why exclude policemen, prison officers and merchant navy personnel? The knock-on effect of the provision would be so great that, as my noble friend Lady Young said, the cost would be enormous for the taxpayer.
I do not wish to digress, but if a widow remarries, obviously she ceases to be a war widow and her new husband should be in a position to keep her. I got married over 50 years ago, but I did not do so until I could keep my wife. Consequently, I believe that that is a basic point.
I conclude by saying that, if we continue the provision for war widows on remarriage, whether it is the first or second remarriage, we cannot exclude other public servants such as firemen, merchant navy personnel and the rest. We cannot afford this provision and, reluctantly, I shall resist the amendment so ably moved by the noble Lord, Lord Freyberg. It has not been thought through as regards the eventual cost for the taxpayer.
Baroness Hollis of Heigham: My Lords, I wish to speak briefly as I have taken up too much of your Lordships' time this afternoon. I want to make clear our support on these Benches for this and the next amendment.
I wish too to pick up some of the points made by the noble Lords, Lord Dean and Lord Clark, and the noble Baroness, Lady Young. The first concerns whether we have a constitutional right to pass the amendment. My noble friend Lord Carter drew page 121 of the red book, the Companion to the Standing Orders, to my attention. It makes it clear that:
"the Lords need not anticipate what view the Commons may take of any Lords amendments with respect to Commons financial privilege".
In other words, it is entirely appropriate for us to discuss the issue today.
The second point was cost. We can afford what is a very modest proposal. It is that, following the end of a second marriage, war widows should be able to revert to their former pension. We are talking about a small number of elderly women; we can and should be able to afford the pension.
The third argument concerned precedent. Obviously one can compare the Armed Forces with an array of other occupations. However, the relevant ones are the disciplined forces: the police and fire fighting forces. They are similarly disciplined and may undertake life-threatening activities without the right to industrial negotiation. The widows of police officers and firemen lose their pensions on remarriage, but the local authorities invariably restore the pension, according to the National Association of Retired Police Officers and the National Association of Retired Firefighters, should the woman become a widow a second time. Far from war widows being over-privileged in comparison, at the moment they do not receive what the widows of those in the other disciplined services receive. Are we this afternoon going to treat our war widows less decently

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and less favourably than the widows of the police and firemen? Surely not, especially in VE year. That is why we shall support the amendment.
Baroness Park of Monmouth: My Lords, I wish to make a quite different point, also in support of the amendment. We must consider the message we are sending to the forces today. Their morale is already low and if we were to show after all this that we were unable to contemplate the proposal, it would send a most unfortunate and wrong message to them.
Baroness Jeger: My Lords, I am glad that we have this proposition, but I should like a widening of the definition of a war widow. I was at a casualty clearing station in the East End of London and my late husband was the main casualty officer in Shoreditch. There we saw firemen, police officers, bus drivers and other people who just came out of their shops who all worked to dig casualties out. I was there and I have never been absolutely clear about the definition of "war widow" for the widows of those who have served overseas. When we mention war widows, could we not sometimes think of widows of firemen, police officers and even the doctors who worked during the Blitz in London? I can only speak of that because that is where I was and sometimes I had to tell a fireman's wife that he would not be coming back. I hope noble Lords will forgive me for saying that I care greatly about those memories and when we talk of war widows I hope that we shall expand the definition to include the extra pensions.
Lord Chalfont: My Lords, it was not my intention to intervene to prolong the debate because I thought that all that needed to be said had already been dealt with. However, one or two points have been made this evening which dismayed and depressed me and I feel the need to mention two. The most important to me is the idea that somehow we must not accept the measure which is implicit in the amendment of the noble Lord, Lord Freyberg, because other people are not treated similarly.
We have heard about air raid wardens, policemen, oil rig workers, miners and so on. It is true that they become injured and lose their lives in the course of their duty. But I would not have thought it necessary to argue in this House, of all places, that a soldier who took up arms against an enemy in time of war was different from all those people. At Committee stage I used the phrase "unlimited liability". That is precisely what the soldier accepts when he takes up arms and faces the enemy.
It is not that he risks his life but that he offers his life. He is to give his life in the service of his country. In my view, this makes the soldier, whether the professional or non-professional soldier caught up in a world war, different from anybody else. I believe that the promise that we make to him when he goes to war is different from the undertakings that we give to anybody else. It would be a shame—I mean that word literally—if tonight we said that we would not treat war widows differently from, and better than, the widows of others.
I mention the question of cost. The noble Baroness, Lady Hollis, has already mentioned that we are perfectly entitled to agree to this amendment, whatever it may
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mean for the financial arrangements in the other place. Of course, it will be a costly measure. The noble Baroness, Lady Young, said that she could think of one or two other budgets from which this money could be taken. I can probably think of a greater number than she has in mind. I believe that we should leave this decision to the other place and subsequently to the Government. This is a matter of honour. I believe that my noble friend Lord Freyberg has done a great service to this House and to the country in raising these matters. In the end, the basic point that has worried me as the debate has proceeded this evening is that the soldier, male or female, who takes up arms to defend his or her country is different from anybody else and should be treated differently from anybody else.
6.30 p.m.
Lord Wolfson: My Lords, I should like to support the amendment so ably moved by the noble Lord, Lord Freyberg, whose historic name commands universal respect. This is a matter of honour, conscience and priority. It is a modest way of saying thank-you to those who have laid down their lives and fought for our freedom and justice against one of the most horrible tyrannies in history. It is also a practical policy. Out of a social service budget of £80 billion or so, it should be possible to find this money as a priority. As a businessman, I would be happy to help find it without harming other people.
Lord Trefgarne: My Lords, like my noble friend Lord Dean and other noble Lords, for a brief time I was responsible for war pension matters in the DHSS some 12 or more years ago. Later on, when I served in the Ministry of Defence, I met these problems at first hand. Therefore, nobody recognises the importance of the case that has been put so eloquently by the noble Lord, Lord Freyberg, than I do. But I am not sure that I go the whole way with the noble Lord, Lord Chalfont. Although it is the case that soldiers, sailors and airmen offer their lives when they join the colours, I believe that people like merchant sailors and firemen in the Blitz in London are no less deserving of your Lordships' concern than are members of the Armed Forces who are alone the subject of these amendments.
Is it proposed that, for example, the widow of a civilian bomb disposal officer, working in dark and dangerous circumstances and expecting any minute to be blown to smithereens—perhaps later on indeed being killed—is somehow less deserving than the widow of someone who happened to join the Armed Forces and was sadly killed, though perhaps in much less demanding circumstances? I do not accept to the extent that the noble Lord, Lord Chalfont, suggested, the distinction between the two. As my noble friend Lord Dean said with such eloquence, I believe that those people, too, are worthy of concern. Sadly, the amendments proposed by the noble Lord, Lord Freyberg, are silent as far as those individuals are concerned. The effect of the amendments proposed by the noble Lord is to create a new injustice. I believe that your Lordships should pause before doing such a thing.

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My noble friend Lord Boyd-Carpenter, speaking with his usual eloquence and persuasiveness, told us of his experiences as Minister for Pensions. I suggest to my noble friend that when he assumed the position of Chief Secretary, as he did, he might have taken a rather different line. The fact of the matter is that these amendments involve very considerable expenditure, as my noble friend Lady Young pointed out. I can assure my noble friend Lord Wolfson, who with the greatest of respect has not had, as I recall, responsibility in government for deciding the allocation of budget matters, that it is a good deal less easy than he may imagine. To find £100 million or £200 million from a particular budget is not straightforward. My noble friend Lady Young rightly pointed out that somebody would lose if these amendments were carried this evening.
I hope that the noble Lord, Lord Freyberg, will on reflection agree that his amendments will unintentionally create as many injustices as they solve. I hope that in those circumstances he will not press them.
Lord Mackay of Ardbrecknish: My Lords, we have had a long and interesting debate, as we did in Committee. The noble Lord, Lord Freyberg, has revisited the subjects that he raised so ably at Committee stage and on which he took the views of the House. We are looking now at four new clauses which either repeat those that we debated or are variations upon them. I am sorry that we have to deal with each separately. I apologise if I repeat some of my arguments in the course of the next hour or so as we debate them, especially as those of your Lordships who are interested in the pension arrangements for all our people have now had one very long day on Report and are likely to be here pretty late this evening.
The amendment would restore a DSS war widow's pension previously awarded to the widow of an ex-serviceman but withdrawn on her subsequent remarriage should she be unfortunate enough to become widowed for a second time, or should her second marriage fail for any reason. This amendment does not go as far as the earlier amendment that we debated and disagreed to in Committee. That amendment sought to amend war pensions legislation so that such pensions, once awarded, would be inviolate regardless of any change in widows' marital status.
Your Lordships will recall that I said that the cost of the earlier amendment would be at least £60 million a year. Some surprise was expressed at that figure. Indeed, supporters of the amendment of the noble Lord, Lord Freyberg, suggested that I was wrong. They stressed that, whilst there would be costs in war widows' pensions, there would be savings to my department on other benefits like retirement pensions which would not be payable in addition to war widows' pensions. In the light of that, my officials, on my instructions, revisited their calculations and estimates and brought them to me. (Some of your Lordships know that I have a passing interest in figures.) They found that the figure was indeed wrong.
780
Perhaps I may take the House through the calculations and assumptions that we have made. We start with the one figure that we know for a certainty. About 90,000 war widows have remarried since 1939. As an aside, I must say that that rather negates the noble Lord's argument that they have been prevented from remarrying because of these pension arrangements. We estimate that about half of those will have died and have assumed that some 30,000 still living will claim the war widows' pension if it becomes payable for life. The headline cost of such a restoration will be £220 million; that is, £140 per week times 52 weeks times 30,000.
When the estimates were first made it was assumed that about 70 per cent, of that gross cost would be offset by savings in other benefits. That was the figure that the noble Lord and others invited me to look at again because they thought that I had rather underestimated it. That estimate was based partially on the assumption that most of those reclaiming the war widows' pension would be in receipt of full retirement pension and other income-related benefits. That figure led me to the £60 million that I quoted. In fact, we now believe that about half of those women will still be living with their second husbands or divorced or separated from them, and their offset will be mainly the married women's retirement pension based on their husband's contribution. That means that the offset is about 40 per cent.
So after looking more carefully, as I was invited to do, at the savings which would come from the full restoration, we have concluded that the headline total of £220 million would reduce by 70 per cent, for half the ladies, and about 40 per cent, for the other half. That would lead to a total cost of £100 million, if the noble Lord, Lord Freyberg, had been successful a fortnight ago. I go through the arithmetic of it because I want to be sure where I am coming from on this issue. The amendment before us would allow restoration of war widows' pensions only where the second marriage had come to an end. That would cost, as noble Lords who followed my calculations will appreciate, £40 million a year.
Lord Ennals: My Lords, I am grateful to the Minister for giving way. Before he proceeds, can he say what consideration has been given by him and his officials to the fact that on the whole this is an aged population and, sadly, the numbers will be reducing fairly rapidly year by year?
Lord Mackay of Ardbrecknish: My Lords, I am not sure what argument led the noble Lord, when he was the Minister responsible for these matters, to reject the case that has been put to us tonight. But I must tell him that I asked the question that he asked me; in fact, I asked it when I joined the department. It is rather inelegant to talk about deaths and recruitment to widowhood, and so on. But it is a fact, as I hear the noble Lord rightly remind me. The decline in the number of war widows is much slower than one would anticipate because there are still recruits (if I may call them that rather inelegantly) to the ranks. Those who are widowed now because their husbands were so severely disabled that their deaths are attributable to their war injury, become war widows. So it is not just a case of the elderly passing on. It is also a matter of others being

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added. The decline in numbers is very much slower than the noble Lord's intervention would lead me to understand.
Perhaps I may remind the House, as I did the last time that we discussed this matter, that the war widows' pension is a generous one. It is awarded where the husband's death was either due to or hastened by an injury which was attributable to or aggravated by any service in the Armed Forces. It is important to stress that for ex-servicemen it is not necessary for death to have been caused by injury sustained in battle or even on active service.
The rationale behind the war widows' pension is that it should assist with the loss of support that a widow could have expected from her late husband. The pension is not and never has been intended as compensation for his loss. No pension could possibly do that.
It is logical that, if the widow remarries, the war widows' pension is withdrawn. She is no longer a widow but the wife of her second husband. The noble Lord, Lord Freyberg, seems to have accepted that in the argument that we had on the earlier amendment by not coming back with that particular new clause. As a special war widow's preference, a gratuity worth £7,000 for most is awarded at that stage of remarriage; but thereafter she has no further claim on the war pension scheme unless of course her second husband should die also as a result of service in the Armed Forces.
The amendment seeks, first, to restore the war widows' pension should the second husband die. I consider that to be neither logical nor fair. It is not logical because, although it is clearly very unfortunate that she should be widowed again, the fact remains that this time the widow has not been widowed as a result of her husband's service in the Armed Forces. She has lost her husband in exactly the same way as very many other women do.
In many cases the second marriage will have lasted for many years. Over 80 per cent, of former war widows who remarried did so before 1955. On second widowhood, the former war widow is thus likely to have had the support of her second husband for longer than many national insurance widows have had the support of their only partner. I am sure that we can all think of ladies we know—I certainly can—who have been widowed in exactly those circumstances. To do as the amendment proposes would be most unfair to the majority of widows in this country.
The second aim of the amendment is to restore the war widows' pension if the second marriage should fail. That would mean restoring the pension not only on divorce, but also where the relationship has broken down short of divorce. That would be even more unfair to other women in similar situations. There is no state pension provision available to them when their marriage fails. It would also be unworkable in practice. Who would be the arbiter of whether a marriage has failed? We should be entering quite difficult territory there.
A further unfairness lies in the selective nature of the amendment. A number of noble Lords have pointed out that the amendment before us would benefit only the ex-war widows of servicemen and not other widows who have lost their husbands in the service of the country in
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one way or another. When listening to one of the speeches, I was reminded of a day last year when I stood in front of the merchant navy war memorial on the Embankment. I was overwhelmed by the large numbers of merchant seamen and fishermen whose names are inscribed on that memorial and whose widows undoubtedly were left in quite similar circumstances to those about whom we have heard. I do not know whether it is intentional that they have all been omitted from the amendment or whether it is an oversight. It certainly appears to be discriminatory, as a number of noble Lords, including the noble Baroness, said.
I have already said that war pensions are given at a very preferential rate. I trust that your Lordships will not take it amiss if I remind them of what I have said on the matter. In recognition of the special circumstances of widowhood and the sacrifice made by the late husband, for most war widows this pension is worth almost two-and-a-half times more than a national insurance widows' pension, which is received by the majority of widows in this country: £140 per week and tax-free compared with £57.60 and taxed.
The amendment is also incorrect in describing the £48.70 a week tax-free supplement for pre-1973 war widows as "ex gratia". Your Lordships should be left in no doubt about it: it is not ex gratia. The supplementary pension is a legal provision which was introduced by this Government in April 1990.
Of course, we all have great sympathy for those widows who lost their husbands as a result of the war and who, consequently, for all these years since, have not had the partnership and support that they naturally expected. Much has been said today about the emotional traumas and difficulties that those women have faced and how much they deserve our full support. I agree wholeheartedly. Half a century on, there are roughly 50,000 of them who rightly receive a war widows' pension substantially above the rate of other widows, as I just said. It is no more than their due.
However, this amendment is not about those ladies. It is about ladies who remarried. The vast majority of them will have had the support of a second husband for many years and financial support during the marriage and thereafter in the widow's provision made by the second husband.
This is a difficult and emotive area for us all. But bearing in mind the original rationale behind the provision of war widows' pension, we can see no justification for amending the legislation so that the pension may be restored on second widowhood or on the failure of the second marriage. As one of my noble friends said, for a moment let us just let our heads rule our hearts. On that basis, I am unable to commend this amendment to your Lordships.
6.45 p.m.
Lord Freyberg: My Lords, I should first like to thank all the noble Lords who have spoken for this clause. The Minister restated the provisions that exist for war widows. But the war widows about whom we are primarily speaking are the pre-1973 war widows who

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remarried; and, no matter how important they now are, they have been completely excluded from any pension provision, either the DSS or the ex gratia payment.
It is important that war widows who have seen their husbands die in the service of their country in war, on active service or attributively, should have some form of safety net built into the pension provisions which would allow them to remarry without fear of financial hardship should anything go wrong with the second marriage.
I should also like to refer to the Minister's comments on gratuities. It is true that on remarriage the DSS awards each widow a gratuity equivalent to one year's pension. As some 90 per cent. of those who died in the Second World War were non-commissioned, the majority of their widows received extremely small pensions. Their gratuity often amounted to as little as £20. That is not much compensation for losing a war widow's pension for life. Furthermore, so far there have been only 34 widows who received the maximum of £7,000.
There is little doubt that, given the choice, most war widows considering remarriage would prefer to have the safety net of automatic restoration of their DSS pension were they to be widowed again or divorced rather than the gratuity. I should like to emphasise that there is every sign that the enormous decrease in the number of First World War widows between 1968 and 1978 will be repeated in the next decade now that the Second World War widows have reached the same age. In 1968, there were some 44,000 First World War widows. Ten years on, there were some 17,800. Today, we have approximately 46,000 Second World War widows. So in the next decade we can expect a similarly very significant reduction in numbers. That will inevitably also lead to a significant reduction in cost. It seems only decent, therefore, that the Government should extend the war widows' pension to those who have already remarried and have been widowed again or divorced. I would emphasise that such provision is the norm for all allied and European comparable armed forces pension schemes.
Finally, I cannot stress too strongly that this ruling is the source of much unhappiness and poverty, frightening war widows against ever remarrying and punishing those who suffer second bereavement or divorce. Britain must not leave elderly widows of so many of its fighting men in dire straits any longer. It is for this reason that I must test the opinion of the House.
6.50 p.m.
On Question, Whether the said amendment (No. 185) shall be agreed to?
Their Lordships divided: Contents, 191; Not-Contents, 145.

Division No. 3

CONTENTS

Ackner, L.

Allenby of Megiddo, V.

Acton, L.

Annaly, L.

Addington, L.

Archer of Sandwell, L.

Airedale, L.

Ashbourne, L.

Alanbrooke, V.

Attenborough, L.

Aldenham, L.

Avebury, L.

784

Bancroft, L.

Hylton-Foster, B.

Barnett, L.

Iddesleigh, E.

Beaumont of Whitley, L.

Irvine of Lairg, L.

Belhaven and Stenton, L.

Jeger, B.

Birkett, L.

Judd, L.

Blackstone, B.

Killearn, L.

Blake, L.

Kinloss, Ly.

Bledisloe, V.

Kinnoull, E.

Borthwick, L.

Kirkhill, L.

Boyd-Carpenter, L.

Kitchener, E.

Braine of Wheatley, L.

Lawrence, L.

Brightman, L.

Layton, L.

Broadbridge, L.

Macaulay of Bragar, L.

Brookes, L.

Mackie of Benshie, L.

Bruce of Donington, L.

MacLehose of Beoch, L.

Butterfield, L.

Mallalieu, B.

Carmichael of Kelvingrove, L.

Mar and Kellie, E.

Carter, L.

Mason of Barnsley, L.

Chalfont, L.

Mayhew, L.

Chapple, L.

McAlpine of West Green, L.

Charteris of Amisfield, L.

McCarthy, L.

Chorley, L.

McConnell, L.

Cledwyn of Penrhos, L.

McGregor of Durris, L.

Coleridge, L.

Mclntosh of Haringey, L.

Combermere, V.

McNair, L.

Congleton, L.

Merlyn-Rees, L.

Cornwall's, L.

Meston, L.

Cox, B.

Milne, L.

Craigavon, V.

Milner of Leeds, L.

Croham, L.

Monson, L.

Cross, V.

Moore of Wolvercote, L.

Darcy (de Knayth), B.

Moran, L.

David, B.

Morris of Castle Morris, L.

Davies, L.

Morris of Kenwood, L.

Dean of Beswick, L.

Nelson, E.

Derwent, L.

Nicol, B.

Desai, L.

Norrie, L.

Diamond, L.

Ogmore, L.

Donaldson of Kingsbridge, L.

Park of Monmouth, B.

Donoughue, L.

Pearson of Rannoch, L.

Dormand of Easington, L.

Perth, E.

Dubs, L.

Peston, L.

Dundonald, E.

Peyton of Yeovil, L.

Dunrossil, V.

Phillips of Ellesmere, L.

Elis-Thomas, L.

Plant of Highfield, L.

Ennals, L.

Portland, E.

Erroll, E.

Prys-Davies, L.

Ezra, L.

Raglan, L.

Falkland, V.

Ranfurly, E.

Farrington of Ribbleton, B.

Rea,L.

Fisher of Rednal, B.

Redesdale, L.

Foot, L.

Rennell, L.

Freyberg, L. [Teller.]

Richard, L.

Gage, V.

Ripon, Bp.

Geraint, L.

Ritchie of Dundee, L.

Gladwin of Clee, L.

Robson of Kiddington, B.

Glenarthur, L.

Rochester, L.

Gould of Potternewton, B.

Rodgers of Quarry Bank, L.

Graham of Edmonton, L.

Roskill, L.

Greenway, L.

Runciman of Doxford, V.

Grey, E.

Russell, E.

Halsbury, E.

Salisbury M.

Hamwee, B.

Saltoun of Abernethy, Ly.

Harris of Greenwich, L.

Savile, L.

Harrowby, E.

Seear, B. [Teller.]

Haskel, L.

Serota, B.

Hayter, L.

Shannon, E.

Healey, L.

Sharples, B.

Henderson of Brompton, L.

Shaughnessy, L.

Henniker, L.

Simon of Glaisdale, L.

Hollick, L.

Simon, V.

Hollis of Heigham, B.

Skidelsky, L.

Holme of Cheltenham, L.

Slim, V.

Hooson, L.

Smith, L.

Howie of Troon, L.

Stallard, L.

Hughes, L.

Stedman, B.

785

Stoddart of Swindon, L.

Turner of Camden, B.

Strabolgi, L.

Waverley, V.

Strafford, E.

Wedderburn of Charlton, L.

Strange, B.

Westmorland, E.

Strathcona and Mount Royal, L.

Whaddon, L.

Wharton, B.

Swinfen, L.

White, B.

Temple of Stowe, E.

Wilberforce, L.

Tenby, V.

Williams of Crosby, B.

Thomas of Walliswood, B.

Williams of Elvel.L.

Thomson of Monifieth, L.

Williams of Mostyn, L.

Thurlow, L.

Willoughby de Broke, L.

Tope, L.

Winchilsea and Nottingham, E.

Tordoff, L.

Wolfson, L.

NOT-CONTENTS

Aberdare, L.

Haddington, E.

Addison, V.

Hailsham of Saint Marylebone, L.

Ailsa, M.

Aldington, L.

Hambro, L.

Alexander of Tunis, E.

Harding of Petherton, L.

Astor of Hever, L.

Hardinge of Penshurst, L.

Astor, V.

Harmar-Nicholls, L.

Barber of Tewkesbury, L.

Harmsworth, L.

Barber, L.

Hayhoe, L.

Belstead, L.

Henley, L.

Bethell, L.

Hives, L.

Biddulph, L.

Hogg, B.

Birdwood, L.

Holderness, L.

Blaker, L.

HolmPatrick, L.

Blatch, B

Hood ,V.

Blyth, L.

Hooper, B.

Brabazon of Tara, L.

Hothfield, L.

Brougham and Vaux, L.

Howe of Aberavon, L.

Bruntisfield, L.

Howe, E.

Buchan, E.

Inglewood, L. [Teller.]

Buckinghamshire, E.

Jenkin of Roding, L.

Butterworth, L.

Johnston of Rockport, L.

Cadman, L.

Kimball, L.

Caithness, E.

Kingsland, L.

Campbell of Croy, L.

Laing of Dunphail, L.

Carlisle of Bucklow, L.

Lane of Horsell, L.

Carnegy of Lour, B.

Lauderdale, E.

Carnock, L.

Leigh, L.

Carr of Hadley, L.

Lindsay, E.

Chalker of Wallasey, B.

Lindsey and Abingdon, E.

Chelmsford, V.

Long, V.

Chesham, L.

Lucas of Chilworth, L.

Chilver, L.

Lucas, L.

Clanwilliam, E.

Lyell, L.

Clark of Kempston, L.

Mackay of Ardbrecknish, L.

Coleraine, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Colwyn, L.

Cork and Orrery, E.

Macleod of Borve, B.

Courtown, E.

Marlesford, L.

Cranborne, V. [Lord Privy seal.]

McColl of Dulwich, L.

Mersey, V.

Cumberlege, B.

Miller of Hendon, B.

Davidson, V.

Mills, V.

Dean of Harptree, L.

Milverton, L.

Dilhorne, V.

Monteagle of Brandon, L.

Dixon-Smith, L.

Morris, L.

Dudley, E.

Mottistone, L.

Dundee, E.

Mowbray and Stourton, L.

Eccles of Moulton, B.

Moyne, L.

Eden of Winton, L.

Murton of Lindisfarne, L.

Elliott of Morpeth, L.

Noel-Buxron, L.

Fairfax of Cameron, L.

Northbrook, L.

Falmouth, V.

Northesk, E.

Ferrers, E.

Onslow, E.

Fraser of Carmyllie, L.

Oppenheim-Barnes, B.

Gisborough, L.

Orkney, E.

Goschen, V.

Oxfuird, V.

Gowrie, E.

Parkinson, L.

Gray of Contin, L.

Plummer of St. Marylebone, L.

Hacking, L.

786

Prentice, L.

Stewartby, L.

Pym,L.

Stodart of Leaston, L.

Rankeillour, L.

Strathclyde, L. [Teller.]

Rawlings, B.

Sudeley, L.

Reay, L.

Teviot, L.

Rees, L.

Thomas of Gwydir, L.

Renton, L.

Trefgarne, L.

Renwick, L.

Trumpington, B.

Rodger of Earlsferry, L.

Ullswater, V.

Rodney, L.

Wakeham, L.

Seccombe, B.

Whitelaw, V.

Selborne, E.

Wise, L.

Shaw of Northstead, L.

Wynford, L.

Skelmersdale, L.

Young, B.

Stevens of Ludgate, L.

Resolved in the affirmative, and amendment agreed to accordingly.
7.2 p.m.
Lord Freyberg Lord Freyberg moved Amendment No. 186:
Before Clause 114, insert the following new clause:
("Service Widows' pensions: post-retirement marriage
. No widow of a member of Her Majesty's forces shall be disqualified from receiving a full pension in relation to the deceased's membership of Her Majesty's forces by virtue of the fact that her marriage occurred after the deceased member had retired from Her Majesty's forces provided that the marriage took place before his 65th birthday—the end of his recall liability—and has lasted for at least three years.").
The noble Lord said: My Lords, this amendment is different from the previous one. We are now talking about service widows of post-retirement marriages. Widows of servicemen who retired before 1978 unjustly receive none of their husband's pension. Thus, many widows over 70 whose husbands fought in the Second World War and who were lucky enough to survive to contribute towards their widow's pension, both financially and by their service, are left pensionless.
The new clause proposes provision for those widows related to the serviceman's years of service provided the marriage occurred before he reached 65—the age of recall liability—and had lasted at least three years.
Post-retirement marriages are a particular problem in the Armed Forces because retirement is commonly so much earlier than in other professions. Typically, officers retire between the ages of 45 and 55 and other ranks as early as 35 to 40. Naturally, many of those men of such ages wish to marry, and do so; but until 1978 no pensions provision was made for their post-retirement widows. That has created an extremely serious position, penalising men who had paid into a pension scheme all their working lives—11 per cent. of their pay until 1986—leaving them unable to provide for their widows when they die. That iniquity causes misery not just for the widow who is to be left without a pension, but horrible mental anguish for her husband while is is alive, as he knows that he will be unable to provide her with the financial security to which she should be entitled.
The Minister has said that second husbands should make provision for their wives. In many cases, in a post-retirement marriage they are prevented from doing just that, as letters that I have received describe. It is not just widows of pre-1978 servicemen who are affected by the ruling. Because of the length of time it will take for the new system to operate fully, whereby each year

787
of service post-1978 counts for 1/34 of a widow's pension, only servicemen who retire in 2012 will be able to give their post-retirement widows the full half-rate pension. If one was to retire today in 1995, one would be able to pass on only a quarter-rate pension.
I am ashamed to say that other countries are more generous in that respect. Pension provision for the widow of a post-retirement marriage is a characteristic of all but one of 14 comparable European allied armed forces pension schemes.
The amendment proposes that pensions be extended only to widows of retired servicemen who marry or remarry before the age of 65—the end of recall liability and the common retirement age for the civilian population. Provided that the marriage lasted for at least three years, the pension should relate to the spouse's number of years in the forces.
The Minister will no doubt mention that premature compulsory or voluntary retirement is a characteristic of other public service professions. But it applies only to the police force, and to nothing like the same degree. If the Minister argues that any concession must be read across to the remainder of the public sector, I would remind him that in the period about which we are talking—pre-1978—the standard retirement age for civil servants was 65. The amendment would put servicemen on a par with civil servants at that period. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, the amendment, as the noble Lord rightly said, is completely different from the previous one. I hope that your Lordships will manage to make the distinction between the case made on the previous amendment, which was about war widows from the Second World War, and the case on this amendment, which is about the Armed Forces Pension Scheme, which is an occupational pension scheme for people, some of whom—very many perhaps—received some injury while in the forces, but the majority of whom retired fairly hale and hearty and took up other ways of civilian life, subsequently died, and obviously left widows.
It is also fair to point out—it may be a nice point to make—that it is not valid to compare this scheme with provision in other countries. One must compare it with the provision in other public service schemes, in this country. Prior to the Social Security Pensions Act 1975, it was a normal and well-established principle of occupational pension schemes, including all those in the public service (including the AFPS), that to qualify for a pension the widow of a pensioner had to be married to him at the time he was engaged in the occupation covered by the scheme. The AFPS was similar in that aspect to other public service schemes. The noble Lord mentioned the Civil Service. I shall throw in education, the health service, doctors, nurses, teachers, police, firemen and local authority employees. That is what this scheme must be compared with.
The effect of the amendment would be to give an open-ended retrospective commitment to the AFPS alone, the full extent of the cost implications of which are difficult to determine. We have no record of the number of post-retirement marriages contracted before
788
6th April 1978 and only learn of those contracted since should an inquiry be made. However, a very broad brush estimate can be given by estimating some 15 per cent. of marriages take place after servicemen leave the forces. The cost of full retrospection could well be in the region of £60 million. What the amendment seeks to do is to entitle any service widow to a widow's pension regardless of the introductory date applicable to the AFPS and other public service schemes. The government of the day—I invite noble Lords on the Benches directly opposite, not the well-whipped noble Lords on the Cross Benches—
Baroness Hollis of Heigham: Shame!
Lord Mackay of Ardbrecknish: My Lords, surely I must have some sport, given the trials that I am suffering. Your Lordships would not deny me that.
Baroness Hollis of Heigham: Resist the temptation.
Lord Mackay of Ardbrecknish: My Lords, no, I have decided not to resist temptation, as the noble Baroness is inviting me to do. I remind the Benches directly opposite that the years about which I am talking are the years in which they had some responsibility. They had some responsibility for the decision not to have retrospection. They introduced the improvement. They were well aware that, as usual, there would be those people who would fall on the wrong side of that implementation date and would therefore not benefit from it. The improvement was given a phased introduction in that only service in the relevant occupation from 6th April 1978 would count.
We are now 17 years into the programme of phased introduction. If it was good enough—dare I say?—for the Benches opposite when they were in government and had the responsibility of finding these kinds of sums of money and decided that they did not want to do it either in this scheme or across the public service scheme, then I suggest it is good enough for them tonight to continue the view that they took then; that is, that they should make a cut-off date of 6th April 1978.
The improvements come to all occupational pension schemes. As I argued in Committee, the principle of all occupational pension schemes in these matters is that retrospection is not taken into account; retrospection is not considered to be the proper way forward. Improvements in schemes are made from the day of the improvement onwards. I do not see any basis for the House agreeing to make a unilateral change in this specific occupational pension scheme.
I hope that your Lordships will accept from me the argument that this amendment concerns an entirely different category of people from those with which we were dealing in the previous amendment. I hope the House will agree that it is right to resist retrospection in what is an occupational pension scheme. If the noble Lord, Lord Freyberg, insists on putting this amendment to the vote and does not rest on the laurels of his first victory, then I hope that your Lordships will join me in the Lobby against him.
Lord Freyberg: My Lords, I should like to emphasise that I am not proposing that pension

789
provision be extended to all widows of post-retirement marriages—a state of affairs that exists in most occupational pensions. I am proposing pension provision for retired servicemen who marry or remarry before the age of 65—the normal civilian age of retirement and the end of recall liability—provided that they have served a minimum number of years (16 in the case of an officer) and have been married for at least three years.
This is a necessary provision because of the habitually early compulsory retirement from the Army, far more so than in any other profession. Indeed, no less a person than John Major made this point in relation to early retirement and pension anomalies to the House of Commons on 2nd May 1980 when he said:
"Service men, by virtue of their profession, are in a special position and should be treated accordingly".—[Official Report, Commons, 2/5/80; col. 1846.]
He went on to ask the Minister to promise that
"the door is not closed on justice for these pensioners and their widows".
It is a plea with which I am in complete agreement and I echo it in the hope that the amendment will be accepted.
The Minister argues that pensions for post-retirement marriages will be costly to implement. Cost alone is no excuse for robbing servicemen of the pensions they earned for their widows. The Minister also says that pensions for widows of post-retirement marriages would have costly knock-on effects. That ignores the special circumstances of army retirement. Policemen and members of the fire brigade retire at around 55, while in the Civil Service, in the 1970s—the period under discussion—almost all civil servants worked until they were 65. There would therefore be no significant read-across. For that reason the Armed Forces, with their far earlier and compulsory retirement dates, must be treated as a separate case.
To sum up, I want to stress that pre-1978 service widows of post-retirement marriages do not simply receive inadequate service pensions; they receive no Armed Forces pension whatever, regardless of their husbands' years of service. Moreover, the pre-1978 cut-off date penalises the most elderly widows. That is indefensible. Their husbands served the country just as long and, in the Second World War, just as hard as the servicemen who came after them. It is for that reason that I must test the opinion of the House.
7.14p.m.
On Question, Whether the said amendment (No. 186) shall be agreed to?
Their Lordships divided: Contents, 121; Not-Contents, 135.

Division No. 4

CONTENTS

Acton, L.

Avebury, L.

Airedale, L.

Bancroft, L.

Alanbrooke, V.

Birkett, L.

Allenby of Megiddo, V.

Boyd-Carpenter, L.

Archer of Sandwell, L.

Brookes, L.

Ashbourne, L.

Carmichael of Kelvingrove, L.

Attenborough, L.

Carter, L.

790

Chalfont, L.

McCarthy, L.

Chorley, L.

McConnell, L.

Cledwyn of Penrhos, L.

McGregor of Durris, L.

Coleridge, L.

McIntosh of Haringey, L.

Combermere, V.

McNair, L.

Cornwallis, L.

Merlyn-Rees, L.

Craigavon, V.

Meston, L.

Cross, V.

Milne, L.

Darcy (de Knayth), B.

Milner of Leeds, L.

David, B.

Monson, L.

Davies, L.

Moore of Wolvercote, L.

Dean of Beswick, L.

Morris of Castle Morris, L.

Derwent, L.

Morris of Kenwood, L.

Desai, L.

Murray of Epping Forest, L.

Diamond, L.

Nicol, B.

Donaldson of Kingsbridge, L.

Park of Monmouth, B.

Donoughue, L.

Peston, L.

Dormand of Easington, L.

Phillips of Ellesmere, L.

Dubs, L.

Plant of Highfield, L.

Elis-Thomas, L.

Portland, E.

Ennals, L.

Prys-Davies, L.

Ezra, L.

Ranfurly, E.

Falkland, V.

Rea, L.

Farrington of Ribbleton, B.

Redesdale, L.

Foot, L.

Richard, L.

Freyberg, L. [Teller.]

Ritchie of Dundee, L.

Geraint , L.

Robson of Kiddington, B.

Gould of Potternewton, B.

Rodgers of Quarry Bank, L.

Graham of Edmonton, L.

Russell, E.

Gregson, L.

Seear, B. [Teller.]

Gregson, L.

Serota, B.

Hamwee, B.

Shannon, E.

Harris of Greenwich, L.

Shaughnessy, L.

Haskel, L.

Simon, V.

Healey, L.

Slim, V.

Henderson of Brompton, L.

Smith, L.

Henniker, L.

St. John of Bletso, L.

Hollis of Heigham, B.

Stallard, L.

Holme of Cheltenham, L.

Stedman, B.

Howie of Troon, L.

Stoddart of Swindon, L.

Hughes, L.

Strabolgi, L.

Hylton-Foster, B.

Strafford, E.

Iddesleigh, E.

Temple of Stowe, E.

Irvine of Lairg, L.

Thomas of Walliswood, B.

Jeger, B.

Thomson of Monifieth, L.

Judd, L.

Tope, L.

Kitchener, E.

Tordoff, L.

Lawrence, L.

Turner of Camden, B.

Macaulay of Bragar, L.

Westmorland, E.

MacLehose of Beoch, L.

White, B.

Mallalieu, B.

Williams of Crosby, B.

Mar and Kellie, E.

Williams of Elvel, L.

Mason of Barnsley, L.

Williams of Mostyn, L.

McAlpine of West Green, L.

Wolfson, L.

NOT-CONTENTS

Aberdare, L.

Braine of Wheatley, L.

Ackner, L.

Brougham and Vaux, L.

Addison, V.

Bruntisfield, L.

Ailsa, M.

Buchan, E.

Aldington, L.

Buckinghamshire, E.

Alexander of Tunis, E.

Butterworth, L.

Annaly, L.

Cadman.L.

Astor of Hever, L.

Caithness, E.

Astor, V.

Carlisle of Bucklow, L.

Barber of Tewkesbury, L.

Carnegy of Lour, B.

Barber, L.

Carnock, L.

Belhaven and Stenton, L.

Carr of Hadley, L.

Bethell, L.

Chalker of Wallasey, B.

Biddulph, L.

Chelmsford, V.

Blake, L.

Chesham, L.

Blaker, L.

Chilver, L.

Blatch, B.

Clanwilliam, E.

Blyth, L.

Clark of Kempston, L.

Borthwick, L.

Coleraine, L.

Brabazon of Tara, L.

Colwyn, L.

791

Courtown, E.

Marlesford, L.

Cranborne, V. [Lord Privy Seal.]

McColl of Dulwich, L.

Mersey, V.

Cumberlege, B.

Millar of Hendon, B.

Dean of Harptree, L.

Milverton, L.

Dixon-Smith, L.

Monteagle of Brandon, L.

Dudley, E.

Morris, L.

Dundonald, E.

Mottistone, L.

Eden of Winton, L.

Moyne, L.

Elles, B.

Murton of Lindisfarne, L.

Fairfax of Cameron, L.

Noel-Buxton, L.

Falmouth, V.

Ferrers, E.

Norrie, L.

Fraser of Carmyllie, L.

Northbrook, L.

Gage, V.

Northesk, E.

Gisborough, L.

O'Cathain, B.

Glenarthur, L.

Onslow, E.

Goschen, V.

Oppenheim-Barnes, B.

Gray of Contin, L.

Orkney, E.

Hacking, L.

Oxfuird, V.

Haddington, E.

Parkinson, L.

Hailsham of Saint Marylebone, L.

Prentice, L.

Rankeillour, L.

Harding of Petherton, L.

Rawlings, B.

Harmar-Nicholls, L.

Reay, L.

Harmsworth, L.

Rees, L.

Hayhoe, L.

Renton, L.

Henley, L.

Renwick, L.

Hogg, B.

Rodger of Earlsferry, L.

Holderness, L.

Salton of Abernethy, Ly.

HolmPatrick, L.

Savile, L.

Hood, V.

Seccombe, B.

Hothfield, L.

Sharples, B.

Howe, E.

Shaw of Norhtstead, L.

Inglewood, L. [Teller.]

Simon of Glaisdale, L.

Jenkin of Roding, L.

Stevens of Ludgate, L.

Kimball, L.

Stewartby, L.

Kingsland, L.

Stodart of Leaston, L.

Lane of Horsell, L.

Strathclyde, L. [Teller.]

Layton, L.

Sudeley, L.

Leigh, L.

Teviot, L.

Lindsay, E.

Thomas of Gwydir, L.

Lindsey and Abingdon, E.

Trefgarne, L.

Long, V.

Trumpington, B.

Lucas of Chilworth, L.

Ullswater, V.

Lucas, L.

Wakeham, L.

Lyell, L.

Wise, L.

Mackay of Ardbrecknish, L.

Wynford, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.23.p.m.
[Amendments Nos. 187 and 188 not moved.]
Baroness Gould of Potternewton Baroness Gould of Potternewton moved Amendment No. 189:
Before Clause 114, insert the following new clause:
Carers' credits
(". For any person attaining pensionable age on or after 6th April 1999, for the purposes of Schedule 3 to the Social Security Contributions and Benefits Act 1992 (contribution conditions for entitlement to benefit) and for the purpose only of calculation of retirement pensions, a person prevented from regular employment by responsibilities at home shall be treated as having paid primary Class I contributions during any period during which they were so prevented.").
The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 194. The aim of the new clause and Amendment No. 194 is to ensure that all those eligible for home responsibility
792
protection instead have their contributions credited on the same basis as people who are registered as unemployed or in receipt of invalidity benefit. They will be treated as having paid primary Class 1 contributions during the period of time that they are prevented from doing so because of care responsibilities in the home.
Currently, for people in that situation HRP provides for them to have each of those years up to a maximum of 20 deducted from the requisite number of qualifying years for a category A pension. The introduction of HRP was a major breakthrough, particularly for women who failed to qualify for pension rights because of long breaks in their working life.
But the position is not satisfactory for a number of reasons. As home responsibility protection is based on a full tax year and not credited on a week-by-week basis, any year in which a person meets only the requirements for that part of the year will not qualify, creating for those people serious gaps in the protection afforded. Similarly, while equalisation of the maximum number of years for HRP for a full basic pension at 22 years will remove the discriminatory element between women and men, the time limits still penalise those with large families or families with children with special needs.
Other flaws in the current arrangements are, first, many carers miss out because of the narrow qualifying base. Secondly, for those looking after people with disabilities HRP does not provide an automatic payment. They are often unaware that HRP exists. The most important reason for this change is that it will bring people into the contribution system. That has to be beneficial since it reinforces their responsibility for making adequate provision for their retirement. For instance, they would be reminded by the contributions agency if they do not have a full insurance record for a particular year and so be prompted to pay Class 3 contributions to protect their pension entitlement.
It is important to stress that this is broadly a cost-neutral option, as HRP and carers' credit give the same level of entitlement. Equally important, the date of April 1999 proposed for implementation allows time for the necessary administrative changes and coincides with the Government's stated intention to make provision for HRP to be extended to SERPS.
The Government may argue that there is no need for this amendment as they are committed to making the change. We believe, however, that it is important to include this clause in the Bill to guarantee that there will be no removal of HRP without it being replaced by more adequate provision.
Finally, it is estimated that the unpaid work of carers saves the Government £34 billion a year. A more comprehensive approach to protecting their pensions would show that their efforts are truly appreciated. I therefore hope that the Government will feel able to accept this modest amendment. I beg to move.
Baroness Seear: My Lords, as president of the Carers National Association I must declare an interest in supporting this amendment. I wish to support it as powerfully as I possibly can. In the early days of carers' work becoming recognised, those of us who were working for carers did a survey to ask what their major

793
anxiety was. It may perhaps surprise your Lordships to learn that their major anxiety was, "What is going to happen to us when we get old? We are looking after people who cannot look after themselves now. When it is our turn, what is going to happen to us?". So many of them had to give up opportunities to earn a pension for themselves and they had even lost their right to the state pension because they were not paying contributions.
If the work of carers is to be carried out properly, they must be free from this haunting anxiety that they will be in deep poverty when they themselves reach old age. Indeed, a great many of them are in deep poverty already. Some security in old age is essential and therefore I beg the Government to get this amendment onto the face of the Bill.
Lord Mackay of Ardbrecknish: My Lords, I am not sure whether I am alone in feeling like an actor in a B movie which comes on after the audience has gone, or almost all gone. The long service medal people remain, I see.
These amendments seek to limit the effect of the current provisions of home responsibilities protection. They would treat any person attaining pensionable age on or after 6th April 1999 who is prevented from regular employment by responsibilities at home as having paid primary Class 1 contributions for the purposes of calculating retirement pension during any period during which they were so prevented.
These amendments which seek to replace home responsibilities protection with national insurance credits are unnecessary. Home responsibilities protection, as the noble Baroness, Lady Gould of Potternewton, rightly said, already provides a simple and effective mechanism which fully protects the entitlement to the state basic pension of people whose working patterns are interrupted by caring responsibilities.
It may help if I explain how it works. Home responsibilities protection allows years of caring to be excluded from the number of qualifying years otherwise needed for basic pension purposes, subject to a minimum of 20 qualifying years. So those whose opportunity to work is limited by caring responsibilities at home are not penalised in terms of the ability to maintain entitlement to a full basic pension. It is available to carers of children under 16 and to carers of the sick and disabled.
Our own proposals included in the Bill will ensure that, as women's pension age goes up, and the number of years needed for a full basic pension increases to 44 years, so the number of years that can be covered by home responsibilities protection increases by three years to 22 years. That will retain the principle that a person with caring responsibilities can earn a full basic pension with half the number of qualifying years normally needed. The protection available should thus provide adequate coverage for the majority of carers.
We value the role played in society by those who care for others. I agree entirely with the tribute which the noble Baroness, Lady Gould, paid to those who carry out that caring, whether for children, the elderly or the
794
infirm. However, I believe that home responsibilities protection fully recognises that value and is a fair measure to protect carers' entitlement to basic pension. By the year 2030, it is estimated that more than 4 million women alone will be benefiting. I am content that home responsibilities protection fulfils our obligation to safeguard future basic pension rights for people with caring responsibilities.
Having heard my remarks about HRP and my confirmation of how it works—it seems to me that it fulfils the objectives of the noble Baroness—I hope that the noble Baroness will feel able to withdraw her amendment.
7.30 p.m.
Baroness Gould of Potternewton: My Lords, I thank the Minister for that detailed reply, but I regret the fact that he has not found it possible to take on board our dissatisfaction about the flaws in HRP which I have outlined.
The Minister said that he values the role which carers play in society. I question that because the provisions do not fully cover carers in their old age. As the noble Baroness, Lady Seear, said, they should be free from such anxieties when they are looking after other people, yet no provision is being made to ensure that the maximum number of people can claim HRP or a new contributory benefit. It is estimated that more than 7 million carers work for some 20 hours a week without pay. It is a great pity that the Government are not prepared to make this small change to improve their situation. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, perhaps I may suggest that Report stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Civil Evidence (Family Mediation) (Scotland) Bill [H.L.]
7.33 p.m.
Report received.
Clause 1 [Inadmissability in civil proceedings of information as to what occurred during family mediation]:
The Lord Advocate (Lord Rodger of Earlsferry)The Lord Advocate (Lord Rodger of Earlsferry) moved Amendment No. 1:
Page 2, line 9, at end insert:
("(5) A document purporting to be a certificate by the Lord President for the purposes of this Act shall be accepted by the court as such unless the contrary is proved.").
The noble and learned Lord said: My Lords, at the Committee stage of this Bill on 21st February, the noble and learned Lord, Lord McCluskey, suggested that it would be wise to consider inserting a provision into Clause 1 to the effect that a document purporting to be a

795
certificate by the Lord President of the Court of Session approving an organisation should be accepted by the court as such unless the contrary is proved. We are most grateful to the noble and learned Lord for making that point. We have been happy to take his advice. Indeed, there is a precedent in statute for such a provision. Therefore, I hope that the amendment will be acceptable to your Lordships and, in that spirit, I beg to move.
Baroness Carnegy of Lour: My Lords, it may be helpful if I intervene at this stage to express my gratitude to the noble and learned Lord, Lord McCluskey, for the advice that he offered on this matter in Committee. I am also grateful to my noble and learned friend for his response. I am happy to accept the amendment and hope that other noble Lords will do likewise.
The Earl of Mar and Kellie: My Lords, I have some questions for the noble and learned Lord the Lord Advocate about the amendment. I have read the Official Report of the last stage of our deliberations when I raised the issue of exactly how the Lord President would decide whether an organisation was appropriate to qualify as a mediator. Having read Hansard, I believe that the noble and learned Lord suggested that it was not up to the Lord President to make that decision. I therefore wonder what value the measure has and from where the criteria for approving an organisation will come. Indeed, should we be considering deleting subsections (3) to (5) of Clause 1?
Lord Rodger of Earlsferry: My Lords, with the leave of the House, perhaps I may reply that I made the slightly more specific point that whereas the noble Earl had indicated that he envisaged that the Lord President might have a wide-ranging responsibility for keeping organisations up to standard, so to speak, I did not think that that was the function of the Lord President. In broad terms, the Lord President has to be satisfied that such organisations are responsible and operating properly in the mediation service. He has to be satisfied that their proceedings are suitable and can attract the evidential immunity that is in question. As I said in Committee, the Bill relates entirely to evidential matters, not to wider matters. It is within that general framework that I think that it is important that the Lord President should be involved in this way. It is important that that immunity should arise only for approved organisations.
Lord Macaulay of Bragar: My Lords, before the noble and learned Lord sits down, can he confirm that before making decisions about such organisations, the Lord President will engage in wide consultation?
Lord Rodger of Earlsferry: My Lords, again with the leave of the House, it is not for me to prescribe what the Lord President will do. I am sure that he will be alive to the necessity of ensuring that the organisations that he approves are suitable and that he will take the necessary steps to that end.
On Question, amendment agreed to.
Clause 2 [Exceptions to general rule of inadmissibility]:
Baroness Carnegy of Lourmoved Amendment No. 2:
Page 2, leave out lines 24 to 26 and insert:
("(a) of information as to any contract entered into during family mediation or of the fact that no contract was entered into during such mediation;").
The noble Baroness said: My Lords, in moving Amendment No. 2, perhaps it will be for the convenience of the House if I were to speak also to Amendment No. 3. I tabled these amendments to address the concerns about the existing text of paragraphs (a) and (b) of Clause 2(1) which were made known to me by both Family Mediation Scotland and Comprehensive Accredited Lawyer Mediators, known respectively as FMS and CALM. Put briefly, they feared that the words,
"agreement (whether written or oral)",
which appear in Clause 2(1) (a), would allow one party who wished to lead evidence as to what occurred during mediation to aver or claim that there was an oral agreement. That could lead to the other party to the mediation challenging the existence of such an agreement. In an examination of that, the so-called "sealed room" of mediation would be opened without the agreement of all the parties, as is provided for in Clause 2(1) (c).
I understand that FMS and CALM mediators have described their anxieties to the Scottish Law Commission, which concluded that it would be reasonable to try to meet the anxieties of those involved in the mediation process. As a result, the Scottish Law Commission suggested the amendments that we are now considering. They are acceptable to FMS. It tells me that it will require to adjust its practice slightly in order to ensure that clients understand clearly the difference between oral or written contracts which are intended to be binding and other kinds of agreements which more often emerge from family mediation. The CALM lawyers had proposed a different approach, but I am sure that they will recognise that this is a fair compromise and, like FMS, will be able to adjust their practice to work within the law.
I am sure that your Lordships are as grateful as I am to CALM for pointing out the problem and to FMS for backing it in its request to the Scottish Law Commission. Likewise, I am sure that we are all grateful to the Scottish Law Commission for responding as it has. I beg to move.
The Earl of Mar and Kellie: My Lords, the two amendments put the wording of the Bill onto a better footing. They pave the way for a wider range of decisions, as characterised by Clause 1(2) (b) to (e). I had initially spoken about the Bill as though only Clause 1(2) (a) existed; that is, that family mediation was only about determining the children's future. While I recognise that we are dealing with a wide range of issues, I believe that the word "contract" is a more businesslike description of what needs to be achieved. After all, many of the decisions that must be taken on the dismantling of a marriage are similar to those taken in dismantling a partnership in business.

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As informal agreements are not to be regarded as contracts, less evidence will become admissible. However, I believe that more agreement will appear in the joint minute when it arrives at the divorce court. That is a plus, and therefore I am keen to support the amendment.
Lord Lyell: My Lords, I thank my noble neighbour for explaining admirably clearly all the thoughts in my mind. I wish her success with the amendment.
Lord Macaulay of Bragar: My Lords, I have spoken to the noble Baroness, Lady Carnegy, about the Bill and have made it clear that I am not trying to stop its process. However, I wonder whether we are moving away from the informality of mediation and into the legalism of contract. The source of the word "contract" has come from the Scottish Law Commission in a learned dissertation by one of its members. The more I consider the matter, the more I believe that the word "contract" is too legalistic to sit happily with the concept of mediation. I make that point in passing and perhaps it can be considered in another place.
7.45 p.m.
Lord Rodger of Earlsferry: My Lords, I am happy to agree with the comments made by my noble friend Lady Carnegy as regards the amendment. The issue touched upon was discussed on Second Reading and was raised by the mediation organisations. We are anxious that the privacy of mediation should not be disturbed by spurious allegations after the event that an agreement had been entered into when no such thing had taken place.
I appreciate the anxieties that the mediation organisations have in this regard. Nonetheless, I must have regard to the overall needs of the law of evidence in Scotland and to the need to ensure a balance of justice to all concerned. I am aware that the proposed amendments have been the subject of extensive discussions with Dr. Clive of the Scottish Law Commission, but I believe that they affect the balance. I believe that there would be a risk of injustice if, where the parties had entered into a contract which they intended should be binding upon them, thereafter one party sought to escape from such a contract without the other party being able to put the matter into the proof in a civil proceeding.
With respect to the noble Lord, Lord Macaulay, the word "contract" is well chosen. It is only where in the course of mediation proceedings a legal and binding contract has been entered into—and that may not occur often—it is right that thereafter evidence of the contract should be able to be led. Otherwise there would be a risk of injustice. It is precisely in order to allow for the fact that more often there may be informal agreements about which evidence will not subsequently be led that the word has been well chosen.
My noble friend has pointed out that the mediation organisations will have regard to the terms of the legislation when deciding the particular forms of procedure to adopt. For those reasons, I take the view that it is justified to have the exception in the way now defined and I am happy to support my noble friend's amendment.
Baroness Carnegy of Lour: My Lords, I thank the noble Earl, Lord Mar and Kellie, for his support and for his explanation of the reason for that support. His experience adds value to the discussions. The noble Lord, Lord Macaulay, was right to clarify the amendment because it is the main change being made to the Bill on Report. I am grateful to my noble and learned friend the Lord Advocate for explaining the meaning behind the proposal of the Scottish Law Commission.
I understand that no one can stop people making a contract if they so wish, and I believe that the noble Lord, Lord Macaulay, will agree with that. It seldom happens in mediation, but no one can stop people doing so. It will not be a usual occurrence, but it would be wrong if a contract were made and no one could lead evidence about it in court in later civil proceedings. I hope that the House will approve the amendment.
Lord Macaulay of Bragar: My Lords, before the noble Baroness sits down, perhaps I may make a technical point. I understand that in making representations on the matter Dr. Clive was not representing the views of the Scottish Law Commission but was merely trying to assist the passage of the Bill through your Lordships' House.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 3:
Page 2, line 27, leave out ("written agreement") and insert ("contract").
On Question, amendment agreed to.
Lord Rodger of Earlsferry Lord Rodger of Earlsferry moved Amendment No. 4:
Page 3, line 8, leave out ("in a case where") and insert ("insofar as").
The noble and learned Lord said: My Lords, in moving Amendment No. 4, I shall speak also to Amendments Nos. 5, 6 and 7. Again, we are grateful to the noble and learned Lord, Lord McCluskey, who, in Committee, voiced certain concerns that, as drafted. Clause 2(2) might interfere with the intended operation of Clause 2(1) (c). The clear intention of the Scottish Law Commission as described in recommendation 13(d) of its report is that the arrangement set out in Clause 2(1) (c) should not extend to a child participant who is the subject of the mediation but who is too young to understand the nature and significance of the matters involved. It would not be right that such a child should have a veto.
In addition, it is only proper that the child should be able to agree to the admission as evidence of information that directly concerns him or her. These would include matters such as where the child is to reside, maintaining personal relations and direct contact with his or her parents or matters concerning the control, direction, guidance, guardianship or legal representation of the child.
Thus, both to highlight the useful concerns expressed by the noble and learned Lord, Lord McCluskey, and to make full provision for the policy as set out by the Scottish Law Commission, I have brought forward these amendments. I beg to move.
Baroness Carnegy of Lour: My Lords, perhaps it may be convenient for me to intervene at this point to

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say that I am grateful to the noble and learned Lord, Lord McCluskey, for pointing out in Committee that this part of Clause 2 does not quite say what it was intended to say.
It was always the intention that children who are the subject of mediation about matters directly affecting them and who are capable of understanding the meaning of what is discussed should be able to agree that such information should be admitted as evidence. I am grateful to my noble and learned friend Lord the Lord Advocate for clarifying that point and for bringing forward these amendments to provide the necessary alterations. I am happy to accept the amendment.
Lord Macaulay of Bragar: My Lords, I should like to express my personal reservations as regards the representation of the child. That point has not been met at all by the amendment. I shall not table a counter amendment but I hope that the matter will be looked at in due course. I know that an amendment has been tabled in another place by Family Mediation (Scotland) about the child having representation in the mediation process. At the moment, the child is regarded as a participant in the family mediation with a legal capacity when he would have nothing of the kind. I wonder whether the Bill goes far enough as regards representation for the child. I hope that that will be given some consideration when the Bill goes to another place.
The Earl of Mar and Kellie: My Lords, I support these amendments. They tidy up the Bill. However, they seem to rely on an amendment to the Children (Scotland) Bill which is at present in another place. That amendment deals with how the child will be represented. I like the idea that an appropriate person should be appointed to interview the child and report back. I hope that this amendment will be accepted within the Children (Scotland) Bill so that it carries on into this Bill. The amendment clarifies the fact that the more mature child should be consulted when admissibility is sought. I support the amendment.
Lord Rodger of Earlsferry: My Lords, I recognise all the anxieties expressed by the noble Lord, Lord Macaulay, and the noble Earl. I accept that they are expressing anxieties about the way in which children are represented in connection with mediation. I reiterate that that is a matter to be considered in relation to the substance of mediation proceedings. Here we are considering the question of the admissibility of evidence as to what went on at the proceedings. As has been indicated, there may be another opportunity on which to raise those matters which I accept are matters of substance because if mediation is to be a recognised part of the procedures for dealing with family disputes, and so on, it is important that everyone should be satisfied about the way in which children's interests are satisfied. However, that is another matter which does not fall squarely within the terms of the Bill. I commend the amendment.
On Question, amendment agreed to.
Lord Rodger of Earlsferry Lord Rodger of Earlsferry moved Amendments Nos. 5 to 7:
Page 3, line 9, after ("who") insert ("— (i)") .
Page 3, line 10, at end insert ("; and
(ii) at the time the family mediation took place was capable of understanding the nature and significance of the matters to which the information which is sought to be admitted as evidence relates").
Page 3, line 15, leave out from ("evidence") to end of line 17.
On Question, amendments agreed to.
The Earl of Lindsay: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.56 to 8.30 p.m.]

Pensions Bill [H.L.]
Consideration of amendments on Report resumed.
Lord Stallard Lord Stallard moved Amendment No. 190:
Before Clause 114, insert the following new clause:
("Retirement pension: absence from Great Britain
.—(1) The Secretary of State shall prepare and lay before Parliament, before the expiry of a period of six months beginning with the date on which this Act receives Royal Assent, a report on—

(a) the numbers, age and economic circumstances of persons absent from Great Britain who, but for the provisions of section 113(1) (a) of the Social Security Contributions and Benefits Act 1992, would be eligible under that Act for a retirement pension of any category or graduated retirement benefit (including any increase of the amount payable in respect of any such retirement pension for adult and child dependants); and

(b) the implications for persons mentioned in paragraph (a) above of the establishment of reciprocal pensions and benefits arrangements between Great Britain and the government of the country in which such persons are resident.

(2) Unless either House of Parliament resolves, in the light of the report mentioned in subsection (1), that this section should no longer apply, the Secretary of State shall, before the expiry of a period of one year, beginning with the date on which this Act receives Royal Assent, by order make regulations to disapply, in whole or in part, the application of section 113(1) (a) of the Social Security Contributions and Benefits Act 1992 in respect of a retirement pension of any category or graduated retirement benefit (including any increase of the amount payable in respect of any such retirement pension for adult and child dependants).
(3) An order under subsection (2) shall be subject to approval by resolution of each House of Parliament.").
The noble Lord said: My Lords, I move the above amendment in a slightly different atmosphere to that which prevailed earlier in the afternoon. However, I hope that the small presence in the Chamber will not make too much difference. I expect that noble Lords are all hiding somewhere or still having dinner. I do not intend to make a long statement because I believe that I have made two or three already and many people, both inside and outside the House, are now beginning to latch on to the fact that there is an injustice here. Indeed, it is another one of those injustices about which we heard so much this afternoon.
People are beginning to understand that there is an injustice. Something is wrong where people who qualified for a pension in exactly the same way as I did, after 44 years of paying Class 1 stamps on a contribution card, are now not able to receive the increases that I and many people receive every year.
It is a question of the three main principles that we have argued about throughout the proceedings. First, there is the statutory right which has been accepted by the Government and by previous government Ministers as being correct. Secondly, there are the reciprocal agreements which have already been accepted and which operate in 33 different countries. Again, that is an accepted principle, so such pensions can be paid to some pensioners who live abroad provided that there is a reciprocal arrangement in existence. That takes care of the argument that it is an impossible request; indeed, it can be done. Thirdly, because it is an entitlement, we certainly do not accept the argument that it would cost too much. You cannot argue that for one case when the opposite takes effect in those cases where reciprocal agreements apply. If there are 33 or 34 reciprocal agreements where pensioners receive all increases and then you say, "We cannot give those pensioners the same treatment because it would cost too much", that is an argument against itself. Therefore, we do not accept it.
We heard this afternoon about former servicemen and pensioners. We have here a very similar case. A great many of the people whom I have been discussing for many years now served this country as servicemen, as taxpayers and, in the past two or three years, as overseas electors. Indeed, I imagine that both major parties at present are canvassing for the support of such people, who are the same pensioners in those same countries, for the forthcoming general election. Therefore, they are good enough to vote and good enough to serve in the forces, and so on; but, when it comes to their pension entitlement, it is said that because they live in those Commonwealth countries they are not entitled to it because there is no reciprocal agreement and the Government do not intend to have one. We say that that is wrong for many reasons. It is an injustice, it is immoral and it is almost a deceit to say that we will have reciprocal agreements with others but not with those countries.
I tend to agree with the noble Lord, Lord Brookes, who spoke about conscience this afternoon. Again, we are discussing a conscience issue; indeed, it affects people's consciences. They cannot believe that there are people living in America and others living only a few minutes away in Canada and that, on one side of that divide, people receive the full pension while, on the other side, they receive the pension that was frozen when they left this country, which is usually under £10.
Twenty thousand pensioners live in those conditions in Canada with a pension that is under £10, although, as I said, they have the required qualifications for a full pension. It is wrong. The noble Lord, Lord Boyd-Carpenter, echoed the sentiments expressed in our recent debates by saying that, if there is to be a time to change the system, this year would be the time: the 50th anniversary of the end of the last war is a perfectly good time—if time is needed—to put such injustices right.
802
We are discussing one of them. I believe that it should be given the same kind of priority as some of the other matters. That is why I have changed the form of the amendment from the usual kind in the hope that the Government will accept it as being a more constructive proposition.
In the first part of my amendment, I simply ask for a report to be produced to give us all the information on the subject. We have been bedevilled over the years by various statistics from different sources that never seemed to match as regards numbers, costs or anything else. I am asking for a report that would put that situation right. Once we know the size of the problem, how many people are involved and where they are, we shall then know the implications of applying a reciprocal agreement to those people.
No one has ever explained to me why we cannot come to a reciprocal arrangement with, for example, Canada as, indeed, we have done with America, or with Australia in the same way as we have done with Israel, Cyprus, Greece or Spain. No one has ever been able to tell me why we cannot do so. Therefore, I must ask: what would be the effects of reciprocal pensions and benefit arrangements between the UK Government and the government of the country in which such persons are resident? It is no good saying that those countries do not want to do so because most of the Commonwealth countries have asked for such arrangements. They would be quite happy to sit down and negotiate.
The second part of my amendment would require the Government, in the event of the production of a report being agreed to, to come forward 12 months thereafter with regulations that would take care of the section in the Social Security Contributions and Benefits Act 1992 which, at present, excludes such pensioners from receiving increases in their benefits. My proposition is fairly simple. There is time to consider and implement it. Indeed, there are ways and possibilities as to how it would be implemented when the time comes and as regards the wording of the regulations, and so on. However, it would give us a little more scope and would take care of the "knockabout stuff" that we usually have. I hope that the Minister will put forward a more positive approach in his response to what is really an injustice that the Government continue to support; indeed, he has never given us a proper reason for the Government's refusal to come to some reciprocal agreement. I beg to move.
Baroness Seear: My Lords, I should like briefly to support the amendment so ably moved by the noble Lord, Lord Stallard. It is quite an irrational position. The burden is on the Government to establish why there is any justification for a pensioner who is in exactly the same position in every other respect who lives one side of the American border receiving an increase in his pension while another person, who is in all ways identical, but lives on the Canadian side, does not. It is an irrationality which surely demands an explanation.
The only explanation that I have heard so far from the Government Benches is that it would cost a little more money. Well, that is at least an argument—if you accept it. However, it does not meet any of the other

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arguments about the irrationality and the injustice of dealing with the matter in such a way. The noble Lord, Lord Stallard, has put forward his proposition in a form which surely makes it easy for the Minister to accept. It does not commit the Minister to anything: it would merely provide the House with more information with the prospect, on the basis of that information, that we could then go ahead to reach a logical and justifiable settlement for what has been a nagging problem for a great many years.
Baroness Turner of Camden: My Lords, this amendment is different from the previous amendments on the same subject in that it recognises to some extent the force of the Government's argument that, where pension increases are paid, reciprocal agreements exist. One hopes that the report envisaged in the amendment will give further impetus to the search for reciprocal agreements. If they really could not be obtained, the fallback position would apply which would mean that the position of these pensioners would then be safeguarded in the way that my noble friend suggests. It seems to me that this different approach warrants a rather different response from the Government. On that basis, we on this side of the House on the Front Bench support the amendment.
Lord Shaughnessy: My Lords, I hope I may join in the discussion for a moment. As a Canadian it seems to me an affront to those who live in Canada as expatriate British citizens that they have been discriminated against in this way for so long. It is not a happy situation since outside the old Commonwealth a citizen of Windsor, Ontario gets a pension of something like £10 a week, while another British expatriate citizen in Detroit gets a pension of £95 a week. There must be something wrong with that.
Lord Mackay of Ardbrecknish: My Lords, your Lordships will, I am sure, recall the comprehensive and thorough debate in Committee on Amendment No. 183 which sought to entitle pensioners abroad to the same amount of retirement pension as if they had resided in Great Britain. The noble Lord, Lord Stallard, put his measure to the vote on that occasion and he did not win. I must congratulate him on the ingenious device he has deployed to return to the subject at Report stage. However, no amount of dressing-up can get away from the simple fact—which I put before the Chamber at Committee stage—that the cost of this proposal is £235 million, which is a £¼ billion, give or take a few million.
I am not in the least surprised that the noble Baroness, Lady Seear, on behalf of the Liberal Democrats, can happily clock up another £¼ billion. I must put her on my list of people whose expenditure commitments I add up as we go through the days and weeks. A quarter of a billion pounds is a lot of money. I believe I detected the noble Baroness, Lady Turner, adding the Labour Party's voice to the expenditure of £¼ billion. On a very quick estimation, that makes a promise of enormous extra expenditure by the next Labour Government, if we ever have one. However, I believe the greater the expenditure that party promises, the more the electorate might see through the new Labour Party. I have now
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reached an expenditure figure of £335 million for the day so far, and I still have a little calculation to make as regards one of the Divisions.
However, I thought we agreed in Committee on my proposition, which is as follows. If I had £¼ billion more from the Treasury to spend, I am sorry to inform the noble Lord, Lord Stallard, that I could find many other cases in the social security field which I consider would have a greater priority on the British taxpayers' money than the one we have before us, however it is disguised. I see the noble Lord, Lord Monkswell, rising. He wishes to add more money to these promises. I am happy to give way.
Lord Monkswell: My Lords, far from seeking to add money to the noble Lord's calculations, I wish to ask him a question. Is the calculation which he or his department has made in terms of the cost of this amendment a gross or a net figure? Is the saving in terms of, for example, expenditure on the National Health Service that would be incurred if these people were resident in this country included in the equation? What estimate have the Government made of the net effect of this proposal in years to come? I use the example of someone who retires in the next year or two. He may decide either to stay in this country or to go abroad. If the pension continues to be paid and is uprated in line with the UK figures, that pensioner will cause a drain on the Exchequer in a number of other areas apart from pensions. But if that pensioner is abroad, that drain, particularly in terms of the National Health Service, will not exist. The fundamental question concerns whether the Minister is talking about gross figures or net figures.
8.45 p.m.
Lord Mackay of Ardbrecknish: My Lords, as I think I explained at the Committee stage, I am talking about gross figures because it is very difficult to subtract the figure the noble Lord mentioned. But before he thinks he has scored a bull point, he must remember that, if he is looking for net figures, he also has to take account of the tax which these people are no longer paying to the British Exchequer as British taxpayers, but which they are paying in Australia, New Zealand or wherever else they live. Therefore I do not think he has scored too great a point. I say that just in case he thinks he has scored a point. The simple fact of the matter is that the provision would add £¼ billion to the pensions bill in this country. I reiterate that I believe that in the unlikely event of Treasury staff phoning me tomorrow morning and offering me an extra £¼ billion to spend, I would have far better causes inside the social security budget in this country on which to spend that money rather than go down the road we are discussing.
I turn to the amendment before us. The numbers of people receiving frozen pensions are well known. We also know their ages. However, the noble Lord seeks to place an impossible burden on the Secretary of State in asking him to report on their economic circumstances. The following statistics make it abundantly clear why that would simply not be possible. We pay our pensions at frozen rates to some 400,000 people in almost 150

805
countries worldwide. It is simply not possible to hazard a guess at the economic circumstances of people with widely varying amounts of British pensions, to say nothing of their other income, living in countries such as, not only Australia and Canada, but also Pakistan, Kenya, Brazil or even Saudi Arabia.
It would also be impracticable to attempt to prepare a report on the implications for these pensioners if the United Kingdom were to establish reciprocal agreements on pensions and other benefits with the governments of the countries where our pensioners live. It would not be possible to conclude such arrangements with the many countries which do not have a social security system with which to reciprocate. Other systems may be so different as to make reciprocity impracticable, while others may have a very limited range of benefits. Some countries may simply be unwilling to negotiate with the United Kingdom. In short, the duty which the noble Lord seeks to place on my right honourable friend the Secretary of State is neither reasonable nor practicable.
The noble Lord seeks to impose a further duty on both Houses to reconsider the whole question of frozen pensions again in the light of the report. That would not be possible, of course, if no such report is published because a meaningful report would be impossible to produce. Furthermore, this House has already rejected an amendment to unfreeze pensions. If a similar amendment were to meet the same fate in the other place, it would be totally unreasonable to expect both Houses to revisit the issue as soon as within 12 months from when this Bill is passed.
We discussed this matter at some length in Committee. The Chamber came to a conclusion. I congratulate the noble Lord on the ingenious way in which he has returned to this issue, but I believe that the suggestion he has made about a report is totally impracticable. It is, of course, simply a vehicle to allow the subject to be aired again—I am well aware of that—but I think the important point is the matter of principle that I have mentioned, the sum of money involved and the other ways in which we could use that amount of money if we were to take it from the British taxpayer. I could go on about the need to control our social security budget for the benefit of all taxpayers and of our economy, but I shall spare the House and the noble Lord a lecture on that particular subject—
Noble Lords: Oh!
Lord Mackay of Ardbrecknish: My Lords, I shall spare the House that lecture much as I am being tempted to go down that road by those in a sedentary position. I have nothing to add to the point that I made in Committee, and nothing that I have heard this evening persuades me otherwise. While I congratulate the noble Lord on a clever amendment, I hope that he will withdraw it.
Lord Stallard: My Lords, I thank the noble Lord for his kind remarks about the amendment. It would have been better had he answered it or even discussed it. I am not asking for the kind of report to which he referred. I am asking for a very limited report. It relates only to
806
those people who are eligible under the Act for a retirement pension of any category. That would reduce the numbers he mentioned.
I gather that the relevant statistics are already available on computers in the various countries. It is merely a question of getting them together and publishing them in one report. It is not as far fetched as the noble Lord would have us believe, involving millions of clerks sitting down with pen and ink and big ledgers to collate the statistics. They are all on computer and could be taken up.
The number of pensioners in some of the countries the noble Lord mentioned are no more than 10, 12 or 15. In one country I believe there are only two pensioners. Therefore, it is not the major task that he says it is.
The biggest task is in the Commonwealth countries, where pensioners are entitled to more consideration. Certainly the statistics for those Commonwealth countries are available. Details of the economic circumstances of their populations are compiled in those countries in the same way as we collect details of the economic circumstances of our own population. In England we always seem to imagine that everybody else lives in the dark ages and we are far in advance of everyone. I can tell the noble Lord that in those countries they are just as advanced, and in some cases they are more advanced than we are in the collation of these vital statistics. The Minister did not reply to that point, or certainly not adequately.
The Minister never mentioned reciprocal arrangements. He said that some countries would not want such an arrangement. We can do nothing about it if they do not want it. Those countries are entitled to say that. I say that there are countries which would welcome such an arrangement, in the same way as America, Finland, Greece, and a total of some 33 countries. We have accepted their willingness to enter into a reciprocal arrangement and have done so. Nobody can understand why we refuse to make such an arrangement for Commonwealth citizens, to whom many of us are indebted for so much.
I shall not go on any longer. I cannot accept the Minister's response. I know that I may stand to win by 12 votes to nine, but I should like to test the views of the House.
8.52 p.m.
On Question, Whether the said amendment (No. 190) shall be agreed to?
Their Lordships divided: Contents, 22; Not-Contents, 85.

Division No. 5

CONTENTS

Addington, L.

Howie of Troon, L.

Airedale, L.

Macaulay of Bragar, L.

Carmichael of Kelvingrove, L.

Mar and Kellie, E.

Cocks of Hartcliffe, L.

McCarthy, L.

David, B.

Monkswell, L. [Teller.]

Dean of Beswick, L.

Pearson of Rannoch, L.

Donoughue, L.

Rodgers of Quarry Bank, L.

Elis-Thomas, L.

Seear, B. [Teller.]

Hamwee, B.

Shaughnessy, L.

807

Stallard, L.

Tordoff, L.

Thomson of Monifieth, L.

Turner of Camden, B.

NOT-CONTENTS

Acton, L.

Howe, E.

Addison, V.

Inglewood, L. [Teller.]

Aldington, L.

Jenkin of Roding, L.

Allenby of Megiddo, V.

Kimball, L.

Annaly, L.

Kingsland, L.

Astor, V.

Leigh, L.

Barber, L.

Lindsay, E.

Blaker, L.

Lindsey and Abingdon, E.

Blatch, B.

Long, V.

Boardman, L.

Lucas, L.

Borthwick, L.

Lyell, L.

Boyd-Carpenter, L.

Mackay of Ardbrecknish, L.

Braine of Wheatley, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Bridges, L.

Brookes, L.

Macleod of Borve, B.

Brougham and Vaux, L.

Marlesford, L.

Buckinghamshire, E.

McColl of Dulwich, L.

Butterfield, L.

McConnell, L.

Butterworth, L.

Miller of Hendon, B.

Carlisle of Bucklow, L.

Monteagle of Brandon, L.

Carnegy of Lour, B.

Moyne, L.

Carnock, L.

Norrie, L.

Cavendish of Furness, L.

Chalker of Wallasey, B.

Northesk, E.

Clanwilliam, E.

Park of Monmouth, B.

Coleraine, L.

Parkinson, L.

Courtown, E.

Peyton of Yeovil, L.

Cranborne, V. [Lord Privy Seal.]

Pym,L.

Rankdllour, L.

Crathorne, L.

Renfrew of Kaimsthorn, L.

Cumberlege, B.

Renton, L.

Dean of Harptree, L.

Rodger of Earlsferry, L.

Dixon-Smith, L.

Seccombe, B.

Dundonald, E.

Shaw of Northstead, L.

Eden of Winton, L.

Stewartby, L.

Erroll of Hale, L.

Stodart of Leaston, L.

Gisborough, L.

Strange, B.

Glenarthur, L.

Strathclyde, L. [Teller.]

Goschen, V.

Thomas of Gwydir, L.

Hacking, L.

Trumpington, B.

Harmsworth, L.

Ullswater, V.

Hayhoe, L.

Whitelaw, V.

Henley, L.

Wynford, L.

HolmPatrick, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
9p.m.
Schedule 4 [Equalisation]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 191:
Page 108, leave out from beginning of line 11 to end of line 40 on page 110 and insert:
("(1) From the date of commencement of this Act, any person shall be entitled to be treated as having attained pensionable age at any time between the dates upon which they attain the age of 60 and 70.").
The noble Baroness said: My Lords, Amendment No. 191 encompasses the Labour Party's position on the flexible decade of retirement. Until 20 or 30 years ago, men worked full time until they were 65, whereupon they stopped work and moved smoothly on to their pension, which would support them and their wives. They moved smoothly from work to pension. That world has gone. People's working lives are becoming more uncertain, more precarious, more casualised and shorter. Forty per cent, of people experienced
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unemployment in the past five years, and as many expect to do so again. Those in work find the steady full-time job dissolving like wet sand under their feet. Their jobs are becoming casualised; they are put on temporary contracts—just as the Government have put people on to contracts of 51 weeks at a time to avoid providing statutory employment rights. I have to say that that is a pretty disgraceful activity. Others see their work fragmented into part-time fractions. Still others, especially if unskilled or in poor health, find that after the age of 55 or 60 they never again find another job.
All the government arguments which were advanced at Committee stage, about the ratio of working age to pensioners founder on one simple fact: that what matters is not the ratio of people of working age to pensioners, but the number of workers to those of pension age. If people are not in work, whatever their age, they are likely to be on benefit of some kind. I hope that the Minister will respond to that point.
Pushing up the pension age will do nothing to alter the so-called dependency ratio unless those people denied pensions are in work; and increasingly they will not be. And why not? The whole of the Government's argument founders on that simple fact. The trend across Europe shows that people, especially men in manual jobs, are leaving the workforce earlier and earlier. They are not wanted in the labour market. In the scramble for jobs, unskilled men in late middle age and with uncertain health lose out on the one hand to the young and fit men with more skills, perhaps with a family to support, and on the other to women who, as second earners, are often willing to work part time for very low pay, at rates of £1.50 or £2 an hour. Those rates are not a living wage but such people can do so because their wage is the second income of the family.
At the very time that the relatively poor men are leaving the labour market earlier—that is happening across Europe —the Government are retaining the pension age at 65 and are pushing up the women's pension age to join it. Instead of most families stopping work one day and drawing a pension the next, they will experience a twilight gap of at least five years when they are neither in work nor eligible to claim their pension. A few in that gap will have decent occupational pensions. For the remainder, the gap will still have to be spanned by benefit—invalidity benefit, unemployment benefit, income support, call it what one will as long as, in the Government's eyes, one does not call it a pension.
And why, my Lords? It is because the Government are obsessed with an inappropriate concept of a dependency ratio which takes no account of unemployment, no account of women's capacity to work longer than the part-time hours they work at present, and no account of the country's potential with investment for economic growth. It ignores the fact that by 2020 the UK will have one of the best support ratios in Europe and one of the cheapest.
Hence the amendment, which takes account of all those considerations. It proposes a flexible decade of retirement with a pivotal age of 63. Such an amendment has three great advantages. First, it is cost neutral. It costs no more than the present system and may even generate modest savings. Secondly, it is fair between men and women.
Thirdly, it is flexible because it allows men and women to choose when to retire and not to have an arbitrary year before which they cannot retire imposed on them by government. The choice is in their hands. They may be comfortably off with a good occupational pension and happy to draw a reduced state pension. If they or their partner are in deteriorating health or if they have demanding caring responsibilities for an elderly parent, they, too, would welcome that choice. But equally the choice, as now, would remain to work past the fulcrum year of 63. The choice will be theirs, not the Treasury's, not the Minister's, and not that of the noble Lord, Lord Mackay. It will be made according to their health, family responsibilities, financial situation and work prospects. And why not, my Lords?
The provision is cost neutral and actuarially neutral. I am confident that a flexible decade is what most people would like and welcome. With a pivotal age of 63 we can afford it. It permits a much smoother progression between work and retirement. It empowers people to make their own choice of when to retire. I beg to move.
Baroness Turner of Camden: My Lords, I support the amendment. It is an important issue. The amendment proposes that we should proceed towards the desirable objective of equalising state pension ages as between men and women via a flexible decade of retirement. The idea that we attempt to promote is that men and women should be able to retire at any time between the ages of 60 and 70 and should be able to make a choice based on personal circumstances and, of course, as a result of negotiations with the employer as to when they should retire.
As my noble friend Lady Hollis said, there has in this concept to be a pivotal age—an age at which full state pension becomes payable. I believe that that should be 63. We have chosen that age because it is cost neutral. That would have a number of benefits. In the first place it would reduce the number of years a man would have to work before he became entitled to the state pension. Women, although having to work longer than now, would not have to work until 65—which is the Government's current idea.
Of course, that was not always the Government's position. In 1989—it is one of the reasons why I attempt to intervene in the debate—I was a Member of your Lordships' committee which produced a report entitled Equal Treatment for Men and Women in Pensions and other Benefits. It was our job then to look at the draft European directive completing the implementation of the principle of equal treatment for men and women in statutory and occupational social security schemes. Naturally, equalisation of pension ages in the state scheme received a great deal of consideration from us at the time.
We took evidence from a wide range of organisations, including the CBI, the TUC and also the DSS and the Minister. It is true that the TUC position was then, as it is now, that there should be equalisation at the age of 60. The CBI, however, was very sympathetic to the whole idea of the flexible decade of retirement. The evidence submitted by the CBI explored a number of options, but concluded:
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"After careful consideration, CBI members are in no doubt that the fourth option, that of flexible retirement with common pension entitlement for men and women, is the approach which should be pursued. Provided appropriate transitional arrangements are adopted, such an approach should eliminate the differential treatment between men and women, without generating significant additional costs and without adversely affecting reasonable expectations of individuals. It will also provide the flexibility essential to the future well-being of the economy".
The CBI also submitted in its evidence a number of proposals as to the way in which the new arrangements could be phased in.
Not only the CBI, but also the House of Commons Select Committee on Social Security recommended, in its 1982 report on Age of Retirement, that there should be flexible retirement based on a notional common pension age of 63 for both men and women. It is worth recalling that the Government's own Green Paper in 1985 referred to the idea of a flexible decade as being a particularly attractive one, and certainly at that time the impression was widely around that the Government were favourably disposed towards that notion.
Clearly it has its attractions. In the first place, not all employments are the same or make the same demands— particularly physical demands—upon employees. Everyone who has experience of the world of work knows that some people can hardly wait to retire, while others look upon the prospect with something like dread. Although the rate of possible pension after retirement is a factor—people with good pension expectations are more likely to want to retire earlier than others (and we should be working towards a situation in which people do not dread retirement because of a rapid possible descent into poverty)—there are other considerations. There is a social element in work. Even in employment that does not, to an outsider, appear particularly rewarding, there is the presence of fellow workers with whom the individual may have developed close ties and friendships. Many people approaching retirement do not want to lose those connections. That is one reason why counselling for retirement and pre-retirement courses— encouraged and provided by many good employers—have an important role to play.
But, as my noble friend has already said, there has to be an element of individual choice. There are many occupations where the physical labour involved is such that individuals should be encouraged to retire earlier on health grounds and the pension provision available should be such as to make that an acceptable proposition. One can think of a number of industries where that might apply—mining is an obvious example, or an industry like deep sea fishing, where I understand the industrial injury statistics are particularly high.
On the other hand, there are jobs which involve a high degree of expertise and commitment where the individual may be perfectly capable of carrying on and making a contribution for some time after what we now regard as normal retirement age.
Those were all considerations which weighed with the committee of your Lordships' House which reported in 1989. We strongly recommended that equalisation should be through a decade of retirement between the ages of 60 and 70 and that the pivotal age should be 63 for both sexes. We were advised that it would be

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cost-neutral. We were well aware of the cost involved in equalising at the age of 60, as was recommended by the TUC.
We believed that we were recommending what would represent an improvement for everyone, with a fair system which treated people as individuals, capable of and willing to exercise a choice. We were also heartened by the fact that, judging by the CBI's evidence which was put to us in great detail, after much consultation with CBI member firms, there would be no opposition from employers. Indeed, it appeared to us that employers would welcome it and would be willing to participate in its introduction.
I do not think that circumstances have changed greatly since we made our report. The conclusions are still relevant and important and I therefore have great pleasure in supporting the amendment.
9.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, as the noble Baronesses have explained, this amendment would introduce a flexible decade of retirement. As the noble Baroness, Lady Turner, pointed out, it is one of the options which the Government considered carefully during the period of consultation on the state pension age. We decided that it would not be in the interests of current or future pensioners and workers to have a flexible decade of retirement. The expression of course is not correct: most people can choose when to retire. What is really meant by the amendment is a flexible decade for starting to draw the state retirement pension, but that phrase, while a little more exact, is a little less elegant.
Perhaps I may begin by describing what a flexible decade of retirement will look like. People would choose the age at which they would draw their state pension. The earlier they did so the lower the level of pension they would have for the rest of their lives. That is because the level of pension that they would receive would be set actuarially. The additional years during which the pension is drawn will be paid for by a permanent reduction in pension.
There are two key features to a flexible scheme: the age at which it starts, and the pension level in the first year. The amendment provides the former only: age 60. To set the level in the first year, we shall also need to fix the age at which the full rate of pension can be drawn. This is normally called the pivotal age. The higher the pivotal age, the lower the level of pension in the first year. The noble Baroness in her amendment does not specify the pivotal age. However, I did not have to wait until she spoke this evening, because in the Observer her honourable friend Mr. Donald Dewar—
Baroness Hollis of Heigham: My Lords, perhaps the Minister will be kind enough to give way. All of this was discussed at Committee stage when the Minister was glad to be told where our pivotal age had been set.
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I am sorry that he has had to be reminded between Committee stage and Report stage by newspaper cuttings.
Lord Mackay of Ardbrecknish: My Lords, I am sorry that I have stung the noble Lady to the Dispatch Box. My point is that the pivotal age of 63 does not figure in the amendment before us. I am just trying to be helpful to those of your Lordships (if there are any) who were not here at Committee stage when the pivotal age of 63 was discussed. It is to be 63 so far as the Labour Party is concerned. It does not have to be 63; it can be 60, which is equalisation by another name. I should remind your Lordships as part of the present discussion that equalisation at 60 will cost £13 billion more of public expenditure by 2030 than the Government's proposal, which is 65.
If the noble Baroness will contain herself, as I have to do during her speeches, I can come to the point. I am just trying to lay the groundwork for the Government's decision on this matter. Unless the noble Baroness is trying to hurry to a vote, I am not entirely sure why she is trying to move me along on this subject. The last vote was all right, and a few more of those will redress the balance.
I am trying to deal with the actuarial position. I take the pivotal age of 63. If one pivoted the present pension arrangements at 63, the actuarial reduction would mean that a person retiring at 60 would receive £46 per week, as opposed to a retirement pension of £57.60. What I find odd about the noble Baroness's espousal of this cause is that she always appears to tell us how poor everybody is in retirement. Her proposition will tempt more people to retire when their pension will be less than the current state retirement pension. It may be as low as £46 a week. That £46 a week—up-rated perhaps—will go on for the rest of their lives. When they come to 65, or whatever is another magic age, they will not suddenly be up-rated as if they have retired at that age. They will carry on with that rebated lower pension for the rest of their lives.
Those people who were tempted to take advantage of this age of flexibility will need to augment their retirement income with income-related benefits or other pensions. It seems to me that women, for whom the noble Baroness continually flies the flag, will be at a particular disadvantage. Many will retire at the same age as they do now (60) but at a lower rate of pension. It will also mean a higher start-up cost. For example, the first year cost of a scheme with a pivotal age of 63 introduced overnight is likely to be about £5 billion.
Two other OECD countries have flexible retirement schemes: Belgium and Sweden. A number of others have early retirement benefits, but these are normally limited to those in ill-health or the long term unemployed. Some are subsidised by employers. These schemes do not offer flexibility to individuals who wish to plan an early retirement as they have restrictions of entitlement similar to our own benefits, such as incapacity benefit, industrial injuries benefit and unemployment benefit.

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The limited experience of flexible schemes in these countries demonstrates some of the points that I have made. In 1991 Belgium introduced a flexible retirement age. The majority of people now appear to retire at the earliest possible opportunity. That has led to a rapid increase in pensions expenditure, obviously a rapid increase in the number of pensioners and an increasing number of pensioners who retire on less than the full retirement pension.
Baroness Hollis of Heigham: My Lords, I thank the noble Lord for giving way. I take the point about people in Belgium retiring at the earliest point to draw retirement pensions. But the Minister was, as we would expect, fastidious in his choice of words. He did not indicate that those people were leaving work to retire. His description could very easily apply to a situation in which people were currently unemployed and therefore chose to re-label themselves as "retired" at the earliest possible age. All the evidence is that in most of Europe people are leaving work even earlier than in the United Kingdom. I suspect that my description of Belgium may very well be accurate.
Lord Mackay of Ardbrecknish: My Lords, the noble Baroness paints the usual picture that her party paints; namely, that almost everybody in this country is unemployed. The simple fact is that when I last saw the unemployment figures they were 8.5 per cent, for the United Kingdom and falling, unlike most of our friends in the rest of the European Community. So I do not think that her argument is a good one. I want to see as many people as possible carry on working. That is important for reasons that I have certainly mentioned in earlier speeches: what is called the support ratio, which is the number of people of working age as opposed to the number of pensioners.
The present pensioner system offers a flexible half decade of retirement. The Government propose to maintain and enhance that flexibility. Anyone who defers retirement beyond the new state pension age of 65 will be entitled to an increment for each successive year. That increment will be increased to 10.4 per cent, per year as against the present 7.5 per cent. No limit will be set on the number of years that a pensioner can defer beyond 65. In effect, that is a flexible decade and more, starting at 65.
As I hope to have shown, a flexible decade of retirement does not deliver the benefits that its supporters believe. Perhaps I may just point out that the argument about support ratios is still important. It is very important to the future of our country that we do not burden the working population with costs, especially in the social security budget, which, frankly, they and the economy are unable to sustain.
I have read out the figures before in Committee. I make no apology for doing so again. If we do not move on this issue, the number of people of working age will fall from the year 2010 to 36.2 million; the year 2030 to 33.7 million; and by the year 2050 to 32 million. Correspondingly, the number of people of pension age in the year 2010 will be 11.7 million; in 2020 it will be 13.5 million; in 2030 it will be 15.8 million; and in 2040 it will be 16.3 million.
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The proposal in the Bill will decrease the number of people above state pension age in, for example, the year 2030 from 15.8 million to 13.7 million and will increase the number of people of working age from 33.7 million to 35.8 million. With regard to the support ratios, the ratio of the number of people of working age per pensioner, which is set to go down if we do nothing to 2.12, will go up to 2.6 and 2.4 in the years 2030 and 2050.
Perhaps I can answer the noble Lord's question without him intervening. Of course, that is the present situation against 65. The problem with the flexible age of retirement is that it is very difficult to predict exactly when people will take the pensions, except for the point that I made about the experience in two quite small countries. That was quite limited experience, where there is much evidence that people have taken their pensions at the earliest possible moment. Thus, the situation may move closer towards a retirement at 60 than in fact the so-called pivot at 63.
Lord Monkswell: My Lords, I thank the Minister for giving way. He did not in fact guess correctly the question that I intended to ask. My question to him is: what estimate for the rate of unemployment was considered by the Government when they deduced their figures for the support ratios? Obviously, if there is an unemployment rate of 10 per cent. or 15 per cent., the figures are rather different from those with an unemployment rate, which it is to be hoped we would achieve under a Labour Government in the future, of between 1 and 2 per cent.
Lord Mackay of Ardbrecknish: My Lords, that is a nice promise. A Labour Government will have 1 or 2 per cent, unemployment. The noble Lord picks 10 or 15 per cent, as the norm, supposedly, under this Government. I have to tell him that the current rate of unemployment is 8.4 per cent, or 8.5 per cent.—one figure is for Scotland and the other is for the UK—and falling. Most of our European friends have higher rates of unemployment, including those countries which have been blessed with the wisdom of socialist governments, who, I have no doubt, the noble Lord and his friends consider to be their blood brothers in some way or other.
We believe that we have unemployment on a downward trend. We believe that, with a properly run economy—we are getting it that way with a lot of inward investment coming in and exports booming—unemployment is set to fall further. I cannot predict other than that the trend would reverse if the party opposite took over and started to put up the costs of employing people and of producing goods and made this country less competitive. Perhaps I am being diverted and should come back to the question at hand.
Baroness Hollis of Heigham: My Lords, the noble Lord thinks that there is a vote coming up and that he has to filibuster.
Lord Mackay of Ardbrecknish: My Lords, I do not think there is a vote coming up. I suspect that there are not enough members of the party opposite who really believe in this scheme of 63 and a flexible decade in order to muster a decent vote on the subject. Further

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down in the same Observer article, Mr. John Edmonds, the general secretary of the GMB union, who I understand is a significant supporter of the party opposite, said:
"The party policy at conference is for a retirement age of 60. The party policy is straightforward and clear. I don't want any change in the party policy".
Given the way the policy of the party opposite changes so regularly—every other day it seems to me—I think that poor Mr. Edmonds has a shock coming.
I shall pray in aid another Labour Party document. Perhaps it was not a Labour Party document. It is only a Labour Party document when the party wants to agree with it. I refer to the interesting report of the Commission on Social Justice. It came to the conclusion that 65 was the right age. With that, if not with anything else in the document, I completely agree.
Baroness Turner of Camden: My Lords, does the noble Lord understand that I was not referring to Labour Party policy particularly but to a document produced by your Lordships' Select Committee in 1988–89? It was an all-party document which made a strong recommendation for a flexible decade of retirement. It was a very distinguished committee. Not only was I a member of it but it was chaired by the noble Lord, Lord Allen of Abbeydale, a noble Lord with considerable experience in these areas.
Lord Mackay of Ardbrecknish: My Lords, all committees of your Lordships' House are distinguished. Clearly, the noble Baroness, Lady Turner, is putting them a cut above—perhaps a considerable cut above —the Commission on Social Justice. I might agree with her about that because she is praying in aid a committee of your Lordships' House against the Commission on Social Justice.
This has been a difficult but interesting and important debate on what conclusion we should come to on equalising pensions. There are a number of proposals about and there have been for some time. As I mentioned at the beginning of my speech, we looked seriously at all the propositions in front of us, including the flexible decade of retirement. We have concluded, for some of the reasons I have given this evening and for some of the reasons I gave—dare I threaten your Lordships—at even greater length during the Committee stage, that the proper proposal to go for is a common retirement age at 65. Attempts were made in Committee and have now been made at Report stage to persuade me to change my mind. However, the logic of our position is backed up very clearly by the same move taking place all over the world. Most of our friends in the European Community and most of our competitor countries around the world are moving their retirement pension age up, to 65 and indeed in some cases beyond.
One cannot be oblivious to what is happening in the rest of the world. The Government's decision is a right and sensible one. While a flexible retirement age, with a pivot at 63, has its attractions, it has some serious downsides, not just for the economy but for the individual who may be tempted to retire at 60 with a much reduced pension upon which he or she would have
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to live for the rest of his or her life. I should have thought that that would be a subject that would interest the noble Baroness, Lady Hollis of Heigham.
Having heard the debate, and having explored the issues, I hope that the noble Baroness will withdraw the amendment. But if we must have a vote on it, I am confident that my noble friends will support me.
9.30 p.m.
Baroness Hollis of Heigham: My Lords, that must be the first confident statement the Minister has made today. I concede that were we to have a vote his noble friends would probably support him. The Minister failed to address the two substantive points that I sought to make. Despite a newly alert and invigorated Minister, we had, I am afraid, the same tired old arguments about tempting people to retire at 60; we would all retire young; and what is happening in Europe.
We were trying to make two basic points on this side of the House. Whether the Minister acknowledges this or not, there is a gap now between when people leave the labour market and when they will draw their pension. The Government's actions are making that gap wider. The Social Justice Commission, which the Minister is fond of praying in aid when it suits him, noted that 59 per cent, of men between the ages of 55 and 64 are now not in work. That is the majority of men. Some have retired with an occupational pension. They have to live on something. Nothing the Minister said seemed to recognise the world in which we now are as opposed to the world we were in when the Tory Government inherited from the Labour Government a half-way decent pensions policy which they have now warped and deformed by their changes to SERPS and subsequent changes to unemployment policy, such as record counting.
That world has changed. We have seen men in manual employment leaving work earlier; more and more jobs fragmented into part-time jobs; and an increasing casualisation of the labour market. The Minister did not say one word to connect the world of pensions to the world of work. I am amazed. I should have thought that by now the Minister would have appreciated that pensions carry into old age the life chances, the affluence of support and the opportunities one has experienced in work. As they are shrinking in work, there are further problems to be addressed with regard to pension age. The Minister offered no recognition of that at all. He gave us just the tired old stuff about dependency rates for the third and fourth time around the roundabout.
I wish that the Minister could sometimes strengthen the depth of his briefing and take on board what is happening in the world of work to see how that maps on with the increasing insecurities and uncertainties of the pension world that we are facing. At the very time the world of work is becoming precarious, the Minister is trying to make the world of pensions more harsh and rigid. That is absurd. He must intellectually start calibrating those two things otherwise—I am sure he

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will not mind me saying this—he is failing to put the message of an appropriate task for social security to his department and to his colleagues.
The first point relates to the gap that now exists between the world of work and the world of pensions about which the Minister said not one word, as though the speeches made by my noble friend Lady Turner and myself had never been heard by him. I am sure of course that that was not the case.
The second point that the Minister did not acknowledge was that the difference between our position and his is choice. On the one hand, the Minister knocks a flexible decade, because many people might retire at 60. He says that we are tempting them, as though he, the Minister, knows what is in other people's best interests rather than trusting them to make an informed choice for themselves. Then he went on to say that they have half a decade of flexible retirement at the other end. In other words, on the one hand he is conceding flexibility when it suits his case, but he rejects it when it suits the fortunes of the people on the ground.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Baroness for giving way. In the half decade of flexible retirement that I mentioned, the pensioner starts off with a full retirement pension. That would not be the case in the flexible decade of the noble Baroness.
Baroness Hollis of Heigham: My Lords, I entirely accept that. It is the same pot of money being redistributed over a lifetime in different proportions according to which point one wishes to take it. Actuarially it ought to be neutral whether one takes it at 65 or 62; it is the same pot of money spread over. People make that choice. The difference between us is that the Minister will make the choice for us. The Labour Party position is that people should be able to make their own informed choice as to whether they take a lower sum earlier or a larger sum later according to their circumstances.
Why should the Minister tell people what to do? Why does he know best what most suits the 2 million to 3 million families who approach retirement each year? How can he know? Their health, their family circumstances, the type of job they do, the age differential between spouses, the income and affluence they already enjoy will all inform their choice. Why, when we see around us a world of work becoming increasingly flexible and uncertain, will the Minister not only not seek to smooth that situation at the point of pensions, but will produce a harsh rigidity of his own which takes no account of people's choice?
The position that the Minister is adopting—this is not a personal comment because the Minister is not an arrogant man—is one of supreme and lofty arrogance: that the Minister, and behind him the Treasury, knows best when people should retire from work and be eligible to draw pensions, even though the world of work is changing around them. I find it sad that not one word of what the Minister said tonight engages with the real world outside of working pensioners. But, as the
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Minister so percipiently diagnosed, we shall not be seeking to press the amendment to a vote tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Gould of Potternewton Baroness Gould of Potternewton moved Amendment No. 192:
Page 113, line 12, leave out ("2000") and insert ("2010").
The noble Baroness said: In moving Amendment No. 192, I shall speak also to Amendment No. 193. These amendments are minimal and therefore I shall be brief. However, they are important to the people they affect.
The purpose of the amendments is to introduce a transition period of 10 years with a reduction in survivors' entitlement to the additional pension on the death of the spouse. Under the current proposal, if a man dies on 5th April 2000, his widow will receive a 100 per cent, entitlement to the additional pension. But if he dies one day later, that entitlement is cut in half.
To phase in the reduction over a 10-year period between 5th April 2000 and 6th April 2010 would remove the huge difference in entitlement caused by the delay of death by one day. It could be as much as £3,000 per annum, and would certainly have the effect of driving women into claiming income support with the extra cost to the Government that that would involve.
We consider that at a time of great stress the knowledge that an exact date of death will make such a large difference to an entitlement will place an additional emotional strain on the family of a terminally ill person. It is insensitive as well as being unfair. Reluctantly we are willing to accept the cutting entitlement. But to help alleviate possible suffering we would argue that it should be phased in in small steps over a 10-year period. The cost of phasing it in in that way will be relatively small. The full reduction will only be delayed; it will occur and will result in savings.
We hope that the Government will feel able to accept the delay and, in the name of compassion, accept the spirit of the amendment and draft a mechanism to enable it to happen. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, as the noble Baroness explained, these amendments seek to introduce a phased reduction in the amount of additional pension which a person inherits on the death of their spouse. As the legislation stands the amount of additional pension inherited by a surviving spouse is one half where the death occurs on or after 6th April 2000. Under the amendment the amount inherited reduces from 100 per cent, in steps of 5 per cent, per year to reach 50 per cent, in the year 2010.
The reduction in the amount of additional pension which is inheritable from April 2000 was introduced by the Social Security Act 1986. The change had two purposes. It was part of the package of measures designed to bring spiralling expenditure on the state earnings related pension scheme under control. And it was designed to bring state provision into line with occupational pension scheme provision.
As noble Lords will be aware, the state earnings-related pension scheme offers a second tier pension to those who are not members of an

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occupational or personal pension scheme either by choice or circumstance. The provision of full survivors' benefits, as opposed to the half which is the norm in occupational schemes, is the main area of disparity between state and private pension provision. I am sure that noble Lords will agree that an alignment of survivors' benefits is quite justified.
This reduction and alignment in the amount of additional pension which can be inherited will not come as a surprise. As I said earlier, it was announced and legislated for in 1986. I am sure that noble Lords will agree that 14 years is a more than adequate lead-in period. To ask, as the noble Baroness does, for a further 10 years of phasing seems to be stretching this issue out just that little too long. Of course we accepted in 1986, and we have accepted since, that this is a sudden drop—and without phasing of course it is a sudden drop—but 14 years seems to us more than enough notice to give people who may be affected when the year 2000 comes. With that explanation of where the Government stands, I hope that the noble Baroness will withdraw her amendment.
Baroness Gould of Potternewton: My Lords, I thank the Minister for his reply. I take the point about alignment, but that takes no account of the reduced earnings opportunities of women who do not always have the occupational pension scheme or private pension scheme that many men have. That has been ignored. There is also the question of awareness of the change. My understanding is that there is little awareness of it and that this measure is still going to come as a great shock to many people when it happens.
There is no doubt that a change of this magnitude from one day to the next will lead to considerable unfairness and stress on the families involved. I regret that the Minister has not had the compassion to make this minor but important concession. With regret I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 193 to 195 not moved.]
Clause 120 [New requirements for contracted-out schemes, other than money purchase schemes]:
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 196:
Page 71, line 9, after ("subsection") insert ("(2A) or").
The noble Earl said: My Lords, with the leave of the House, in moving this amendment, I shall speak to Amendments Nos. 198 and 202. The purpose of this group of amendments is to enable those contracted out schemes which wish to do so to have the opportunity to continue to use the guaranteed minimum pension test for periods of pensionable service after 1997 instead of being required to pass the new requisite benefits test.
The Bill proposes that the present guaranteed minimum test should cease to apply for periods of pensionable service after April 1997, and that schemes should only be able to contract out if they pass the new requisite benefits test outlined in Clause 120. One of the difficulties of which noble Lords will be aware with this proposal is that it would give rise to difficulties for
820
scheme administrators who would need to run two systems side by side for at least 40 years after April 1997 until no scheme members were left in active employment who had periods of pensionable service before that date. Another difficulty is that the resulting complexities will make it even harder than is at present the case for an existing member to comprehend exactly how his benefits are to be calculated.
If the new requisite benefits test was a straightforward simple test, these problems might not matter too much. However, it is clear from the description of the reference scheme in the Bill and the consultation documents which have been issued, that it is likely to be far from straightforward. For example, it would include salary definitions that will not necessarily conform to those used by the scheme. Some schemes might therefore find that they could not be certain of passing the requisite benefits test in respect of all their members; for example, those with high earnings but low basic pay. They may therefore need to build in the requisite benefits as a minimum test applied to each individual member in much the same way as the guaranteed minimum pension but, of course, using the new method of calculation prescribed for the reference scheme. One method of calculation would apply to pre-1977 benefits and another to post-1977 benefits for each member.
If the use of the guaranteed minimum pension test were to continue to be permitted for post-1977 service, as I propose, a modification would be needed in connection with the pension increases which schemes would have to provide on guaranteed minimum pensions accruing after April 1977. My amendment provides for those increases to be at 5 per cent, instead of 3 per cent, if the increase in the cost of living exceeds 5 per cent. In my view, that change is unlikely to cause great administrative problems to contracted out schemes since it is, in principle, the same kind of change as they had to cope with in 1988 when contracted-out schemes were required to start to provide increases on the guaranteed minimum pension at the 3 per cent, level.
Finally, my amendments provide that the anti-franking provisions should not apply to guaranteed minimum pensions accruing after April 1977. These provisions are of labyrinthine complexity and I believe that few people understand them fully. They do not sit easily with the concepts underlying contracting out, which have taken a broader brush approach. I hope that my proposal that the anti-franking provisions should be faded out will be acceptable.
In conclusion, my amendments would open up an important opportunity for schemes to avoid administrative complexity, help to prevent the position from becoming even harder for the member to understand and reduce the danger of contracting back into SERFS with its likely adverse financial impact. I beg to move.
9.45 p.m.
Lord Mackay of Ardbrecknish: My Lords, I find this a complicated group of amendments. Perhaps it would help the House and my noble friend if I were to pick my way carefully through them. I almost feel like

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saying that if anybody does not understand this explanation, I shall read it again slowly. As I have said, this is a complex matter.
Amendment No. 196 affects subsection (3) of Clause 120 which introduces new subsections (2A) and (2B) into Section 9 of the Pension Schemes Act 1993. The effect of this amendment is to amend Section 9(2) of the Pension Schemes Act so that, after the principal appointed day, contracted-out salary-related schemes can choose whether to contract out either on the current GMP basis or through the new scheme-based quality test.
Amendments Nos. 198 and 202 appear to be based on the assumption that Amendment No. 196 will be accepted and that contracting out via the GMP system would continue to be an option for the future.
Perhaps I may address first the principal amendment, Amendment No. 196, and explain why we are not prepared to agree to it. I shall then say something about the other two amendments. Many employers have criticised the current system for its complexity, a criticism which was repeated in the PLRC report and by the deregulation task force.
Giving contracted-out salary-related schemes a choice in the method of contracting-out would complicate future arrangements. Employers opting to retain the GMP system would not benefit from the simpler administration introduced through the new contracting-out test. Of course, it would be for individual employers to decide, but, frankly, I would be amazed if many employers were to decide to continue to operate them.
We discussed yesterday the difficulties which the Barber ruling has created for GMPs. GMPs are linked to the state pension age and SERFS, hence they are unequal. Unequal GMPs make it very awkward for pension schemes to achieve equal treatment in their schemes. Our proposed new contracting-out arrangements, under which GMPs are to be abolished and replaced for the future by a test of overall scheme quality, will make it easier for schemes to achieve equal treatment. Schemes will be free to do so in a way which best suits them within the limitations imposed by existing European law.
My noble friend's amendment also has implications for contracted-out rebate. In future the rebate will be based on the value of SERPS forgone rather than the cost of providing a GMP. Therefore, this amendment by itself would result in employers and employees who chose to contract out on the GMP basis being over-compensated for contracting out of SERPS. The only workable solution would be to have two rebates, one based on the cost of GMPs and the other based on the value of SERPS forgone. I do not believe that anyone would welcome a complication of that kind.
Such dual arrangements would also have serious implications for the operational effectiveness of the contributions agency, adding to government costs of administration. This would inevitably complicate the requirements placed on schemes and employers; for example, in transfers between different types of pension provision.
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The Government have listened carefully to all the criticisms of the complexity of the current contracting-out arrangements, in particular following the Barber ruling. We consulted widely on proposals for change and the overwhelming preference was for the abolition of the GMP and its replacement by an overall test of scheme quality. The Government have listened and acted, and I am somewhat surprised that there seems now to be a view, though I doubt widely shared, that GMPs are not so bad after all.
I turn to Amendment No. 198, which would come into play if Amendment No. 196 were agreed. It would remove the protection of the anti-franking provisions in respect of any guaranteed minimum pensions which accrued after the principal appointed day. It will not be possible for benefits accrued under the proposed new contracting-out arrangements to be franked. The pension will be considered as one element rather than being split into two separate components. But it is still our intention that the anti-franking requirements should apply in respect of GMPs which have already accrued.
I cannot recommend this amendment to the House for two reasons. First, if GMPs were to continue we would not wish to see a reduction in the degree of protection given to early leavers by removing the anti-franking requirements. Secondly, and more fundamentally, if GMPs were not to continue, the amendment would have no effect whatever.
Finally, I turn to Amendment No. 202. If GMPs were to continue to accrue after the new arrangements come into force, my noble friend would of course be right to want to ensure that those future GMPs would be indexed by the retail prices index up to a maximum of 5 per cent, in line with the requirement on occupational pensions generally.
However, my noble friend's amendment is worded in such a way that it applies both to past and future GMP accruals. The amendment therefore has the potential to add significantly to employers' costs. This is because the contracting-out rebate paid in respect of past GMP accruals assumed a rate of indexation of the GMP up to a maximum of 3 per cent., not 5 per cent. We believe that the present arrangements for increasing GMPs are about right. They strike the appropriate balance between what is affordable and protection against inflation.
My noble friend may be anxious about how different indexation rates would impact on the contracting-out rebate for salary-related schemes and may believe that, if pre-1997 GMP accruals were not to be subject to the same degree of inflation-proofing, considerable difficulties would arise in setting that rebate at the appropriate rate. I believe that I can assure him on that score. The contracting-out rebate is set, usually for a period of five years, following a review of contracting-out terms by the Government Actuary. Under present arrangements, the rebate is based on the cost to schemes of providing GMPs. Currently it assumes that schemes are required to index the GMP by the RPI up to 3 per cent. The cost of meeting that future liability is therefore taken into account when setting the current rebate. If, however, subsequently, the contracting-out terms were altered retrospectively by

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requiring schemes to index the GMP up to a maximum of 5 per cent., schemes would have been inadequately compensated for this additional liability.
I am sorry for speaking at length on complicated arrangements. However, their complication makes it difficult to speak briefly. I hope that I have explained the position and the reason why we cannot accept the amendment. I have also explained why, as always, we are trying to get the right balance between the employers and the potential pensioners.
The Earl of Buckinghamshire: My Lords, I thank the Minister for his very clear explanation as to why the amendments should not be accepted by your Lordships. It is just as well for both of us that we do not have to answer supplementary questions on the little test which has been set for us this evening. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 197:
Page 71, line 11, leave out ("24") and insert ("23").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 209 and 210. Amendment No. 210 repeals Section 24 of the Pension Schemes Act 1993 and amends Section 25 of that Act.
Section 24 requires the Occupational Pensions Board to be satisfied that the resources of contracted-out salary related schemes are sufficient. It will not be needed when the board disappears and the provisions in this Bill which introduce new funding requirements for schemes come into effect.
Section 25 deals with discretionary requirements. The amendment repeals those subsections that give the Occupational Pensions Board powers to impose conditions about investments and resources on contracted-out and formerly contracted-out salary related schemes and to require steps to be taken to increase resources. The remainder of Section 25 is amended to enable the Secretary of State to monitor the security and sufficiency of scheme resources in respect of guaranteed minimum pensions during the transitional period before the minimum solvency requirement is fully implemented.
Amendments Nos. 197 and 209 remove references to the repealed Section 24 in other parts of the Bill. I beg to move.
On Question, amendment agreed to.
[Amendment No. 198 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 199:
Page 71, line 19, leave out from ("12A") to end of line 21.
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 200 and 201. To contract-out in future, salary related schemes must satisfy a number of conditions which are set out in Clause 120. Amendment No. 200 clarifies the wording relating to employer-related investments.
Subsection 9(2B) (a) of the Pension Schemes Act 1993, as amended by this Bill, provides for the Secretary of State to be satisfied that the scheme complies with
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the statutory standard, subject to its modification in regulations for prescribed cases. A similar modification power is needed for the provision in subsection 9(2B) (b) which relates to the requirements on employer-related investments set out in Clause 33. This is because there are some schemes to which Clause 33 does not apply. They will mainly be certain types of overseas schemes which fall outside OPRA's remit because they are outside the jurisdiction of UK law. Regulations will need to specify that they may not invest more than a prescribed limit in employer-related investments if they wish to contract out. Amendments Nos. 199 and 201 effect that addition in an aesthetically satisfactory way. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendments Nos. 200 and 201:
Page 71, line 22, leave out lines 22 to 24 and insert:
("(b) restrictions imposed under section 33 of the Pensions Act 1995 (restriction on employer-related investments) apply to the scheme and the scheme complies with those restrictions").
Page 71, line 31, at end insert:
("(2C) Regulations may modify subsection (2B) (a) and (b) in their application to occupational pension schemes falling within a prescribed class or description.".").
On Question, amendments agreed to.
[Amendments Nos. 202 and 203 not moved.]
Clause 121 [State scheme contributions and rebates]:
Lord Haskel Lord Haskel moved Amendment No. 204:
Page 77, line 5, at end insert:
("() The reference in subsection (2) to a period of tax years (not exceeding five) is a reference to a period of tax years in relation to which an order has effect under section 42B(2).").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 205 to 207 and 220 to 222.
I am sure that the Minister will have no problem with the amendments, and therefore he can start looking cheerful. They are about giving choice and relieving burdens on the taxpayer. Indeed, they are matters about which the Minister has shown great enthusiasm during the past two days. They are also about creating a level playing field.
Amendments Nos. 206 and 207 provide that the same age-related rebates should be paid to appropriate personal pensions as are paid to contracted out money purchase schemes. At present, there are higher rebates for personal pensions than for money purchase schemes. In Committee, the Government gave three arguments in favour of the latter. First, they argued that it is essential to make allowance for a reasonable level of expenses as, otherwise, it would not be best advice to contract out of SERFS into a personal pension. Secondly, it was argued that personal pensions relieve a burden on the workforce of the future by reducing expenditure on SERPS. The third argument was that personal pensions play a vital role in extending the pensions choice.
Perhaps I may respond to each of those arguments in turn. It is now well understood that personal pensions are expensive. Estimates vary; but the typical level of expense ranges from 15 per cent, to 30 per cent, of contributions. Whatever the expense, it is significantly

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higher than the equivalent money purchase occupational scheme where a technical level of expense is less than 10 per cent. There is no dispute about that as the difference has been made clear in the table in Appendix C of the report by the Government Actuary.
In cash terms, the cost of the higher rebate for personal pensions which is suggested by the Government Actuary means that personal pension providers will be subsidised to something like £300 million per year. It needs to be emphasised that that money will not go towards higher benefits but simply as a subvention to the companies which sell the personal pensions.
The need for that subsidy dents the claim that personal pensions offer a much better deal. If an extra expense allowance for personal pensions is so important, it suggests that the choice is not as obviously in favour of contracting out as the industry often suggests. Indeed, given the greater security and certainty of SERPS benefits, it suggests that few people should actually be advised to take out an approved personal pension. The Government are always anxious to save taxpayers' money, especially when used as subsidy. Here we have the opportunity save about £300 million and thereby create a level playing field.
The second argument used in Committee was that approved personal pensions relieved a burden on the workforce of the future by reducing expenditure on SERPS. But, in doing so, they are placing even greater burdens on current workers because of the need to subsidise personal pensions. Thus, in the period from 1988 to 1993 £10 billion of rebate was paid out to personal pensions, while only saving prospective SERPS benefits that had a current value of some £4 billion. As a result, they are imposing a greater increase on the current rate of national insurance contributions than the reductions achieved in the next century through lower SERPS benefits. That net cost to the National Insurance Fund by approved personal pensions of £6 billion over that period represents, in large part, a subsidy to the higher expenses of personal pension providers. Here again, why not remove the subsidy and create a level playing field?
The third reason given by the Minister in Committee was that approved personal pensions play a vital role in extending choice. Of course they do; but the choice is distorted by the subsidies. By all means have choice, but let someone who chooses an appropriate personal pension bear the cost of that choice and not expect to have it paid by national insurance contributions at large.
I hope the Minister will be consistent and accept this argument. Yesterday when we were debating the funding of OPRA the Minister said that those who benefit from OPRA should pay for it instead of the cost being paid out of general taxation. To be consistent, the same argument should be applied here. Remove the subsidies paid by the taxpayer to personal pensions and then provide true choice based on a level playing field.
There are other elements of the level playing field in this group of amendments. Clause 121 sets out the rules for contracting out and reduced national insurance contributions and rebates. Not only could there be two different contracting out rates, but these rates could run
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in different five-year periods. This would make it difficult to judge how level the playing field is, and therefore it would be far more logical and practical to ensure that the five-year periods run concurrently for COMPS and personal pensions. Amendments Nos. 204 and 205 do this. Then a direct comparison can be made. The Minister may consider that in practice the rates will be set to run at the same time, and the rebates can alter as they are subject to affirmative resolution procedure. If that is the case, why does not the Bill say so?
Another element of a level playing field is dealt with in Clauses 142, 143 and 144. The Government intend to apply limited price indexation to protected rights elements of appropriate policies only. Why should this not be applied to all pension schemes, whether occupational or personal? Applying it to one type of scheme not only tilts the playing fiéld, but it makes it more difficult for individuals purchasing pensions to make a sensible, long-term choice. I would have thought that all pensions should be liable to indexation so that people .are not tempted by what appears to be the cheaper product because there is no guarantee that the final pension will be as good as the indexed one.
Amendments Nos. 220 and 221 make this a level playing field by applying indexation to all pensions. Amendment No. 222 brings all these arguments in this group of amendments together and permits earners to choose their own appropriate personal pension scheme on a level playing field without any distortions. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, these amendments, as the noble Lord, Lord Haskel, has carefully explained, deal with various aspects of personal pensions. I believe it would be for everyone's convenience—certainly for mine—if I take them in order. I hope that that way I shall deal with them all and the points that the noble Lord has raised. I shall start with Amendments Nos. 204 and 205. These are about national insurance rebates for personal pensions and occupational money purchase schemes which are contracted out of the state scheme. The amendments seek to align the periods for which the rebates are set.
The Bill provides for the reviews and the orders setting the levels of rebate for personal pensions and occupational money purchase schemes to be completely independent. That includes the year in which the reviews and orders are to be carried out. It also includes the duration of the orders, subject to a maximum of five years. Normally the rebate reviews for personal pensions and occupational money purchase schemes will be carried out simultaneously and the orders made will have the same durations. However, the differences between these two types of pension provision may mean that it makes sense to make orders of differing durations. But I can assure your Lordships that such action is not envisaged at present.
There are two other important points worth noting here. First, when the Government Actuary carries out a review of the rebate, there is normally a full consultation exercise. This gives any interested party an opportunity to comment on the rebate, including the most sensible duration for the rebate order. Secondly, the system of

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age-related rebates will mean that the rebate rates will change every year anyway. This is because the rebate is designed to replace SERFS, which is still maturing. So the rebate rate needed for any given age group one year will be different from that needed the next.
The orders setting the rates of age-related rebates will set out separate levels of rebate for each of the years which they cover. So even if the orders for personal pensions and money purchase occupational schemes were made in different years, it would actually make no difference to the administration of schemes, since new rates of rebate will have to be implemented every year in any case.
The rebate reviews for personal pensions and occupational money purchase schemes are separate because these types of pension provision are separate and have different needs. I suggest that there is no point in linking the orders setting the rebate in the manner proposed by the noble Lord.
I now turn to Amendments Nos. 206 and 207. These amendments are also concerned with the contracted out rebates for personal and occupational money purchase pension schemes. In this case the amendments seek to have the same level of rebates for both types of scheme. The Government believe that there needs to be different levels of rebate. We have already discussed this subject in Committee, and I can do no better than rehearse the arguments I used then, as no doubt the noble Lord, Lord Haskel, would expect.
There are two reasons why the rates for occupational schemes are likely to be lower than those for personal pensions. First, the different types of scheme have different levels of expenses. Occupational schemes relate to a particular employment. Therefore, they would generally be expected to incur lower expenses due to economies of scale. While each member of an occupational money purchase scheme has his or her own fund, all members work for the same employer. Their contributions can be collected from the same payroll and so on.
Personal pensions are entirely individualised and can thus be expected to incur greater expenses. The rebates need to reflect that. The Government Actuary will be asked, in advising on the levels of age-related rebates, to make allowance for the reasonable costs and charges of the more efficient personal pension providers.
Secondly, for administrative reasons, members of money purchase occupational schemes and their employers will receive part of the rebate during the course of the tax year as a reduction in national insurance contributions. The balance will be paid after the end of the tax year. For personal pensions, the whole rebate will be paid after the end of the tax year. This means a loss of investment return on the rebate in respect of this later payment. That will be taken into account in calculating the rates.
The net effect of these differences is that the rebate for occupational schemes is expected to be at a lower rate than that for appropriate personal pension schemes. I must stress that we are not proposing preferential terms for personal pensions. The rebate is intended simply to be the amount required to be invested now to replace
828
the future SERFS given up by contracting out. If the rebate is too low to do that, it will generally not make sense to contract out through that route.
If the amendments were accepted personal pensions would be likely to get a lower rebate. It could well be too low to replace the SERFS given up. Most personal pension holders would then be best advised to return to SERFS, as I suspect was the noble Lord's intention. A personal pension is, of course, the only alternative to SERFS for many people, so there would be a reduction in choice. Moreover, it is important to lift the burden of high SERFS expenditure in the next century. Our ability to do that would be jeopardised if, as a result of these amendments, the rebate were set so low that personal pensions were not worth while for most people.
I turn now to Amendments Nos. 220 and 221. These affect Clause 142, which requires annual increases in the rate of pensions from protected rights in an appropriate personal pension. I assume that these amendments seek to extend the provisions to all of the pension derived from a personal pension.
It is a regrettable fact that many people still do not make adequate provision for their retirement. That is a position that we all wish to change. But even where such provision is made, even quite low inflation can erode the value of a pension over time. People are now living longer and spend more time drawing their pensions. I believe that indexation is necessary to help maintain an adequate income stream, protected against possible inflation, throughout retirement. It is right and sensible to apply this indexation to the protected rights in an appropriate personal pension because such schemes replace SERFS, which is itself indexed.
However, we have to recognise that in other circumstances there is a large element of personal choice. Where individuals are not members of an occupational scheme, they are not compelled to save for their retirement. We do not want to deter them from setting aside adequate provision. It is possible that a requirement to index such optional arrangements might have such an effect. The requirement would inevitably mean a lower starting rate of pension, for any given size of personal pension fund. People could well be put off by this.
There is nothing to stop a person having the whole of his personal pension uprated annually if that is his choice. But we do not think it right to make that compulsory, as this amendment would do. Deterring individuals from setting aside adequate provision for retirement is not in anyone's interests. Finally, your Lordships will be pleased to hear me say that I turn to Amendment No. 222. This seeks to extend the circumstances in which the department can refuse to accept the earner's choice of appropriate personal pension scheme. It would include instances where the department considers that it would not be in the earner's best interests to join the scheme for whatever reason. That would mean that my department's officials would be called upon to make complex judgments about the likely returns of the appropriate personal pension plan. They would need to have regard to factors such as the

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individual's age and earnings, the provider's charges and investment returns, and the levels of additional contributions which would be made.
In short, the amendment proposes that my staff should assume the role of financial advisers and undertake a function that they have neither the training nor the authority to tackle. Giving such advice is tightly regulated under the Financial Services Act and can be carried out only by authorised persons. However, I totally agree that people who invest in personal pensions must be able to rely on the highest standards of expert advice from those authorised advisers. They must be able to have confidence that the regulatory framework will protect their interests.
I am glad to say that the Securities and Investments Board, the chief investments regulator, has taken a series of steps to act as an effective watchdog of the standards of professionalism of those who sell personal pensions. These include the requirement for financial advisers to disclose the amount of commission they stand to gain from recommending a particular product; the use of a mandatory transfer value analysis; and the "reason why" letter which explains why a particular product has been recommended.
SIB has also taken steps to ensure that those who are found to have lost out as a result of bad advice in the past will receive appropriate redress. With effective regulation, people making decisions about whether to buy a personal pension can have confidence in the quality of the advice they receive. I do not believe that it would be right to place that responsibility on the officials of the contributions agency.
I have gone into some detail on the amendments because I believe that each amendment is important; it addresses a slightly different issue. I hope that while I may not have entirely satisfied the noble Lord, Lord Haskel, I have at least allayed some of his fears and explained why the Government have included the detail that they have in the Bill and why we are not keen on his amendments.
10.15 p.m.
The Earl of Buckinghamshire: My Lords, before the noble Lord, Lord Haskel, responds, I had put my name to Amendment No. 220. I may have missed some reference in the Minister's reply on indexation and free standing additional voluntary contributions as regards personal pensions. If the choice as to whether or not they should have indexation is to be given to free standing additional voluntary contributions in personal pensions, I fail to understand why the same choice is not given to additional voluntary contributions within occupational pension schemes. The same arguments apply. I look forward to hearing my noble friend's reply.
Lord Mackay of Ardbrecknish: My Lords, my noble friend has caught me rather late at night, not paying the close attention to his argument that I ought
830
to have done. If he will allow me—since I do not normally do so, perhaps the House will forgive me— perhaps I may take refuge in sending him a letter.
Lord Haskel: My Lords, I shall take a leaf out of the Minister's book and take refuge by saying that I shall study carefully what he said. These are complicated amendments. I am most grateful to the Minister for going into such detail in his response. I still do not quite understand why he does not take this opportunity to save money and reduce the subsidies to the personal pension schemes. I suspect it is because the Minister wants people to take out personal pension schemes. However, I shall study what he said in detail in Hansard tomorrow and meanwhile I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 205 not moved.]
Clause 122 [Minimum contributions towards appropriate personal pension schemes]:
[Amendments Nos. 206 and 207 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 208:
After Clause 128, insert the following new clause:
Limitation
(" . In the Limitation Act 1980, after section 4A there is inserted—
"Special time limit far actions in respect of personal pensions, etc.
4B. An action founded on a claim that a person has suffered loss as a consequence of leaving an occupational pension scheme and becoming a member of a personal pension scheme under the Pension Schemes Act 1993 may not be brought after the expiration of six years from the date on which the person became aware of his loss, but the right of action in such a case shall not be barred by any failure to obtain information as to whether a loss has been suffered which is attributable to the failure of another person to provide such information.".").
The noble Lord said: My Lords, this amendment tries to calm the fears of those who are victims of the mis-selling of personal pensions, about which the Minister told us a few minutes ago. Your Lordships will remember the scandal of those in the pensions industry who sold personal pensions on the basis of "best commission" instead of on the basis of "best advice", as they were required to do. As the Minister told us, the SIB is now trying to rectify the position by reviewing pensions sold in that manner. If there has been any mis-selling, there must be financial compensation.
The exercise is expected to be expensive for many insurance companies and independent financial intermediaries. If there has been mis-selling, the insurance companies can probably afford to pay the compensation, but many intermediaries may not. Because of that, there is a suspicion that some intermediaries will simply drag their feet, in the hope that eventually claims will be barred by the usual time limit of six years for bringing a case to court.
The SIB has two years to carry out its review and the six years do not start until there is "reasonable knowledge". However, there is some concern that the reasonable knowledge could be construed to start when the publicity came out and people should have started to act then instead of waiting to be contacted. That may

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encourage those who have mis-sold pensions to drag their feet. The amendment will render that meaningless, avoid any doubt and clarify the position. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, as the noble Lord said, the amendment affects people who have suffered loss as a result of being advised to transfer from an occupational pension scheme into a personal pension scheme. Its aim is to allow them to bring an action in respect of that loss after the expiry of the six-year time limit imposed by the Limitation Act 1980. This would apply in cases where a third person has failed to give them information about whether a loss had been suffered.
The Securities and Investments Board, the chief investments regulator, last year issued guidance on mis-selling of personal pensions to people in occupational pension schemes. This covered how to recognise mis-selling and how to calculate redress where due. It specified cases for automatic review, together with a timetable for carrying out the task.
That means that those people concerned who fall within the priority groups identified by the SIB will have their cases looked at again to see whether they have suffered loss as a result of bad advice. The priority groups are those who have started to draw their pensions; men aged 55 or more and women aged 50 or more at the time of the transfer; and those who have died. People who are not in the priority group but have transferred into a personal pension can also ask to have their cases looked at again. Where loss is found to have resulted from bad advice, whoever is responsible for giving that advice will have to offer appropriate redress. This may mean reinstatement into the occupational scheme where that is possible, or a top-up of the personal pension plan.
By requiring firms to review past business, SIB has sought to remove the need for individual investors to spend time and money on legal proceedings. Where investors nevertheless seek to pursue their claims through the courts, I understand the noble Lord's anxieties about time barring. But I believe that these are misplaced. Under the Latent Damage Act 1986, investors have three years from the date on which they receive the relevant facts in which to bring a claim. The review timetable set down by SIB should therefore mean that there are few, if any, cases where time barring is an issue. If such cases should arise, SIB and the other regulators will consider whether further action is necessary to protect investors. The Personal Investment Authority said on 22nd February that firms should complete reviews in all circumstances where they had reason to believe that a relevant limitation period might be about to expire. If such a period was exceeded, an investor would still be entitled to lodge a complaint with the ombudsman. I understand that the ombudsman would be likely to exercise his discretion in favour of investors whose rights had become time barred because of delays engendered by the review process itself.
The Government's first priority in financial services regulation remains investor protection. The action taken by SIB and the PIA is an example of how the regulators can act to ensure that people are properly protected.
832
I hope that with my explanation of how we envisage that the procedures will work, together with my assurance that there are safeguards—in case anybody decides to drag this out—the noble Lord will appreciate that his amendment is unnecessary and will withdraw it. I am, however, glad to have the opportunity to place on record again exactly those procedures which have been set out to deal with this problem.
Lord Haskel: My Lords, I thank the Minister for his reassurance. I am sure that people who have any doubt about whether their claims can be time-barred will be gratified by his reply. In view of the very strong reassurance that he has given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 [Amendments relating-to Part III]:
Lord Lucas Lord Lucas moved Amendments Nos. 209 and 210:
Page 121, leave out lines 12 and 13.
Page 123, line 7, leave out paragraph 16 and insert:
(". Section 24 (sufficiency of resources) is repealed.
. In section 25 (conditions as to investments, etc.)—

(a) subsections (1) and (3) are repealed, and

(b) for subsection (2) there is substituted—

"(2) A salary related contracted-out scheme must, in relation to any earner's service before the principal appointed day, comply with any requirements prescribed for the purpose of securing that—

(a) the Secretary of State is kept informed about any matters affecting the security of the minimum pensions guaranteed under the scheme, and

(b) the resources of the scheme are brought to and are maintained at a level satisfactory to the Secretary of State.".").

The noble Lord said: My Lords, I spoke to Amendments Nos. 209 and 210 together with Amendment No. 197. I beg to move both amendments en bloc.
On Question, amendments agreed to.
Lord Lucas Lord Lucas moved Amendment No. 211:
Page 125, leave out lines 20 to 22 and insert:
("() in subsection (1)—

(i) paragraph (a) is omitted,

(ii) in paragraph (b), for "that section" there is substituted "section 58", and

(iii) paragraph (c) is omitted,

() subsection (2) is omitted,
() in subsection (3)—
() paragraph (a) is omitted,").
The noble Lord said: My Lords, I beg to move Amendment No. 211. Some noble Lords may feel that this amendment comes perilously close to painting the lily or gilding refined gold. Its sole effect is to beautify the drafting of government amendments made at Committee stage.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 212:
Page 125, line 32, at end insert:
(". In section 84(5), paragraph (b) and the preceding "or" are omitted.").
The noble Lord said: My Lords, I beg to move Amendment No. 212. The provision in the Bill to dissolve the Occupational Pensions Board has caused us to look again at the power which allows the board to approve a scheme's alternative revaluation arrangements. This power has never been used, nor is it needed.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 213:
Page 127, line 17, at end insert:
("() in paragraph 4(3), for the words from "does not cease" to the end there is substituted "which, apart from the regulations, would not be contracted-out employment is treated as contracted-out employment where any benefits provided under the scheme are attributable to a period when the scheme was contracted-out".").
The noble Lord said: My Lords, I beg to move Amendment No. 213. Paragraph 4(3) of Schedule 2 to the Pension Schemes Act 1993 allows an individual to remain contracted out on those occasions where temporarily his service does not qualify him for a guaranteed minimum pension. An example of this would be a period of unpaid maternity leave where national insurance contributions would not be payable for that period. Consequently, contracted-out benefits would not accrue. The amendment extends this provision to service after the principal appointed day.
On Question, amendment agreed to.
10.30 p.m.
Lord Lucas Lord Lucas moved Amendment No. 214:
Page 127, line 26, leave out paragraph 60.
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 181. I beg to move.
On Question, amendment agreed to.
Clause 135 [Breach of regulations under the Pension Schemes Act 1993]:
Lord Lucas Lord Lucas moved Amendments Nos. 215 to 217:
Page 87, line 36, at end insert:
("(4A) Where—

(a) apart from this subsection, a penalty under subsection (4) is recoverable from a body corporate or Scottish partnership by reason of any act or omission of the body or partnership as a trustee of a trust scheme, and

(b) the act or omission was done with the consent or connivance of, or is attributable to any neglect on the part of, any persons mentioned in subsection (4B),

such a penalty is recoverable from each of those persons who consented to or connived in the act or omission or to whose neglect the act or omission was attributable.
(4B) The persons referred to in subsection (4A) (b)—

(a) in relation to a body corporate, are—

(i) any director, manager, secretary, or other similar officer of the body, or a person purporting to act in any such capacity, and

(ii) where the affairs of a body corporate are managed by its members, any member in connection with his functions of management, and

(b) in relation to a Scottish partnership, are the partners.

(4C) Where the Regulatory Authority requires any person to pay a penalty by virtue of subsection (4A), they may not also require the body corporate, or Scottish partnership, in question to pay a penalty in respect of the same act or omission.").
Page 87, line 39, at end insert:
("() Where by reason of the contravention of any provision contained in regulations made, or having effect as if made, under this Act—

(a) a person is convicted of an offence under this Act, or

(b) a person pays a penalty under subsection (4),

then, in respect of that contravention, he shall not, in a case within paragraph (a), be liable to pay such a penalty or, in a case within paragraph (b), be convicted of such an offence.").
Page 87, line 41, at end insert ("and "Scottish partnership" means a partnership constituted under the law of Scotland.").
The noble Lord said: My Lords, I spoke to Amendment No. 215 with Amendment No. 19, to Amendment No. 216 with Amendment No. 177 and to Amendment No. 217 with Amendment No. 19. I beg to move these amendments en bloc.
On Question, amendments agreed to.
Lord Lucas Lord Lucas moved Amendment No. 218:
Page 88, line 12, at end insert:
("() In section 186 of that Act (Parliamentary control of orders and regulations), in subsection (3), after paragraph (c) there is inserted "or
(d) regulations made by virtue of section 168(2)".").
The noble Lord said: My Lords, in moving this amendment I shall speak at the same time to Amendment No. 229.
These amendments ensure that regulations made under the provisions of the Pension Schemes Act 1993 and under Part I of the Pensions Bill that provide for a breach of duty to be a criminal offence by virtue of Clauses 135 and 105 respectively must be subject to the affirmative procedure. These amendments take account of the concerns expressed by the Select Committee on the Scrutiny of Delegated Powers and concerns voiced in this House during Committee stage by the noble Baronesses, Lady Hollis and Lady Seear, and the noble and learned Lord, Lord Simon of Glaisdale, about the provisions that allow criminal offences to be created in secondary legislation.
In introducing these amendments we have balanced, I hope to the House's satisfaction, the need to have the flexibility to create criminal offences in regulations with the need to ensure that Parliament is able to give proper consideration to any that are created in this way.
It should be noted that the regulations made under the provisions of the Pension Schemes Act 1993 that already contain criminal penalties for failure to comply have been included under these amendments. I beg to move.
Baroness Seear: My Lords, I should like briefly to say that we appreciate the fact that the Government have taken note of the representations that have been made and we are glad to accept the amendment.
On Question, amendment agreed to.
Clause 137 [Jurisdiction of Pensions Ombudsman]:
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 219:
Page 90, line 15, after ("proceedings),") insert ("after subsection (4) there is inserted—
"(4A) On any application to the court by any party to an investigation or by the Pensions Ombudsman the court may order that the case be transferred to the court if it is a case which the court considers is more fit to be adjudicated on by the court)."; and").
The noble Earl said: My Lords, this amendment surrounds the role of the pensions ombudsman and the interaction with the courts. There are certain disputes which can be satisfactorily resolved by the ombudsman process and others, involving potentially complex issues and large sums of money, that would normally be better dealt with by the courts. The issue is made more acute by the extension of the ombudsman's jurisdiction, both under the Bill and as a result of the current ombudsman's recent policy decision not to rule out consideration of cases concerning the disposal of scheme surplus, the exercise of trustees' discretion or the validity of actuarial calculations, especially as to transfer values.
In its 1989 report, Protecting Pensions: Safeguarding Benefits in a Changing Environment, the Occupational Pensions Board recommended the establishment of a pension tribunal to deal with not only individual grievances but also disputes between different trustee bodies and disputes between trustee bodies and other organisations. In the event, a pensions ombudsman dealing only with individual grievances was set up with subsequent recourse to the courts restricted to points of law. The jurisdiction of the ombudsman has now been extended to that which the Occupational Pensions Board originally envisaged for a pensions tribunal.
This amendment would allow the ombudsman to continue as an inexpensive and informal one-stop forum for addressing straightforward individual grievances but open up recourse to the courts where more complex issues are involved. It would avoid the cost associated with a pension tribunal, to which my noble friend may well object. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, this amendment seeks to allow either party involved in an investigation by the pensions ombudsman to approach the court to seek the transfer of the case from the ombudsman to the court.
The office of pensions ombudsman was created in 1990 to provide a low cost, efficient and effective alternative to the courts for the resolution of disputes and disagreements. It has provided individual scheme members with a route by which their concerns may be addressed without the need for expensive and time-consuming litigation. Building on the PLRC's recommendations, we announced in the White Paper that the ombudsman's jurisdiction would be extended to include disputes between trustees and employers; and between trustees of different schemes. The Bill makes provision for this.
Disagreements between trustees and employers and between trustees of different schemes can often result in lengthy and costly litigation. We believe it sensible that, as an alternative to action in the courts, the ombudsman should be given the power to consider such cases. This
836
will offer schemes the opportunity, which their members already enjoy, to have disputes resolved effectively and speedily, without the costs associated with litigation.
We think it right that the expertise and experience which the pensions ombudsman has clearly demonstrated, and which was recognised by the Pension Law Review Committee, should now be available for the resolution of a wider range of pension disputes.
The current arrangements allow for considerable flexibility which will not be affected by the change in jurisdiction that we propose. They provide a number of routes by which cases can be handled by the courts if that is more appropriate. First, it is open to trustees of a pension scheme to apply to the court for directions if they wish to seek guidance on the appropriate course of action on a particular issue. They may do this at any time, whether or not a case is already before the pensions ombudsman.
Secondly, the pensions ombudsman considers each case for investigation on its merits and has discretion as to whether or not to accept a case. If the matter is one which he feels is more appropriate for the courts, he may decline to conduct an investigation. He may also, if he wishes, refer cases to the courts to determine questions of law. If court proceedings have already begun before the case is referred to him, he is precluded from conducting an investigation.
Thirdly, should the ombudsman accept a case for investigation, either party to the dispute retains the right to go to court at any time if they feel it appropriate. And the court would handle the case unless the other party to the dispute makes an application to the court to "stay" the proceedings—that is, asks the court to take no action until the ombudsman has completed his investigation.
If such an application is made the court is required, under Section 148 of the Pension Schemes Act 1993, to consider whether there is sufficient reason why the ombudsman should not handle the case. The court will, effectively, be considering whether the matter in dispute is one which it is appropriate for the ombudsman to consider. That, I think, goes to the heart of my noble friend's concern.
We believe that the provisions already in place are sufficiently flexible to allow cases to be considered by the most appropriate body, be that the courts or the ombudsman. As things stand, it is for the courts to decide matters of appropriate jurisdiction and that, I believe, is what my noble friend is hoping to achieve.
We accept that it may not be appropriate for the ombudsman to investigate all referrals made to him. Indeed, we intend that certain matters should be specifically excluded from the ombudsman's jurisdiction and be the sole responsibility of OPRA. These are matters where the authority's enforcement powers are more likely to be effective in securing compliance with the legislation than the ombudsman, whose role is one of adjudicator rather than regulator; for example, cases involving payment from surplus to an employer, failure to meet the minimum solvency requirement, failure to comply with audit requirements, and procedures for the appointment of member nominated trustees and the scheme actuary.

837
I hope that I have reassured my noble friend that the current arrangements and our proposals for the future are sufficiently flexible to meet his concerns. As I have explained, both the existing arrangements and the proposed future arrangements allow full access to the courts where appropriate. On the basis of that explanation I hope that my noble friend will feel able to withdraw his amendment.
The Earl of Buckinghamshire: My Lords, I thank my noble friend the Minister for his clear and reassuring reply. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 142 [Annual increase in rate of personal pension]:
[Amendment No. 220 not moved.]
Clause 143 [Section 142: supplementary]:
[Amendment No. 221 not moved.]
Clause 144 [Power to reject notice choosing appropriate personal pension scheme].
[Amendment No. 222 not moved.]
Clause 145 [Levy]:
[Amendment No. 223 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 224:
Page 94, line 14, at end insert:
("() Regulations made by virtue of subsection (1)—

(a) in determining the amount of any levy in respect of the Regulatory Authority, must take account (among other things) of any amounts paid to the Secretary of State under section 168(4) of this Act or section 9 of the Pensions Act 1995, and

(b) in determining the amount of expenditure in respect of which any levy is to be imposed, 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).").

The noble Lord said: My Lords, subsection (a) ensures that civil penalties imposed by the authority must be taken into account when determining any levy.
Rather than give the authority direct control of income from fines, we have provided for those amounts to be taken into account when the levy is set by the Secretary of State. The Bill provides for levy receipts and fines to be paid to the Consolidated Fund because the Secretary of State will control the authority's funding and it will have to agree its budgetary requirements with him. That will ensure that the authority's expenditure is subject to the full public accounting procedures and value-for-money scrutinies. To pay fines directly to the authority would place the money raised outside that system of control. Also, if the authority is allowed to bolster its budgets by increasing the number and size of the penalties it imposes, there would be a clear danger of jeopardising the authority's objectivity.
In Committee, the noble Baroness, Lady Turner, the noble Lord, Lord Ezra, and my noble friend Lord Buckinghamshire expressed considerable interest in the use which would be made of money received as a result of civil penalties imposed by the regulatory authority. At the time we explained that they would go to defray
838
the costs of the authority. That intention is now placed beyond all doubt by the explicit provision introduced by this amendment.
With regard to subsection (b), when setting the rates of the levy for any year, it will be necessary to estimate the costs that will be incurred during that year.
Once the accounts of each organisation have been finalised, the total expenditure actually incurred will be compared with those estimates and with levy income. Any shortfall, or excess, will then be taken into account in setting future levies. That will ensure that all amounts collected by the levy will be used for the purposes laid down and surpluses will not simply disappear into the Consolidated Fund. I beg to move.
On Question, amendment agreed to.
Baroness Young Baroness Young moved Amendment No. 225:
After Clause 145, insert the following new clause:
("Pensions on divorce, etc
.—(l),In the Matrimonial Causes Act 1973, after section 25A there is inserted—
"Pensions.
25B.—(1) The matters to which the court is to have regard under section 25(2) above include—

(a) in the case of paragraph (a), any benefits under a pension scheme which a party to the marriage has or is likely to have in the foreseeable future, and

(b) in the case of paragraph (h), any benefits under a pension scheme which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring.

(2) In any proceedings for a financial provision order under section 23 above in a case where a party to the marriage has, or is likely to have in the foreseeable future, any benefit under a pension scheme, the court shall, in addition to considering any other matter which it is required to consider apart from this subsection, consider—

(a) whether, having regard to any matter to which it is required to have regard in the proceedings by virtue of subsection (1) above, such an order (whether deferred or not) should be made, and

(b) where the court determines to make such an order, how the terms of the order should be affected, having regard to any such matter."

and, in section 25(2) (h) of that Act (loss of chance to acquire benefits), "(for example, a pension)" is omitted.
(2) Nothing in the provisions mentioned in subsection (3) applies to a court exercising its powers under section 23 of the Matrimonial Causes Act 1973 (financial provision in connection with divorce proceedings, etc.) in respect of any benefits under a pension scheme which a party to the marriage has or is likely to have in the forseeable future.
(3) The provisions referred to in subsection (2) are—

(a) section 203(1) and (2) of the Army Act 1955, 203(1) and (2) of the Air Force Act 1955, 128G(1) and (2) of the Naval Discipline Act 1957 or 159(4) of the Pension Schemes Act 1993 (which prevent assignment, or orders being made restraining a person from receiving anything which he is prevented from assigning),

(b) section 82 of this Act,

(c) any provision of any enactment (whether passed or made before or after this Act is passed) corresponding to any of the enactments mentioned in paragraphs (a) and (b), and

(d) any provision of the scheme in question.").

The noble Baroness said: My Lords, it seems a considerable time since we debated this matter. I should like to say just two things. First, I again thank my noble and learned friend the Lord Chancellor for his help in this matter, and my noble friend the Minister. I am grateful to them for their help and sympathetic understanding. I should like to say on behalf of my noble friend Lady Elles, who is unable to be here today, that she supports the amendment. I know that she is pleased, as am I and I am sure everyone in the House is, that the Government have accepted this principle. I beg to move.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved as an amendment to Amendment No. 225, Amendment No. 226:
After Clause 145, line 27, at end insert:
("(1A) Where the court determines to make an order under this section, such an order may bind a person who is not a party to the marriage but who is, or is likely to be in the foreseeable future, liable to pay any benefit under a pension scheme to a party to the marriage.").
The noble Baroness said: My Lords, we are not sure whether this amendment is providing belt and braces, given Amendment No. 175. It may be valuable to have an alternative phrasing which the Bill team can clear up later. I ask the House to support the amendment in the spirit of Amendment No. 175. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, I am prepared to accept the amendment. We shall sort out the wording between the two amendments.
Baroness Hollis of Heigham: My Lords, I am grateful to the Minister.
On Question, Amendment No. 226, as an amendment to Amendment No. 225, agreed to.
On Question, Amendment No. 225, as amended, agreed to.
Clause 148 [Amendments consequential on Part IV]:
Lord Lucas Lord Lucas moved Amendment No. 227:
Page 95, line 39, leave out ("amendments consequential on this Part") and insert ("general minor and consequential amendments").
On Question, amendment agreed to.
Schedule 6 [Amendments relating to Part IV]:
Lord Lucas Lord Lucas moved Amendment No. 228:
Page 129, line 32, at end insert:
(".—(1) Schedule 9 (transitory modifications) is amended as follows.
(2) In paragraph 1—

(a) in sub-paragraph (1), sub-paragraphs (ii) to (v) are omitted,

(b) in sub-paragraph (3) (a) (i), for "provisions mentioned in paragraphs (i) to (v)" there is substituted "provision mentioned in paragraph (i)", and

(c) sub-paragraph (5) is omitted.

(3) Paragraphs 3 and 4 are omitted.").
On Question, amendment agreed to.
Clause 151 [Parliamentary control of orders and regulations]:
Lord Lucas Lord Lucas moved Amendment No. 229:
Page 96, line 40, leave out from ("contains") to ("must") in line 41 and insert ("any regulations made by virtue of—
() section 56(4),
() section 70(6), or
() section 105(1)").
On Question, amendment agreed to.
[Amendment No. 230 not moved.]
Schedule 7 [Repeals]:
Lord Lucas Lord Lucas moved Amendment No. 231:
Page 129, column 3, line 43, leave out ("84(6)") and insert ("84(10)").
The noble Lord said: My Lords, in moving Amendment No. 231 I shall speak also to Amendments Nos. 232 to 236 and 238 to 246. These amendments are designed to bring the contents of Schedule 7 into line with the amendments made to the Bill in Committee. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendments Nos. 232 to 246:
Page 130, column 3, leave out lines 6 and 7 and insert: ("In section 110, subsections (2) to (4).

("In section 110,

subsections (2) to (4).

Section 112.

Section 114.").

Page 130, column 3, line 16, at end insert:

("Section 144.").

Page 130, column 3, line 21, leave out ("and subsection (6)") and insert (", paragraph (d) and the preceding "or", and subsections (6) and (7)").
Page 130, column 3, leave out line 24.
Page 130, column 3, line 28, leave out ("the first "104(8)"").
Page 130, column 3, leave out line 36.
Page 130, line 39, at end insert:

("1988 c. 1.

The Income and Corporation Taxes Act 1988.

In section 187, in subsection (2), the definition of "pensionable age",").

Page 130, column 3, line 42, at end insert:

(" In Schedule 3, in paragraph 5(7) (a), "(or at least 20 of them, if that is less than half.").

Page 131, line 11, at end insert:

("1992 c. 5.

The Social Security Administration Act 1992.

In Schedule 4, the entries in Part I relating to the Occupational Pensions Board.").

Page 131, line 19, at end insert:

("1993 c. 8.

The Judicial Pensions and Retirement Act 1993.

In section 13(9), in the definition of "personal pension scheme", "by the Occupational Pensions Board".").

Page 131, column 3, line 20, at end insert:

("In section 9(3), "22 and".").

>
Page 131, column 3, leave out lines 41 to 43 and insert:

("In section 45, subsection (2) and, in subsection (3), paragraph (d).

In section 55, subsection (1) and subsections (3) to (6).

In section 56, subsection (1), in subsection (2), the words following "the prescribed period", and subsection (3).

In section 58, subsections (1) to (3), (5) and (6). Section 59.

In section 60, subsections (1) to (3) and (6) to (10).

In section 62, subsection (2).

In section 63, in subsection (1), paragraphs (a) and (c), subsection (2), in subsection (3), paragraph (a) and the words following sub-paragraph (ii), and subsection (4). Sections 64 to 66.

In section 84, in subsection (5), paragraph (b) and die preceding "or". Sections 133 to 135.").

Page 132, column 3, leave out line 20 and insert:

("In section 177, in subsection (3) (b) (ii), the words from "sections 55" to premiums)", and in subsection (7), paragraph (b).").

Page 132, column 3, leave out lines 42 to 44 and insert:

("5, in sub-paragraph (1), "or the Board" and "or, as the case may be, the Board", in sub-paragraph (3), "in relation to state scheme premiums" and paragraph (b), and sub-paragraph (5).

In Schedule 6, paragraph 11.")

Page 132, column 3, leave out lines 48 and 49 and insert:
PART IV
MISCELLANEOUS AND GENERAL
CHAPTER SHORT TITLE EXTENT OF REPEAL
1971 c. 56. The Pensions Increase Act 1971 In section 3, in subsection (2) (c), "is a woman who".
1993 c. 48. The Pension Schemes Act 1993 Sections 136 to 143.
In section 149, in subsection (3), at the end of paragraph (a), "and".
In section 164(1) (b) (i), the words from "136" to "143".
In section 166(5), the words from "136" to "143".
Section 172(1) (b).
In section 177, in subsection (3) (b) (i), the words from "136" to "143".
In section 178, in paragraph (b), the words from "136" to "143".
In section 181, in subsection (3), the words from "136" to "143".
In section 183, in subsection (1), the words from "136" to "143".
In Schedule 9, in paragraph 1, in sub-paragraph (1), sub-paragraphs (ii) to (v), and sub-paragraph (5), and paragraphs 3 and 4.
The repeal in me Pensions Increase Act 1971 has effect in accordance with section 156 of this Act.").
On Question, amendments agreed to.
Clause 156 [Commencement]:
Baroness Young Baroness Young moved Amendment No. 247:
Page 97, line 25, at end insert:
("() Section (Pensions on divorce, etc.) shall come into force on such day as the Lord Chancellor may by order made by statutory instrument appoint.").
On Question, amendment agreed to.
House adjourned at a quarter before eleven o'clock.