Lords Sitting of 7 May 1998

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Exeter.

Beef Bones Regulations 1997
Lord Stanley of Alderleyasked Her Majesty's Government:
Whether any offence has been committed under the Beef Bones Regulations, if banned beef bones supplied by a butcher for dog consumption are subsequently used for human consumption; and, if so, by whom is the offence committed.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, yes. If the food prepared using the bones was sold or supplied in the course of a business, an offence would have been committed by the supplier of the food to the ultimate customer.
Lord Stanley of Alderley: My Lords, I thank the Minister for yet another valiant attempt to defend these asinine and nannyish regulations. Does he agree that his Answers, particularly the second one, drive a bullock cart through the regulations? Will the Government give serious consideration to redrafting them so that every person is given the right—which a farmer has when he has a home kill—to choose whether or not to eat beef on the bone?
Lord Donoughue: My Lords, I always view with great seriousness everything that the distinguished noble Lord says and asks. I can reassure him that we constantly keep these regulations under review. If at an appropriate time they should be lifted, we shall be happy to do so; but for the time being it is our conviction that they are necessary for the protection of public health and in order to restore confidence in British beef.
Lord Renton: My Lords, is the noble Lord aware that, although noble Lords are always glad to know his opinion, it is not binding upon the courts in any criminal matter?
Lord Donoughue: My Lords, I am aware of that fact. It would be quite inappropriate for me to comment on any court action that may be pending. The noble Lord may be interested to know that there is to be an appeal against a certain judgment on Thursday of next week.
The Countess of Mar: My Lords, is the Minister aware that I tabled a Question for Written Answer on this subject? When I studied the beef bone regulations I learnt that I could not give my dog a T-bone steak.
728
Is the Minister aware that those regulations do not allow the sale of T-bone steaks with the bone to any person or any thing? Does the Minister agree that the bones relate only to humans? Can the Minister explain the anomaly between his first Answer to the noble Lord, Lord Stanley, and the answer to my Question for Written Answer?
Lord Donoughue: My Lords, there is no such anomaly. As far as concerns T-bone steak, under the regulations that cannot be supplied. The beef must be properly removed from the bone. If the beef has been so removed, the bone can in particular circumstances be provided to pets because that is not contrary to the regulations. The regulations are made under the Food Safety Act 1990 and apply to the human food chain, not to pets. There is no evidence of dogs being subject to CID. There is no anomaly and the noble Countess is referring to two quite distinct situations.
Lord Steel of Aikwood: My Lords, is the Minister aware that it was the sensible sheriff in Selkirk who threw out the prosecution of a hotelier in my former constituency and described the regulations as utterly incompetent? In view of that, if the Government are not to redraft the regulations, will they at least pay attention to the opinion previously expressed by this House in its vote that the regulations should be withdrawn altogether?
Lord Donoughue: My Lords, the noble Lord will be aware that this matter is sub judice and subject to imminent appeal. It would be quite inappropriate for me to comment upon it, and I do not believe that much has been added by the comment of the noble Lord.
Lord Monkswell: My Lords, bearing in mind that some pet cats have succumbed to a condition similar to mad cow disease, have the Government issued a circular to vets to watch out for this kind of disease in pet dogs as a result of their owners having fed them beef bones?
Lord Donoughue: My Lords, I am not aware that the Government have received any scientific advice on this matter, but if they have I shall write to the noble Lord and inform him.
Lord Tebbit: My Lords, can the noble Lord reassure me that neither I nor my dog committed an offence when we shared a T-bone steak recently? More to the point, does the noble Lord recollect that yesterday in a Written Answer the noble Lord confirmed that, while it was illegal for a butcher to sell oxtail for the making of soup, it was not illegal to sell soup made from oxtail, provided that that soup was made by commercial manufacture? Can the Minister inform the House whether a restaurant making oxtail soup is engaged in commercial manufacture?
Lord Donoughue: My Lords, the regulations are clear and I know that noble Lords opposite have had the pleasure of reading them. If in the restaurant the soup is prepared from meat that has been properly removed

729
from the bone of the oxtail, which is normally the case in commercial manufacture, there is no danger and it is perfectly safe. The regulations protect consumers from the unsafe preparation of food. We wait with anticipation to see whether the noble Lord, Lord Tebbit, will suffer from his highly publicised meal.
Baroness Anelay of St. Johns: My Lords, will the Minister join me in welcoming the fact that the judge in Selkirk recognised the virtue of the opinions expressed by your Lordships in January that the regulations were incompetent and unenforceable? How do the Government intend to persuade those whose job it is to enforce the regulations that they can do so, bearing in mind not only the Scottish result but the fact that East Sussex councillors have decided not to proceed with a pending prosecution or any other because they, too, recognise that the regulations are badly framed, bad in law and should be withdrawn?
Lord Donoughue: My Lords, I am always interested in the views of Members of the Front Bench opposite. Our position is clear. I do not normally read from documents at the Dispatch Box because I believe that it tends to bore your Lordships. However, I will break the rule in order to ensure that the position on infected meat is on the record. I read from a document in the public domain which states:
"We have concluded, while the assessment of SEAC and the Chief Medical Officer is that any risk to health is minuscule, the Government's policy of extreme caution in relation to BSE requires us to ensure that the tissues in which infectivity might potentially occur are removed from the human and animal food chain".
That statement of policy was made in 1994 by the Minister for Agriculture, Fisheries and Food in the Conservative Administration, Gillian Shephard, and we stand by it.
Lord Mackie of Benshie: My Lords—
Noble Lords: Next Question!
The Lord Privy Seal (Lord Richard): My Lords, with respect, we should move on. We are in the ninth minute.
Lord Mackie of Benshie: My Lords—
Noble Lords: Order!
Lord Richard: My Lords, I believe that we should move on. It is now nine minutes on the clock.
Lord Mackie of Benshie: My Lords—
Noble Lords: Order! Go on!
Lord Richard: My Lords, I do not like this job of bobbing up and down at Question Time, but when it gets to nine minutes I think that the House should move on.

Multilateral Institutions: Parliamentary Scrutiny
3.16 p.m.
Lord Juddasked Her Majesty's Government:
What is their policy towards more systematic parliamentary scrutiny both of the policies and decisions of multilateral institutions such as the World Trade Organisation, the World Bank, the IMF and the specialised agencies of the United Nations, and of the views expressed by representatives of the United Kingdom within such bodies.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the Government recognise the increasing importance of multilateral institutions and are committed to working for greater transparency in their operation. The policies which the Government pursue through these institutions are subject to parliamentary scrutiny in the same way as all other government policies. Where the UK's policies in these multilateral institutions are pursued through the European Union, the standard parliamentary scrutiny arrangements for EU matters apply.
Lord Judd: My Lords, I thank my noble friend for that Answer. Does he agree that the traditional secrecy surrounding multilateral institutions—for example, the IMF—may have aggravated the consequences of the recent East Asia crisis because of the absence of timely analysis and the right data for discussion and debate among those with political responsibility? Does he further agree that when there is so much concern about improving the quality of democracy within the United Kingdom, an immense question arises about the accountability of those making policy on our behalf in international institutions? I welcome the proposals of the Chancellor of the Exchequer on an evaluation unit—for example, in the IMF—does the Minister agree that that must be accompanied by improved parliamentary scrutiny across the world?
Lord Clinton-Davis: My Lords, I do not dissent from the proposition advanced by my noble friend. We have sought to maximise the possibilities of transparency; for example, in relation to the current negotiations on the multilateral agreement on investment. We have pressed for that and shall continue to do so. However, it is for Parliament rather than for the Government to assert its right to consider what goes on in these institutions. If Parliament wants to step up its activities in that respect, so be it.
Baroness Williams of Crosby: My Lords, the noble Lord, Lord Judd, has raised an important issue. What representations have been made with regard to some of the serious consequences of political unrest, in particular in Indonesia where the IMF's proposals have led to a 71 per cent. increase in the cost of fuel, a more than doubling of the cost of train fares, creating large increases in the cost of basic food elements, and consequently to the use of live bullets in demonstrations? In view of that, will the Government

731
consider making it clear to the IMF that in addition to economic considerations political unrest must be taken into account in the prescriptions it proposes to Asian governments?
Lord Clinton-Davis: My Lords, as I said before, I believe that this Government have certainly progressed the whole question of transparency through those international institutions in a fairly unprecedented way. But it does not fall for me to make a determination about that. I shall certainly pass on to the Treasury what the noble Baroness said and, in particular, her very strong observations about greater transparency affecting especially the IMF.
Lord Bridges: My Lords, surely the noble Lord, Lord Judd, is quite right to draw attention to the significant decisions recently taken by the World Trade Organisation, two of which seem to me extremely serious. The first is the decision taken to unravel the painfully reached European agreement on the import of bananas which threatens the economies of the British colonies in the Caribbean. The second is the decision to oppose or undo the decision taken by the European Union to ban the import of beef with hormones from the United States. It may be that national parliaments are not very effective in controlling the activities of those organisations and that a better course would be for Her Majesty's Government to raise their voice in the annual meetings of the WTO council, or to arrange for suitable debates to take place in the economic and social council of the United Nations or, indeed, in the General Assembly. We really cannot have the accepted rules of international trade on general preferences overturned by such unilateral decisions.
Lord Clinton-Davis: My Lords, the difficulty about that proposition is that it seeks to undermine the process of the disputes resolution procedures which are so crucial to the WTO. I disagree violently with the view that has been expressed occasionally in Congress in relation to using the baseball method of three strikes and you are out. The fact is that we shall win some disputes and lose some. But we must respect the rule of law. I have a good deal of sympathy for the producers of bananas, particularly in the Windward Islands and elsewhere, but we must now create a different regime which is WTO-proofed.
Lord Naseby: My Lords, bearing in mind the Private Notice Question which was asked in the other place earlier this week—
Lord Richard: My Lords, I really do believe that it is the turn of this side of the House and then no doubt the noble Lord can ask his question.
Lord Kennet: My Lords, what would be the Government's reaction to the suggestion that, given the globalisation of everything and the greatly increasing power of the global international organisations, there should begin to be a system for international parliamentary and, indeed, governmental scrutiny of
732
what goes on which could, in some ways, be analogous with the system for the scrutiny of what goes on in the European Union, which we have had for so many years now and which has worked so well?
Lord Clinton-Davis: My Lords, when agreements are made through the WTO—and the European Commission acts as agent of the member states in that respect under Article 113—the Government, as a matter of course, submit to the scrutiny committee their views about whatever may be in issue. The question of scrutiny is a matter for parliaments. We cannot dictate to the French Parliament how it should go about its considerations. But we have a duty to ensure that we carry out adequate and systematic scrutiny. I am sure that there is room for improvement.
Lord Naseby: My Lords, bearing in mind the Private Notice Question which was asked in the other place earlier this week in relation to the United Nations and certain of its policies, is it not rather rich of Her Majesty's Government to suggest that further work should be done on scrutiny when it does not seem clear to any of us that there is a sufficiently clear line between the responsibility of Ministers and their officials on existing policies?
Lord Clinton-Davis: My Lords, that is rather far from the Question which we are considering; but as I like the noble Lord and have played golf with him, I shall answer his question directly. As the noble Lord well knows, this matter is under investigation. It would be quite inappropriate for me to comment on it and, with respect, I believe that he knows that.

London Lighthouse: Funding
3.24 p.m.
The Earl of Carlisleasked Her Majesty's Government:
Whether they will consider ways of assisting London Lighthouse to continue its work.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, first, I have to declare a personal interest as I was a member of the council of management of the London Lighthouse for four years at the beginning of the 1990s. My honourable friend the Minister for Public Health recently twice met representatives of the London Lighthouse to discuss its present position. She has agreed in principle to repeat the Department of Health grant of £150,000 for the year 1998–99. The Government are obviously aware that the London Lighthouse has decided to restructure its services which involves closure of its residential unit, sale of the main building and reciting other services from September. However, as that immediate

733
restructuring requires transitional funding because of the Lighthouse's current financial difficulties, I am pleased to tell your Lordships that the Government have agreed a request from Kensington and Chelsea and Westminster health authorities for them to provide that funding by a loan to be repaid on the sale of the building.
The Earl of Carlisle: My Lords, I thank the Minister for that reply. I am sure that the whole House will wish to join me in congratulating the noble Baroness on all that she has done for London Lighthouse over the past four-and-a-half years. Does the Minister not agree that it is premature to dismantle residential services such as those provided by London Lighthouse while the long-term effect of combination drug therapies is uncertain? Will the Minister continue to look at ways in which £2 million can be found from her department's budget so that London Lighthouse does not have to sell its site in September with very far-reaching consequences for all concerned?
Baroness Jay of Paddington: My Lords, I thank the noble Earl for his kind comments. As I understand it, the local health authorities, which are the purchasers of services from the London Lighthouse, believe that even if there were to be, unfortunately, a rather sad conclusion to the experimental work in relation to the combination therapies, which, as the noble Earl suggests, have reduced the need for residential services, the health authorities themselves would be in a position to provide the beds which might be necessary. Of course, we all hope that that will not be the case.
Baroness Masham of Ilton: My Lords, I too must declare an interest as I served on the council of the London Lighthouse with the Minister. Will she agree with me that much money, both voluntary and public, has gone into that building to make it an excellent site for healthcare? Does she agree with me that it would be very sad if that building and its gardens did not continue to provide healthcare as regards some aspects of respite care of the dying?
Baroness Jay of Paddington: My Lords, I agree with the noble Baroness that it is a very substantial and attractive facility. As she will have understood from my original Answer, transitional funding has now been provided which should enable the current managers of the London Lighthouse to decide how best and appropriately that can be used when it is sold.
Baroness Gardner of Parkes: My Lords, is the Minister aware of a suggestion from the London Lighthouse, which I visited recently, to turn it into a centre for healthy living? Is there any future in that, either by London Lighthouse or another body using the same premises?
Baroness Jay of Paddington: My Lords, I too have heard that suggestion raised informally. Theoretically, the London Lighthouse might indeed be an appropriate place for a healthy living centre, sited as it is in an area
734
of social deprivation with the facility to which the noble Baroness, Lady Masham, referred. It is frankly too early to say what the long-term future may be. As the arrangements for funding healthy living centres are still under discussion, that would be a long-term project.
Lord Rowallan: My Lords, as the number of deaths from HIV has halved in the past 12 months, there are many more people with HIV living in the country today. With more than 1,500 people visiting the centre every week, should not something more than a loan be provided to allow the centre to continue?
Baroness Jay of Paddington: My Lords, as I said in my original reply, my honourable friend the Minister for Public Health has, in principle, agreed the substantial Section 64 grant to the London Lighthouse to enable it to continue precisely those services to support people with HIV who are living in the community. The question is where those services will be sited. I understand that London Lighthouse now feels that it will be able to provide the bulk of those necessary services but not from the site on which its residential unit is presently based.

Cancer Research: International Collaboration
3.29 p.m.
Lord Campbell of Croyasked Her Majesty's Government:
Whether they are in touch with American and Australian health authorities on the subject of cancer research in the light of the recently reported advances made in experiments to overcome the disease.
Baroness Jay of Paddington: My Lords, I should like to assure the noble Lord that the Government are in touch with emerging advances of relevance to the National Health Service, wherever these may occur. There are regular communications between the Government and health bodies in America and Australia. In addition, the Medical Research Council (MRC), the main agency through which the Government support biomedical and clinical research, maintains extensive international links.
Lord Campbell of Croy: My Lords, I thank the Minister for her reply. I hope that the United Kingdom will be able to share in any consequent benefits that may arise. While this is good news and while the researchers concerned are due congratulations, should we not be cautious about use of the expression "break-through", as it is the later stage when the processes are applied to people, instead of mice, that will be most significant? Indeed, that may take some time.
Baroness Jay of Paddington: My Lords, I am extremely grateful to the noble Lord for making those remarks. Indeed, I might well have taken the opportunity

735
to make them in a subsequent answer had he not done so. It is unfortunate when one initiative is seized upon and unrealistically raises the hopes of people who may, even today, be suffering from cancer and, therefore, believe that a cure may be round the corner. I discussed this recent so-called break-through—and I agree with the noble Lord that that is an expression that should only be used with great caution—with a very well-known and distinguished research scientist yesterday. I have to tell the House that he said, somewhat sardonically, that the only beneficiaries of many recent cancer research projects were mice.
Lord Stoddart of Swindon: My Lords, is my noble friend the Minister aware that I am extremely pleased that both she and the noble Lord, Lord Campbell, have urged caution over the matter? Further, is there any way in which my noble friend or her colleagues could prevail upon research organisations, especially medical ones, to be very careful when they release information which may well either encourage people too much or, indeed, scare them too much? In fact, we have just had an experience of how governments and other organisations can be stampeded into bringing forward absurd legislation—like that for beef on the bone—on the flimsiest of evidence and, as my noble friend said earlier, involving minuscule risk.
Baroness Jay of Paddington: My Lords, I leave it to my noble friend Lord Donoughue to reply as robustly as he did in his responses to the Question regarding beef on the bone. However, I turn to the question of the influence of the perhaps premature remarks of some scientists on such matters. I should point out that there are difficulties of balance to be achieved. Whereas we seek every kind of co-operation between the international scientific community to collaborate on such projects, if, for example, a researcher in Boston—like the one quoted in press reports yesterday—wishes to make what I believe it would not be unfair to call exaggerated claims for the immediate effects of his research, there is little that we can do about it.
The Countess of Mar: My Lords, is not one of the problems in this field the fact that scientists rely upon the success of research that they are undertaking at present to secure future funding? The only way that they can get future funding is to publicise that success in the best possible light. Therefore, can the Minister say whether there are any prospects of reviewing the funding for scientific and medical research, especially in the United Kingdom, so that scientists do not have to rely upon this means of obtaining funding?
Baroness Jay of Paddington: My Lords, £290 million was spent on cancer research in 1996–97, which is the latest period for which I have figures regarding the United Kingdom. The Government's share of that amount was about £54 million, while most of the rest was provided by extremely respected and respectable cancer charities
736
whose emphasis is on research. I do not believe that they would wish to feel that their decisions were swayed by immediate media stories, or anything of that kind.
Lord McColl of Dulwich: My Lords, does the Minister agree that her remark about the scientist in Boston might have been a little unwise, because she was referring to Doctor Judah M. Folkman, who is probably one of the most brilliant cancer research workers in the world? His work has been going on for years and, indeed, is very systematic, steady and reliable. He really was not saying anything that was exaggerated, because it is really very exciting work.
Baroness Jay of Paddington: My Lords, it may indeed be very exciting. I do not believe that anything I said could have suggested that it was anything other than exciting. I was responding to a question from my noble friend who suggested that such reports might perhaps cause people to become scared, or generate undue euphoria about the results. As always in the scientific community, one has as many views as one consults.
I was interested in the comments of Professor Karol Sikora yesterday who, as well as being an extremely distinguished oncologist in this country, is also chief of cancer research for the World Health Organisation. He said that, although researchers have had similar success with animal experiments in the past, very often they were disappointed when human trials failed. Indeed, he said that it would be a very long time before any of the work which was reported in the media was available as treatment. That was the simple point that I wanted to underline.
Earl Baldwin of Bewdley: My Lords, will the Minister do what she can to encourage some genuine innovation in this field of research which does not necessarily imply treatment with drugs?
Baroness Jay of Paddington: My Lords, I am very well aware of the noble Earl's interest in complementary therapies in this field. However, he will be aware that the research that the noble Lord, Lord McColl, and I are discussing, which was reported in the media yesterday, referred not to drugs but to the way in which one might cut off the blood supply to tumours. Indeed, it was more of a physical nature than a chemical therapeutic one.
Lord Rowallan: My Lords, can the Minister inform the House whether any human beings have been used as guinea-pigs so far in this respect?
Baroness Jay of Paddington: My Lords, as I understand it, the research that we have been discussing, which was based in Boston, features a cocktail of two drugs being applied to laboratory mice. However, I understand that there is the potential for human chemical trials to be started in this country next year. That, of course, will be dependent upon the further success of international collaboration.

Social Security Bill
3.36 p.m.
Read a third time.
Clause 9 [Revision of decisions]:
The Lord Advocate (Lord Hardie)moved Amendment No. 1:
Page 6, line 5, leave out ("decision") and insert ("revision").
The noble and learned Lord said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 3 and 14 to 23. This group of amendments is wholly minor and consequential and has been brought forward in order to improve, or correct, minor errors in the drafting of the Bill. Subject to the agreement of your Lordships, I do not intend to discuss the details of each amendment but will of course explain any of the changes should noble Lords wish me to do so. I beg to move.
On Question, amendment agreed to.
Clause 12 [Appeal to appeal tribunal]:
Lord Goodhartmoved Amendment No. 2:
Page 8, line 5, at end insert ("save that the time within which an appeal shall be brought shall not be less than two months from the notification of the decision in question.").
The noble Lord said: My Lords, this amendment is coming up for air for a third time. I hope that the Government will accept it and save it from drowning. The Government have said that they intend to impose a one-month limit on the time for appeal by regulations which are to be made under Clause 12(7). The present time limit for making appeals is three months from the date of the decision being appealed against. Obviously, therefore, a reduction in time from three months to one month is a very big one. There has been strong criticism of this proposal from the Child Poverty Action Group, from the National Association of Citizens Advice Bureaux, as well as from other organisations dealing with social security problems. Those organisations take the view that one month is a wholly inadequate period of time.
Most appeals are brought within one month but the Government's decision to shorten the period from three months to one is not, so far as I am aware, based on any research as to the reasons why appeals brought between the end of the first month and the end of the third month were not brought earlier. It seems inherently likely that the later appeals are those which are brought by the most vulnerable and disadvantaged; for example, those in poor physical or mental health, the disabled, the elderly, those with heavy caring responsibilities and those who have problems with literacy or the English language. These people need help to prepare an appeal. They may not know where to go to obtain help and it takes them time to find out. When they contact the CAB or some other organisation they may need a home visit. The heavy caseload may mean that the CAB cannot visit them for two or three weeks.
The amendments which I moved at the Committee and Report stages sought to retain the three-month period, which is what I would prefer. However, this amendment proposes that the period should be not
738
three months but two. It does so because of the Government's response at Report stage. The Government's reply to the amendment appears at cols. 977 to 980 of Hansard of 20th April. The noble and learned Lord, Lord Hardie, said that the appeal period would be two months de facto because the time would run only from the end of the dispute period. I then asked him what the dispute period comprised as no such expression appears on the face of the Bill. The noble and learned Lord, Lord Hardie, replied, in answer to a further question from the noble Lord, Lord Higgins,
"the two-month period is a combination of two separate months. The first month is a dispute period within which a claimant may raise concerns about the decision with the department. At the end of that month a letter will be issued confirming the decision or stating the final decision. So the claimant will receive a letter indicating what the decision is. If the claimant is unhappy with it he goes back to the department. If the department accepts there is a mistake it will issue a corrected decision. If it does not accept there is a mistake it will issue a letter confirming the original decision.
At the end of that period of a month, the appeal period will commence. There is a period of one month after that within which one has to lodge an appeal".—[Official Report, 20/4/98; cols. 978–79.]
Since then the noble and learned Lord has clarified those comments in a letter, a copy of which has been placed in the Library. That letter makes clear, as I had assumed, that there is not an automatic one-month dispute period. It states,
"it is only if a claimant disputes the original decision (within one month) that extra time will be allowed. In these circumstances the Agency will look again at the issues and notify the claimant of the outcome (either that the original decision has been upheld or revised). The claimant will then have one month to lodge an appeal from the date of that notification.
If the claimant does not contact the Agency about the decision within one month—either to dispute it or to lodge an appeal—any subsequent application to have the decision revised will be considered under the provisions for a late appeal".
It is therefore plainly correct that if no challenge is made in month one, there is no dispute period and the time for the appeal expires at the end of month one.
The people who are most in need of help are those who are least likely to raise a dispute in month one. Why not therefore simply say that there will be at least a two-month appeal period for everyone, whether or not they have raised the dispute in month one? This seems to me to be a sensible compromise. I ask the Government to accept it, or at least to undertake to include a two-month period for appeal in the regulations. I beg to move.
Lord Milverton: My Lords, I support the noble Lord, Lord Goodhart. If I remember correctly, I have supported the Liberal Party on some previous amendments of this kind to the Bill. We in the Conservative Party are being left to decide these matters for ourselves. That is a good thing but I would have supported this amendment even if that were not the case as I consider it is only right and proper to do so. I shall support my party as regards the amendment of the noble Lord, Lord Higgins, but as regards the amendment we are discussing I shall support the Liberal Party. That is becoming rather a habit for me lately. I might even find

739
myself walking across to their Benches or even to the Benches opposite. As I have said, I support this amendment as I consider it is right, proper and sensible.
3.45 p.m.
Lord Hardie: My Lords, I assure the noble Lord, Lord Milverton, that if he wishes to cross the Floor of the House he will be most welcome.
I am grateful to the noble Lord, Lord Goodhart, for tabling this amendment. It gives me the opportunity to set out in some detail how the disputes and appeals process will work under the new arrangements. However—this is more important for the House—it also allows me to clarify an issue about the handling of disputes and appeals on which I have already written to noble Lords. As the noble Lord, Lord Goodhart, explained, there is a copy of the letter in the Library.
Clause 12 deals with rights of appeal to the new unified independent tribunal, and includes regulation making provisions on the manner and time limits for lodging appeals. The amendment tabled by the noble Lord, Lord Goodhart, would make it a requirement on the face of the Bill, for there to be a minimum period of at least two months, from the date of notification of a decision, for an appeal against that decision to be lodged. Regulations on time limits for lodging appeals could extend that period of two months, but could not shorten it.
If the amendment were to be accepted, it would limit our flexibility to set time limits for lodging appeals, in regulations. The amendment would give claimants a lengthy period of time within which to lodge an appeal. This would reduce the incentive for clients to act quickly, to ensure decisions are re-visited while the facts are still fresh.
We are all committed to improving the quality of decisions and ensuring that claimants can play an active part. We want claimants to understand the reasons why decisions are taken and to be able to seek redress within agencies in addition to a statutory right of appeal. This is why agencies will be setting up a new informal disputes process to allow claimants to seek additional explanations of a decision or to present new facts. Within this context, it is the overall time limit for claimants to lodge disputes which is important, rather than simply the time limit for lodging an appeal.
It may help your Lordships if I explain how the new arrangements will operate. Claimants will normally have a period of one month, from the date on which they are notified of a decision, to lodge a dispute or appeal. For decisions made by the Contributions Agency, the time limit will be 30 days, and for child support decisions it will be 28 days. A one-month limit will encourage claimants to exercise their rights promptly and will lead to a more rapid settlement of cases. I believe it offers a reasonable time within which the majority of clients can dispute their decision. Clients will be encouraged to seek explanations and to talk to the agencies in the first instance.
In practice, when a decision is made on an application, clients will be sent a notification inviting them to contact the agency if they are not satisfied with
740
the decision or if they have a query. Therefore the letter notifying the claimant of the decision will encourage the claimant to approach the agency if he has any doubt or is dissatisfied. Claimants will be given an opportunity to discuss the decision with staff and to present any new relevant information that they consider appropriate. The intention is to ensure that where a decision is wrong it can be put right quickly and with the minimum of fuss and without the need for a time-consuming appeal. If a decision is disputed within the period and revised in a client's favour it will carry a fresh right of dispute and appeal. If, on the other hand, the original decision is confirmed, the claimant will be allowed a further month from the date that he is notified in which to lodge an appeal.
I believe that this will provide a real incentive for claimants to dispute decisions and talk to the agencies, rather than to appeal at the outset. The arrangements will offer a better and fairer service to clients and will give a means to resolve disputes speedily without in any way prejudicing appeal rights.
With the permission of the House, I wish to clarify one point concerning the disputes and appeals provisions which arose during our debate on Clause 12 at Report stage, and to which the noble Lord, Lord Goodhart, referred. On checking the Official Report I feel I may have given the House the impression that there was an automatic one-month dispute period built in, on top of the one-month period for appeal. However, for those clients who choose to appeal from the outset, the time limit will not be extended. There will be claimants who do not contact the agency about the decision within one month—either to dispute it or to lodge an appeal. Current legislation makes provision for late appeals in special circumstances and there will continue to be arrangements for accepting late appeals in the future. The current rules need to be reassessed. They may need to be more generous at taking on board the point that the noble Lord made: that often it is the more vulnerable members of society who fail to meet the time limits. We shall discuss the provisions of the new arrangements with interested parties, including claimants' representatives.
The Government's intention is to ensure there is no misunderstanding on these points. The new arrangements, when taken as a whole, provide claimants with a far more flexible and sophisticated system of redress than simply being able to appeal against a decision. I hope your Lordships will accept that the amendment is unnecessary. I hope that the noble Lord will feel able to withdraw it.
Lord Goodhart: My Lords, I am grateful to the noble and learned Lord, Lord Hardie, for his reply. It has helped to clarify the situation, which was not entirely clear at the end of debate at Report stage, as the noble and learned Lord admitted. I have still a sense of disappointment that there has not been a firmer commitment to extend the period for appeal. Nevertheless, I do not propose to test the opinion of the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

741
Clause 40 [Child support: revision of decisions]:
Lord Hardiemoved Amendment No. 3:
Page 26, line 27, leave out ("decision") and insert ("revision").
The noble and learned Lord said: My Lords, this amendment was spoken to in the first group. I beg to move.
On Question, amendment agreed to.
4 p.m.
Clause 51 [Class 1 contributions]:
Lord Higginsmoved Amendment No. 4:
Page 35, line 39, leave out ("subsection") and insert ("subsections").
The noble Lord said: It may be convenient to consider Amendment No. 5 with this amendment. Considering the shape in which the original Bill arrived from another place, there is no doubt that your Lordships' House has fulfilled its functions as a revising Chamber. Somewhat different considerations apply to Part II of the Bill. I shall speak to those in a moment. However, we have considered a large number of amendments.
At Committee stage the first Marshalled List had 58 government amendments. The figure rose to 107. At Report stage, there were 40 government amendments. Now, at Third Reading, there are another 15. The fact that the Bill had spent many weeks in Standing Committee in another place, quite apart from the Report stage, suggests that it was not well prepared. We have certainly fulfilled our function as a revising Chamber.
We have been given an unusual task as regards Part II. That is an important fact. The noble Baroness, Lady Hollis, said earlier that it is not unusual for new measures to be introduced in your Lordships' House as part of a Bill. But to introduce an entire Part II—what in effect constitutes a Bill within a Bill, forming moreover an important, perhaps essential, part of the Chancellor's Budget proposals—is probably without precedent. Therefore we need to consider the matter very carefully indeed.
My view, which I expressed at earlier stages, is that the measure should either have been included in the Finance Bill or, if that were not possible, there should have been a separate social security Bill. The House, and I believe Parliament, have been treated with contempt so far as concerns the normal legislative processes. Another place has had no opportunity to discuss the measures in Part II in Standing Committee, on Report or at Third Reading. The first it will hear of them will be when the Bill comes from this House with the amendments that the Government moved at Report stage.
It is an unusual situation and it is not the way in which Parliament should be treated. I feel bound to say that not only is it wrong; it is also unwise. We know only too well that when legislation does not go through the necessary detailed scrutiny, the government of the day often repent at leisure.
Against that background, I turn to the specific amendment which stands in my name. Part II of the Bill effectively implements proposals which the Chancellor
742
put forward in his Budget speech, but with one important omission. The amendment seeks to implement what the Chancellor said in his Budget speech and to give the other place an opportunity to debate the matter. That is the point I stress. If we do not pass the amendment, the reality is that the proposals will have been passed and another place will have had no opportunity to discuss the crucial issue that I wish to raise on the amendment.
I refer to the remarks of the Chancellor of the Exchequer on 17th March in his Budget speech. He said:
"I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country".
The Chancellor continued:
"Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their rights to benefit protected".—[Official Report, Commons, 17/3/98; col. 1106.]
There is no doubt that the impression created by both those remarks and more specifically perhaps by spin doctors and others outside was that the Chancellor was going to make those two important changes. As regards abolition of the entry fee, that was so. Reports in, for example, the Daily Telegraph, under the heading, "Brown spares middle classes", and on radio and television, gave the impression that the lower limit was to be raised to £81.
However, while there was provision financially in the Red Book for the first of those proposals, there was no provision for the second. I believe therefore that the Chancellor's proposals have not been implemented; and it is right and appropriate—and I stress this strongly—that another place should be given an opportunity to debate the issue. It will not have that opportunity if we do not pass this amendment. It can discuss other amendments, but we believe that this specific omission from the amendments that the noble Baroness moved at earlier stages should be debated in another place, and, if necessary, voted upon.
That said, I turn briefly to the second sentence that I just quoted which relates to the contributory principle. The Chancellor said:
"All employees earning between £64 and £81 will have their right to benefits protected".—[Official Report, Commons, 17/3/98; col. 1106.]
But we have not received the slightest indication as to how the Chancellor of the Exchequer proposes that that should be so. Indeed, the measures as a whole tend to undermine the contributory principle, which has in many ways been the bedrock of the social security system ever since Beveridge; namely, one receives certain benefits only if one has contributed towards them.
The Government now seem to be saying that, for a certain level of income, people will be entitled to contributory benefits even though they have not contributed towards them. That is very mysterious. We have no idea at all what the Government propose to put in the place of the contributory principle. Yet, as I say, it is a matter of the greatest importance and must cast some doubt on the Government's position as regards the future of the national insurance pension. It is a matter on which there is increasing concern.

743
However, I know only too well from my own experience as a Member of Parliament in another place the way in which the contributory principle is regarded as being of great importance. There are those who say: "We have contributed and therefore we are entitled to certain benefits". The Government have stated that the position will be protected, but it has not been made in the least bit clear how that is to be done.
Finally, I wish to turn to another related point which gives me considerable cause for concern. It may seem on the face of it to be a detailed, even pedantic point. Nonetheless, it is important, because in many ways it casts doubt on the whole position taken on this issue by the Chancellor.
Let me remind the House that the Chancellor said:
"Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings".—[Official Report, Commons, 17/3/98; col. 1106.]
That is what he said. It clearly created the impression that that is what would happen. That is why we believe it appropriate to move this amendment so that the matter can be given further consideration.
Although there has been no discussion of the Bill in Standing Committee—it is in fact a Bill within a Bill—or at Report stage or Third Reading in the other place, the matter was raised when the Treasury Select Committee took evidence from the Chancellor of the Exchequer on 31st March. I refer to page 71 of the Treasury Select Committee's report. Mr. Quentin Davies raised this issue in relation to the statement made by the Chancellor.
Perhaps I may stress this point. The words used in the Chancellor's Budget Statement were:
"Further reforms will also ensure that no one pays national insurance",
and so on. It is inconceivable that that was not a correct record. Had it been said in an ordinary debate, it may have been that Hansard was "not quite there", that the Minister's PPS did not go up to the office in time to correct the report, and one way or another the Chancellor's remarks were not correctly reported. But many Members of this House, certainly those who have been at the Treasury, will know perfectly well that the report of the Budget Speech is most certainly what the Chancellor actually said. The text goes to the Hansard office and is accurately reported; those were indeed the words that he used.
The extraordinary thing is this. When the Chancellor came to give evidence to the Treasury Select Committee on 31st March, he was questioned by Mr. Quentin Davies, who had some difficulty pinning him down on the point about the £81 limit rather than the question of the abolition of the entry fee. Mr. Davies pressed the Chancellor, who replied that the Budget Speech had stated:
"I am abolishing the perverse entry fee every employee pays to be part of the National Insurance system".
It is true, as stated, that that is a relief, and we welcome it. The Chancellor of the Exchequer then went on to say:
"We are agreed that is what the Budget did. Then I said: 'Future reforms will also ensure that no-one pays National Insurance for the first £81.' The word is 'future'. These are reforms we want to make".
744
The Chancellor did not say "future"; the Chancellor said "further". The statement in the Budget Speech is clearly correctly reported. There is a clear distinction between the impression given to the national press and so on by using the word "further", particularly in the context into which I have correctly put it, and that given by the word "future". Had the Chancellor used the word "future", we should not for one moment suggest that this matter ought to be debated in this House this afternoon and that amendments ought to be made in relation to it.
What gives me cause for grave concern is that the Chancellor, when appearing before the Select Committee in another place, sought in effect to rewrite history. He must have known what he had said. He had only to look at Hansard. Yet he sought to get off the hook by going before the Treasury Select Committee and making a statement which is clearly and deliberately untrue. He is now saying that this is something the Government will do in the future, that it will depend on the contributory principle, and so on.
The reality is that the Budget Speech stated quite clearly what was the Chancellor's proposal. We therefore believe it right that, at the very least, this amendment should be passed, so that it can be discussed by Members of another place—it may well be appropriate for the matter to be discussed by your Lordships, but we have not had the option. This part of the Bill has been introduced not in any revising sense but ahead of any consideration by the Commons of the detail. We believe it right that that should be so. It is in no way inappropriate that your Lordships should do this, given the way in which the matter has been brought before this House and the way in which Parliament has been treated by the Government. We ought to pass this amendment, so that further discussion on a detailed basis can appropriately be undertaken. The Chancellor's Statement on Budget Day should be one to which he is held and for which he rightly ought to stand accountable. I beg to move.
Lord Goodhart: My Lords, this group of amendments concerns Clause 51, which introduces what is probably the most important restructuring of national insurance contributions for a decade. It will affect virtually every employer and employee in the country. It is, of course, a move towards the integration of national insurance contributions and tax. We have already gone a long way in that direction. We have collection of national insurance contributions through the PAYE system. The link between the amount of contributions and the amount of benefits has largely been broken. For employees who are contracted in, the amount of their contributions affects only their right to the state earnings related pension supplement (SERPS). For those who are contracted out of SERPS, the amount of their contributions affects the size of their benefits not at all. It is true that the making of contributions is still the trigger for the right to receive benefits. But even there the link has been diluted by the credits given to the unemployed and disabled people, and by home responsibility protection. Those all confer benefits without the payment of contributions.

745
There are statements made in the Budget that the Contributions Agency is to be transferred to the Inland Revenue, that the starting-point for employers' contributions is to be the same as the single personal allowance, and the start for employees' contributions is to be brought to the same level as soon as the Government work out a mechanism for preserving the rights of those earning between £64 and £81 a week. That will mean that for the first time someone in employment who is paying no contributions will qualify for benefits. Employers' contributions have no upper earnings limit. Earnings above the upper limit do not even qualify an employee for SERPS. The integration of national insurance contributions and tax has therefore gone at least half-way and indeed rather more.
That development is not in itself unwelcome. The time has come to realise that national insurance contributions are effectively a charade. Many people think that contributions pay for the national health service or go into a fund to pay for their pensions, which, of course, they do not. As I said on a previous occasion, the national insurance fund is not a reservoir but a pipe. If we recognise national insurance contributions as a tax, as indeed they are, we could abolish the complex record-keeping which the contribution system still requires; we could base retirement pensions on residence in the United Kingdom; and we could base jobseekers' allowance on having an employment record. That would be both simpler and more honest. However, that is a matter for the future.
I return to Clause 51. It is an extremely important restructuring of national insurance contributions. I share the regret of the noble Lord, Lord Higgins, that it was introduced at Report stage in this House after the Bill had completed its passage through the other place. There was therefore no opportunity to test the clause in Committee in either House. It had a perforce limited discussion at Report stage in this House. It is for that reason that I believe it right to bring amendments to the clause on Third Reading to allow further discussion. The House of Commons will have an opportunity to discuss the issue on the debate on the Lords' amendments, but I believe that that is not a satisfactory substitute for a proper debate in Standing Committee in that House.
While I share the view of the noble Lord, Lord Higgins, that this is a thoroughly unsatisfactory way of introducing these extremely important changes to national insurance, I am unable to support the text of his amendment. I believe that it was a useful peg on which to hang a speech criticising the procedural way in which the Government have dealt with the matter. The noble Lord's textual analysis of the Chancellor of the Exchequer's Budget speech was perhaps pressing the point too far. While the Government will no doubt be in a better position than I am to refer to chapter and verse, it was my understanding at the time—certainly within a day or two afterwards—that it was no part of the Budget undertakings by the Chancellor to raise the lower earnings limit at the same time as he raised the threshold for employers' national insurance contributions in line with the threshold for tax.
746
Secondly, I believe that it is improper for this House to knock a hole in the Government's taxation plans by effectively cutting tax by raising the starting point for employees' national insurance contributions from £64 to £81 a week.
Thirdly, and most importantly, the amendment will cut out those earning between £64 and £81 a week from the duty to make contributions and will therefore deprive them of the contribution record to which they would otherwise have been entitled. It is clear that the amendment cannot be supported unless there is at the same time an amendment to preserve the rights of those earning between £64 and £81 a week.
Therefore, while I support the objections to the procedural way in which this has been handled, I am unable to support the amendment as it stands.
4.15 p.m.
Lord Newton of Braintree: My Lords, I rise briefly to refer to my Amendment No. 6, if only to dispel any impression that it is a rival to my noble friend's amendment or that there is any dispute between us. I have every sympathy with the arguments he advanced.
My amendment arises from doubt as to precisely what the Government mean by the £81 figure. If it is intended to be a substitute for the current lower earnings limit, admittedly at some uncertain time in the future, presumably it will, like the lower earnings limit, normally be reviewed and usually increased year by year.
I should like to know, first, whether the £81 figure is what the new lower earnings limit would be if it were introduced now or whether it is what the figure will be at some unknown time in the future when it is introduced. If, as I understand it, it is loosely related to the single person's allowance, in the same way as the current lower earnings limit is, that, of course, is index-linked and will rise each year. Therefore, when the Government finally get round to doing this, £81 will not be the right figure, in which case my amendment is more closely directed to achieving what the Government intend.
From the body language of the Minister—if I may call it that—I believe I am right in my interpretation that that is not the figure at which it will be introduced, but perhaps she could confirm that. I mean that I should like to have it on the face of Hansard.
My noble friend on the Front Bench and the noble Lord, Lord Goodhart, raised a point as to what the alleged protection means. At present, on current-year figures people earning over £64 a week and paying contributions would acquire pension rights and rights to unemployment benefit, and so on, in certain circumstances. It is clear that at some future stage those earning over £81, or whatever the figure is, will do the same. We are told that people earning between those two figures will be protected. What does that mean? Does it mean that the rights that they have already built up to pensions, for example, will be protected; does it mean that for a period, until they run out of them, their rights to unemployment benefit will be protected, those rights only ranking for two tax years in relation to

747
national insurance contributions; does it mean simply that the rights that those people already have will be protected but that they will not go on acquiring new rights to pensions, and the like, on contributions which they are not paying; or are we to have a new form of contribution credit? That question must be answered if we are to be sure that we are not blowing a complete hole in the national insurance system or seriously damaging rights in a way which purports to be improving people's position. We need a clearer idea of the answer to that question before we can acquiesce to the way the Government are proceeding.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I urge the House to reject these amendments. I am sure the House will be relieved to hear that I shall not make a Second Reading speech on Part II of the Bill; nor do I intend to joust with the noble Lord, Lord Higgins, about the difference between "further" and "future", when my understanding is that both lie in the future. Instead, I shall try to address the amendments.
In putting forward the amendments, the noble Lords, Lord Higgins and Lord Newton, appear to be trying to introduce into the Bill a change heralded by my right honourable friend the Chancellor in his Budget. The Chancellor announced future reforms that would raise the lower earnings limit to the level of a single person's tax allowance. As I was invited to do by the noble Lord, Lord Newton, I confirm that that is indeed the case. The alignment will in future be with the single person's tax allowance. In that sense, he is right to correct the possible technical flaws in his noble friend's amendment.
I am pleased to see that the Opposition support the Chancellor's proposals to such an extent that they want to expedite their introduction. Unfortunately, neither the amendment of the noble Lord, Lord Higgins, nor that of the noble Lord, Lord Newton, addressed the major implications, touched on by the noble Lord, Lord Goodhart, that they would have for the pension and benefit position of millions of employees. The amendments would take up to 1 million low-paid people—four-fifths of them women—out of reach of certain contributory benefits. They would reduce the future state earnings-related pensions and contracted-out pensions of millions of others. And they would reduce national insurance contribution revenue by approaching £1.5 billion a year.
The Government have introduced into this Bill a number of changes to the structure of national insurance contributions as announced by the Chancellor in the Budget. Those measures brought forward at Report stage are intended to come into force in April 1999. They will abolish the 2 per cent. entry fee paid by employees on their earnings below the lower earnings limit. That will increase by £1.28 a week the take-home pay of every employee who pays contributions. The measures will enable us to increase the point at which employers start to pay contributions from the current level of £64 a week to the level of the single person's tax allowance—£81 a week this year. They will abolish
748
the contribution that employers pay on earnings below this new higher threshold. And they will greatly simplify the structure of employer contributions by cutting the number of rates from four to one.
This radical package of reforms will help to make work pay. It will build on the many other measures the Government are introducing to help people move from welfare into work, including the working families tax credit, the childcare credit and the new deals. And it will align the national insurance system more closely with income tax, cutting red tape for business and reducing the cost of administration.
The Chancellor also announced his intention to build on these changes. He said that, crucially, once measures were in place to protect people against benefit losses he would be increasing the lower earnings limit for employees to align with the new higher threshold for employers; that is, to the level of the single person's tax allowance.
The proposed increase in the lower earnings limit will have many advantages. It will build upon other measures the Government are introducing to make work pay. And it will continue the progress made by this Government to cut the cost of administration for employers. We wish to do this as soon as possible. That is why the Chancellor announced his intention to introduce the measure in the future, and one imagines that is why noble Lords opposite tabled the amendments.
But without corresponding changes to the benefit rules, an increase in the lower earnings limit would remove access to certain contributory benefits from up to 1 million men and women earning between £64 and £81 a week. Those people—four-fifths of them women—would cease to build up rights to jobseekers' allowance, to incapacity benefit and to maternity allowance. They would no longer be eligible for statutory sick pay and statutory maternity pay. And many would cease to build up rights to the basic state pension.
In addition to these effects on the low-paid, the amendments would reduce the pensions being built up by millions of people right across the earnings spectrum. They would cut the portion of earnings that count for the state earnings-related pensions scheme—SERPS—thus reducing future SERPS pensions and many occupational and personal pensions. Is that what noble Lords want from the amendment?
The noble Lord's amendments do not provide people with any protection against those benefit and pension effects. They make no effort to prevent losses. That cannot be either right or decent. If the noble Lords, Lord Higgins and Lord Newton, were truly concerned about the level of benefit, they would do as the Chancellor proposes and await the brigading of both sides of the equation—the benefit side with the tax side—and not seek to bring forward today a one-handed, one-sided amendment which would strip people of the earnings and the entitlement to those earnings that they built up through the insurance system. The noble Lord's amendment does precisely what he says he does not want it to do. I hope that as a result he will change his mind.

749
The Government believe that those effects are unacceptable, indecent and wrong. We will not increase the lower earnings limit at the expense of people's access to contributory benefits and pensions. Instead, we will wait until we have completed both sides of the equation. As the Chancellor announced, we will take the steps necessary in the future and at the same time to ensure that these low-paid men and women do not lose benefit as a result of the change.
Of course, all aspects of the present system are not cast in stone forever. We need to modernise the national insurance system; we need to simplify its administration and to examine the link between contributions and benefits. That is precisely why we will be coming forward with proposals in due course. But they will be proposals that do not strip away benefits from lower paid men and women as the amendment, in isolation, does.
That is my first criticism of the amendment; that is, that it strips away the rights that people are entitled to claim by virtue of their insurance. It is no use the noble Lord shaking his head; that is precisely what the amendment does. He may not wish it, but it does. I have a second criticism which is that the amendment is financially reckless. It is reckless with people's benefit entitlements and reckless with public funds. It would leave a gaping hole in the Government's finances. It would reduce national insurance contribution revenue, as the noble Lord, Lord Higgins, admitted, by £1.5 billion a year. I note that neither the noble Lord, Lord Higgins, nor the noble Lord, Lord Newton, were anxious to tell us where they will find that £1.5 billion or by what cuts in expenditure they will seek to do it. Will they take it from pensions, from education or health?
Changing the lower earnings limit has major financial implications and noble Lords are ducking the issue today by not addressing how they will compensate for that shortfall. It is for the Chancellor to decide when it is appropriate to make such a change. The financial effects will appear in the Red Book at that time as part of his Budget proposals and matters will be properly discussed by the Commons in that Budget debate. The change will not be made in April 1999. It will be made when the Chancellor feels that the time is right and the financial effects will then appear properly in the Red Book at that time. I urge your Lordships therefore not to support the amendment.
The third point raised by the noble Lord is that if the amendment is not about financial prudence—it is not; it is reckless—and if it is not about considering the policy in the relationship between contributory benefits—it cannot be because it failed to do so—then why press it? The noble Lord, Lord Higgins, said that it was to allow the other place adequate scrutiny of the Chancellor's Budget intent. The other House has already had a debate on the Budget.
Raising the LEL is not part of the Bill; I must emphasise that. Because it is not part of the Bill, we are not denying the House the proper scrutiny it should have. If we were trying to introduce LEL into the Bill,
750
the point would be well taken. We are not. The noble Lord, Lord Higgins, is not aiding the House of Commons by initiating a debate today and asking Members to debate in due course something that is not even in the Bill.
In due course this measure will be formally brought forward by the Chancellor of the Exchequer, probably in a Budget but possibly not. In either case it will need to come forward as primary legislation. At that point the raising of the lower earnings limit will be discussed, scrutinised and debated by the Commons in four stages of its procedure and five stages of this procedure. Is the noble Lord going to tell us that, as a result of that, any such change will not have been properly scrutinised? The noble Lord, Lord Higgins, cannot hide behind the need of the Commons to debate when there will be ample opportunity in due course, when we have the full information, to debate this when primary legislation is introduced.
I urge your Lordships therefore not to support the amendment which, I promise, is extremely ill-judged. It is financially reckless. I repeat: it leaves a gaping hole of £1.5 billion in public finances without any suggestion of how that hole should be plugged. Is it now Tory policy not to tax and spend, but to spend and not to tax?
The amendment is also indecent. It leaves those struggling in low-wage jobs without the protection of insurance benefit which they thought they had earned. This amendment will strip away their rights. That is quite wrong and it is not decent to do so. Is it now Tory policy not to favour the brigading of work with insurance rights, but to insist on work without those rights? Is that fair to those struggling on low wages, because that is what this amendment does? Is it also the case that if we do not introduce a lower earnings limit clause into a Bill which has nothing to do with it, that we are going to deny the Commons the opportunity to debate it when it is introduced as primary legislation? Of course not. Any proposals will be properly scrutinised in both Houses in due course when both the tax and the benefit sides are brought together. In that regard, the Government have made clear in their Red Book how the loss of national insurance contributions is to be properly funded. To do anything other than that is reckless, imprudent and wrong.
This amendment would be perfectly proper as a probing amendment, but it is not a probing amendment. To push it to a vote would be reckless and imprudent. I hope that your Lordships will value the judgment of this House and not do so.
In the course of the Committee and Report stages, as I am sure the Tory Opposition will accept, many amendments were moved and most of them were accepted by the Government. We all believed—and the voice of the House indicated—that to do so was good public policy. I can list the amendments if noble Lords wish. About 10 amendments have been tabled by us which arose from Opposition amendments to improve the Bill. That was in the nature of good public policy. This amendment is not; it will not make it a better Bill and it is not relevant to it. Noble Lords have the numbers. They can push these amendments through if

751
they choose, but on the grounds of financial prudence and of respecting the right of the lower paid to the insurance benefits that they have built up; and also respecting the role of the Commons to debate this issue when proper legislation is introduced in due course, I urge noble Lords not to support these amendments, but to press the noble Lord to withdraw them instead.
4.30 p.m.
Lord Higgins: My Lords, I think that the noble Baroness doth protest too much and, in a large measure, has been hoist with her own petard. Part II of the Bill has been introduced by the Government, totally bypassing the House of Commons up to this point. The purpose of this amendment is to give the other place an opportunity to discuss a specific point which was explicitly referred to in the Chancellor of the Exchequer's Budget speech, which undeniably gave the impression that he was going to do this. That is what this amendment seeks to do.
Baroness Hollis of Heigham: My Lords, the noble Lord will, of course, wish to remind his friends behind him that because the Bill contains new clauses on national insurance it will be debated by the Commons anyway. This amendment is not needed in order to provide a peg to enable the other place to discuss the national insurance clauses in this Bill.
Lord Higgins: My Lords, of course that is true, but the point is that the Commons need to do so on a specific amendment which is designed to do what the Chancellor of the Exchequer clearly gave the impression it was his intention to do. It is right and proper that we should do that.
Baroness Hollis of Heigham: My Lords, I believe the noble Lord misunderstands. The point is that this House, as a result of supporting government amendments, has put new amendments into the Bill which the Commons have to consider. Therefore, there will be consideration of these issues without the need for this amendment to be the peg on which to do so.
Lord Higgins: My Lords, but clearly it is better that the specific point is made to implement clearly what the Chancellor intended, according to the words I have quoted.
Earl Russell: My Lords, simply for clarification, will the noble Lord, Lord Higgins, accept the Minister's contention that the lower earnings limit is not being altered by this Bill?
Lord Higgins: My Lords, I am suggesting that we should incorporate in this Bill—as I say, the Government have been hoist with their own petard—a specific remark made by the Chancellor of the Exchequer. The new clauses are in effect a Bill within the Bill. Therefore, we can have a Bill which not only implements everything said by the Chancellor that the Government have incorporated, but also what he said but the Government have failed to implement. That is the purpose that we have in mind in moving this amendment. The noble Lord,
752
Lord Goodhart, said that it is a peg on which to hang a debate and to permit a vote and for the other place also to have the chance to vote on it. It is very important indeed that that should be so.
As regards the points about introducing the provision into the Bill, the noble Baroness keeps saying that that has to be done in primary legislation. This is primary legislation. Of course, it should have been primary legislation introduced in the other place so that the matter could be properly debated.
Baroness Hollis of Heigham: My Lords, the point I made is that this particular amendment needs to be introduced in primary legislation so that it is brigaded with the issue of contributory benefits. Otherwise the House would be stripping away people's rights if it were to pass this amendment tonight.
Lord Higgins: My Lords, perhaps, in reply to what the noble Baroness has just said, I may quote what the Chancellor said quite clearly. He said,
"Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected".—[Official Report, Commons, 17/3/98; col. 1106.]
We presume that that is what the Government will do, because they have clearly given an undertaking that when the limit is raised those employees will be protected. If it is the case that the Government have not the remotest idea how they are going to do that, then why on earth did the Chancellor put that in his Budget speech? It would have been totally inappropriate to do so. He should have said, "If we can find some way of doing this while protecting the contributory principle, then of course we shall go ahead". That is not the impression that he gave in his speech on Budget Day, that was reported on radio, in the press and introduced by spin doctors. The Chancellor clearly said that he would do both. Certainly, we shall support him in doing the second and we look forward to seeing what will happen.
Incidentally, perhaps I may stress the dates in the amendment, which are "1999–2000". So the Government have ample time. It may be that they have introduced this matter in a totally foolhardy way, and simply wanted to get a few cheap cheers on Budget Day—"cheap cheers" is a rather inaccurate description. If that is what they propose, it should not have been done in the Budget.
Perhaps I may return to the point that I make. The noble Lord, Lord Goodhart, said that I was carrying textual analysis too far. That was not quite the point I was making. I was saying that the Chancellor's Budget Statement, which no one would dispute was correctly reported, states,
"Further reforms will also ensure that no one pays national insurance for the first £81 of their income".—[col. 1106.]
However, what he said in evidence to the Select Committee at page 70 was this,
"Then I said—
there he is referring to his Budget speech—
"Future reforms will also ensure that no-one pays National Insurance for the first £81".

753
He did not say "further" but "future". There is a distinction. The use of the word "further" in the Budget speech clearly gave the impression that he was going to do it whereas "future" would have been quite different.
What worries me is that the Chancellor went before the Select Committee and said that he had used the word "future". He had only to look at Hansard, knowing that it was correctly reported, to see that that was not true. That gives me grave cause for concern. The Chancellor of the Exchequer should have said, "I am very sorry that what I said in my Budget speech was not right. I gave a false impression and I should have said 'future' and not 'further"'. It is not textual criticism, but a question of whether the Chancellor deliberately said one thing to the Select Committee when he knew he had said another.
I do not want to detain the House too long. I say quite specifically—and it is very important—that I believe that this whole matter of introducing the Chancellor's budget proposals into the House at a late stage without going through the Commons is completely wrong. I believe that we ought to hold the Chancellor to what he said. In the amendment, we give him ample time to sort out the problem, which he said he would undertake, of ensuring that employees earning between £64 and £81 have their rights to benefits protected. If the Government have no idea how that is to be done the noble Baroness had better say so and we will be absolutely clear on where we stand on it. But they have ample time to do so and we certainly expect them to do something. We are not opposing this measure. We are deeply opposed to the way in which it has been done. We believe that the Chancellor should be held to the situation which he stated in his Budget speech and which was clearly intended.
Let them, of course, consider this in another place. We are only looking at this now because of the strange way in which it has been introduced. It has been introduced here and we are right to deal with this matter so that the other place can give it due consideration. We are in no way, let me stress—
Baroness Hollis of Heigham: My Lords, perhaps I may—
Lord Higgins: My Lords, I shall give way in just a moment. Let me stress that we are in no way usurping the position of the other House. If the other House does not like what is in this amendment it will not take the appropriate action as far as concerns financial resolutions and it will oppose the amendment. That will be entirely a matter for it. It ought to have been a matter for the other House long since but it is right that this House should give the opportunity which would otherwise be denied it to look at this specifically.
Baroness Hollis of Heigham: My Lords, I shall ask the noble Lord two questions and I should be grateful if he would give a yes or no answer. Does the noble Lord agree that the House of Commons will have the opportunity to discuss the national insurance changes, as they have been inserted by amendment into this Bill?
754
Does he agree that there will be a debate on them? Secondly, does he agree, in answer to the noble Earl, Lord Russell, that the lower earnings limit is no part of this Bill and should not be introduced into this Bill?
Lord Higgins: My Lords, as far as the second question is concerned, it is a matter of what view the House takes this afternoon. If the House takes the view that the amendment should be supported, the amendment will be in the Bill. As for going back to the Commons, the crucial point is this. It will be an appalling stage in the Commons. I understand it is proposed to have only one day on Lords' amendments when there are 160 or so government amendments which they will have to consider.
Earl Russell: My Lords, before the noble Lord asks the opinion of the House, I wonder whether I could ask him to read once again the passage from the Chancellor's Budget speech to which he has drawn our attention. I accept that it does not include the specific word "future". I should like to hear if it includes the specific word "present".
Lord Higgins: My Lords, the noble Earl's colleague on the Front Bench has accused me of "textual analysis". No, I have read out the quotation several times already and I shall do so again:
"Further reforms will also ensure that no one pays national insurance for the first £81 of … earnings. All employees earning between £64 and £81 will have their right to benefits protected".— [Official Report, Commons, 17/3/98; col. 1106]
But it is in the context of the previous paragraph as far as abolishing the entry fee is concerned and the two were clearly intended to be taken together.
The first question to which the noble Baroness requested a "yes" or "no" answer was, if I recall correctly, in relation to whether the other House would have an opportunity to discuss the Social Security Bill—
Lord Ashley of Stoke: My Lords, I wish to—
Lord Higgins: My Lords, perhaps the noble Lord will allow me to continue for a moment. I am coming to the end of my remarks and I have been much longer than I intended. The noble Baroness asked whether the other House would have an opportunity to discuss the proposals in Part II of the Bill. Yes, of course it will. But the crucial question is whether it will have an opportunity to vote on the specific amendment we are discussing this afternoon. If we do not pass the amendment, clearly it will not. If we do, it may be that the Government will resist it and there can be a specific debate and, if necessary in the Government resisting it, a vote on that matter. Given what the Chancellor said in his Budget, I believe it is right that the other place should have an opportunity to look at the specific issue. That is what this amendment seeks to do.
4.44 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordship divided: contents, 146; Not-Contents, 115.

Division No. 1

CONTENTS

Aberdare, L.

Gainford, L.

Addison, V.

Garel-Jones, L.

Ailsa, M.

Gisborough, L.

Aldington, L.

Glentoran, L.

Alexander of Tunis, E.

Hamilton of Dalzell, L.

Alexander of Weedon, L.

Harding of Petherton, L.

Ampthill, L.

Hemphill, L.

Anelay of St. Johns, B.

Henley, L.

Annaly, L.

Higgins, L.

Archer of Weston-Super-Mare, L.

HolmPatrick, L.

Ashboume, L.

Hood, V.

Attlee, E.

Hooper, B.

Balfour, E.

Ilchester, E.

Banbury of Southam, L.

James of Holland Park, B.

Barber, L.

Jopling, L.

Belhaven and Stenton, L.

Kenyon, L.

Belstead, L.

Kimball, L.

Bemers, B.

Knollys, V.

Blaker, L.

Lane of Horsell, L.

Blatch, B.

Lauderdale, E.

Bowness, L.

Leigh, L.

Brabazon of Tara, L.

Lindsey and Abingdon, E.

Broadbridge, L.

Long, V.

Brougham and Vaux, L.

Lucas of Chilworth, L.

Burnham, L. [Teller]

Luke, L.

Butterworth, L.

McColl of Dulwich, L.

Byford, B.

Mackay of Ardbrecknish, L.

Cadman, L.

Mackay of Drumadoon, L.

Campbell of Alloway, L.

Macleod of Borve, B.

Campbell of Croy, L.

Marlesford, L.

Camock, L.

Mayhew of Twysden, L.

Chelmsford, V.

Mersey, V.

Chesham, L.

Middleton, L.

Clanwilliam, E.

Miller of Hendon, B.

Coleridge, L.

Milverton, L.

Cope of Berkeley, L.

Molyneaux of Killead, L.

Courtown, E.

Monk Bretton, L.

Cranbome, V.

Monro of Langholm, L.

Crathome, L.

Mountevans, L.

Crickhowell, L.

Mowbray and Stourton, L.

Cross, V.

Munster, E.

Cuckney, L.

Murton of Lindisfarne, L.

Cumberlege, B.

Naseby, L.

Davidson, V.

Nelson, E.

Dean of Harptree, L.

Newall, L.

Denham, L.

Newton of Braintree, L.

Dixon-Smith, L.

Northesk, E.

Downshire, M.

O'Cathain, B.

Eden of Winton, L.

Onslow, E.

Effingham, E.

Oppenheim-Bames, B.

Ellenborough, L.

Orr-Ewing, L.

Elles, B.

Parkinson, L.

Elliott of Morpeth, L.

Pearson of Rannoch, L.

Eme, E.

Pender, L.

Ferrers, E.

Pilkington of Oxenford, L.

Flather, B.

Platt of Writtle, B.

Fraser of Carmyllie, L.

Plummer of St. Marylebone, L

Gage, V.

Prior, L.

756

Rankeillour, L.

Teynham, L.

Rathcavan, L.

Thomas of Gwydir, L.

Rennell, L.

Trefgame, L.

Renton of Mount Harry, L.

Trumpington, B.

Renwick, L.

Vivian, L.

Roberts of Conwy, L.

Waddington, L.

Rotherwick, L.

Wade of Chorlton, L.

Rowallan, L.

Weatherill, L.

Seccombe, B.

Westbury, L.

Skelmersdale, L.

Wilcox, B.

Skidelsky, L.

Willoughby de Broke, L.

Stanley of Alderley, L.

Wise, L.

Strathclyde, L, [Teller.]

Young, B.

Strathcona and Mount Royal, L.

Younger of Leckie, V.

Sudeley, L.

Taylor of Warwick, L.

NOT-CONTENTS

Acton, L.

Hardy of Wath, L.

Alderdice, L.

Harris of Greenwich, L.

Allenby of Megiddo, V.

Haskel, L.[Teller.]

Amos, B.

Hayman, B.

Annan, L.

Hilton of Eggardon, B.

Archer of Sandwell, L.

Hollis of Heigham, B.

Ashley of Stoke, L.

Hooson, L.

Avebury, L.

Howie of Troon, L.

Bassam of Brighton, L.

Hoyle, L.

Beaumont of Whitley, L.

Hughes, L.

Berkeley, L.

Hughes of Woodside, L,

Blackstone, B.

Jay of Paddington, B.

Bledisloe, V.

Jenkins of Putney, L.

Blyth, L.

Judd, L.

Brooke of Alverthorpe, L.

Kennedy of The Shaws, B.

Bruce of Donington, L.

Kennet, L.

Burlison, L.

Kilbracken, L.

Callaghan of Cardiff, L.

Kintore, E.

Carlisle, E.

Kirkhill, L.

Carter, L.[Teller]

Levy, L.

Castle of Blackburn, B.

Linklater of Butterstone, B.

Charteris of Amisfield, L

Longford, E.

Clancarty, E.

Lovell-Davis, L.

Cledwyn of Penrhos, L.

Mackie of Benshie, L.

Clinton-Davis, L.

McNair, L.

Cocks of Hartcliffe, L.

Mallalieu, B.

Currie of Marylebone, L.

Merlyn-Rees, L.

David, B.

Milner of Leeds, L.

Davies of Coity, L.

Mishcon, L.

Davies of Oldham, L.

Monkswell, L.

Desai, L.

Montague of Oxford, L.

Dholakia, L.

Morris of Manchester, L.

Donoughue, L.

Nicholson of Winterbourne, B

Dormand of Easington, L.

Nicol, B.

Dubs, L.

Orme, L.

Elis-Thomas, L.

Palmer, L.

Evans of Parkside, L.

Peston, L.

Exeter, Bp.

Ponsonby of Shulbrede, L.

Ezra, L.

Prys-Davies, L.

Falconer of Thoroton, L.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rendell of Babergh, B.

Fitt, L.

Richard, L. [Lord Privy Seal.]

Freyberg, L.

Rodgers of Quarry Bank, L.

Gallacher, L.

Russell, E.

Gilbert, L.

St John of Bletso, L.

Gladwin of Clee, L.

Serota, B.

Goodhart, L.

Sewel, L.

Gould of Pottemewton, B.

Shepherd, L.

Graham of Edmonton, L.

Simon, V.

Hardie, L.

Simon of Highbury, L.

757

Stallard, L.

Walker of Doncaster, L.

Stoddart of Swindon L.

Watson of Invergowrie, L

Strabolgi, L.

Whitty. L.

Taveme, L

Williams of Crosby, B.

Williams of Elvel, L.

Thomas of Macclesfield, L.

Williams of Mostyn, L.

Tordoff, L.

Winston, L.

Turner of Camden, B.

Young of Old Scone, B.

Resolved in the affirmative, and amendment agreed to accordingly.
4.54 p.m.
Lord Higginsmoved Amendment No. 5:
Page 35, line 44, leave out from beginning to ("specified") and insert—
("(1A) For the tax year 1999–2000, the lower earnings limit (for primary Class 1 contributions) shall be £81.
(1B) For the tax year 2000–2001 and each subsequent tax year, the limits and threshold referred to in subsection (1) above shall be").
On Question, amendment agreed to.
[Amendment No. 6 not moved.]
Lord Goodhartmoved Amendment No. 7:
Page 36, line 41, at end insert ("together with the additional percentage of so much of such earnings as exceeds the current upper earnings limit (or the prescribed equivalent)").
The noble Lord said: My Lords, in moving our amendment to Clause 51, I cannot refrain from starting by expressing the view that the Conservative Party in this House has done its cause both in this House and in the country no good by moving and winning the vote on the previous amendment.
The changes to employees' national insurance contributions, which are contained in this Bill following the government amendment, are changes which we undoubtedly welcome because they simplify and make fairer the system of employees' national insurance contributions. The justification for the changes to employers' national insurance contributions is not quite so clear. I suggested on Report that there were possible drawbacks to the changes. It would be simpler to have employers' contributions as a straight payroll tax at a flat rate. That would also avoid—perhaps this is more important—the incentive for an employer to employ two part-time workers instead of one full-time worker. On that issue, however, I recognise that there are arguments for, as well as against, the changes.
We accept the Government's decision in going for the exemption of earnings up to the threshold of £81 per week. We recognise that that provides an incentive to employ more lower paid workers. However, if the Government are going for a progressive system of employers' national insurance contributions, why not make it properly progressive?
The Government propose that in return for the removal of contributions up to the threshold, contributions above the threshold will go up from 10 per cent. to 12.2 per cent.—that being, as I understand it, something which is intended to produce a revenue-neutral result. Doing that will reduce the burden on low-wage businesses and increase the burden on
758
high-wage employers. That is fine if one thinks of high-wage employers as stockbrokers and city banks. I should add that it will not affect barristers, who are self-employed. However, the changes will increase the burden on some bodies that are financed by public funds. The universities currently estimate the net cost to them of the changes at £20 million per year. That is not an enormous amount, but it is significant.
The proposals in my amendment are simple. The rate between the threshold and the upper earnings limit will be reduced, as compared with the Government's proposals, from 12.2 per cent. to 12 per cent. The rate above the upper earnings limit will be increased from 12.2 per cent. to 15 per cent. The upper earnings limit is now £485 per week or about £25,300 per year. Under the Government's proposals in Clause 51, the crossover point—that is, the point at which employers will pay more national insurance contributions than now—is about £23,200 for non-contracted-out employees.
My amendment means that the crossover point will be approximately the same as the upper earnings limit—that is, about £2,000 per employee above the present crossover point. Basically, that means that no employee earning less than the upper earnings limit will become more expensive to employ. That reduction will be made up by significantly higher contributions on earnings above the upper earnings limit. I believe that it is right that progressive income tax should be matched by progressive employers' contributions. At present, it is an anomaly that the aggregate national insurance contribution (adding together the employer's and the employee's contributions) falls when the upper earnings limit is reached because the employees stop paying contributions on their further earnings. At present—it will be the same under Clause 51, if enacted in its present form—the aggregate contributions by both sides fall by 10 per cent. when the upper earnings limit is exceeded. Under my amendment the fall will be only 7 per cent.
Furthermore, I believe that this amendment will eliminate the net cost to universities and should increase the advantage to other public sector organisations such as schools and hospitals. I have to say that the amendment is raised essentially for discussion. It is, in nature, a probing amendment and is being raised on Third Reading only because of the Government's introduction of Clause 51 at Report stage. So this is the only occasion on which it is possible to raise such an amendment. In the circumstances I make it clear immediately that it is not my intention to press it to a vote.
There is a great deal to be said for the principle that employers' national insurance contributions should, as against the Government's current proposals, be reduced on earnings up to the upper earnings limit and should be increased on earnings above that limit. I hope that the Government will look favourably on that idea and give themselves the power to impose a higher rate of employers' national insurance contributions on earnings above the upper limit. I beg to move.
5 p.m.
Lord Haskel: My Lords, the Government cannot support the amendment. This is because the progressive structures suggested by the amendment seek to introduce something which would be far from revenue-neutral when compared to the structure of employers' contributions that the Government propose to bring into operation from April 1999. First, it would be more complex than the Government's proposals and, as my noble friend Lady Hollis explained with some considerable force, the Government's measures will increase the point at which an employer starts to pay contributions from the current level of £64 per week to the level of a single person's tax allowance at £81 this year. However, the Government's measures will abolish the contribution that employers currently pay on earnings below this new higher threshold.
As I explained on Report, these changes make 12.5 million employees earning up to £440 a week cheaper to employ. This is of benefit to two-thirds of workers and their employers. It is clear that the changes will give job creation incentives for employers across the full range of pay rates and not just those under the new earnings threshold. This includes, of course, the universities, which the noble Lord particularly mentioned.
We believe that our clause as drafted has several advantages which the noble Lord's amendment would destroy. Our broadly revenue-neutral package of reforms of employers' contributions will encourage employers to create jobs for people who want to move from welfare to work. It will align the national insurance system more closely with income tax, cutting red tape for business and reducing the cost of administration. The noble Lord's amendment would to a large extent negate these positive effects.
The objectives of the Government's radical restructuring of employers' national insurance contributions are clear and have been broadly welcomed—welcomed in consultation and also by Mr. Martin Taylor's review committee. The reforms cut red tape for business, simplify administration and support the Government's welfare-to-work programme. One has to contrast that with the amendment put forward by the noble Lord, Lord Goodhart, and the noble Earl, Lord Russell. Their proposal would increase administrative complexity for business and would cost employers hundreds of millions of pounds a year. There is no comparison. I urge the noble Lord to withdraw his amendment.
Lord Goodhart: My Lords, I find some difficulty understanding whether the noble Lord, Lord Haskel, has really appreciated the purpose of the amendment. He says that it would negate the positive effects of the Government's amendments. But, far from doing that, it would strengthen them. It would mean that any employee below the upper earnings limit would be even cheaper to employ than under the Government's present proposals. I acknowledge that there would be a small element of additional complexity but I believe that is a price worth paying for ensuring that the Government's provisions are even more favourable to those on
760
relatively low incomes, including incomes up to the upper earnings limit, and that the higher burden on employers falls only, but in this case rather more sharply, on those with earnings above the upper earnings limit.
The noble Lord, Lord Haskel, says that my amendment is not revenue-neutral. However, he gave no indication of the extent to which it is not revenue-neutral nor indeed of the direction in which it is not. I find the answer distinctly unsatisfactory. Nevertheless, as I made clear, the amendment is introduced for the purposes of discussion and I do not intend to press it. I hope, however, that the Government will take it away and examine it rather more thoroughly than appears to have been the case up to now. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Clause 64 [Liability of directors etc. for company's contributions]:
Lord Haskelmoved Amendment No. 9:
Page 47, line 32, at end insert ("and
() where that sum is given by paragraph (b) of subsection (3) below, specifying the proportion applied by the Secretary of State for the purposes of that paragraph.").
The noble Lord said: My Lords, in moving the amendment I wish to speak also to Amendments Nos. 10 and 11. We discussed Clause 64 during the Committee and Report stages. I am pleased that there was general support for the principles behind it: that where national insurance contributions are owed and directors are found to be fraudulent or neglectful they should be held personally liable for the debts. However, the noble Lord, Lord Goodhart, had some concerns about the appeal rights of those found to be culpable, and I promised that we would reconsider the proposals in the light of our discussions. We have now done so, and this group of amendments is the result.
Amendment No. 9 ensures that the personal liability notice will now stipulate not only the total unpaid debt and the amount which is being transferred to that individual, but also the proportion of the debt for which the recipient is held liable. This will enable him to check the calculation used to arrive at the total debt and to make it crystal clear what degree of culpability has been found to fall on him.
Amendment No.10 adds the right of directors to appeal on the grounds that the total amount of national insurance was not actually due from the company. This can be exercised in cases where the company has not already exhausted this appeal right.
I also undertook to consider the noble Lord's request that it should be made explicit on the face of the Bill that the onus of proof in any appeal under these provisions falls on the Secretary of State rather than on the appellant. I shall therefore be happy to move Amendment No. 11 in due course, which does precisely this. I hope that your Lordships will agree that we have

761
made a very good measure even better and I thank the noble Lord, Lord Goodhart, for his constructive concern. I beg to move.
Lord Goodhart: My Lords, these amendments are certainly welcomed by me. I raised these points, both at Committee stage when Clause 64 was first introduced, and at Report stage, when I myself put forward some amendments to it. There are two serious problems which I saw with the original draft. One was that the original version of Clause 64—that is, Clause 64 as it stands without these amendments—makes the Secretary of State the creditor in a claim against the defaulting directors as well as being the investigator and the judge. I believe that that caused very serious problems about compliance with Article 6 of the European Convention on Human Rights. Secondly, I believed that unnecessary complications were created by the Secretary of State saddling herself with the obligation to allot the responsibility between defaulting directors by determining their respective contributions rather than simply imposing joint and several liability.
The second of these problems has not in any sense been dealt with, but it is the less important of the two. As to the first, I remain less than convinced that Clause 64, even as amended, will necessarily be proof against Article 6, but it makes it much more probable. It means that there will be an appeal stage at which the burden of proof will rest on the Secretary of State to prove her case before a tribunal which is probably sufficiently independent to come within the bounds of Article 6.
I therefore welcome the amendment. While we are not entirely happy with the result we on these Benches are most grateful to the Government for having listened to the case and at least accepted an important part of it, as they have on a number of other occasions in dealing with this Bill.
On Question, amendment agreed to.
Lord Haskelmoved Amendments Nos. 10 and 11:
Page 49, line 2, leave out from beginning to ("was") in line 3 and insert ("the whole or part of the amount specified under subsection (2)(a) of section 121C above (or the amount so specified as reduced under subsection (7) of that section) does not represent contributions to which that section applies;
() the failure to pay that amount").
Page 49, line 15, at end insert—
("() On an appeal under this section, the burden of proof as to any matter raised by a ground of appeal shall be on the Secretary of State.").
On Question, amendments agreed to.
5.15 p.m.
Clause 72 [Power to reduce child benefit for lone parents]:
Earl Russellmoved Amendment No. 12:
Page 52, line 44, at end insert—
("() Regulations under this section may not be made until there is evidence from a systematic independent study of relative costs, incomes and expenditures of lone parent and two parent families on
762
benefit and in work which conclusively demonstrates that one and two parent families should be treated equally by the tax and benefit system.").
The noble Earl said: My Lords, this amendment deals with something that is a great deal more important than the amendment recently moved by the noble Lord, Lord Higgins, but I undertake not to spend quite as long in debating it. This is our last chance to look at the issue of lone parents, which has been a contentious matter since the very beginning of this Bill.
The purpose of this amendment is to defer the cut in child benefit introduced by this Bill until research has been conducted which conclusively demonstrates that one and two-parent families should be treated equally by the tax and benefits system. The purpose of this amendment is to address the fundamental issue of whether there should be a separate element of benefit attributable to lone parenthood. We are aware that both the other Front Benches do not agree with the view that there should, but in the world at large I believe that it is the other two Front Benches that are isolated.
This amendment defers the issue to the results of research and places the burden of proof in that research on the Government. The Minister may say—she would probably be mistaken if she did, but the view would be a defensible one—that the burden "conclusively demonstrates" is too heavy to shoulder. Were that to prove to be the case I would not particularly regret it. However, it gives the Government the opportunity to shoulder that burden if they wish. The Minister has said that the jury is still out on the question of whether there is an extra degree of financial hardship attributable to being a lone parent.
The Minister's office has very kindly sent me a considerable body of research on which the Minister has relied in reaching that finding. I have read all of it. I have also read the report What happens to lone parents? by Reuben Ford and others published since Report stage. I thank the Minister and, through her, her officials most warmly for their co-operation in that. One must set against that research the words of the noble Lord, Lord Ashley of Stoke, at Report stage. His was the voice of experience, and research must always be tested against the voice of experience.
I accept that there is a division within the research. I believe that it tilts on one side, but I shall not make an issue of it. I have tried to see whether I can distinguish anything in research methods or other approaches to the subject which makes people come down on one side or the other. I do not believe that this is just a question of bias; it is a question of how one sets about an academic research method.
The first aspect that is undoubtedly clear from the research is that in dealing with all parents on benefit one starts from a very low base. The research by Oldfield and Yu, for example, stated that income support failed to provide for the most basic needs of children. Professor Jonathan Bradshaw, who has worked out a minimum standard low-cost budget, says that the cost of meeting that budget is 30 per cent. above income support levels. Clearly, "a degree of hardship" is pretty generous. In deciding what to do with lone parents there is no great margin of error.

763
The conclusion I have come to is that the result depends on the particular research method that is used. There are basically two types of approach, one of them along the lines used by the retail prices index. It is known as the budget standard method. One takes a basket of goods which one believes to represent basic minimum needs and prices them. The other method starts from the other end. Like the family expenditure survey, it comes from the expenditure end of the equation. It looks at what lone parents can afford and what couple parents can afford.
I believe that the conclusion of the research into whether lone parents experience special hardship depends on which of those methods is adopted. It is fairly clear when one thinks about it which of those research exercises is the right one. If one adopts the budget standard method, like the retail prices index, most of the time one simply assesses the costs of the children, but the extra costs of single parenthood are very largely the costs of the parent. Essentially, those costs are concerned with time and the difficulty of being in two places at once, with diseconomies of scale in housing and heating. Some of the studies leave out housing, which must materially distort the resultant findings. No one has actually said that the children of single parents need to eat more than the children of couple parents. Therefore, if one proceeds simply on the basis of the standard method one will arrive at a basket of basic needs which one agrees are the same. The difference between single parent households and couple households is the difficulty in meeting those needs.
There has been a lot of criticism of attempts to assess financial standing by what people can afford. If one goes higher up the income scale, among the more prosperous expenditure measures tend to look at taste rather than poverty. For example, in some of these surveys I have appeared as poor because I do not possess a video recorder. (I did not possess a colour television until I found that I was unable to buy a black and white one on the market.) But if one goes rather lower down and considers such matters as three meals a day, one pair of waterproof shoes and one warm coat, those are not matters of taste but are widely agreed to be matters of necessity. If one finds a very wide variation in those articles one identifies a very real difference.
I know that the Minister is familiar with the Rowntree study, Small Fortunes, which uses the expenditure method. It concentrates heavily on basic physical needs. I have figures showing the number of children who are going without one of the basic items of food. They indicate 24 per cent. of children of lone parents not working, against 8 per cent. of children of couple parents neither of whom work. That is a considerable discrepancy. Furthermore, 42 per cent. of children of single parents not working are going without one basic item of necessary clothing. The equivalent figure for the children of two parents neither of whom work is 25 per cent. which is just above half the figure for single parents. Such figures must have an explanation.
I also draw the Minister's attention to Focus on the Family, published by the Office for National Statistics. It is not on all fours because it is a comparison of all
764
couple parents with all single parents and it leaves out the benefit element. It shows that 51 per cent. of couple parents possess a car, but only 9 per cent. of single parents. When one considers economy shopping or access to work, that makes a considerable difference to the cost of living. If one shops in a good, cheap supermarket the cost of living is a good deal less than if one is confined to walking to the shops. Such factors of time must be taken into account. If the differentials in spending indicated in the Small Fortunes study do not show that it is more expensive to be a lone parent, what do they show? I beg to move.
Lord Newton of Braintree: My Lords, I do not wish to follow the noble Earl, Lord Russell, down all the wide and winding paths that he sought to take us. I wish to raise only one specific point and I should like to hear what the Minister has to say. As regards housing benefit for those who are working, how far can it be right to treat lone parents and two-parent families in the way the Government care to believe would be right in all respects? I emphasise that I am talking only about lone parents who are in work. None of my questions applies to people who are out of work and receiving income support because in most circumstances all their rent is paid. I emphasise that I am talking about the group which everyone is determined to help if they can; they are the lone parents who are in work, possibly with some difficulty, or who would like to return to work.
A basic feature of the 1986 to 1988 reforms, with which I had a modest involvement, was that the starting point for calculating housing benefit in circumstances where it was not being paid 100 per cent. was the income support rate which the person or persons in question would receive. I am convinced that strategically that was right. It was the only way in which we could get rid of one of the world's greater complexities, even in the complex field of social security. I shall not weary your Lordships with the details, but a benefit which existed until that time was called "housing benefit supplement", which nobody, but nobody, understood or could make work.
The structure of 1986 to 1988 enabled that to be got rid of. But I wish to press the Minister on a point relating to the meaning of that in the context of the noble Earl's comments. I can best illustrate the point by giving a possibly oversimplified but not impossible example. Its simplicity enables the point to be clearly revealed. Let us suppose that we have a two-parent family with only one earning and two children. The modest income from the one earner means that the family is entitled to help with the rent. Let us suppose that the non-earner leaves. In that situation the house is the same; the housing need is the same (namely, three bedrooms unless the children are small); the income is the same because the non-earner has left; the rent is the same because the income support entitlement of the lone parent is less than that of two parents; the starting point for calculating housing benefit will fall; and therefore the amount of housing benefit will fall but the amount of rent that must be paid will rise.

765
I ought honestly to acknowledge that that was a slightly uncomfortable feature of the 1986 to 1988 reforms in the interest of the greater good of getting rid of housing benefit supplement. As has been acknowledged by welfare rights groups such as CPAG, a specific part of the thinking was that the lone parent premium, which was also introduced at that time, would cushion the effect. It was a countervailing increase in income support entitlement and therefore in the starting point for calculating housing benefit.
What was an uneasy situation has been revealed more starkly because the lone parent premium is to disappear. Whatever the strategic advantage of the structure introduced in 1986 to 1988, it is difficult to see how it is easy to defend the position that I have described. I accept that I have illustrated a simple case and that in most cases the position will be a little muddier. But if that simple case can exist in any number, I do not understand what the Government will now say to someone suddenly becoming a lone parent in that situation.
Lord Ashley of Stoke: My Lords, I support Amendment No. 12 so admirably moved by the noble Earl, Lord Russell. My noble friend Lady Hollis has won all the arguments today, even though she lost one vote, but, despite her great skills, I wonder whether she will win the argument on this amendment. I am by no means certain because it seeks to tackle the problems created by the Government when they suddenly decided—suddenly decided—that lone parents do not need any extra help.
That is contrary to the long held belief that lone parents need and deserve help. That is a common-sense belief and to deny it, as the Government have done, and to embody it in a Bill has resulted in a seriously flawed clause. My noble friend Lady Hollis said, among other gems in her speeches on Report, that research is inconclusive. She believes that we shall always have a "hung jury" on the question of the costs relating to one or two-parent families. We can argue for years about that and other famous topics such as how many angels can dance on the head of a pin. But behind this fine dispute lies reality; that one-parent families will feel hung unless the Government accept the amendment.
The basic idea behind the amendment was suggested by the Social Security Advisory Committee. That is the expert body which opposed such a drastic change by the Government unless and until conclusive research could show that the costs of one-parent families are basically no different to those of two-parent families. I agree with the committee, but the Government have acted in haste and without evidence. They stated in their response to the committee that such research depends heavily upon assumptions of how to distinguish needs from taste.
That leads me on to the splendid point mentioned by the noble Earl, Lord Russell. Many of us will remember my noble friend Lady Hollis speaking about assumptions and research and that clash we had in an earlier debate. I hope we have a further clash on this shortly.
766
I do not know what the Government mean when they talk about depending on assumptions and how we distinguish need from taste. Perhaps my noble friend will enlighten us when she replies to the debate. I assume that modern researchers look at poverty in the context of normal expectations in our society. Surely our Government cannot be hinting that if lone parents aim to do the things that other families do, it is because they have a "taste" for it. Is that really what the Government are saying? If it is, perhaps my noble friend can tell the House which "tastes" one-parent families have that the Government are rejecting as a need. I should like to know and I am sure that other noble Lords would too.
My noble friend Lady Hollis also said earlier that lone parents share with couples similar costs for housing, heating, lighting, cleaning and furniture. That is precisely the point. It is meeting those costs which represent the additional burden for lone parents, especially those who work. That point is so obvious that it should not need repeating. However, two-parent families have a male salary and a female salary, albeit that the female salary is usually lower. In most lone parent families, the sole salary is the low female one. I know that there is rent relief for some families. But there is no help with mortgage payments or other fixed costs such as heating bills. That alone must make lone parents deserving of a little extra money.
I believe that the Government have made a mistake, no doubt in good faith, by making that policy change which is so damaging to lone parents on an unproven basis. Nevertheless, for all my noble friend's reservations, including her comments about research and hung juries, she said also:
"Where research on, say, smoking and cancer, is coherent and scholarly, and is consistent with other research, that is the point at which the Government can take action".
That is fine. I am more than happy with that. For my part, that will suffice. I accept my noble friend's proposition. Therefore, what we need now and what lone parents deserve is coherent and scholarly research on that subject.
It is unacceptable on a major issue of this nature to presume that because there is a risk of assumptions determining the result, we should not bother at all. I fear that that may be the course which the Government are taking. We need well-constructed research proposals exploring all aspects of the issues. Therefore, what are the Government planning to do? Perhaps my noble friend will spell that out in her response. Are the Government going to initiate a research programme or no research programme at all? The House should be told. I ask my noble friend what the Government intend. Do they intend to commission research or do they intend to defy the SSAC and the many thousands of lone parents who are so angry and upset about being deprived?
This Government have done a great deal for single parent families and under-privileged people. I warmly commend what they have done. However, on this specific issue, I believe that they are jumping the gun without the evidence that should be there and I believe will not be there, seeking, wrongly in my view, to prove that single parent families bear no greater costs than two

767
parent families. If my noble friend can assure the House that there will be that independent research, despite her reservations about different kinds of research, that will go a long way towards reassuring many of us.
5.30 p.m.
Baroness Hollis of Heigham: My Lords, I am not sure whether I am more vulnerable to the arguments of the noble Earl, Lord Russell, the blandishments of my noble friend or the faintly mea culpa attitude of the noble Lord, Lord Newton.
The amendment seeks conclusive evidence of the relative needs of lone parents and coupled families. The Government—myself included—do not believe that further research can provide a definitive answer. There is already a wide body of research in this area. In the past 12 months or so, there have been eight major reports on the inter-relationship of lone parents, benefit, work and hardship. And yet despite that, we cannot achieve conclusive evidence on the relative needs of lone parents and coupled families. Yet another piece of research cannot answer in the way that the previous research has failed to do.
When I made the comparison with scientific research—the link between cancer and smoking—I referred to it being coherent, scholarly and consistent with other research; in other words, where going over the same material with similar groups of people, there could be a replication of the findings. That is the basis of scientific research—replication. The point about the research is that because of the presumptions, assumptions and perspectives, scholarly and coherent though they are, the research cannot be replicated in any way which suggests that such questions are analogous with the links between, for example, smoking and cancer.
The noble Earl, Lord Russell, suggested that there are several approaches and he is absolutely right. For example, I know that there are comparative expenditure surveys which make the distinction between "need" and "taste". My noble friend pressed me on that. The point is that that creates difficulty as regards research because families spend their income regardless of whether it is spent on what you or I may regard as "essential" or as "less essential". Smoking is an obvious example. Half of all lone parents smoke.
Earl Russell: My Lords, is the Minister aware that alcohol and tobacco are entirely excluded from Professor Bradshaw's low cost budget, which is the basis of much of the work done?
Baroness Hollis of Heigham: My Lords, yes, but that was in 1993 and if the noble Earl looks at the research of Reuben Ford on making work pay, he will see that he says that one of the largest influences which increases hardship is that of being a smoker. That is on page 65. Therefore, further research has clarified that point.
Do not misunderstand me. I do not say that because lone parents are smokers, therefore they are foolishly wasting their money. I am not saying that at all. I am saying that the distinction between what is essential and
768
what is less than essential is often a question of genuine debate between the lone parent and how she spends her money and the researcher. That is why so many different studies come up with such different findings.
The Cost of Children and the Welfare State by Dickens, Fry and Pashardes suggests, for example, that, relatively, all families with children on income support are over-compensated for the cost of their children and that coupled families are under-compensated for the cost of a second adult. That means that any expenditure survey must guess which expenditure is on the basis of "need" and which on the basis of "taste". Without making a judgment about the propriety of that, that is what is built into the difficulty of assessing that research. It means that different approaches lead to different and therefore inconclusive results. That means that a second researcher asking the same questions of the same families would arrive at a different answer. That is why the research is not scholarly and cannot be scholarly in the same way as scientific research. It is not the less valuable for that but it cannot be conclusive in the way that we can, for example, establish links between cancer and smoking.
Secondly, there is the "budget standard" approach. As the noble Earl has said, that type of analysis depends crucially on questions of judgment as to what is to be included in a budget standard. We know that lone parents have the same costs as a couple in relation to housing and I shall return in a moment to the point made by the noble Lord, Lord Newton. Lone parents have higher costs as regards child care. However, there are areas where lone parents have lower costs. For example, a coupled family has an extra mouth to feed and an extra person to clothe.
The noble Lord, Lord Newton, pressed me on housing costs. He gave a perfectly fair example of a situation in which the man was in low-paid work and therefore receiving housing benefit; his wife left; and as a result, he was in the same house with the same number of children and paying the same rent but the amount of his housing benefit would fall. He asked whether that was reasonable. Yet it is. I say that because the difference is that there is one adult fewer in the household. In the noble Lord's example, where there is no wife, there is one adult fewer in the household. Therefore, the rest of that man's money is going on less expenditure. In other words, by having one adult fewer in the household, there is less expenditure on other items, including food and clothing, and that will therefore fall. So that man's applicable amount will be lower analogous to the income support rates being lower. However, the housing benefit taper and withdrawal will kick in in exactly the same way.
Lord Newton of Braintree: My Lords, I apologise for intervening at this point, but I am grateful to the Minister for allowing me to do so. I shall try not to make it too much of a habit. I do not see how that line of argument stands up, unless it is being argued, against all the theory of the whole system, that the income support rates include an amount which is available to meet housing costs. But the whole basis of the system, given that 100 per cent. of rent is met for people on income

769
support, is that the income support rates contain no element for rent costs. The Minister has just argued that when there is one adult in the household in the circumstances that I described, somehow some part of the benefit which is not paid for housing costs, for rent, becomes available for it.
Baroness Hollis of Heigham: My Lords, the noble Lord has made my point for me. When on income support, a lone parent with one or two children receives less money in income support than two people with two children will get on JSA. That is the precise point. Indeed, the noble Lord has exactly made my point. In other words, you are carrying forward the equivalent of that lower figure on income support for a single adult, plus two children, compared to a couple with two children—the applicable amounts—into the structure of housing benefit. The reason that the lone parent with one child or two children receives a lower amount than a couple with two children is that that family has lower expenditure on food and clothing. That is why their income support is lower. Therefore, although they receive full housing benefit at the level of their income support, their applicable amount, which is their income support equivalent, is at a different level. That is then carried over into the work situation because, if there is only one adult in the household compared to two, there is lower expenditure—exactly analogous as in income support—and, therefore, lower applicable amounts apply, even though the structure of housing benefit remains the same in both situations. As I said, I believe that the noble Lord has made my point for me. Indeed, he has probably done so better than I could have done.
Research suggests in differing ways that lone parents may have higher costs than a couple. However, sometimes the reverse is the case. Perhaps I may take the obvious example, and this reflects the point made by the noble Earl about the Bradshaw Report. Let us suppose that a lone parent on income support re-partners. Therefore, we are now talking about a couple family which has to cover all the needs of an additional adult going into that family from just £28.65 a week—that is, £4 a day—for his or her food, clothing and transport. So we can begin to understand why much research concludes that lone parents are relatively better off than couples on benefit. Perhaps we should consider the lone parents quoted in the Graham study and requoted by Lister in the past month in her PSI report. Indeed, lone parents are quoted there as saying that they are better off being lone parents than when they were married because, when they were married, the men were relatively so expensive given the costs particularly of their food, and, to a lesser extent, their clothes and their transport. Therefore, they prefer to remain single and found themselves better off accordingly. That is the result of research which is only one month old.
Finally, there are the "deprivation studies". The noble Earl quoted from Small Fortunes which found that children in lone parent families are more deprived than in couple families. That is because a large proportion of lone parent families are on income support. It does not
770
compare apples with apples; it compares apples with pears. It is also clear from the PSI and DSS reports produced during the past 12 months that lone parents on levels of income support vary quite widely in how much hardship they report to the researchers that they have experienced.
If the argument of the noble Earl and my noble friend was correct, all lone parents on the same level of income would actually experience a similar level of hardship. That would follow, would it not? But it does not. Why is that? It is because it depends on differing factors, such as the number of children, on their health and on whether the family has any access to savings. Moreover, given that half of all lone parents smoke, it also depends on whether they smoke and, in turn, whether that relates to any health problems. In other words, the disposition of income, together with capital—that is, the human capital and the financial capital—with which a lone parent goes into the situation of lone parenthood determine whether any individual lone parent experiences hardship.
What we accept—and I certainly would not dream of contesting it—is that a large number of lone parents are on low income and that a much greater proportion of lone parents experience low income than other family types. Indeed, that is absolutely undeniable. However, the response to that is to recall—and, again, all the research shows this and no one has contested it today—that the reason that lone parents proportionate to couples are on low income and why many of them experience hardship, which undoubtedly they do, is that they feel unable to work. They remain trapped for long periods on income support and, once on income support, they stay there longer and cannot get back into work. That is the problem: they remain trapped on income support, unable to go into work. All the research shows that when they go into work, even more than when they re-partner, that is when their standards of living begin to rise. It is when they cannot get into work and remain trapped on income support for long periods that their levels of income support become increasingly less adequate to meet their needs. That is why we are making such changes to the Social Fund.
That is why our strategy is to develop the New Deal for lone parents, to develop the national childcare strategy and to develop the working families tax credit and the childcare tax credit. That will allow lone parents an unprecedented opportunity to move into work, to improve their incomes through work and to improve the living standards of their families.
I am sorry, but I do not believe that we could accept the amendment because it presumes that there is a definitive answer which somehow or other inadequate research has so far failed to produce. We have received something like eight reports on lone parents in the past year. I have read them, as I am sure have many noble Lords. Judging by the assumptions which have been brought forward and what is being tested, we know that some answers will be found. That is not because they are not scholarly or because they are not reputable or coherent. Indeed, they come with different assumptions and ask different questions. You choose your questions and your findings.

771
Given that fact, the right answer is not to ask for more and more research but to accept, as we all do, that many lone parents suffer hardship because of the length of time that they spend on benefit. Therefore, the right way to respond to the situation is not to commission more research, which I am confident will continue to be inconclusive. The right response is to offer lone parents the opportunities that they themselves call for; namely, the opportunity to work, which is possible only with decent and affordable childcare. That is what we propose to do. In the light of that explanation, I hope that the noble Earl will feel able to withdraw his amendment.
5.45 p.m.
Earl Russell: My Lords, I should like, first, to thank those who have supported my amendment, especially the noble Lord, Lord Ashley of Stoke, who has supported me on this issue consistently from the beginning. I am most grateful to him. I am also most grateful to the noble Lord, Lord Newton of Braintree, for his extremely interesting and powerful contribution. Indeed, I thought that his reply to the Minister was conclusive. I hope that the noble Lord will continue to ask such questions as we approach the review of housing benefit. Mr. Field has suggested that people should meet an element of their rent out of their own funds, which must mean their income support. If there is any danger of that, I hope that the noble Lord, Lord Newton, will repeat the same questions.
On the virtue of work for those single parents who want it and on the great importance of childcare to help them get into it, I must say again to the Minister that there is nothing between us. There is no issue there, so I shall not pursue it. However, the noble Baroness accused me of believing that research can be conclusive. If she had listened very carefully to my opening remarks, she would know that I did say that she might argue that it could not be conclusive but that, in that case, she could not do what she proposes to do. If the burden of proof is too heavy for her to carry, she should not do what she is doing.
This is not just a matter of tastes. When we have dealt with needs I have been careful to restrict myself to two basic needs—enough food to preserve body and soul and, if possible, health, and enough clothing to keep out the cold. The indicators I mentioned in the example I gave were three meals in a day, one warm coat and one waterproof pair of shoes. I do not believe that in saying that people need those I am making an assumption which is a matter of taste. I believe those are genuine needs. One might possibly dispute the warm coat in the Sudan but one is hardly likely to do so here.
Study after study has found that single parents and their children find it much harder to get those things than other families. Before I decide what I shall do with the amendment I ask the Minister once more, with regard to the findings in Small Fortunes, if she does not
772
explain them as a result of the disadvantages of single parents, how does she explain them? Before I leave this subject I should like to hear her answer.
Baroness Hollis of Heigham: My Lords, there are about eight different pieces of research which all contain different statements and assertions about lone parents. Earlier the noble Earl quoted the Bradshaw Report as key evidence of hardship. That shows that lone parents' income support levels are closer to lone parents' would-be expenditure than that for couples. It seems to me that the noble Earl is trying to have it both ways. He is selecting sections of different pieces of research that support parts of his argument and neglecting the rest. As regards the Small Fortunes findings, I can produce five or six other surveys which show pretty conclusively—I refer to the refined hardship index in the latest report by Ruben, Ford and Company—that the Small Fortunes study does not appear to be conclusive in this regard.
Lord Ashley of Stoke: My Lords, before my noble friend sits down, if she believes that research cannot prove the case that the noble Earl and others have put, why did the Government act in a contrary way without evidence to support that action?
Baroness Hollis of Heigham: My Lords, the Government—in my view correctly—have produced a package for lone parents which states that all children, whether in lone parent families or couple families, should be treated in the same way. However, we have also raised the benefits for all of those families in terms of child benefit and the benefit through income support for children under 11. As a result, a lone parent with two children will be £7.50 a week better off under the Government's proposals.
In addition to those Budget proposals—as my noble friend will know—the Government have mounted a major New Deal strategy which draws to the attention of lone parents the possibility of work—which they have asked for—supported obviously by childcare proposals. Although initially the benefits of lone parents were reduced to those of couples in the Budget, the Government have lifted the benefit levels for both couples and single-parent families. In that way we focus on the needs of children and not the family structure they are in. We have given lone parents the opportunity to work and to receive childcare. We know that opportunity will spring them out of hardship.
Earl Russell: My Lords, I have one last point to make. In invoking the research by Professor Bradshaw I believe the Minister has not followed my line of argument. The expenditure to which she referred was putative expenditure reached by the budget standard method. I think she understands why I am saying that that is not measuring the right thing; it is barking up the wrong tree. When Professor Bradshaw tried checking the Family Expenditure Survey he got a quite different answer. On page 29 of his research he states,
"According to the Family Expenditure Survey only about half of single pensioners and lone parents actually achieve this no-frills standard of living. It is reached by four out of five two-parent families".

773
That is a more consistent finding than the Minister accepts. We shall need to return to this issue, but for the time being I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 13 not moved.]
Schedule 6 [Transitory provisions]:
Lord Hardiemoved Amendments Nos. 14 and 15:
Page 70, line 20, after ("section"") insert (", in the first place where they occur,").
Page 70, line 22, after ("determination"") insert (", in the first place where it occurs,").
On Question, amendments agreed to.
Schedule 7 [Minor and consequential amendments]:
Lord Hardiemoved Amendments Nos. 16 to 21:
Page 79, line 38, leave out ("that section") and insert ("section 17").
Page 80, line 10, leave out ("that section") and insert ("section 20").
Page 82, line 48, at end insert ("which"").
Page 87, line 18, at end insert ("and
(b) for the word "determination" there shall be substituted the word "decision".").
Page 98, line 48, at end insert—
(" In paragraph 10(2) of Schedule 1 to that Act (supplementary provisions), for the words "section 5(1)(n) of the Administration Act" there shall be substituted the words "section 21(2) of the Social Security Act 1998".").
Page 99, leave out lines 15 to 17.
On Question, amendments agreed to.
Schedule 8 [Repeals]:
Lord Hardiemoved Amendments Nos. 22 and 23:
Page 105, line 46, column 3, leave out ("paragraph 25") and insert ("paragraphs 25, 33 and 34").
Page 106, line 14, column 3, at beginning insert—
("Section 137(2).")
On Question, amendments agreed to.
Baroness Hollis of Heigham: My Lords, I beg to move, That the Bill do now pass.
We have come to the end of a long and intensive scrutiny of this Bill. This is our seventh full day in the House and we have considered nearly 350 amendments during that time. I shall speak briefly. I wish to thank in particular my noble and learned friend the Lord Advocate for ably taking through the measures in the first part of the Bill. His legal experience was invaluable, especially in a House with such strength in the legal profession. I also thank warmly my noble friend Lord Haskel for taking us through the complexities of national insurance. Many noble Lords have contributed to these debates and the wealth of experience and expertise found in this House has been amply demonstrated by their contributions.
I also thank the noble Lord, Lord Higgins, the noble Baroness, Lady Anelay, the noble Earl, Lord Russell, and the noble Lord, Lord Goodhart, for the extent to which they have pushed the Government and have forced us to scrutinise this legislation in detail while
774
maintaining the impeccable courtesy for which all four of them are known. I appreciate that. At Second Reading I said that
"the Bill will allow us to create an active, secure and integrated system of welfare delivery".—[Official Report, 15/1/98; col. 1147.]
It will streamline the decision-making process. We are putting into place new appeals procedures. We are reforming national insurance. We are delivering a welfare-to-work strategy for lone parents. I hope your Lordships will agree that, apart from the deplorable result of this afternoon's vote, the other amendments we have passed and the scrutiny on all sides of this House have meant that this Bill has been taken forward in a co-operative and positive way. Apart from today's lapse, which I am confident will soon be remedied in another place, I think the Bill is a better Bill. I thank noble Lords who have made it so.
Moved, That the Bill do now pass.—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, I had not intended to speak but I join the noble Baroness in expressing my appreciation to the noble Earl, Lord Russell, and to the noble Lord, Lord Goodhart. I also thank the noble Baroness, Lady Hollis of Heigham, the noble and learned Lord, Lord Hardie, and the noble Lord, Lord Haskel, for the courteous way in which they have had discussions behind the scenes on a number of the technical amendments. That has enabled us to improve the Bill. Most of all, I thank my noble friend Lady Anelay of St. Johns for the tremendous support she has given me. Until I arrived in this House I was not a particular specialist in this area. As to the events of this afternoon, it is important to stress that in our view it is right that the other place should be given an opportunity to debate the matters. However, it must be seen in the context of the whole of the Chancellor's speech and the paragraphs which I quoted which clearly stated that he would ensure that those no longer paying contributions would be protected.
Earl Russell: My Lords, I, too, wish to thank all concerned. I have enjoyed on this Bill the rare luxury of working with a team. I warmly thank all the members of that team. I refer to my noble friend Lady Ludford and her conspicuous success on backdating. My noble friend Lady Williams of Crosby made one of the best speeches on single parents that I have heard in this House. My noble friend Lord Goodhart has been a veritable Trojan beside me on the Bench, as your Lordships have observed. It has been a delight to work with them.
I thank the noble Lord, Lord Higgins, and the noble Baroness, Lady Anelay of St. Johns, with whom I have found it very easy and enjoyable to work, and with whom we have co-operated to some purpose over the composition of panels and many other issues. I shall not reprove the noble Lord, Lord Higgins, for today's events. In English law suicide is not a crime.
I thank the Minister, and through her her officials, for the highest standards of courtesy and co-operation and of provision of information all the way through the Bill. It has been much appreciated and has eased our work

775
enormously. I wish to thank the Minister herself for engaging in the argument and endeavouring to understand it at every stage of our proceedings. I thank her for ensuring that the proceedings have been conducted in a way which I think is a model of how a revising Chamber should work.
We have had a number of changes in the Bill. Those have been brought in by agreement between the Benches. I believe that they have made the Bill much better than it was. I still think that it is a bad Bill. The House knows that; and I shall not elaborate on that further now.
On Question, Bill passed, and returned to the Commons with amendments.

Northern Ireland (Elections) Bill
6 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Dubs.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Skelmersdale) in the Chair.]
Clauses 1 to 3 agreed to.
Clause 4 [Disqualification]:
Lord Molyneaux of Killeadmoved Amendment No. 1:
Page 2, line 28, leave out subsection (2).
The noble Lord said: During the Second Reading debate yesterday, the Minister was kind enough to refer to this amendment. I am grateful to him. My motive was not to enable Her Majesty's Lieutenants to stand for the assembly but to discover why such a provision was necessary in the Bill. Perhaps I may ask whether such a disqualification section has been employed in regard to any previous body. If the answer is yes, it still remains a curious device.
The Minister stated yesterday that the duties of Lords-Lieutenants specifically exclude them from holding a political post or engaging in political activities in certain areas; and I agree. But as the Lord-Lieutenant is appointed by the Sovereign, his duties are surely outlined in some detail by the Sovereign. Therefore the restriction is already in force. Why is it necessary for a government department to seek parliamentary approval for a disqualification already provided by the Crown, and which the Sovereign herself is quite capable of enforcing without reference to Parliament?
I am sure that the Minister will have reflected on this matter overnight. I welcome his conclusions. I beg to move.
Lord Glentoran: I support the amendment, but in doing so I declare an interest—indeed, it is my
776
argument. I did not see the amendment until today so I have not undertaken a great deal of research. However, if my memory serves me correctly, my late father represented East Belfast as an elected Member of the Stormont Parliament, later became a Cabinet Minister, later still became a Member of the Senate, and, finally, was Speaker of the Senate in Stormont until such time as it was prorogued. If my memory serves me correctly, throughout that time he was Her Majesty's Lord-Lieutenant for the City of Belfast. The noble Lord, Lord Molyneaux, indicates to me that my memory is correct. That may be a precedent which contradicts the Bill.
Lord Dubs: Clause 4 sets out the disqualification from membership of the assembly. As in the rest of the United Kingdom, it disqualifies Lord-Lieutenants and Lieutenants from representing their county or county-borough in a political post, in this case, the assembly. This amendment would change the legislation to provide for Lord-Lieutenants to stand in the assembly if they so wished.
Perhaps I may refer to the question posed by the noble Lord, Lord Molyneaux. It is my understanding that the prohibition is applicable to each particular piece of legislation, so there would be separate legislation debarring Lords-Lieutenants from standing for the House of Commons, and so on. That is why we need similar legislation in this instance.
I think that this is an undesirable amendment for the following reason. The Lord-Lieutenant is Her Majesty's representative in a particular county. I quote from the duties of Lord-Lieutenants:
"In particular, he should keep in mind that, as Her Majesty's representative, he should stand aloof from politics in his county and should not, therefore, take part in political activities in his county or hold office in political party organisations in his county."
There is of course no prohibition on a Lord-Lieutenant standing in the assembly elections for any Northern Ireland constituency outside his own county or county borough. But to compromise the integrity of the Lords-Lieutenants in Northern Ireland as well as to provide an unwelcome precedent for the rest of the United Kingdom by accepting this amendment would be extremely undesirable.
I thank the noble Lord, Lord Glentoran, for having given me notice of his question. He referred to the situation as regards his father. We are talking about provisions for the assembly which are the same as for the House of Commons. It seems sensible to have the same provisions. Therefore, even if historically there were a different practice, it seems proper that Lords-Lieutenants should be constrained in the way that I have suggested is proper.
I urge the noble Lord to withdraw the amendment; and, if he has any friends who are Lords-Lieutenants who wish to stand for election elsewhere than in their own counties or county boroughs, to urge them to do so.
Lord Molyneaux of Killead: I do not imagine that there will be a great rush of nominees for that particular post. However, I wish to confirm what the noble Lord, Lord Glentoran, said about the distinguished services

777
rendered to the whole of the United Kingdom by his late father. He served with distinction in all those positions to which the noble Lord referred. I wish to state that sincerely.
In a sense the Minister has confirmed my suspicions that the restrictions on the behaviour and eligibility of Her Majesty's Lords-Lieutenants and Lieutenants are already in being, and probably enforced for all I know by the Crown. I am still not clear why Parliament is being asked to replicate, or perhaps override, instructions which will have already been given, fairly firmly I imagine, by Her Majesty.
However, I have taken note of what has been said. I hope that further consideration will be given at some future stage to what appears to be a rather confused arrangement. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clauses 5 to 9 agreed to.
Schedule [The Assembly]:
Lord Cope of Berkeleyhad given notice of his intention to move Amendment No. 2:
Page 4, line 4, leave out from beginning to ("as") and insert ("The first meeting shall be held at such time and place").
Page 4, line 5, at end insert ("and subsequent meetings at such times and places as the Assembly decides").
The noble Lord said: In view of the Minister's helpful reassurances yesterday, I shall not move Amendments Nos. 2, 3 and 5.
[Amendments Nos. 2 and 3 not moved.]
Lord Molyneaux of Killeadmoved Amendment No. 4:
Page 4, line 13, at end insert—
("Conditions of holding office
. No person shall hold any office in the Assembly if he belongs to a party which—

(a) is attached to a proscribed organisation which is listed in Schedule 2 to the Northern Ireland (Emergency Provisions) Act 1996 and which—

(i) has not declared, and is not honouring, a permanent and total cessation of violence,

(ii) has not surrendered its illegal weaponry, and

(iii) has not dismantled its paramilitary structure; and

(b) has not made an unequivocal declaration of its acceptance of the six principles contained in the Report of the International Commission on Decommissioning, which establish a commitment to—

(i) employ exclusively peaceful means; and

(ii) abide by the democratic process.").

The noble Lord said: All who were present for our debate yesterday will remember that a common theme ran through many, if not all, of the speeches; namely, the need for effective decommissioning to ensure the workability of the proposals, and even the initial assembly.
The Minister reminded us of the Prime Minister's undertaking, given some four weeks ago (at col. 661 of Hansard), that if, during the course of the first six months of the shadow assembly, or even the assembly
778
itself, those provisions were shown to be ineffective, the Government would support changes to the provisions to enable them to be more effective.
However, the six-month timescale has been to a great extent shortened by the declaration last week of the IRA ruling out any possibility of the disarming of their war machine, and by this week's statement that the IRA will permit those of its members who are also members of Sinn Fein to serve in the assembly.
So we have the benefit of two declarations of intent from the IRA: first, that the IRA will serve in the assembly; and secondly, a declaration of no intention to leave the guns outside the assembly. Thus, the IRA have rendered obsolete the Prime Minister's trial period of six months. We can take that as being over and done with. We now know for certain that the present provisions have already been shown to be ineffective. As from this day, the Government are duty bound, in the words of the Prime Minister, to "support changes".
Some may find the Prime Minister's words,
"The Government will support changes",
rather puzzling. However, being of a charitable nature, I shall not quibble over the Prime Minister's statement, but shall modestly cast myself in the role of initiator of a proposal which the Government can then support.
My Amendment No. 4 therefore launches the initiative, which I expect the Government to support, in line with the Prime Minister's undertaking, which undertaking simply requires to be updated in line with the two very clear declarations of intent by the IRA. I beg to move.
Lord Cope of Berkeley: I was one of those who spoke yesterday on the lines indicated by the noble Lord, Lord Molyneaux. It will therefore come as no surprise that I support the principle behind the amendment. At the risk of repeating the remarks I made then, I strongly believe that no one who belongs to an armed conspiracy to subvert the state has any place in a democratic government of that state. That is the principle which is at stake here.
While that debate was taking place in this Chamber, in another place the Prime Minister agreed that prisoner releases should be linked in legislation to the decommissioning of arms. I take the same view, as does the amendment, in relation to membership of the executive and decommissioning.
I have two difficulties with the amendment. First, the drafting is not very happy. I refer in particular to the first main line of the amendment; namely,
"No person shall hold any office in the Assembly if he belongs to … a proscribed organisation".
I am not quite sure who is covered by the phrase,
"hold any office in the Assembly".
It is the habit in this Parliament that a reference to those who are Officers of the House normally means the Clerks, Black Rod, the Serjeant-at-Arms and the others who help us with our work but are not Members of either another place or this House. I am not quite sure what would be meant in law by the phrase, "in the Assembly".

779
It is clear what the noble Lord means (and what 1 mean). The reference is to those who become members of the executive. They will be members of the assembly first, and then members of the executive—as First Minister, Deputy First Minister or one of the other Ministers. However, I am not sure that the phrase used in the amendment actually covers that.
The second difficulty is that the amendment will fit more happily into the Bill that we are promised on the main constitution. That, after all, will be the Bill setting up the executive, and it will create the posts to which we refer; namely, First Minister and the others. It seems to me that an amendment of this character would be better inserted into that Bill. However, I support the principle that lies behind the amendment moved by the noble Lord, Lord Molyneaux.
6.15 p.m.
Lord Alderdice: I have a good deal of sympathy with the reasons advanced by the noble Lord, Lord Molyneaux, for tabling this amendment. Secondly, those who involve themselves with, support, or give any succour or credence to those involved in paramilitary organisations cannot be accepted as those who should properly hold government office at any level. Indeed, one would not really want to see such people involved in democratic life.
In Northern Ireland it has been the case that, for many years, we have had to work with politicians of more than one strain and from more than one side of the community, as local government councillors, indeed as chairmen and deputy chairmen of committees in local government. That has been despite the fact that the previous administration introduced legislation requiring that everyone standing for local government office should sign a declaration against violence. People have happily signed, but to our certain knowledge have continued to support those who have used violence. So, for me, there is a very real problem—one that I share with the noble Lord, Lord Molyneaux—in relation to the facts of life in Northern Ireland in political terms.
I have a number of problems with this particular amendment, on this particular point, in this particular Bill. First, the noble Lord said that the whole question of how the republican movement might operate over the next six months has been foreshortened by the announcements from the IRA, and indeed the republican movement generally, over recent days. In that, he may be absolutely correct. We are not to know.
Yet I should not feel happy to allow the republican movement off the hook, as it were. A referendum has not yet taken place involving people throughout the island of Ireland stating their case clearly. If the people of Ireland, north and south, on 22nd May—as I fully expect—give their assent in a referendum, the moral pressure on republicans in particular, though not exclusively republicans, to set aside the ways of violence and to accept this agreement in its totality will be enormous. I believe that all those Members of this House and another place, and all those members of the houses in Dublin also, and all those involved in responsible politics and the community as a whole,
780
should use the result which I fully expect to see in the referendum on 22nd May to put pressure on all republicans, loyalists and those of whatever shade of opinion, to put away violence and all its trappings for good. Therefore, I am reticent about accepting the suggestion from the noble Lord, albeit that it may be correct in the fullness of time. I am reticent about simply accepting at this point that there is no possibility of any changes being made.
I ask noble Lords to note that the terms of the amendment proposed by the noble Lord, Lord Molyneaux, do not state that there should be a start on decommissioning or a commencement of the dismantling of the paramilitary structure, but rather that the whole business should be completed. On the first day of a cease-fire, I expect no one to be shot; but I do not expect the whole paraphernalia of a terrorist structure built up over 30 years to be dissolved. However, 12 months or 24 months down the line, I do expect a great deal more.
It may be unlikely; however, were it to be the case that on 22nd May there was a positive result, and if by the end of the month there were some indications of a positive kind that republicans and loyalists were prepared to make some movement; and by the end of June, July or August a real dismantling of the terrorist structures was beginning to take place although that process would not be completed, I should not only welcome it but I should feel that some kind of positive response should be forthcoming.
Under the terms of the noble Lord's amendment, it is not just executive positions that may be closed to all those from, for example, a republican or indeed a loyalist background, but all positions of office in the assembly. The Bill is merely an enabling Bill; it does not set down all the officers of whom we are speaking. It may or may not involve the kinds of officers referred to by the noble Lord, Lord Cope; it may simply refer to all those who are elected officials and who hold chairmanships or deputy chairmanships of committees, as well as those who hold positions in the executive.
There was a tacit acceptance by all those who adhered to the agreement following the talks—unionists, nationalists, members of the Alliance Party, and all—that the fundamental problem concerned people involved with violence holding positions as Ministers. There was a general acceptance that, as in local government, people might hold positions as chairmen or deputy chairmen of committees. Under the terms of the noble Lord's amendment, there could be a situation where, for example, a republican might be denied the opportunity to be the deputy chairman of a house committee looking after the members' dining room. However reasonable it might seem on this side of the water to say that no one involved in violence should play any part in the assembly, it would be an anomaly in terms of how we have to conduct business in Northern Ireland. It would be seen not as an accepting of republicans into the democratic fold but rather a cutting back on the privileges they already enjoy in other areas of politics in Northern Ireland. It would be seen as counter-productive.

781
We shall have a full opportunity to address these matters when the settlement Bill comes to us. That will be a major piece of legislation. Those from Northern Ireland will have to crave the indulgence of your Lordships' House as we proceed with what will be a difficult and complicated piece of legislation. At least it will come at a point when we shall know the result of the referendum and shall know better how republicans and loyalists intend to conduct themselves. At that point it may be possible to bring forward in another way some of the sentiments behind the noble Lord's amendment and to look at them in a more considered fashion. At this point, bearing in mind the timing, the technical detail and the question of the appropriateness of this enabling Bill, I respectfully call upon Members of the Committee to set aside the amendment while valuing the clear moral imperative which drove the noble Lord to propose it. Not only do we appreciate his integrity in doing so; many of us share the sentiments which motivated him.
Lord Monson: I too support the principle of the amendment and would ask the Minister whether it is not more or less in line with what the Prime Minister promised sceptical teenagers in Belfast yesterday, as many of us will have seen on BBC television news programmes.
Lord Fitt: Anyone with a Northern Ireland background will understand the reasoning which prompted the noble Lord, Lord Molyneaux, to propose the amendment. It shows clearly what we all know to exist in Northern Ireland: a lack of trust. Even though an agreement has been reached, a great deal of distrust and suspicion still exists between the two main communities in Northern Ireland.
When I saw reference in the Mitchell principles to decommissioning, I realised, as anyone who knows the history of Northern Ireland would, just how impossible that would be. It has never happened before in Irish history. Uprisings and armed violence have stopped or faded away and the arms left to rust. There was a campaign of violence in Northern Ireland between 1956 and 1962. When the official IRA, as it then was, called off its campaign, it did not decommission. The arms were left to rust. When the split between the official IRA and the provisional IRA took place in 1970, members of the official IRA were called "rusty guns" in a derisory way by the provisionals because they had let their guns rust and allegedly did not have them to hand to defend the Catholic people when the troubles broke out in 1969 and 1970.
After our debate yesterday, I went home and racked my brains to try to think of any possible steps which could be taken by any one of the parties to the agreement in order to bring about a little trust in the opposing community. If the IRA is told by the British Government or the Irish Government that it has to decommission, that is tantamount to saying that it has to surrender. No one in Irish political history has ever surrendered. They may have called off their campaigns throughout the ages, but none of them ever surrendered.
782
Indeed, it is on record that when the first Dail, the Irish Parliament, took place following a civil war, elected members went in with their guns in their pockets.
In view of what I heard yesterday on television, though I have not yet read about it, I believe that if the IRA is sincere in wishing to abide by the principles in the agreement it has been very mischievous in saying that it will permit its members to take their seats in a newly created assembly. That is bound to create mistrust among the people of Northern Ireland.
However, it must be said that not every member of Sinn Fein has given allegiance to that party because they believe in the armed struggles. Many nationalists have given their votes and support to Sinn Fein for economic reasons and because they believed that Sinn Fein would provide the best public representatives in certain areas. That is certainly the case in West Belfast where, whatever one may think of it politically, Sinn Fein has proved to be a party which looks after the interests of the people who vote for it. Not everyone who votes for Sinn Fein supports a re-emergence of violence.
The main ex-terrorist parties who supported the agreement are the UDA, the UVF and Sinn Fein. The IRA has now said that it has called off its campaign. Would it not be possible for the political representatives of the UDA, the UVF and the IRA—namely, Sinn Fein—to get together and agree on what gestures could be made, however small, in relation to decommissioning? I believe that the three ex-terrorist organisations which were represented in the talks and will be represented in the new assembly could make a tremendous gesture towards the people of Northern Ireland by coming together. After all, they met in the talks and have had discussions at local authority level in Northern Ireland. If they were to meet, that would isolate the LVF, which was not party to the agreement, the INLA and other fringe organisations. It would be a very important step forward in relation to decommissioning if those organisations—the people who were using the guns—were to come to an agreement and say, "We are not going to use guns any more."
6.30 p.m.
Lord Molyneaux of Killead: Perhaps I can be of help to my noble friend Lord Cope, who was puzzled by the words "holding office".
In the United Kingdom generally people who hold office are appointed by the person emerging as the winner of a general election. That occurs mainly in the other place. However, in the assembly the places of authority will be allocated mainly by the assembly. I understand also that two officers of the House will be appointed by the Secretary of State. In my view, therefore, the term "holding office" probably embraces all of those.
I am reluctant to divide the Committee in view of the sympathetic support shown for the general thrust of my amendment and also in view of the sympathetic support from the Minister which may be forthcoming in the near future. Therefore, because of what I believe to be the position of others in places of high authority and the

783
assurance that we will be able to come back to this topic when we come to consider another Bill, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Schedule agreed to.
House resumed: Bill reported without amendment:
Report received.
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 30th April), Bill read a third time.
Lord Dubs: My Lords, I beg to move that the Bill do now pass.
I did not have a chance to respond to the arguments put forward in relation to Amendment No. 4, so perhaps I may say a brief word in that regard.
The House listens with interest to the noble Lord, Lord Molyneaux. He brings great experience of Northern Ireland to bear on our debates. He was the leader of the main political party in Northern Ireland and what he says is always of importance to us.
In a sense, we have already moved beyond the amendment and I believe that I put the Government's position clearly in the debate on Second Reading yesterday. I do not want to trespass further on the time of the House by going over the same arguments. However, I listened with interest also to the noble Lord, Lord Cope. As his friends in the other place said, this issue is one with which they would like to deal when the settlement Bill comes later, rather than during debate on this Bill.
The noble Lord, Lord Alderdice, made the important point that a "Yes" vote in the referendum is likely to change the mood in Northern Ireland such that things will become possible which perhaps today are not possible. I agree that there is an importance in all this and I take to heart the important contribution of my noble friend Lord Fitt.
I thank all Members of the House for enabling this Bill to go through quickly. The reasons for haste are well understood, but I appreciate the way in which all Members who took part in the debate contributed to a rapid outcome so that we can have the Bill on the statute book quickly. I commend the Bill to your Lordships.
Moved, That the Bill do now pass.—(Lord Dubs.)
On Question, Bill passed.

Social Security Amendment (New Deal) Regulations 1998
6.34 p.m.
Lord Whittyrose to move, That the draft regulations laid before the House on 9th March be approved [26th Report from the Joint Committee].
The noble Lord said: My Lords, my purpose today is to seek approval for amendments to the jobseeker's allowance (JSA) regulations which will allow us to take forward measures for the New Deal for those aged 25
784
and over who have been unemployed for two years or more, and for the New Deal for 18 to 24 year-olds. We believe it is essential that we take action to help people in those groups to improve their employability and find work. As the bulk of the package of regulations before the House today relate to the 25 and over age group I will turn to those first.
Noble Lords will be aware that a manifesto commitment was given that, as part of our Welfare to Work programme, we would introduce a New Deal for people aged 25 and over who have claimed JSA for two years or more. There are two elements of this New Deal: first, an entitlement to an employer subsidy of £75 per week for up to six months; secondly, opportunities for people in this group to study full-time for up to a year on an employment-related course while on JSA.
Noble Lords will no doubt also be aware that we intend to pilot further measures for this group. Those were touched upon in the Budget announcement on 17th March. However, the regulations before us today do not concern the development of those pilots. I intend, therefore, only to deal with the regulations necessary to bring the two elements already developed for introduction in June 1998. To introduce the employer subsidy requires no legislation. The regulations deal with the legislation necessary to offer full-time education and training opportunities to those eligible for the New Deal for the 25s and over.
To provide those opportunities we propose to adopt an approach broadly similar to the JSA Workskill pilot approach, which was started under the previous government. The House will be aware that we extended those pilots in September 1997. We intend to amend the main JSA regulations so that the people in this New Deal group will be able to receive JSA while they undertake full-time employment-related education and training courses. They will be excused from the normal requirements to be available for and actively seeking work. We believe that alongside existing provision from the Employment Service and training and enterprise councils and local enterprise companies, the job subsidy and this measure will provide the opportunity for this group to pick up new skills or refresh existing ones. We also believe that it will work as an added incentive for employers to recruit from this group. That will mean that people in this particularly disadvantaged group will have a better chance of finding work.
People in this New Deal group will be able to apply for a full-time education or training course for up to one year, though we expect in practice that many will want to take job-focused courses of shorter length. They will be able to undertake a wide range of courses, most of which will lead to an approved qualification. They will normally be able to take courses up to and including NVQ level three standard; that is, broadly A-level standard. However, to maximise flexibilities for this age group of whom some will have substantial work experience and high qualifications, people will, in particular cases, be allowed to take courses at a higher level. The regulations place the condition that all courses have to be employment-related. That is because

785
we want the courses taken to help people to get the skills needed for work, for particular occupations or for improving job search facilities.
We expect these opportunities to be welcomed by people in this New Deal group. From those that do take advantage of this measure we will expect their commitment to attend and make satisfactory progress on their courses. To discourage the few who might be tempted to relax or lapse on their course once they are excused the normal JSA attendance arrangements and job search rules, there is a potential sanction in terms of loss of JSA for two weeks. We want people to benefit from the considerable flexibility we propose to the JSA rules to allow them the opportunity to study full-time.
There is one additional regulation in this package which relates to self-employment. This does not only apply to New Deal participants—although it is relevant to the New Deal for young unemployed people, where self-employment is one of the options available—but applies particularly to an anomaly in Scotland. It will benefit all JSA claimants preparing for self-employment programmes in Scotland. Under the current regulations, not all JSA claimants could be treated as actively seeking work when they are preparing to take up a place on a self-employment programme. Because of the existing regulations in Scotland, JSA claimants who are preparing for a self-employment programme which is not provided by Scottish Enterprise or Highlands and Islands Enterprise are not treated as actively seeking work. The proposed amendment will allow all JSA claimants, including New Deal participants, to be treated as actively seeking work for up to eight weeks, when preparing for self-employment programmes in Scotland which are funded directly or indirectly by the Secretary of State for Scotland, in addition to those provided by Scottish Enterprise or Highlands and Islands Enterprise.
These measures are only part of our approach to the New Deal. We shall be shortly laying other regulations which will extend the employment option of New Deal to include self-employment. Broadly speaking, these are two measures and I hope that they will be acceptable. I hope that the explanation has helped noble Lords. I commend these regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th March be approved. [26th Report from the Joint Committee].—(Lord Whitty.)
Lord Higgins: My Lords, I am grateful to the Minister for his comments. I have two points on this matter concerning the question of balance. The first relates to the support which is to be given to the over-25 year-olds as against those below that age. Much of the Government's thinking on this some time ago was based on the idea that the level of unemployment among the younger members of the young community would remain very high and the provision was designed to deal with that problem. But in fact the trend has been rather more steeply downwards, as I understand it, for that group than for those who are in an older age bracket. I wonder whether the Government's proposals here have
786
really caught up with the change in the overall unemployment situation and in particular the position of the older members as against the younger.
The second is a more general point as to whether the provisions made for full-time education and training for the New Deal create a reasonable balance as regards the entire expenditure on the programme. My understanding is that it is only about 10,000 or so who may benefit over the lifetime of a parliament. That would seem to be a relatively small number given the scale of the overall expenditure on the New Deal project as a whole. I shall be grateful if the Minister can comment on those two points.
Earl Russell: My Lords, we on these Benches warmly welcome the principle of what the Government are doing. We have some reservations—some of significance—about how exactly they set about it. The Minister will not remember the many hours when his noble friend Lady Hollis of Heigham and I slogged through the night fighting against the 16-hour rule. They were really hard fights. It is a very great relief that we are not going to need to have those fights again. It was a rule that discouraged people from trying to better themselves. It discouraged them either to get a job in the first place or to get into a better qualified job where they could make themselves rather more useful. That always seemed to us to be rather stupid.
For the over-25s the Government exempt them from the jobseeker's allowance rules if they are engaged in full-time employment-related education or training. That is a constructive measure. But they have to confine themselves to courses for only up to one year.
Here there is a disadvantage. My honourable friend Mr. Webb, speaking about these regulations in another place, referred to one of his constituents who had taken up a two-year course in cabinet making. He assured the House that it was not of the Westminster variety. At the end of the first year of the course the man was made to give it up, although he achieved a distinction in the first part of it, because he had been offered a temporary part-time poorly paid job as a van driver. That did not seem particularly useful. Because it applies to courses up to one year, my honourable friend's constituent is not going to benefit. That is very far from being an isolated case.
I received a letter yesterday by sheer chance from one of our councillors in Swansea concerning someone in his own ward. I referred this case to the Minister's office and I hope that the Minister is provided with an answer to it. A single mother enrolled on a three-year nursing course. She received a bursary, but was turned down for housing benefit, council tax benefit and family credit because the course for training to be a nurse is not classed as work. Therefore, the changes, together with the single-parent changes, make her £45 to £50 a week worse off plus £17.50 a day for child care.
One would have thought that it might have been in the public interest for that person to qualify as a nurse as it would have been for my honourable friend's constituent to qualify as a cabinet maker. One of my son's closest school friends was recently caught by the

787
16-hour rule regulations. He wanted to qualify as an electrician. I say not only as a family friend, but as a satisfied customer, that he knew what he was about and loved his work. He also had to withdraw from his course. I rang him up last night to tell him that the law was being changed and found that, although he would otherwise have been eligible to benefit, he had taken a job as a painter and decorator just last week.
That leads me to wonder whether, with a qualifying period of two years' unemployment before one can come into the scheme, it may to some extent act as a perverse incentive because there are people with a perfectly serious sense of vocation for a job that needs qualification but who will be unable to get the qualification unless they remain unemployed for two years.
If one's vocation is really genuine and serious, one may take that. It is not necessarily going to be in the public interest. So will the Government think about whether a shorter period of unemployment might qualify people to take part in this rather generous scheme?
I also ask the Government to look at the interface between this scheme and the actively seeking work rules. My honourable friend's constituent, as he said, was pushed off a course paid for by one department to meet the rules of another department. As so often, one wants to say to government departments "only connect". But if one pushed that they would set up an inter-departmental committee which would become known as the Howard's End Committee and be chaired by a not quite sound civil servant called Howard. It is a very difficult job.
We shall have to think about protecting people who are on these courses against attempts to get them to take dead-end jobs. I take the Minister's point that they must do the courses properly. I understand why there is a benefit sanction if they do not. I ask the Minister to read the speeches made in the last Parliament by his noble friend Lady Hollis of Heigham about the case for arguing that people should not lose benefit before appeal. They were very powerful speeches. I hope that the thinking they represent is not now lost inside the Government.
It is worth their while to think about whether the burden of proof about attendance on a course should be placed on the provider rather than the claimant if for no other reason than that the provider is usually rather better provided with records. I hope that the Government will think—as, I hope, things improve—that the budget for this scheme might be improved. It is a little disproportionate compared with what is made available to the under-25s.
I am very glad indeed that this scheme does not include an element of compulsion. It is for the people who want to do it so that they are taken out of the actively seeking work rules rather than being deemed to be actively seeking work when they are not under the Humpty-Dumpty clause of the Jobseeker's Act. But it leaves one wondering why the under-25s are being treated as lesser breeds without the law, but that is a matter for another occasion.
788
My right honourable friend Mr. Ashdown once drew attention to the plight of young people sleeping in shop doorways, only a width of plate glass away from advertisements for jobs they will never have the skills to apply for. We now have a beginning of addressing that problem. I welcome it warmly, but it is only a beginning. I look forward to the next instalment.
Lord Graham of Edmonton: My Lords, perhaps I may crave the indulgence of the House to make one comment. Like many of my colleagues I was waiting somewhat impatiently for the conclusion of the business in respect of Northern Ireland. But I delayed just a moment or two and my ears pricked up when this business began.
I have a son aged 40 who has a medical condition called myotonica dystrophia which causes him difficulties. He is registered at Loughton unemployment exchange. They are very helpful to him and he, I can assure you, is very keen to work. He wanted to attend a course but before he could be accepted and take up training he needed to qualify and pass an examination. He failed by not obtaining the 50 marks required; he obtained 48. He does not have a jobseeker's allowance because, by prudence, he has sufficient moneys which he declares and which prohibit him from receiving that allowance.
My question to the Minister is that when he and his colleagues are looking at ways in which one can take account of, and encourage, people who are genuine, who want the opportunity to work and who accept that there needs to be training, perhaps they should consider showing tolerance at the lower level and agree that the lower level needs to be reduced or ensure so that in some way discretion is applied. My son was simply told that he had failed the entrance examination and that was the end of the matter. It was not the end of the matter for Martin, I can assure you. He was advised, at one stage, that office skills would be useful to him and he has taken courses in computer studies, among other things, at the technical school near our home.
Perhaps the Minister and his colleagues will look closely at those near the borderline. Wherever the line is drawn there will be some near to it. I understand that standards need to be set. There are so few places and so many applicants that one has to be harsh. But if the Government are opening up what I call a new seam of those who are willing to work and want to be trained, perhaps they can look at that aspect. I shall be glad to furnish the Minister and his colleagues with further details.
Lord Whitty: My Lords, I very much appreciate the general welcome for these moves reflected in the speeches of all noble Lords who have contributed to the debate. Clearly this is part of an overall strategy. The noble Lord, Lord Higgins, raises perhaps one of the important points of the strategy: the balance between those over 25 and those under 25.
We have always made it clear that the whole welfare-to-work strategy is to increase the opportunities for all those who are currently on welfare to move into jobs. We made a start with the 18-24 year-olds because

789
we believed that they were the group most seriously affected by under-skilling. If they do not start at that age attaining skills which they have somehow failed to attain during their formal education, they will become an even bigger problem in later years. It is also true that although long term unemployment among the under-25s has fallen, it remains at about twice the national average. They are therefore still the highest priority group, even on a statistical basis.
The amendment regulations we are discussing are only part of the measures that will be available to people in the over-25 group. The total package of measures will provide a range of help and advice and a coherent approach to addressing employment and training needs for the over-25s. As we announced in the Budget, we have made available £450 million from the windfall tax for the New Deal for long-term unemployed adults. The allocation will change over time but the priority is still with the under-25s, although we are beginning to shift more resources to the over-25s.
The noble Lord, Lord Higgins, also raised the question of the numbers participating in the education training part of the package. The figure of 10,000 has been quoted. That is probably an under-estimate. We have effectively talked about £23 million on the basis of 10,000 people studying for nine months. In practice, the average length of course is likely to be less than nine months. Therefore, that will be interpreted with some flexibility. We believe that many courses will be shorter than that and therefore the figure will be larger. But that is, broadly speaking, the ball park figure about which we are talking. Between 10,000 and 15,000 people seriously lack skills and have been unemployed for two years at a relatively adult age of over-25.
In terms of the total provision for the over-25s, we have effectively provided 70,000 new opportunities for adults reaching the 12 and 18 month point of unemployment. Those pilots will provide individually tailored help and support for those aged 25 and over. They follow from the provision for the under-25s and the other provisions which were started under the previous government and which we have expanded. Noble Lords will be familiar with the categories: the employment subsidy, work in the voluntary sector, job-related training and help into self-employment, part of which is covered by these regulations.
The noble Earl, Lord Russell, asked why courses were only of one year. We do not want too much of a crossover between the provision of welfare to work and the provision of what are effectively long-term student courses. The prime aim of the jobseeker's allowance is to help people into work. There is a balance between relaxing the labour market rules of the JSA and encouraging people to take up jobs. One year at this
790
stage seems to us the right balance. We will, of course, review matters as we move through delivering the New Deal.
Earl Russell: My Lords, I thank the Minister. Will he consider the possibility that the key dividing line should perhaps be the words "employment related" rather than the length of course?
Lord Whitty: My Lords, unfortunately, I think one has to specify both. We are talking about priorities here and what courses we would relax the JSA rules for without moving into a situation where JSA is still applied to people who are effectively in full-time education, whatever their age. I think that probably the one year cut-off is sensible. I appreciate that there will be situations like the one mentioned of the furniture maker where this seems a little unfortunate. There has to be a cut-off. The key cut-off is certainly that they are employment-related courses. But there has to be a division also between what we are doing to encourage people off welfare into work and what we are doing to encourage people at a later age to move into full-time education, as such.
The noble Earl also raised the question of whether the two-year unemployment threshold was appropriate in all the circumstances. Again, we are talking of priorities. Clearly there will be people who have been unemployed for less than two years who will be looking to improve their employability through improved skills. This measure, however, addresses people who are over 25, who are adults and who may well have family responsibilities, and who have been out of the labour market for over two years. Such people are our priority among that group at this stage. That is why the relaxation of the 16-hour rule and the other rules relating to it have been prioritised and that is why it is not a general relaxation.
Both the noble Earl, Lord Russell, and my noble friend Lord Graham referred to specific cases. In respect of the case about which the noble Earl notified the department earlier today, I must advise him that we are not sure of the details of the case. Perhaps I may give some clarification. The regulations will allow those who are 25 and over and who have been unemployed for more than two years to take full-time education and training while remaining on jobseeker's allowance. Lone parents with a dependant under 16 are described for benefit purposes as a vulnerable group. In most circumstances they will not at present be in receipt of jobseeker's allowance. Those in that group may study full time and still remain eligible for income support and for other social security benefits. I have the letter from the noble Earl's colleague. It is not clear why benefit was refused in that case. We would appreciate some further details. If the noble Earl will permit me to do so, I shall write to him because if he can provide me with further details, I am sure that the department can give a more detailed response to that case.
My noble friend Lord Graham referred to the situation of somebody who is not in receipt of jobseeker's allowance but who, because of failing some sort of access course, failed to get on the proper

791
employment-related course. That situation needs greater examination. If further details are available, we shall look into it. Clearly, it is our intention that the rules should be operated with some degree of flexibility towards benefit claimants. Indeed, we have built a support system into the New Deal process so that individual circumstances can be taken into account. That does not apply directly to my noble friend's son in the sense that, as I understand it, he is not on benefit at this point. However, if my noble friend will provide us with further details, I am sure that we can develop a more detailed response.
I believe that I have dealt with the specific points raised in the debate in so far as I can tonight. Further details can be provided in writing. I thank noble Lords for their general support for the regulations and I commend them to the House.
On Question, Motion agreed to.

Mutual Assistance in Criminal Matters: ECC Report
7.2 p.m.
Lord Hoffmannrose to move, That this House take note of the report of the European Communities Committee on Mutual Assistance in Criminal Matters (14th Report, HL Paper 72).
The noble Lord said: My Lords, the Select Committee on the European Communities has reported to the House on a proposal which arises out of the serious growth in organised crime which has been affecting member states of the European Union. I need not go into the causes of the phenomenon. The fact is, like many other forms of economic activity, organised crime is becoming globalised and it requires a co-ordinated response from national enforcement authorities.
The European Union Council of Ministers, at a meeting in Dublin in December 1996, set up what was called a "high level group of experts" to report on how to tackle organised crime. One of its recommendations was a strengthening of the conventions for mutual assistance between the law enforcement authorities of the various member states. I say "a strengthening" because such conventions have been in existence for some time; for example, all the member states are parties to a convention on mutual assistance in criminal matters which was concluded under the auspices of the Council of Europe in 1959. In addition to the members of the European Union, about 15 other states are parties to that convention.
However, the form of co-operation which that convention provided was of a rather leisurely kind, perhaps best illustrated by the fact that all requests for co-operation were to be routed through the courts. The court would send a letter of request to the authorities in the other country asking for assistance in such matters as obtaining evidence for a criminal prosecution already under way. The idea was to obtain help when charges had already been made or prepared for the judicial process. It did not provide for direct co-operation between police authorities in the investigation of crime.
792
I am bound to say that the United Kingdom does not appear to have attached much importance to that form of mutual assistance because, although it signed the convention in 1959, it did not ratify it until 32 years later, in 1991, after the necessary primary legislation had been passed in 1990.
The Council of Europe has also been considering a revision of the 1959 convention, but progress has also been rather slow. It produced one draft in 1994, but that was abandoned as being over-ambitious. Work started on another, but eventually in 1995 the European Union decided that it was all taking too long and—although other things being equal it is best to have a convention with as many countries party to it as possible—it was felt more practical to start with one confined to the member states. The drafting of this convention was thus under way (about three years ago) when an even greater sense of urgency was injected into it by the report of the high level committee of experts which I mentioned earlier.
The convention has a rather complicated drafting history and I have burdened your Lordships with it only because the natural reaction to such a proposed convention is to say, "Why only the European Union, when organised crime reaches out to Europe from east and from west, from over the Atlantic, from North and South America and from the states of the former Soviet Union?" The answer is that it would be desirable to have as many states party to the convention as possible, but negotiations on a wider front than the Union have been too difficult to enable anything useful to be done within a reasonable time. Meanwhile, I gather that the UK presidency hopes to have this convention signed before its term ends in June.
Perhaps I may outline for your Lordships some of the forms of co-operation for which the convention provides. It builds on the older procedures for co-operation between judicial authorities in matters such as obtaining evidence, and in those respects it simplifies the old convention, but there is nothing new in principle.
The convention also provides for some new forms of co-operation between police authorities; for example, assistance may be requested in what are called "controlled deliveries". That is a technique that is frequently used against drug smugglers. The police obtain information that a quantity of drugs is about to be exported or imported. They allow the delivery to take place in order to discover to whom they are going, and then they pounce and arrest that person. There was a good example of that in a case recently before your Lordships' Appellate Committee. Customs and Excise were tipped off that a dealer in Pakistan was sending a large package of heroin to the United Kingdom. They intercepted the package, took out the heroin, substituted Horlicks (which I am told has the same smell as heroin) and persuaded the exporter to come to London to collect it. When he did so, they arrested him. I think that he is now spending 15 years in prison.
Article 10 of the draft convention enables the police of one state to request assistance for allowing a controlled delivery to take place in another state. There is also provision for assistance in what are called "covert

793
operations", which sound very dramatic, but mean that police officers may be allowed to go to another member state and, in co-operation with the local police, operate under a false identity if that is necessary to achieve the results that they want.
Those are useful forms of co-operation in investigations of a kind which are already taking place in this country. They require no change in domestic law.
However, I think that at the heart of this convention are the three articles numbered 6 to 8, which were inserted at a late stage as a result of the initiative of the High-Level Group and deal with the interception of communications. This is an important weapon in dealing with organised criminal activities, especially with an international crime, to which such communications are essential. On the other hand, any extension of police powers to intercept people's telephone conversations raises very sensitive issues of civil liberties. It was for this reason that the Select Committee invited the views of the Data Protection Registrar and certain non-governmental organisations such as Justice and Liberty, whose evidence your Lordships will find annexed to the report. These organisations expressed some disquiet about the proposals and so the Select Committee decided to hold a short inquiry, and it produced the report which I am now putting before the House. In the end, having, I hope I may say, considered the matter with the care that any possible invasion of our civil liberties should receive, the Select Committee decided that subject to one or two minor points the proposals were acceptable.
The general principle in these three articles is that a member state should not be obliged to give assistance in intercepting the conversations of people on its own territory unless that would be lawful in accordance with its domestic law. If we take, for example, a request from the French police to intercept a conversation between someone in Paris and someone in London, the Metropolitan Police could do that only by going through the procedures which are required under English law. If I may remind your Lordships, that would mean they would have to get a warrant from the Secretary of State under the Interception of Communications Act 1985, exactly as if it were a domestic interception.
In addition, the member state which executes the request may impose conditions about what, in the example I gave, the French police can do with the transcripts of the interceptions. These conditions are intended to protect the privacy of people who were parties to or even mentioned in the intercepted communication. These matters were of course of particular interest to the Data Protection Registrar, who said that they were welcome. She made one or two suggestions as to how they might be improved, which the Select Committee passed on to the Home Office. The Minister of State, Mrs. Quin, told the sub-committee that she did not envisage any difficulty about satisfying the registrar on these points.
The principle that the interception must be justified according to the law of the state where it takes place has one exception in the convention. That is necessary in order to take account of modern communications technology. Communications through satellites are
794
routed through ground stations which may be in other member states. For example, one system of satellite communication apparently has its ground station in Finland and so the conversation on mobile phones between two people who are both in Birmingham may actually be going through a ground station in Finland. At the moment there are only three or four of these ground stations for satellite communication systems, and as it happens there is not one in the United Kingdom.
What the convention provides is that if the authorities of the country in which the ground station is situated—say the Finns—are asked to intercept a conversation between two people, neither of whom is in their territory, they should not concern themselves with going through the local procedures for intercepting conversations, as they would if they were dealing with people who were actually in their territory. They should leave that question to the states in which the people are present. Therefore, for example, if a conversation was between someone in London and someone in Paris the Metropolitan Police would have to obtain the warrant of the Secretary of State and would have to obtain the clearance of the French authorities, but they would not have to get the equivalent of a warrant in Finland as well. That is just where the hardware happens to be, and Finland has no greater interest in the protection of the privacy of the parties to the conversation than anyone else. Obviously the need for compliance with the formalities of another country would give that much greater protection, but the Minister of State said she did not think that it was worth the additional expense and delay, and the Select Committee accepted her view.
There are other provisions in the convention which your Lordships will find discussed in the report, but I think I have outlined the more important ones. The committee thought that the convention was a useful addition to the equipment of rather hard-pressed law enforcement agencies in coping with organised crime, and it thought that it left the civil liberties of people in the United Kingdom unaffected. There was, I think, some suggestion in the evidence which we received that it was desirable also to harmonise the protection of civil liberties on these matters in other member states, but that is not and cannot be the object of a convention like this. All the member states are already parties to the European Convention on Human Rights and there is therefore a minimum standard of protection—that is ensured.
As for the territorial scope of the convention, it is hoped that in due course substantially similar provisions will be adopted by members of the Council of Europe and that there will be co-operation on similar lines with the United States and Commonwealth countries. But this present convention represents an urgently needed first step, and so I commend the report to the House and beg to move the Motion standing in my name.
Moved, That this House take note of the Report of the European Communities Committee on Mutual Assistance in Criminal Matters (14th Report, HL Paper 72).—(Lord Hoffmann.)
7.15 p.m.
Baroness Elles: My Lords, I should like to express the gratitude of the House to the noble and learned Lord, Lord Hoffmann, for presenting the report this evening—a report produced by the committee which he chaired—which gives details of its considerations and also of the evidence which came from different sources. It does make a readable document—not too difficult and without great legal implications but with perhaps more procedural implications than legal ones. I should also like to thank, if I may, on behalf of the committee, Dr. Kerse, the legal adviser to the committee, who should also be congratulated on and thanked for his contribution to the work of Sub-Committee E. I should also like to offer thanks to all the staff who assisted in producing the report which is now before your Lordships.
As noble Lords will have gathered from what was said by the noble and learned Lord, Lord Hoffmann, although the subject matter was comparatively easy the procedures have been quite difficult: various drafts have been produced over the last few years. Indeed, the sub-committee itself has heard two or three times about the contents of this draft convention, amended and changed over the last two years.
The draft convention drawn up by the member states of the European Union brings the 1959 Convention of the Council of Europe up to date in some specific matters, due mainly to technical changes in methods of communication. However, the basic provisions which encapsulate national legislation throughout the convention's members remain. Therefore, 15 states will still be bound by the provisions of that convention, even though this new draft convention before your Lordships' House is to be adopted by the 15 member states of the European Union.
There have been certain variations of the draft convention which have come before the sub-committee. The first was in November 1996; there was a revised version in May 1997 which came up for scrutiny in July 1997 and there were two further drafts—one in September 1997 and one in November 1997—the latter of which was considered by our sub-committee earlier this year and now forms the basis of this report.
As of February 1998, Article 4 and Articles 6 to 9 have been left blank in the text and it has apparently been decided to withdraw Article 4, being contained in the Naples H draft convention, which is the convention on customs authorities throughout the member states and in fact is very similar to the one we are discussing today. New wording is provided for Articles 6, 7 and 8 (Article 9 having been withdrawn) to cover interception of terrestrial and satellite telecommunications.
The United Kingdom has contributed three new provisions for Articles 6, 7 and 8 on pages 27–28 of the report, to the effect that mobile or fixed equipment and terrestrial or satellite infrastructure may be used in telecommunications, taking into account three different situations, which have in fact been dealt with by the noble and learned Lord. I will therefore just touch on them very briefly.
796
The three different situations depend on the location of the subject under investigation, the use of fixed or mobile satellite telecommunications and the member state in which his correspondence can be intercepted.
Next, there are provisions in Article 10 covering controlled deliveries. Those are repeated in Article 22 of the Naples II convention on Customs authorities. Article 10 of the mutual assistance convention and Article 22 of the Naples II Convention are almost identical. Those provisions in the latter convention are referred to as "special forms of co-operation".
Article 13 covers the transfer of persons in custody to another member state to assist in criminal investigations. That raises a particular issue for the United Kingdom. Member states have had the option of not adopting the provisions of Articles 20, 21 and 22. The United Kingdom has not adopted Article 20 because it retains its policy of requiring the prisoner's consent to transfer to or from the United Kingdom. That is considered to be a reasonable approach since a prisoner who has not consented is unlikely to be forthcoming in any interrogation that takes place without his agreement. As the Minister who gave evidence to the sub-committee said, mutual recognition of the legal situation in each of the different countries would be respected by the convention.
The Naples II draft convention concerning co-operation between the Customs authorities, like in the other convention, covers aspects of cross-border co-operation to deal with illicit trafficking in drugs and other customs offences. It was pointed out in the evidence given to the sub-committee that such offences included not only drugs but works of art or any goods subject to cross-border trafficking. Customs officers are given powers to engage in hot pursuit across borders in specific circumstances without prior approval to conduct searches as well as the right to carry firearms. The United Kingdom has opted out of that provision in Article 20 but has agreed to the provision in Article 21 which deals with the surveillance of suspects who have entered another member state's territory.
It will be important to ensure that the powers given to Customs authorities are in line with similar powers that have been given to the legal authorities in relation to criminal matters and that a balance is maintained between the different responsible authorities without incurring considerable delay. These measures do not require changes to United Kingdom legislation but they enable the UK and other member states to modernise their national legislation throughout the EU.
Like the noble and learned Lord, I hope that other member states—perhaps the 15 who are members of the Council of Europe and who are still bound by the 1959 convention—will adopt this new convention in due course. It remains to be seen whether a satisfactorily completed text of the draft convention will be available by the due date, which is the end of May; otherwise, it will not be possible for the United Kingdom to adopt this convention under its presidency. We very much hope that this will be possible and that the work which remains to be done on some of the articles whose

797
provisions have still not been drafted in this particular document will be completed in due time and ready for adoption.
7.23 p.m.
Lord Goodhart: My Lords, I rise to speak briefly in the gap. Like the noble Baroness, Lady Elles, I am a member of the sub-committee which produced the report that has been introduced by the noble and learned Lord, Lord Hoffmann. The noble and learned Lord speaks for the sub-committee as a whole, but I should like to add a few words for two reasons: first, I believe it is desirable that my party should be represented in this short debate; and, secondly, the sub-committee did not accept a number of criticisms made by human rights organisations. One of them was Justice, a body with which I have a long, close and continuing relationship.
It is obvious that cross-border co-operation between police forces is essential in order to combat cross-border organised crime, which is becoming an increasingly serious problem throughout the world. It is also obvious that such co-operation must comply with the letter and spirit of human rights law. The sub-committee thought that in general the draft Convention on Mutual Assistance in Criminal Matters improved co-operation between police forces in the European Union without infringing human rights. We gave serious consideration to the criticisms by Justice, Liberty and other bodies but we felt that on the whole they were considerably overstated. We concluded that the draft convention was deficient in that it failed to make specific provision for data protection. That is a deficiency that requires correction, and we have made recommendations to that effect in the report.
Finally, I draw specific attention to paragraphs 68 and 69 of the report which point out the importance of applying the convention on a uniform basis in all member states and express the view that the European Court of Justice should be given full jurisdiction over the convention. We hope that in due course the Government will exercise the powers that they will have under the Treaty of Amsterdam to opt into the jurisdiction of the European Court of Justice for the purpose of interpreting the convention. With those words, we are very happy to support the Motion of the noble and learned Lord.
7.26 p.m.
Lord Mackay of Drumadoon: My Lords, this short debate provides a welcome opportunity for your Lordships to pay tribute to the members of the Select Committee for the quality of the report that has been produced. Bearing in mind in particular the limited period of time available, it is clear that the House should be most indebted to the committee for the clear and concise terms in which it has expressed its views. There can be little doubt that this report will be of assistance to government Ministers and their officials as they seek to draw to a conclusion the negotiations on the final terms of the convention.
798
We all know that in recent years there has been considerable discussion on issues connected with law and order. It is an area in which politicians of all parties have not been slow to take very public positions. Proposals for legislation and change come from many quarters. From time to time all of us look abroad to see whether foreign jurisdictions can offer any assistance to enable us to solve the problems of this country. In that discussion the international dimension of certain categories of crime is stressed, and rightly so.
Nevertheless, one of the interesting features of the debate is that very rarely is any mention made of the importance of sorting out the practical details that are necessary to facilitate co-operation between the law enforcement agencies of different nation states. There is little if any public discussion of the existence of the various conventions, let alone their detailed terms. As a consequence, while members of the public tacitly expect law enforcement agencies of different countries to co-operate with one another, there is very little understanding of the practical and legal difficulties that require to be addressed and resolved before co-operation can be prompt and effective. It may be that in the absence of such public discussion government Ministers of all parties and their officials who are involved in the negotiation of such conventions do not feel under the same pressure to move forward, update the relevant procedures and deliver swift action as they do when addressing purely domestic issues in the field of law and order. That view may be supported by the fact that this draft convention is designed to supplement a convention dating back to 1959 which, as the noble and learned Lord has reminded us, was not ratified by this country until some 30 years later.
It is undoubtedly clear that progress in this important area tends to be slow. In the meantime, organised crime does not stand still. For those reasons, it is to be hoped that the parties involved in negotiating the final terms of the convention will be able to do so during the course of this year. Having studied carefully the issues flagged up by the committee in Part IV of its report, it does not appear that any of its minor concerns need stand in the way of that objective being achieved.
Turning to the detail of what the committee set out in Part IV, I venture a few brief observations. The committee is correct to stress that the convention is designed to achieve an improvement in co-operation between the law enforcement agencies of the member states rather than a harmonisation of national laws and procedures. I suggest that that comment should be at the forefront of any publicity given to the convention, whether at the time the negotiations are successfully concluded or when the convention is in due course ratified by the United Kingdom.
That is one of a number of important considerations that should encourage the general public and all those involved in the criminal justice system to give their full support to those who will operate under the terms of the convention. Such an emphasis on co-operation as opposed to harmonisation, when linked to the retention of the dual criminality principle, should reassure those

799
who are inclined to be sceptical on matters European and serve to discourage any misplaced criticism of greater co-operation in this important area.
As in all areas of the criminal justice system, it is impossible to overstress the importance of keeping the public "on side" by educating them as to the procedures involved and reassuring them that the procedures that have been negotiated strike a reasonable balance between the protection of the public who are affected by the criminal activity and the persons accused of crime, whether they are to be prosecuted in this country or in the criminal courts of another member state.
Of course, we need look no further than within the confines of the United Kingdom itself to see how law enforcement agencies and public prosecution services of different traditions and operating under separate systems of criminal law can, where necessary and appropriate, co-operate speedily and successfully in the fight against serious crime, while respecting the separate national identities of the agencies involved.
Seeing the noble and learned Lord, Lord Hope, in his place tonight reminds me of an occasion some years ago when I appeared in front of him in the Court of Criminal Appeal in Scotland on behalf of an Englishman, Mr. Clements, who had been convicted of being concerned in the supply of drugs—I believe that it was cannabis. The Englishman's first visit to Scotland was his arrival in handcuffs on a plane from London, he having been at the London end of a drugs supply route from some dark London suburb. Mr. Clements met the Edinburgh courier at Kings Cross station and was watched by Scottish and Metropolitan police officers as he escorted the courier to wherever the drugs were uplifted. One of the incriminating pieces of evidence against Mr. Clements was that on arrest he was in possession of a Scottish banknote. As a man who had never previously been to Scotland, that was somewhat difficult for him to explain.
I turn to the reservations expressed by the committee about the terms of Articles 6 and 7 of the draft convention dealing with the interception of telecommunications. The benefits of modern means of communication are not restricted to those of us who abide by the criminal law. They have been embraced by the criminal fraternity, as they have been by many other sectors of society. While the use of modern means of communication may provide valuable assistance to criminals by enabling them to keep one step ahead of the police and other law enforcement agencies, the use of such technology does nevertheless afford certain evidence gathering opportunities that can prove invaluable to those who seek to prosecute the participants of organised crime. The very fact that telephone calls are made and fax messages are sent is valuable evidence, even before one turns to the content of such communications if they can be properly intercepted.
As with our domestic legislation, international agreements require to strike a proper balance as to the extent to which civil liberties and the rights of individuals should be infringed in the wider public interest. In paragraphs 61 and 62 of the report, the
800
committee expressed one modest reservation as to the presidency proposal put forward by the Government as a redraft of Articles 6 and 7. While I believe that the committee was correct to draw attention to that matter, I see it as being no more than a drafting issue. I hope that it can be resolved easily and speedily.
The noble and learned Lord, Lord Hoffmann, also drew attention to the article dealing with controlled deliveries and mentioned that that had achieved success. 1, too, can vouchsafe that from my period of office as Lord Advocate of Scotland. On a number of occasions, officials briefed me in advance that certain deliveries would take place. They did take place and interceptions often occurred off the scenic parts of the Scottish coast. Major drugs criminals were caught and in due course successfully prosecuted. It is a form of activity on the part of law enforcement agencies which some years ago might have met with a measure of scepticism. I believe that it is a sensible way to go forward and I welcome the fact that it is dealt with in the draft convention.
I look forward with interest to hearing the Minister's comments on the committee's recommendations. I am sure that he will give them a positive response. I join the committee in encouraging the Government to use their best endeavours to finalise the terms of the draft convention as early as possible. If that could be achieved before the end of the British Presidency, it would be an achievement of which the Government could be rightly proud. They have been assisted in that exercise by the committee's report. In conclusion, I renew my thanks to the noble and learned Lord and his colleagues for discharging their duties with great distinction.
7.37 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, I echo the noble and learned Lord's final words. As the noble Baroness, Lady Elles, pointed out, this is not unique but unusual among such reports because it is a pleasure to read and is clearly set out even for someone who has no prior knowledge of the subject. We are deeply indebted to the committee, in particular to the noble and learned Lord, Lord Hoffmann.
It is quite plain that crime is international and increasingly globalised. If crime is international its investigation, detection and successful prosecution must depend on international co-operation. I recognise and concur with the noble and learned Lord's proposition that this is only a first step because it is limited to the European context. There is of course substantial international co-operation with our colleagues in overseas jurisdictions outside that geographic ambit.
The convention is a major step forward. I take the point made by three of your Lordships that there was a long delay between the 1959 convention and its ratification. I take the point made specifically by the noble and learned Lord, Lord Mackay of Drumadoon, that we need to get on because technology is changing so quickly. It is advancing so rapidly and criminals are so sophisticated in the use of modern technology and devices that we cannot be backward in the means of detection and prosecution of crime. As the noble and

801
learned Lord pointed out, those of us who have been involved in the prosecution of crime have frequently been extremely irritated and frustrated about the difficulties of obtaining admissible evidence in courts within our respective jurisdictions. That is long before the question of prosecution arises, and then continuing thereafter with delays and difficulties and the knowledge that evidence ought to be available but has not been made available by the time of the trial.
I shall deal specifically with the interception of communications, because that was the central theme of concern to all your Lordships who have spoken. Perhaps I may give some background about progress and intention. As has rightly been pointed out, the convention does not presently contain provisions on the protection of personal data or on the jurisdiction of the European Court. There are important unresolved questions on the interception of communications. Discussions on all those matters are continuing.
We intend that there should be a protocol to the convention. The Justice and Home Affairs Council has decided that work on that should be finalised by the middle of next year. I believe that it is always useful to set a date of that sort because it provides a very good internal discipline for those who must meet those targets. Work on the protocol has already begun under the United Kingdom's presidency.
The matters not yet resolved for inclusion in the convention may be considered for possible inclusion in the protocol. Matters already being considered for inclusion in the protocol are further methods of cross-border investigation techniques and privileges for witnesses who travel abroad to give evidence. As has been said, it is those small questions of technique and practicability that very often are more important than grand, sweeping statements of co-operative principle.
Of course, the protocol will be submitted for parliamentary scrutiny in the usual way, and I hope that your Lordships have found it helpful that I have been able to give that indicative timetable.
The convention and—which is very important indeed—joint action on good practice, reverting to the point that one needs to get the practical points right, are due to go to the Justice and Home Affairs Council for political agreement on 28th and 29th May of this year. The Government intend that both instruments should be adopted before the end of our presidency. Therefore, I am happy to be able to respond positively, firmly and in some detail to the questions which have been asked not only this evening but which are obviously an integral part of the committee's report.
I deal with the interception of communications because, as the noble Lord, Lord Goodhart, indicated, there are a number of civil rights questions which are perhaps particular to that area. When requests are made, the policy of Her Majesty's Government is that the target of the interception will be protected by the national laws both of the requesting member state and the member state in which the target is present. That is a double-lock system of safeguards. I make it clear, and willingly, that
802
the United Kingdom does not intend to comply with requests for the interception of calls on a telephone being used on United Kingdom territory unless the request satisfies the strict criteria which we find in the Interception of Communications Act 1985. We have accepted the committee's recommendation that the requested member state should be able to impose conditions relating to the use and destruction of intercepted material where the subject of the interception is on the territory of the requested member state.
We do not believe that the requested member state should be empowered to impose any conditions which it would not apply to its own national authorities. We believe that that is a clear distinction and is the basis upon which we are negotiating. We believe that the situation is quite different, in principle and in practice, where, as the noble and learned Lord, Lord Hoffmann, indicated, a member state's only involvement is the flicking of a switch; in other words, the illustration of a satellite base station being in one country and the subject of the interception in another. In those circumstances, we believe that the requested member state should comply with the request once it is satisfied that the requirements of the convention have been met. To require the requested member state in those circumstances to consider and seek to apply its domestic law would achieve nothing except to hamper effective co-operation and go against the underlying thinking behind this convention.
I have dealt in a little detail with the interception of communications. I return to my general theme of thanks. It is a very good discipline, for which your Lordships' House and the Government are grateful, to have a body of independent-minded people with expertise and knowledge who are able to focus objectively—in a way that government departments cannot always do—on principle, detail and practicality. The Government are extremely grateful and I hope that we shall meet the timetables that I have mentioned, one of them sooner rather than later. I accept in advance, although perhaps incautiously, the congratulations of the noble and learned Lord, Lord Mackay of Drumadoon, on being able to deliver those particular goods.
7.45 p.m.
Lord Hoffmann: My Lords, I am grateful to noble Lords for their contributions to the debate. I am grateful also to the two members of the sub-committee, the noble Lord, Lord Goodhart, and the noble Baroness, Lady Elles, for their support. I thank the noble and learned Lord, Lord Mackay of Drumadoon, and the Minister—not, so to speak, members of the home team—for the care and attention with which they obviously read the report. I endorse also the thanks of the noble Baroness, Lady Elles, to Dr. Kerse and his staff for the contribution which they made to the preparation of the report.
As there is absolutely nothing in any of the speeches which were made with which I do not wholeheartedly agree, no comment on the detail of the matter is called for, and I commend this Motion to the House.
On Question, Motion agreed to.

Royal Assent
7.46 p.m.
The Deputy Speaker (Viscount Allenby of Megiddo): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Northern Ireland (Elections) Act.

Council Tax Benefit (General) Amendment Regulations 1998
7.47 p.m.
Earl Russellrose to move, That an humble Address be presented to Her Majesty praying that the regulations (S.I. 1998/911), laid before the House on 30th March, be annulled.
The noble Earl said: My Lords, the House will, I am sure, understand that praying against regulations does not necessarily imply that one wishes to object to the regulations. Under the conventions of the House, it is the only way in which one can bring about a debate on regulations.
These regulations announce a concession to my honourable friends in another place. That concession is, of course, welcome, and I welcome it warmly. It is the duty of anyone on this side of the House to be thankful for small mercies. If the Government have climbed down, we are glad that they have done so. However, I also want to say that this climbdown does not obey the first law of climbdowns—you must reach the ground.
Perhaps I may explain something of the background. We have two consecutive sets of regulations. The first set restricted council tax benefit to the rate for band E. Therefore, if one was in one of the higher bands, one received a council tax benefit which was short of the council tax that had to be paid. That caused a good deal of concern, not least to my honourable friends.
We now have new regulations which introduce a transitional protection for existing claimants combined with the 12-week linking rule. Those are, of course, extremely valuable concessions. But there is no relief from the regulations for any new claimants hereafter. Therefore, it is an extremely limited concession. It means that the council tax benefit will in those cases fall short of the council tax. That is the problem to which I wish to draw attention because, although it is put off, it is still coming. Claimants have been granted only the privilege granted by Polyphemus to Odysseus of being the last devoured.
It means that local authorities will have to deal with the bureaucratic burden of levying immense numbers of small debts. We know about that from collecting arrears of the community charge. It is a back breaking business. It will involve bailiffs, disputes, and questions about bailiffs exceeding their powers, which is a subject to which we may need to return on another day.
It will also involve discrimination against those areas of the country which have particularly expensive housing. For example, in Hampstead before the
804
concession I found that this was becoming quite a powerful issue in local elections. On the other hand, when I raised the matter on a visit to Colchester I was told that it applied only to 12 people in the whole constituency. There is a very clear discriminatory effect here. London already has enough to put up with; I do not think that it needed this.
Moreover, it will involve an element of discrimination against extended families. I remember the debate on the shared residence requirements for housing benefit. It was then the Government's view—I do not know whether it still is—that they wished to reverse the trend towards smaller households. For bureaucratic reasons, I can see why they might want to do so; but, for human reasons, it is quite a different issue. It seems to me extremely foolish, if the Government have even been thinking in that way, to introduce discrimination against extended families. Can the Minister say whether those involved in the review of care in the community have been consulted about the regulations? It is obviously for the convenience of many people, not excluding the Treasury, that families should be able, when they choose, to live in a large group with relations in the house, sharing care between them when needed. The regulations will make that more difficult. I believe that the Treasury may, in its usual fashion, be cutting off its nose to spite its face.
We have been told—the Minister said this in another place—that the original regulations were brought in because of the determination to stick to government spending limits. I have asked the Minister before why the Government have that determination, but I have not yet received a clear answer. The Minister said that it was because it was in the manifesto. But that is not an explanation. Things do not get into the manifesto because they fall from the sky like a thunderbolt—at least, I hope that they do not. Indeed, one would like to think that there was some reason why this Government put certain things in their manifesto. But if there is such a reason I have yet to hear it. I do not expect to receive an answer this evening. Nevertheless, I warn the Minister and give her notice that I shall ask that question again.
However, perhaps the most important point is the fact that this takes up again the issues raised a short while ago by the noble Lord, Lord Newton of Braintree, in an extremely interesting intervention. We reach the point where benefit does not cover the costs and where some of the costs are meant to be met out of income support because, in many cases, it can mean nothing else. I had understood, as indeed had the noble Lord, Lord Newton, that income support was not meant to meet housing costs. I had understood that it was not meant to meet council tax costs. With local residents' rent, and other things, we have had some quite harrowing cases of people trying to pay housing costs out of their income support.
As we go on into the review of housing benefit, which may take up quite a lot of time, I should like the Government to consider the view that we cannot really expect people to meet housing costs (in which I include council tax costs and, for my purposes, that is a relevant inclusion) on present levels of income support. If the

805
Government were going to do that, they would have to produce really substantial increases in levels of income support. That is something which I do not see in prospect at present. If it is not in prospect, I believe that the Government may start wondering whether they have breached a dike with these regulations which they may at some stage wish they could build up again. Of course, it is much harder to build up dikes than it is to make holes in them.
Moved, That an humble Address be presented to Her Majesty praying that the regulations (S.I.1998/911), laid before the House on 30th March, be annulled.—(Earl Russell.)
Lord Higgins: My Lords, anyone who had not followed the history of these regulations might be rather puzzled by the noble Earl's initial remarks which referred to the fact that, although he was praying against them, that did not necessarily mean that he was against them. The extraordinary aspect about the debate in the other place on 29th April was that the Minister seemed to think that you never prayed against anything unless you were totally opposed to it. The idea that you might do so simply to promote a debate seemed to him to be a rather strange idea.
Although I seldom read the preamble to statutory instruments, I was rather intrigued to note that this one is phrased in rather marvellous language which may well reflect the introduction ceremony to this House. However, if one looks at the more relevant parts of it, which appear after the first part, it will be seen that the preamble refers to the regulations being exercised after consultation with organisations appearing to be representative of the authorities concerned. Therefore, perhaps I may ask the Minister what consultations have taken place. While no doubt local authorities and others appreciated the change which is being made, can the Minister say whether they were in fact in favour of going a great deal further than the Government have now gone?
I turn now to the second point in the preamble, which refers to the fact that it appears to the Secretary of State for Social Security for reasons of urgency to be inexpedient to refer the proposals in the regulations to the Social Security Advisory Committee. Can the Minister tell us what is so urgent about the proposals, which, if I understand them correctly, simply reverse what the Government were previously doing? However, if that is not so, perhaps the noble Baroness will tell us. At all events, why is it so urgent to do something about this particular measure?
The noble Earl referred to the transitional protection and the introduction of a 12-week linking rule, which clearly is something that we welcome. Indeed, it will do something to ameliorate the effect of the previous regulations. However, as has been pointed out, it will do nothing to help new claimants; they will still suffer. Therefore, it is relevant to ask what the savings will now be. As I understand it, in order to comply with the manifesto commitment—the provenance of which, as the noble Earl explained, is not entirely clear—the original regulation produced a saving of some
806
£15 million a year. Can the Minister say how much will now be saved as a result of these regulations which will amend what was previously proposed?
Clearly these transitional arrangements and the linking rule are important, but they will be even more important if people actually know about them. Can the Minister say what proposals there are for ensuring that local authorities make such information available to those who are affected by these regulations?
Baroness Hollis of Heigham: My Lords, these regulations protect all council tax benefit recipients on 31st March 1998 from the changes to council tax benefit which came into force on 1st April 1998. Perhaps I may, therefore, respond to the noble Lord's question as to why this is so urgent. I should point out to him that those changes came into effect on 1st April and it is now 6th May. Had we gone through the Social Security Advisory Committee, that would have further delayed the process and local authorities would have had to come back to this either half-way through the year with rebates or, alternatively, they would have lost a year and had to introduce the proposals the following year. That is the reason for the urgency. In terms of consultation, local authorities have known about this for some time given the fact that it has been coming through the system and was obviously discussed in the other place. Therefore, the expectation is that the new bills will take this into account.
The protection means that the restriction will not apply to those claimants in bands F, G or H who were entitled to council tax benefit on 31st March 1998. It will continue for as long as they remain at that same address and do not have a break in their council tax benefit entitlement of longer than 12 weeks. Therefore, I am pleased to have this opportunity to explain the Government's actions to your Lordships.
As noble Lords will be aware, the restriction of council tax benefit for properties in bands F, G and H was one of a number of measures inherited from the previous administration. That administration gave no indication that it intended to include transitional protection and, therefore, presumably planned to affect all council tax benefit recipients in the top three council tax bands.
When the measure to restrict council tax benefit was debated in the other place last December, we made it clear that we would be closely monitoring the implementation of the measure to introduce it without any transitional protection. But we went further. As a result of those debates, local government made representations to us about their assessment of the restriction. We took note of what they said and we looked carefully at the information that became available. We decided to act at once, before the regulations took effect. We decided that, as an integral part of the implementation of this policy, no existing recipient of council tax benefit should lose at the point of change. That is a transitional protection which is normally the rule in social security matters; namely, that existing recipients are protected. If, for example, a local

807
authority moved from one standard spending assessment to another, there is normally transitional protection in that case.
We are grateful to the local authority associations and individual authorities who provided information on the effects of the change in specific areas. In particular we are grateful to the Association of London Government, which provided comprehensive information on the effects on individual London boroughs.
One of the principal issues to emerge from our discussions and from all the cumulative information we received was that there was considerable anxiety about the effects of the change on current council tax benefit recipients. We accept that this anxiety was justified. We therefore decided that we did not want those currently receiving council tax benefit—perhaps for years—to be faced with having to meet a bill which they had not expected or anticipated. We therefore considered carefully how we could best deal with this concern when implementing the measure and we decided that the best and surest way to protect all of those currently receiving council tax benefit was to introduce transitional protection. As I said, that has a perfectly good track record in social security policy.
I do not suggest to your Lordships that the local authority associations would not have preferred a complete revocation of the measure. But the associations' primary concern was to ensure that vulnerable groups such as the elderly were protected, and they welcomed the introduction of transitional protection which protects these groups—and indeed all other existing claimants—from the point of change.
Once we were satisfied that transitional protection was needed, we acted swiftly. We ensured that the regulations were in place before the change came into force and at the same time we issued comprehensive guidance to local authorities. In this way, we have been able to introduce transitional protection as an integral part of the implementation of the change in council tax benefit. This means that all existing claimants on 31st March, who would have been affected by the change, have been protected from day 1. This was the result of our approach of listening to local government and of working in partnership with them.
The regulations that we are debating today go beyond simply protecting those in receipt of council tax benefit on 31st March 1998. We have provided additional safeguards. The simplest form of transitional protection would have been to end it once a person's council tax benefit entitlement stopped. Given the short implementation timescale, this might have been the easiest form for the local authorities to deal with. But we rejected this because we felt it could have discouraged people who wanted to move into work, as they might have been concerned that they would lose benefit if for any reason the job did not last. The only way of completely avoiding this risk would have been to provide transitional protection to people no matter how long the break between claims might be. But we felt that this would have created unacceptable administrative complexity for local authorities.
808
Consequently, we decided that a 12-week linking rule would strike a sensible balance between these two extremes. This means that individuals will have an acceptable degree of security against the possibility that their job might end prematurely. Local authorities will find a 12-week rule relatively easy to administer. We have also taken steps to protect people whose household circumstances change—for example, new widows whose partners' claim was protected at the point of change. The regulations provide that if the main claimant leaves the home, or dies, the remaining partner can continue to receive council tax benefit without restriction, as long as they, too, were living in the home on 31st March 1998. This means in effect that widows will inherit their partners' protection. Neither will the single person's discount of 25 per cent. be affected.
We have revised our estimates to take into account the latest data, and forecasts of council tax benefit for 1998/9. Our new estimates suggest that at the point of change some 66,000 council tax benefit recipients will have been protected from the restriction. Previously we thought that 65,000 people would have been protected from the restriction.
Transitional protection means that only new council tax benefit claimants, or those claiming council tax benefit after a break of more than 12 weeks, or moving to properties in bands F, G and H will be affected by the restriction. Normally an elderly person will remain in his or her home until he becomes frail and moves into a considerably smaller property. That brings that person into the lower bands. That means that he will then receive the full protection. That would apply in any case if he was on income support.
An important feature of transitional protection is that it helps the more elderly population. All existing claimants are protected at the point of change and the elderly are much less likely to experience fluctuations in their income which would move them on or off council tax benefit than are those of working age. It is also the case that they are much less likely to move home than other people. But I do understand noble Lords' concerns for those who will be affected by the restriction. Let me assure your Lordships that transitional protection does not alter our commitment to monitoring the effects of the restriction. We will continue to work closely with local government to keep a watch on this policy as it develops. We have already shown that we are a government which listens to representations made to us which we think are well founded.
The Prime Minister made clear that it would not be practicable to use the welfare review as a means of reversing the council tax benefit changes. But this is a separate issue from the consideration of council tax benefit policy as a whole, which will, of course, be considered within the reviews currently taking place. We cannot, and should not, ignore the role of council tax benefit within the reviews.
With the Department of the Environment, Transport and the Regions, we are reviewing housing policy and housing benefit to address the weaknesses of the current regime. It is important that the benefit system as a whole

809
works in a way which is in line with our overall objectives for welfare reform and works with the grain of housing policy. We have no intention of repeating the mistakes of the previous administration which allowed housing policy under the DoE to go in one direction and benefit policy under the DSS to go in another, thus increasing benefit dependency and housing poverty. Instead we will develop coherent and sustainable policies which we believe strike the right balance between tenants' rights and responsibilities.
On 30th March my honourable friend Hilary Armstrong published a consultation paper on improving local financial accountability as part of our review of local government finance. This paper discusses the council tax system, including the role of council tax benefit.
The consultation paper itself is concerned with the management of local government finance. It does not propose any radical changes to the council tax structure, nor changes to entitlement to council tax benefit, but it seeks consultees' views. We will listen carefully to these views and consider the implications for council tax benefit before setting out any proposals for reform.
Council tax benefit policy is continually under review. The noble Lord mentioned his worry in regard to any subversion of community care policies. This is a matter that we shall obviously want to address. We will make sure that the structure of council tax benefit fulfils the principles for social security set out in our Green Paper. We will make sure that council tax benefit functions as an integral part of local government finance and an integral part of housing policy. We will also ensure that the particular measure to restrict council tax benefit for those in the highest value properties is kept under close scrutiny, as we do with all our policy changes.
I believe that the transitional protection regulations demonstrate that this Government have paid attention to legitimate concerns, have protected the disabled, pensioners and the elderly and existing claimants in large houses who have large numbers of children. We have acted quickly to modify and improve policy as a result. I hope that your Lordships will accept these regulations.
Earl Russell: My Lords, I thank the Minister for that reply. I have never before observed her use of a careful and defensive straight bat. Normally the Minister enjoys playing shots. This was an absolutely straightforward,
810
defensive exercise. If it is axiomatic that the Government must climb halfway down, I think she gave an effective, convincing defence as to why they should come to rest on this ledge rather than another. But why they should not reach the ground, I did not hear. I think there is sense in Hilaire Belloc's advice that if you were born to walk the ground, remain there, and do not fool around. If I may say so to the noble Lord, Lord Higgins, one other reason matters might not be referred to the Social Security Advisory Committee is if the changes are wholly beneficial. As regards these regulations, that would have been justified under that principle as well as the other.
Lord Higgins: My Lords, I am most grateful to the noble Lord for those comments. I take that point. However, from time to time views on what is beneficial may vary between the two sides of the House, or even between noble Lords on this side of the House. As regards urgency, I am puzzled about a matter. Is it not the case that if the Government had carried out the consultation previously these measures would have been incorporated in the original provisions and it would not be necessary now to treat them as a matter of urgency?
Earl Russell: My Lords, I take that point. There is something of a mystery about why the Government changed their mind when they did. My honourable friends obviously had a big part in that. I suspect also that they spotted, as I and others in my party did, that these matters were becoming quite a big issue in the London local elections. However, we shall have to wait a few hours before we return to that issue.
The important point relates to the review. I was pleased to observe the Minister nod on the point that income support is not meant to meet housing costs. That is an important principle. However, I also noted her statement that the Prime Minister said that it is not practicable to use the review to reverse the cut. I do not understand exactly how those principles sit together. If the cut is not reversed the principle that income support is not being used to meet housing costs is at least brought into question. That principle is of considerable importance in social security policy.
As the housing benefit review progresses, we shall undoubtedly have to return to that point. I do not think that we can pursue it with profit any further tonight. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.
House adjourned at ten minutes past eight o'clock.