Lords Sitting of 6 July 1999

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

University Research: Project Decisions
Baroness Knight of Collingtree Baroness Knight of Collingtree asked Her Majesty's Government:
Whether it is a proper function of a university to carry out research which involves recruiting and paying 600 homosexual males to have anal intercourse.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, universities have procedures involving ethics committees which take decisions on whether experiments, investigations or procedures using human or animal subjects are appropriate.
Baroness Knight of Collingtree: My Lords, does the Minister agree it is odd that a university with no medical research department should have embarked upon this project? Will the Minister agree that many students are impecunious and that some may view this as an easy way to earn £40? Does the Minister realise that the students are aware of the project and that their parents are extremely worried? Can she tell the House what insurance or compensation is available to young men who contract Aids through such a scheme?
Baroness Blackstone: My Lords, I can give the noble Baroness some reassurance about the project. No students at City University or elsewhere are involved in the project. The participants are recruited through gay organisations. I do not believe that this raises an insurance issue, as the project involves clinical trials which will concern protecting the health of homosexual men.
Earl Ferrers: My Lords, why does the noble Baroness not condemn this as a perfectly appalling practice? Why does she not say that it is not the proper function of a university to carry out research of this nature?
Baroness Blackstone: My Lords, as a Member of this House for many years, the noble Earl ought to know that Ministers have no powers to intervene in such matters. Under Section 68 of the Further and Higher Education Act 1992, universities are independent, autonomous institutions, responsible for determining their own educational and research priorities. The House has always held that matter dear. I believe that it is something that the Government and others should respect.
Lord Quirk: My Lords, will the Minister agree that in upholding the right to free academic inquiry, vice-chancellors are vulnerable to public opinion and to public criticism if the project simultaneously involves
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personal risk—in this case such things as rectal injury—and can also be represented as little more than commercially sponsored testing of a commercial product?
Baroness Blackstone: My Lords, this is a clinical trial. Frequently, universities undertake contract research that involves clinical trials. Of course, vice-chancellors have a difficult role to play, particularly if it is put about that the research is in some way dubious. All the evidence I have before me suggests that this is properly conducted research, which has been carefully considered by the ethics committee of the university concerned. I believe that we should respect the view taken by that committee.
Earl Russell: My Lords, the noble Baroness in her private capacity may or may not have strong feelings on this subject. Will she confirm that not everything on which we have strong feelings is a matter on which a Minister is accountable to the House?
Baroness Blackstone: My Lords, I am grateful to the noble Earl for that comment. He has hit the nail on the head. This matter should be left to the discretion of universities. I have every confidence that all the necessary care was taken before this particularly sensitive piece of research was undertaken. I repeat that we should respect the decision that was made.
Lord Davies of Oldham: My Lords, will the Minister agree that we would be treading a rocky path if it 'were suggested that the Minister should take powers to intervene in the research decisions of British universities?
Baroness Blackstone: Yes, my Lords, I strongly agree with my noble friend. Were that to happen, we would be treading an extremely dangerous road where political views of all kinds—and personal views—would start to affect the independence of our universities to undertake properly conducted, thoughtful research.
Baroness Young: My Lords, can the Minister tell us what the cost of such research is to the taxpayer?
Baroness Blackstone: My Lords, I can confirm that the project is contract research, paid for entirely by the private sector organisation sponsoring it.
Lord Milverton: My Lords, does the Minister agree that there are many who would courageously say that such research is not simply quite wrong, but unethical from a Christian standpoint? It is surprising that there are homosexual men prepared to do such a peculiar thing.
Baroness Blackstone: My Lords, of course, I respect the views of the noble Lord. I suspect that there are 300 personal views in the House. However, I do not believe that our personal views are pertinent to the issue.
Baroness Carnegy of Lour: My Lords, perhaps I may suggest that the Minister was correct, in her first answer, to point out that this piece of research had been before a research ethics committee. Is the whole trial to take place within the area of one university, and therefore within the

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area of one ethics committee, or is it to take place across the country? The numbers involved suggest it may involve other centres. If that is so, does the Minister know of the decisions of the ethics committees in the other areas? A serious issue is raised if an ethics committee has found one way in one place and another way elsewhere, as sometimes happens.
Baroness Blackstone: My Lords, I accept entirely what the noble Baroness says; that is, that where research is carried out by several universities, particularly sensitive research of this kind, it is important that the ethics committees of those universities work closely together and reach a common decision. I can confirm that in this case the research was undertaken by a single university. It is not a large piece of research since only 300 gay couples are involved. It is not a piece of research involving thousands of people.
Baroness Blatch: My Lords, is it purely incidental that no student from this university is involved in the research, or is there a ruling that they should not be?
Baroness Blackstone: My Lords, I can confirm that before the research was undertaken the decision was taken that no student at the university should be involved. The noble Baroness, Lady Knight, talked of payments. Each participant receives £20—a small sum of money—at the end of the research for answering 10 long questionnaires. It is standard practice in clinical trials of this sort to pay a small sum to compensate people for giving up substantial amounts of time.

Turkey: Human Rights
2.45 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
What conclusions they draw from the 130 cases brought against Turkey to the European Commission and Court of Human Rights, and in particular those of Mentes v. Turkey, Akdivar v. Turkey and Selcuk and Asker v. Turkey, concerning the destruction and depopulation of villages.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, Her Majesty's Government have repeatedly made clear their condemnation of so-called "village clearances". We welcome the fact that such forced evacuations have virtually ceased since 1996.
On the basis of those cases where the European Court of Human Rights has already ruled against Turkey, Her Majesty's Government conclude that the instances of forced evacuations of villages were at odds with Turkey's obligations under the European Convention on Human Rights. We have repeatedly urged the Turkish Government to comply fully with rulings of the ECHR.
Lord Hylton: My Lords, I thank the Minister for her reply and particularly for her condemnation of what has
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taken place. However, does she fully appreciate the scale on which these activities took place? Is it not the case that 3,000 villages were completely cleared, displacing approximately 3 million people? That is slightly more than the total population of Kosovo.
Baroness Symons of Vernham Dean: My Lords, I am aware that over 3,000 villages and hamlets were forcibly evacuated in the course of the conflicts between the Turkish security forces and the PKK. We condemned the brutal and counter-productive policy behind those evacuations. But criticism alone will not bring about the improvements that we want to see in Turkey's performance over human rights. That is why we continue to encourage the Turks to implement a package of measures which is aimed at improving their record on human rights. For example, we have been giving them help in training lawyers and police and raising their standards to international levels.
Lord Avebury: My Lords, the Minister says that village clearances have virtually ceased. But does she appreciate that in 1998, according to the IHD—the foremost Turkish human rights organisation—30 villages were demolished? Does she agree that the Home Office figure of 500,000 people being displaced by these clearances, which was quoted in the assessment used by the Home Office for immigration and asylum purposes, does not stack up with the 3 million mentioned by the noble Lord, Lord Hylton, and endorsed by such British authorities as David McDowall? Is the displacement of these people who are now living in shanty towns outside Diyarbakir and in the slums of western Turkish cities the reason why the Turkish authorities did not invite the OSCE to monitor their recent elections, knowing that it would discover that all these people were disenfranchised?
Baroness Symons of Vernham Dean: My Lords, I hope I have made clear in robust terms to the House the views of Her Majesty's Government on these village clearances. The noble Lord, Lord Avebury—as did the noble Lord, Lord Hylton—quoted the figure of 3 million. I am given to understand that the figure was some 500,000. I do not want to bandy figures with noble Lords. These are enormous numbers of people. This was a lamentable piece of policy. The recent rulings of the European Court of Human Rights confirmed that position and Her Majesty's Government have no hesitation in criticising that record. As I understand it, there was a considerable slow-down of village evacuations after 1996 and the current position is that the Turkish Government are encouraging those who were evacuated from the villages—that is, the Kurdish population—to return to those villages. We are doing our best to encourage them in that endeavour.
Lord Judd: My Lords, does my noble friend accept that many of us are encouraged by the robust terms in which she has replied to this Question? Indeed, we should like to congratulate the Government on the firm stand that they are taking. However, if NATO is to have increasing responsibility in making an effective stand for human rights in various parts of the world, does my noble friend

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agree that issues may be raised about how far it is possible to co-operate in such action with a nation state which has a record of this kind?
Baroness Symons of Vernham Dean: My Lords, I understand why there is an implicit suggestion—I put it no higher than that—in my noble friend's Question that there is an analogy, if I may put it that way, with the situation in Kosovo; namely—and I paraphrase what my noble friend said—that for one of our own allies to have been in this position does not bear a great deal of scrutiny. When looking at this Question I, too, raised that issue. But having looked at what has actually happened, I really do not believe that the comparison stands up. It is not sustainable to argue that the Turks have pursued what might be described as a "Serbian-style policy" of ethnic cleansing against the Kurds. They have not sought to expel ethnic Kurds, who are Turkish citizens, beyond their borders; nor has there been any attempt, since the clearances, to re-settle ethnic Turks into the villages which were evacuated. However, nothing in that detracts from the robust criticisms that Her Majesty's Government have made of these village clearances or our continuing criticisms of Turkey's record on human rights.
Lord Ewing of Kirkford: My Lords, can my noble friend the Minister tell us what difference the exchanges in your Lordships' House this afternoon have made to the Government's attitude to Turkey's application to join the European Union?
Baroness Symons of Vernham Dean: My Lords, Her Majesty's Government always listen with very great interest to the wisdom that your Lordships are able to bring to bear on a whole range of different issues. However, the Government have pursued the right policies in encouraging our friends in Turkey to improve their record on human rights. Her Majesty's Government do that not only through our contacts in relation to the European Union; indeed, we have also done so through a series of practical measures of help on human rights issues—for example, helping to establish an independent police complaints authority, a young lawyers' exchange scheme, and a pilot on citizens advice bureaux. We shall shortly be announcing a further package when my right honourable friend Miss Quin visits Turkey later this month. We listen; of course, we do. However, it is also important that noble Lords should be aware of the measures that are going forward to try to help Turkey improve.

Motorways: Abnormal Loads
2.52 p.m.
Lord Berkeley Lord Berkeley asked Her Majesty's Government:
Whether the Highways Agency is responsible for authorising the timing, route and lane occupancy of wide loads on motorways and whether compensation is payable by the operator to other drivers for any delay such movements may cause.
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, the Highways Agency plays no part in the authorisation of abnormal loads, The movement of most such loads is authorised by the police, who can vary the date, time and route of the load. The movement of certain extremely large loads must be authorised by the Department of Environment, Transport and the Regions. An operator who is lawfully using a vehicle to carry an abnormally wide load on a motorway will, in the absence of negligence on the part of the driver, not normally be liable to pay compensation to other users of the motorway.
Lord Berkeley: My Lords, I am grateful to my noble friend the Minister for that reply. My Question arose after mine was one of probably about 5.000 cars which were delayed for an estimated two hours on the M.25 one Saturday morning. Can my noble friend tell me why the police do not require these vehicles to travel at night when the motorways are much less congested? Although the operator may not be paying compensation, I should point out that that is not the case with the railways. If you are delayed for two hours when travelling on the railways, you might even get some compensation. I suggest that that should, perhaps, be looked at.
Lord Williams of Mostyn: My Lords, I realise the apparent attraction of moving all abnormal loads at night. However, that would mean the concentration of a scarce police resource within the eight to 10 night-time hours. Very often routine and major motorway programmes, in terms of repair and rebuilding, are planned during night-time hours. Essentially, this has to be something within the discretion of the local chief constable.
Lord Mason of Barnsley: My Lords, is my noble friend the Minister aware that over 1.5 million movements of wide loads in England and Wales are noted by the police each year, and that 10 per cent of these require police escorts? Moreover, I gather that the cost involved must be borne by the police. Surely that cannot be right. What is the view of the Home Office on the matter?
Further, before my noble friend jumps up to the Dispatch Box to reply, can he tell us what are the Transport Association's views on night movements only? Has the association made representations to the Home Office? Similarly, has the Police Community Liaison Committee done likewise?
Lord Williams of Mostyn: My Lords, there is a vast number of abnormal load movements using the motorway network. Of course, these movements are necessary to enable manufacturing industry and other industrial sectors to carry out their work and thereby provide employment and produce profit. In response to my noble friend's specific question, I can tell him that we have put out a consultation document relating to proposals to introduce private escorts for abnormal loads on motorways. That document was produced in the latter part of last year. The report has been circulated

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for consultation and we expect preliminary conclusions to be going to Ministers in the autumn of this year. I can also tell my noble friend that we consulted 258 organisations and consultees, and many of the road haulage associations and related bodies have replied.
Lord McNair: My Lords, can the Minister tell the House whether in France, or other countries, the company whose load is being accompanied by the police pays for the cost of that escort?
Lord Williams of Mostyn: My Lords, my understanding is that on certain motorways in France the person requiring the escort does indeed have to pay the charge that the noble Lord indicated.
Lord Campbell of Croy: My Lords, bearing in mind the unfortunate episode experienced by the noble Lord, Lord Berkeley, is the Minister aware that the M.25 and the M.23 are essential for many travellers to Heathrow and Gatwick airports who have to take flights and travel some distances? Is he further aware that the kind of delay that his noble friend mentioned could have meant that a great many people missed their flights?
Lord Williams of Mostyn: My Lords, I sympathise with people in those circumstances. Indeed, speaking from recent, bitter personal experience, I am well aware of the delays on the M.25. Obviously, these are matters which chief constables must take into account. By and large, bearing in mind the general picture painted by my noble friend Lord Mason, I think that they do this remarkably well.
Lord Gisborough: My Lords, can the Minister tell us whether these rules apply to combine harvesters, which very often travel many miles along a road with, perhaps, a 10-mile queue behind them? Are they subject to the same rules?
Lord Williams of Mostyn: My Lords, it depends on their size and dimensions. If a load is wider than 4.3 metres and/or longer than 18.3 metres and/or weighs more than 41,000 kilograms in total, then it falls within the abnormal load categories which have to be notified. If the noble Lord has been following a small combine harvester, that information will not be of help to him; but if he has been following a very big one it should be of enormous assistance. However, one is frequently delayed by other road users. Quite often, for example, a man with a donkey may be travelling along a road. That is not an abnormal load and one just has to put up with it.
Earl Attlee: My Lords, before putting my questions, I should first declare an interest as I am president of the Heavy Transport Association. Is the Minister aware that, in trying to overcome the difficulties of long delays, operators are being hit with a double whammy of the working time directive that limits how long crews can afford to wait for a police escort and the minimum wage
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which affects imaginative pay schemes? Further, can the Minister confirm that private escorts have already been successfully put on trial by the police?
Lord Williams of Mostyn: My Lords, it is not a double whammy at all. Working time directives are an essential part of public safety protection. It is foolish to think that a driver of a large vehicle ought to be allowed to drive without any limitation. Moreover, when one looks at the level of the minimum wage, it is clear that it is no more than a decent gesture to those who work for other people's profit. The private escorts are part of the scheme that I mentioned. Consultation documents have been put out and the Heavy Transport Association mentioned by the noble Earl—indeed, he was courteous enough to indicate to me other interests that he has—is one of the consultees which has responded.

Student Loan Scheme: Residence
2.59 p.m.
Baroness Young Baroness Young asked Her Majesty's Government:
Whether pupils from British schools in the European Union who qualify for places at British universities are excluded from the student loan scheme.
Baroness Blackstone: My Lords, not all students at British schools in the European Union are British. Nevertheless those students who can demonstrate a residential connection with this country and meet the other eligibility criteria will be eligible for loans. If students have no recent history of residence in the United Kingdom, it is right that they should be excluded from the loans scheme. These residence conditions have remained broadly unchanged for many years.
Baroness Young: My Lords, I thank the noble Baroness for that reply. This is an extremely important issue for British students in British schools in the European Union who, as the noble Baroness knows, follow a British curriculum, take British exams and qualify for British universities. There is uncertainty as to whether or not they are eligible for the student loan scheme. This is a serious deterrent to some of them getting to a university at all. Will the noble Baroness look at this question and clarify the situation? We are not talking about students who are not British.
Baroness Blackstone: My Lords, I am grateful for the noble Baroness's Question because this is a matter that we should look at in terms of providing good, clear information to British students in British schools in the European Union. I certainly would not want any student who is eligible on other grounds—that is, with ability and the right qualifications—to decide not to go to university because he or she is unclear about the arrangements. However, I am sure that the noble Baroness will agree that it is important that we set down proper residence criteria. It would not be right for us to open up the student loan scheme to people, whether

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British or not, who have, for example, lived in the United States for many years and have few connections with the UK.
Lord Walton of Detchant: My Lords, will the noble Baroness clarify whether British students who are studying in international schools in European countries not in the Union, such as Switzerland, would be eligible for such loans if coming to UK universities?
Baroness Blackstone: My Lords, exactly the same provisions apply to them whether they are in an international school in Switzerland, in the United States or anywhere in the world. The student loans regulations relate to residence qualifications. As I have said, that criterion has been in place for many years. However, I am certainly willing to look at the guidance and information that we provide on this matter.
Lord Ewing of Kirkford: My Lords, does my noble friend agree that if students living in another European country are intelligent enough to go to a British university, they are surely intelligent enough to know whether they are entitled to a student loan?
Baroness Blackstone: My Lords, they ought to be but sometimes even I have difficulty in understanding complicated government circulars and regulations of this kind. I am sure that is true of many other Members of your Lordships' House.
Baroness Blatch: My Lords, does not the Minister agree that it is deeply unfair that students from other European countries other than England, Wales and Northern Ireland receive preferential treatment in relation to the waiving of fees for university courses and yet our British subjects are subject to such unfairness?
Baroness Blackstone: My Lords, students from the European Union do not receive preferential treatment in relation to fees. The situation with respect to fees is exactly the same as regards the eligibility criteria for the student loan scheme. They are based on residence qualifications.
Baroness Blatch: My Lords, I really must come back on that. A student from France attending a Scottish university will have the fees waived whereas a student from England attending the same Scottish university will not.
Baroness Blackstone: My Lords, we have been through this on many previous occasions. I think that the noble Baroness is well aware that an independent inquiry on this issue under the chairmanship of Sir George Quigley is under way. It will report to Parliament no later than April 2000.
Baroness Young: My Lords, I ask for clarification because there is a difference of interpretation as regards whether a student is "resident". Some authorities will not allow student loans even if the students concerned
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are on the electoral roll of an area. I think that there is a great deal of confusion on this issue and someone needs to look into it.
Baroness Blackstone: My Lords, the issue of the electoral roll is a complicated one. The reason the Government have never accepted that being on an electoral roll should make one automatically eligible for a student loan is that Commonwealth citizens can be on an electoral roll. That includes Commonwealth students who are not permanently resident in the UK. If we opened up that particular route, I think that there would be quite a lot of abuse.
Lord Monkswell: My Lords, bearing in mind that one of the tenets of the European Union is the free movement of labour, and bearing in mind that the different rules and costs that apply to the education of workers' children—whether they are at school or university—will inhibit that free movement of labour, do the Government monitor the different funding and regulatory regimes that apply in the different countries of the European Union? Does my noble friend have any discussions with her counterparts in the European Union to see what common standards and financial regimes might be achieved?
Baroness Blackstone: My Lords, it is for each independent member of the European Union to have its own system for student support. That is how I believe it should remain. However, of course the Government are constantly in touch with what is happening in other countries, not just in the European Union but elsewhere around the world because we can sometimes learn from what other countries are doing in this difficult and complicated area. Only yesterday I had a meeting with the Dutch Minister of Education during which we discussed this issue, among others.

Business
Lord Carter: My Lords, at a convenient moment after 4 p.m. my noble friend Lady Hayman will, with the leave of the House, repeat a Statement that is to be made in another place on public health.

Employment Relations Bill
3.6 p.m.
Lord McIntosh of Haringey: My Lords, on behalf of my noble friend Lord Simon of Highbury, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clause 1,

Schedule 1,

Clause 2,

Schedule 2,

Clauses 3 and 4,

Schedule 3,

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Clauses 5 to 9,

Schedule 4,

Clauses 10 to 15,

Schedule 5,

Clauses 16 to 26,

Schedule 6,

Clauses 27 and 28,

Schedule 7,

Clauses 29 to 36,

Schedule 8,

Clauses 37 to 39.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

Welfare Reform and Pensions Bill
3.7 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 11 [Effect of bankruptcy on pension rights: approved arrangements]:
Lord Higgins Lord Higgins moved Amendment No. 38:
Page 12, line 22, at end insert—
("(5A) No pension rights of any person shall however vest in his trustee of bankruptcy if they were acquired or secured during a period when the arrangement was approved.")
The noble Lord said: In moving Amendment No. 38, I should like to speak also to Amendments Nos. 39 and 40 which are consequential. Before we discuss the highly emotive issues of war widows' pensions or the higher reaches of pensions policy which are reflected in the amendments tabled by the noble Baroness, Lady Castle of Blackburn, there are one or two rather technical amendments whereby we seek to establish the Government's position.
As Clause 11 stands, our understanding is that it could have retrospective effect. The whole concept of retrospection has always been a difficult one and many different definitions of retrospection have been put forward. As I understand the position, if the Inland Revenue were to decide to disapprove a pension scheme, that could have a retrospective effect as regards the protection of those assets from the trustee in bankruptcy being removed. Although we understand the reasons why the Government think that it is appropriate to change the situation with regard to future arrangements, we believe that there is some danger of retrospection here.
This matter was debated on 16th March in a Standing Committee of another place, where it was suggested that the matter could be solved by an exercise of ministerial discretion so far as concerns protecting the assets in the circumstances I have described. That would not seem to be a very satisfactory arrangement. It is less watertight
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than if it were on the face of the Bill. But these are complicated matters and it would be helpful for the Committee to have an explanation of them from the Government. I beg to move.
Lord McIntosh of Haringey: The measures in Clause 11 of the Bill will protect a person's rights in a tax-approved pension scheme in the event of their bankruptcy. The same amendments were raised in Committee in another place. Before I go on to discuss them, perhaps it will be helpful if I give an outline of how the measures will work.
When a person becomes bankrupt his or her assets are generally taken over by the trustee in bankruptcy. However the current treatment of people's pension rights on bankruptcy is inconsistent. Pension rights in occupational pension schemes are usually safeguarded, whereas rights in personal pensions are at risk of falling into the hands of the trustee in bankruptcy. It is common ground that that is unfair. Not only that, it acts against one of the major principles of our programme of welfare reform; that is, security in retirement.
Clause 11 of the Bill provides that on bankruptcy an individual's rights in a tax-approved pension scheme will be protected from the trustee in bankruptcy by virtue of being excluded from the bankrupt's estate. I understand this was supported by Conservative Members in another place. This new statutory protection will not, however, extend to pension rights held in unapproved pension arrangements. Such arrangements are usually used by the very well off to top up an approved pension arrangement. As I am sure the noble Lord will agree, it would be inappropriate to apply the automatic protection provided by these new measures to such arrangements.
Perhaps I may now turn to the individual amendments and the clear case made out for them by the noble Lord. He is concerned about the position of people in an approved pension scheme which has had its tax approval withdrawn and that people lose protection for rights accrued while the scheme was approved. I share the noble Lord's concern about innocent members of a pension scheme being inadvertently penalised. However, for two reasons, I hope to be able to reassure him that this will not happen.
First, tax approval for pension schemes is not withdrawn unless there are very good grounds for doing so and is done rarely. I shall let the noble Lord have the figures for the number of cases in which it occurs. Tax approval is withdrawn only if a scheme is in breach of the Inland Revenue requirements. If it comes to the Inland Revenue's attention that a scheme is in breach in a particular area, the Inland Revenue will write to the scheme about the matter. The pension scheme is then given every opportunity to put the matter right, with assistance and advice if needed. Withdrawal of approval is a major step; in every case the final decision is taken only after consideration at a senior level.
When considering withdrawal of approval, the Inland Revenue pays particular attention to the interests of members of the scheme who have not been involved in any irregularity. They are allowed to transfer their rights

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to another approved pension scheme. Of course, if they do so, their pensions rights will continue to receive the automatic protections provided by Clause 11.
In any one year, the Inland Revenue withdraws approval from about 75 pension schemes. The overwhelming majority of those schemes are what are known as small self-administered schemes, set up for the benefit of company directors. In practice, the schemes tend to have only two or three members, all of whom are trustees. Unlike other pension schemes, small self-administered schemes are allowed to use scheme assets to secure loans to the employer or to invest directly in the employer, up to a single limit of 50 per cent of the scheme's assets. I am sure that the noble Lord can see the scope for that kind of scheme falling short of the Inland Revenue requirements.
Secondly, there is an additional safeguard, which some noble Lords might regard as a belt and braces approach. Clause 12 gives the court the power to exclude an individual's pension rights in an unapproved scheme from his or her estate on bankruptcy. This will give the same protection from creditors as if they were rights under an approved scheme. The grounds for the court's consideration will be that the rights in the unapproved pension scheme represent the individual's only, or only significant, pension provision. That is a safety net provision for those who have made pension provision only via an unapproved arrangement. It will also apply in those cases where tax approval is withdrawn from a scheme and—although it would be highly unusual—the individual in question decides not to transfer his or her rights to another scheme.
The noble Lord asked me whether this was not retrospective legislation. The treatment of pension rights under Clause 11 is determined by the reference to the true tax status of the scheme at the time of the bankruptcy order, not the date on which tax approval was withdrawn from the scheme. So it is not retrospective legislation but legislation which addresses the circumstances of the case. With that reassurance, I hope that the noble Lord will feel able to withdraw his amendment.
3.15 p.m.
Lord Higgins: The Committee will be grateful to the Minister for his comprehensive reply. As he rightly points out, there is much common ground in relation to these rather unusual schemes. I was a little concerned when the Minister said that the change takes place at the date of the bankruptcy order rather than the date when the scheme is disapproved. Is it the case that the contributions which have already been made before the date when the scheme is disapproved will not be adversely affected by the subsequent events and the subsequent fact that the scheme is no longer approved by the Inland Revenue?
Lord McIntosh of Haringey: The clause has effect only in relation to the pension rights of a person who is made bankrupt after the commencement of the clause. So in that sense it is certainly not retrospective. In so far as the clause bites—in other words, someone is made bankrupt after the commencement of the clause—all the
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other protections, such as a transfer to an approved scheme or the belt and braces protection of Clause 12, will apply.
Lord Higgins: I am grateful to the Minister. On the basis of what he said, I beg leave to withdraw the amendment. He has also covered very largely the contents of Clauses 11 and 12.
Amendment, by leave, withdrawn.
[Amendments Nos. 39 and 40 not moved.]
Clause 11 agreed to.
Clauses 12 to 16 agreed to.
Clause 17 [Compensating occupational pension schemes]:
On Question, Whether Clause 17 shall stand part of the Bill?
Baroness Buscombe: Having reviewed Clause 17 in some detail and having received representations from a number of organisations on it, I should be grateful if the Minister could give some indication of the Government's thinking behind the clause. It is our understanding that the clause extends the eligibility for compensation under the pension compensation provisions in the Pensions Act 1995, through the Pensions Compensation Board. In addition, it increases the maximum amount of compensation that can be paid to a scheme if the assets are lost through theft or fraud and if the employer is insolvent.
However, it also creates a distinction between scheme members; that is, it distinguishes between those who are already in receipt of a pension and retired, together with those who are within 10 years of retirement age—all of whom will enjoy 100 per cent protection against losses through theft, fraud and if the employer is insolvent—and those who are working and more than 10 years from retirement, who will, in turn, have 90 per cent protection.
In theory the differential seems laudable; it fully protects those who will not have the opportunity to rebuild their provision. However, in practice, surety to offer 100 per cent protection—that is, complete protection—thereby negates any need or duty at all on the part of the beneficiary to ensure that the scheme is being properly run. I make this point with particular regard to those beneficiaries who are managers and trustees and therefore should be accountable in their fiduciary responsibility.
We further suggest that this clause, as I understand it, is inconsistent with other parts of the Bill. It appears entirely to relieve managers and trustees of a scheme for the benefit of a retired person or one within 10 years of pensionable age, of their responsibility, if that scheme ends up being underfunded. Perhaps I may explain what I mean by inconsistent. It is, we understand, the Government's intention to make pension provision fairer, which includes being tough on those who do not carry out their responsibilities properly. For example, Clause 10 of the Bill, which deals with late payments by employers, refers to the possible civil or criminal consequences of late payment.

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In contrast, is a manager or trustee of a pension fund to be entirely protected while an employer should, in the event of late payment, be subject to the full force of the law? Again, I should be grateful if the Minister could give us an indication as to the Government's thinking behind the clause and what the Government hope to achieve in practical terms by the inclusion of the clause. I beg to move.
Lord McIntosh of Haringey: I am grateful to the noble Baroness for explaining her difficulties with Clause 17. I hope that I shall be able to reassure her. Clause 17 is virtually entirely benign. When I say "virtually" I mean that my only hesitation is because it includes a somewhat greater demand on the compensation fund which is paid for by all schemes.
Clause 17 improves access to the compensation provisions. It does not take away any compensation provisions from anyone. It also increases the maximum amount of compensation that can be paid to a scheme if assets are lost through theft or fraud and the employer is insolvent. It means that all scheme members will receive a higher proportion of their pension entitlement than under the existing provisions.
At present, the value of the assets of a scheme must have been reduced to less than 90 per cent of its liabilities before a claim for compensation can be made. A compensation payment at present cannot restore the fund above the level required to meet 90 per cent of its liabilities, calculated using the minimum funding valuation method.
But this does not mean that all members will at present receive 90 per cent of their pension benefits. The first priority is to maintain pensions that are already in payment. This means that younger members in a scheme with a high number of pensioners could lose a large proportion of their benefits, in order to make up the compensation payment to those who are already pensioners.
Our proposals recognise that this is unfair. Under Clause 17, compensation will be paid to restore a scheme's assets to meet 100 per cent of its liabilities for older scheme members. That means that more money will be available in the scheme to compensate people who are below pension age if their pension fund is lost through theft or fraud. The calculation will also include an expense allowance to take account of the cost of winding up the scheme, and 90 per cent of the value of liabilities in respect of younger members. Overall these younger scheme members will receive more than under the current system. It is not the scheme which gets compensation; it is the trustees on behalf of the members of the scheme. Therefore, those who have committed any theft or fraud do not receive any benefit from it.
I believe that, on reflection, the noble Baroness will agree that no members of the scheme lose out through the provisions in Clause 17. Those who are most in need—existing pensioners—will get 100 per cent
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compensation, as they would have done, but that will not be at the expense of younger members of the scheme. I commend the clause to the Committee.
Baroness Buscombe: I am grateful to the Minister for that full explanation. I do not suggest that members would lose out. All I suggest is that we must be careful when it comes to ensuring that fiduciary responsibility remains with those who are responsible for running the scheme. I thank the Minister. I take note of what has been said and shall read it in Hansard.
Clause 17 agreed to.
Clause 18 agreed to.
Baroness Fookes Baroness Fookes moved Amendment No. 41:
After Clause 18, insert the following new clause—
WAR PENSIONS FOR WIDOWS: ENTITLEMENT
(" .—(1) In determining whether a pension is payable to a person as a widow under any of the enactments in subsection (2), no account may be taken of the fact that the widow has remarried or is living together as husband and wife with a person of the opposite sex.
(2) The enactments referred to in subsection (1) are—

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

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

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

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

The noble Baroness said: In the unavoidable absence of the noble Baroness, Lady Strange, I was asked to move the amendment which stands in her name, that of my noble friend Lady Gardner and myself. It is a somewhat daunting prospect to stand in the shoes of the noble Baroness, Lady Strange, because she is well known as a doughty champion and supporter of war widows. I hope that I can do justice to her sentiments in the matter.
The general thrust of the amendment is to ensure that a war widow who remarries or lives as the wife of someone to whom she is not married should not lose her entitlement to a war pension. It is felt that in other pension schemes this is not happening. It therefore seems particularly unjust that it should happen in the case of a woman who loses her husband as a result of war.
However, I appreciate that this is a complex matter. As I understand it, war widows receive their pension from two entirely different sources. They are entirely different schemes administered by two entirely different departments of state. One is the Ministry of Defence, where it is effectively an occupational pension; the other is the DSS, where it is an indication of the loss widows have suffered as a result of war.
I appreciate, therefore, that what I seek may go beyond the scope of the Bill, but I hope that at the least we could open up the whole subject and get things moving in at any rate one department, if not the other. If I sound a little dubious, it is because, having been a Member of Parliament, I have had dealings with the MoD in the past. The department is extraordinarily stiff-necked when it comes to any matter of benefits. The tendency seems to be to give less rather than more, if that is possible. Maybe it has the Treasury standing behind it—that I would not know. All I know is that it is a great job to get it to move, but I realise that this Bill may not be the appropriate place to force that movement.
Nevertheless, an important principle is at stake. I am therefore pleased to move the amendment on behalf of the noble Baroness, Lady Strange, whom, incidentally, I still prefer to regard as my noble friend. She believes that the number of people who might be affected, if this came into operation, would be in the order of 2,700 war widows. That does not count any who may subsequently become widows as a result of any other conflicts in which we may be involved. It is not likely that all 2,700 would remarry. However, the principle is important and therefore I have pleasure in moving the amendment. I beg to move.
Lord Morris of Manchester: I am grateful to the noble Baroness, Lady Strange, for facilitating this important debate by tabling Amendment No. 41, and also to the noble Baroness, Lady Fookes, for moving it with such clarity. The noble Baroness, Lady Strange, is held in the highest regard by war widows, and rightly so. At Second Reading, she said that she knew my noble friend Lady Hollis would argue that,
"this Bill does not affect war widows".—[Official Report, 10/6/99; col. 1626.]
For her part, the noble Baroness, Lady Strange, said that she believed there to be a connection. To make doubly sure, she tabled her amendment. It addresses what Jenny Green, writing for the War Widows Association of Great Britain, described as the "iniquity" of treating war widows who remarry less favourably than they would be treated if their pensions were paid under other schemes.
In the report of his team's review of the Armed Forces' manpower, career and remuneration arrangements, Sir Michael Bett recommended that spouses' attributable pensions should be awarded for life and not withdrawn on remarriage in line with what had become standard private sector occupational pension scheme practice. The Goode report had previously made the same recommendation. Today that recommendation is even more relevant, since the award of spouses' pensions for life has now also been introduced into a major public service pension scheme; namely, that for local government officers.
I speak as the former chairman for 14 years of the managing trustees of the parliamentary contributory pension scheme and of the House of Commons Members' Fund. It is accepted in the parliamentary scheme that remarriage should not cost a widow her pension. I am sure there will be noble Lords on both sides of this House who think that war and service widows are as deserving of treatment no less favourable
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than that of those for whose pensions I used to be responsible in chairing the parliamentary contributory pension fund.
Of all the duties that it falls to Parliament to discharge, none is of more compelling priority than our bounden duty to act justly to men and women who were prepared to lay down their lives for this country and to the dependants of those who did so. That is the case for urgent consideration of the anomaly to which the noble Baroness, Lady Fookes, has drawn our attention and which has been criticised so strongly by Jenny Green and the War Widows Association. I am sure my noble friend, who battled long and hard for war widows in opposition in close alliance with the noble Baroness, Lady Strange, will want to reply as helpfully as she can to this debate.
3.30 p.m.
Lord Campbell of Croy: I merely raise a point for clarification. In proposing the new clause, my noble friend spoke about those who are widows as the result of war, and about the possibility of another war. My understanding is that he expression "war widows" covers a whole further range—that is to say, the widows of servicemen who have died in peacetime on Armed Forces duty in this country. A figure of 2,700 was mentioned. My estimate is that well over half would have been in that category and not involved in any way in a war. That does not make them any the less deserving of the intention behind this clause. The media and the public are sometimes unintentionally misled by that term, and also by the expression "war pensioners". I know from my own experience, and from research with the help of officials, that more than half of those who are termed "war pensioners" have never been anywhere near a war; their disabilities have usually been caused by firing their own weapons on ranges in this country in peacetime. But again, they deserve a pension.
As I have said, the terms "war pensioner" and "war widow" are misleading. "War pensioner" ought to be replaced by "Armed Forces disability pensioner". Then, the matter would be clearer. I sympathise entirely with the purpose of the new clause. It is merely a question of being clear about the group to whom we are referring. I hope that the noble Baroness, Lady Hollis, will confirm what I have said.
Earl Russell: On behalf of my noble friend Lord Goodhart, who is detained in a meeting of the Freedom of Information Committee, and for my own part, I strongly support the amendment. Wearing my other hat, in the course of research I have had the experience of reading the wills of innumerable 17th century gentlemen. One after another, they made settlements on their wives, "on condition that she shall live sole, chaste and unmarried". I know that in the course of doing research one must sit on one's emotions, but one does not stop having them. Every time I read those words, I am struck with the reflex, "What an impertinence!". I use the word "impertinence" in both its abusive and its technical sense. Once the man is dead, it is simply none of his business. If it were his business, he might well hope that the woman would be privileged to find happiness, as one hopes, for a second time.

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If that were not enough, the world has changed. Our perceptions have changed. Support for a widow is not a badge of ownership. It is not a dog collar and lead. It is a recognition of her having put a share into the running of a household. Therefore, support is owed to the woman in justice and equity because of what she has done during the period of the marriage, regardless of what she may see fit to do thereafter.
The case of war widows is of particular importance. The point made by the noble Lord, Lord Morris of Manchester, about "war widowers" is also well taken and will be supported by the European Convention on Human Rights. I do not think that any woman's consent to her husband going off and risking his life in war is happily given. It may be freely given; and it is our national fortune sometimes that it is. But for it to be given happily is extremely rare. That that consent should be given is nationally vital. If there is not an adequate arrangement for the support of the widow, that consent will be rather harder to come by. It is to our national benefit.
Finally, in this, as in child support and many other issues, there is a Treasury interest to be considered. If the Treasury considers its own interest with proper enlightenment—that is a considerable proviso—we might find, for once, that the Treasury is on the side of the angels—because a widow not properly supported by the Treasury will inevitably become dependent on income support. We know that that is not what the Minister wants, and we do not want it either.
Lord Higgins: As so often in this House, one speaks with diffidence on certain issues because of the long-standing commitment of other Members of this place. In opening the debate, my noble friend Lady Fookes referred to the work done by the noble Baroness, Lady Strange, in regard to war widows. That is of considerable significance.
As has rightly been pointed out, there are two separate types of pension. There is the pension administered by the DSS, and there is that administered by the Ministry of Defence. I listened with interest to the remarks of the noble Earl, Lord Russell, regarding the position of the Treasury. Its record on war widows over the years has been somewhat varied.
The crucial point that underlies these amendments is remarriage. In effect, if in present circumstances someone remarries the Treasury gains as a result because the pension that it has previously paid will cease. Therefore, it would be helpful if the Government made a general statement about their policy with regard to pensions and remarriage. The ramifications go a good deal wider than war widows, of whatever type. As my noble friend Lord Campbell pointed out, from time to time that definition can cover people in rather different circumstances. What is the position of the Government in regard to pensions and remarriage?
In the course of the debate it was said that the normal practice in regard to occupational pensions was that if someone remarried she retained the pension. That slightly surprises me. My impression is that, while that
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may be true of a number of occupational pension schemes, in a considerable number of cases where a widow remarries she loses that pension. The same applies to different kinds of pension.
There is also the complication that nowadays the status of marriage is supplemented—that is not the right word—by those who live as husband and wife without being formally married, as the amendment suggests. The amendment seeks to cover both circumstances. In many other areas the Treasury, Inland Revenue and so on carry out extensive investigations to determine the exact position. I am not at all clear whether, if a war widow has not formally remarried but is living in a relationship, which is described in the amendment as "husband and wife", she loses the pension. Perhaps the Minister can clarify that particular point.
This matter gives rise to a broad issue of policy, and it would be of assistance to know the attitude of the Government with regard to remarriage and the definition of those circumstances in which a war widow's pension may be withdrawn. More broadly, I would have thought it undesirable from the point of view of public policy to create a situation in which effectively there is a deterrence to marriage. As the noble Earl pointed out, someone who has been widowed may want to remarry but the financial disadvantages can be substantial.
A further problem may arise if, having remarried, she is widowed a second time. It may be that the second husband, in contrast to the first, has little or no pension rights. Therefore, if she decides to remarry not only does she lose her own pension but if her new husband is older than herself, as may well be the case, she may suffer a considerable disadvantage in later life in that she has neither her own pension nor a pension of any great significance from her second husband. I believe that the Committee would be assisted if the Minister could set the whole of this issue in the broader context of remarriage and pensions.
3.45 p.m.
Baroness Hollis of Heigham: I shall try. Like other Members of the Committee, I pay tribute to the work of the War Widows Association, with which I have worked closely over the past couple of years as both a Minister and in opposition. The association has always been eloquent, reasoned, consensual and persuasive in its arguments. A good deal of Treasury stiffening is required to resist a number of amendments for which the association argues. The noble Baroness, Lady Fookes, who moved the amendment on behalf of the noble Baroness, Lady Strange, referred to the latter as "my noble friend". I am sorry that the noble Baroness cannot be here. I, too, hope that outside the Chamber, particularly when it comes to espousing widows' causes, we are indeed her friend and she ours.
We all accept, as movingly described by the noble Earl, Lord Russell, that the change in status from marriage to widowhood, especially war widowhood, is not easy. It is traumatic if one's husband is a serviceman and every day one lives with the fear of widowhood, particularly when, as now, so many of our Armed Forces are deployed in the Balkans. I have met many

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widows who have been helped by the War Widows Association and are extraordinarily grateful for the generosity, warmth, concern and support of that body, which understands the trauma and can help people through it. The association is also tireless in fighting for improvements in the various pension schemes which make provision for servicemen's widows, on whose behalf my noble friend Lord Morris has always been a powerful advocate.
This amendment is an example of the improvements sought by the association. It seeks to provide a war widow's pension from government funds during the lifetime of a war widow regardless of the particular family circumstances following remarriage. In effect, it would introduce government-funded tax-free supplements to the incomes of the second families of war widows which do not take into account the income levels enjoyed by those families. As it stands, the amendment refers to the DSS war widow's pension. The fundamental principle of that pension is that it compensates the widow for the loss of financial maintenance by a husband who has died as a result of service. It is not an occupational pension.
In response to the noble Baroness, Lady Fookes, I cannot comment on the position of the Ministry of Defence. But a pension that is paid by the DSS as a result of widowhood stops when the individual ceases to be a widow. Therefore, in so far as it affects the DSS the Government cannot accept the amendment. Should a war widow be unfortunate enough to become widowed again, or a second marriage ends in divorce, she is eligible to have her war widow's pension reinstated. That amendment to the Pensions Act 1995 was fought for by many in this Chamber, led by the Cross-Benchers. That principle was established for the DSS scheme and therefore applies also to the MoD scheme. The department took on board the decision of this Chamber that a war widow should be able to resume a war widow's DSS pension, and therefore it also applies to the occupational pension. My understanding is that the War Widows Association did not seek to amend the DSS war widows' scheme—it wrote to us to that effect—but to probe the situation with regard to the MoD"s occupational pension scheme, even though, technically, that is perhaps slightly beyond the scope of this Bill.
Cessation of widows' pensions on remarriage, with discretion to restore on second widowhood, is a feature of most public service pensions. I was pressed by the noble Lord, Lord Higgins, about how widespread was the ability of a widow to retain an occupational pension on remarriage. The position differs from scheme to scheme. It is much more likely to apply in the private sector. My information is that in the public sector it ceases on remarriage or cohabitation—which are treated as the same—in the police service, the fire service, the National Health Service, the Civil Service, unless an additional premium is paid, and for MPs, but not for local government, where the position has recently changed, or universities. The vast majority of public sector schemes do not allow an individual to continue to retain an occupational pension once she ceases to be a
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widow. But the world is changing: the local government scheme has recently changed and others may follow suit.
My honourable friend the Minister of State for the Armed Forces announced last September that the Armed Forces pension scheme would be the subject of a major review. We expect recommendations to emerge around the turn of the year and to be the subject of public consultation. These points and others will be taken up in that review. I have no doubt that the War Widows Association will contribute to that consultation, and I shall draw this debate to the attention of my colleagues in the Ministry of Defence. Their work will examine widows' pensions, including the question of whether they should continue to be withdrawn on remarriage.
Given that the original intent of the amendment was to probe the Government's thinking on MoD pensions and whether we were reviewing the situation, I can assure the Committee that we are. The amendment was not originally intended to apply to the Department of Social Security, although the DSS tends to follow movement elsewhere. At the moment, it is separate. I hope that in the light of the explanation and assurances I have given, the noble Baroness, Lady Strange, will feel able to withdraw the amendment.
Lord Campbell of Croy: I wonder whether the Minister could clarify whether the group we are discussing—war widows—covers those widows whose husbands were servicemen on duty when they died, but who were not involved in a war. For example, if a husband fell off a ladder on duty in barracks in Britain in peacetime, his widow rightly deserves a generous pension. As I understand it, she is automatically classified as a "war widow".
The issue is important because, fortunately, we have not had a major war involving many battle casualties since Korea, nearly 50 years ago. Therefore, there are far more service widows whose husbands have died during peacetime activities. They are the ones whose numbers matter now and are more likely to be of an age to remarry.
Earl Russell: Before the Minister replies to the noble Lord, Lord Campbell, will she bear in mind in defining "peacetime" the declining frequency of the declaration of war and the increasing use of the Army, as we saw the day before yesterday, in circumstances involving civil disturbance?
Baroness Hollis of Heigham: The noble Lord and the noble Earl are both right. It is true that most war pensions are received not because of service in the Falklands or in Northern Ireland, but because of injuries incurred in training, ranging from sports injuries to noise-induced hearing loss, associated with not having protective clothing during weapons training. Pensions may also be paid as a result of accidents, such as those involving jeeps.
In so far as a war injury has occurred for a serviceman or a war pension has been paid to a service widow, if the injury occurred because the serviceman was in service at the time, the pension is paid. The noble Lord, Lord Campbell, is right.

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The noble Earl, Lord Russell, is also right. It is not easy to make a clean distinction between war and peace when so many of the demands made on today's Army relate to peacekeeping. Much of the Army's activities involve keeping the peace, and any injury or death incurred is properly covered by the arrangements.
Baroness Fookes: I am grateful to the Minister for the generous tribute she paid to my noble friend Lady Strange and to the work of the War Widows Association. I am sure that my noble friend will be delighted to learn about the review that is to take place within the Ministry of Defence, and no doubt she will wish to give her trenchant views to that body.
I would not dare to second-guess what my noble friend might do subsequently in the Bill, but for the time being, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42 to 44 had been withdrawn from the Marshalled List.]
4 p.m.
Baroness Castle of Blackburn Baroness Castle of Blackburn moved Amendment No. 44A:
After Clause 18, insert the following new clause—
CONTRIBUTIONS TO SERPS
(" .—(1) Contributors or prospective contributors to a pension scheme, whether an occupational pension scheme or stakeholder pension or a personal pension shall be given the option of contributing to the State Earnings Related Pension Scheme as enacted in the Social Security Pensions Act 1975 or to such modification of it as may be prescribed.
(2) To enable prospective contributors in exercising this option the Secretary of State shall publish comparative tables of the contributions required to produce specified benefits in each case including the charges levied on the contributions or on the accumulated fund in each case and the portability of each pension.")
The noble Baroness said: The purpose of the amendment is clear: it is to give all people a genuine choice between the various options of pension provision that are open to them and will be open to them under the Government's policies. In seeking to give people that choice, I include the provision of SERPS, with which the Committee is by now familiar.
The Government's policy is to phase out SERPS gradually as an option and in the mean time to encourage contributors to adopt other forms of pension. The Minister has made it clear in previous discussions that she considers SERPS provision inferior to the Government's state second pension, for example, for certain categories of income groups. I urge the Committee to accept that the merits of SERPS have been sufficiently recorded by a wide range of people, including Members of the Government, for it to be wrong to remove it as an option for those who wish to choose it. We need to give people a genuine choice.
The merits of SERPS have frequently been pointed out. It is a defined pension, so people know what they will get when they have contributed. It is a pension that is paid as of right and it is inflation proofed, which does
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not apply to every scheme offered as an alternative. SERPS is also completely portable. We have a highly flexible labour market, but SERPS can be moved with no difficulty at all from one job to another because employees are still members of the same fund—the National Insurance Fund. It has also been acknowledged on all sides that the administrative expenses of SERPS are lower than those of any other pension scheme. So why phase it out?
The Minister has advanced two arguments against the continuation of SERPS. The first is that it is earnings related. I was surprised to hear the Government use that argument. Has it suddenly become a crime for a pension scheme to be earnings related? If so, what are the Government doing introducing a stakeholder pension scheme, which will be earnings related? Why suddenly applaud the merits of flat-rate pensions?
The second argument that the Minister has advanced is that SERPS does least for those who earn the least. Of course, that is true of any earnings-related scheme, although the scale of income involved may be different. One cannot have an earnings-related scheme that equally benefits people regardless of their income. The Government must make up their mind. If relating pensions to earnings is a crime, they should drop that from the stakeholder pension scheme or from the state second pension. Of course, the Minister will tell me that that is exactly what the Government will do with the second state pension. As the stakeholder pension emerges more strongly into the limelight, the Government will make the SSP a flat rate. That, they say, will do far more for those on the lowest incomes.
I am the first to admit that one of the best bits in the Government's policy provision which they have set out is the decision to "credit in" some of the lowest income groups as though they were earning £9,000 a year. So those on £3,000 or £4,000 a year will be treated as though they are earning £9,000 a year. Wonderful! I welcome that. After all, £3,000 or £4,000 a year is about a quarter of the average national earnings. So they will be credited into half average national earnings. It is not exactly the dawn of a great affluent millennium, but it is an improvement on the present situation.
I ask the Government this question. If that is their concern, why do they not inject that provision into SERPS to add to its many other qualities which I have enumerated and which the Government have time and again accepted? I tell noble Lords why. It is because, without a word of explanation to any of us, the Government have gone overboard for funded pension schemes—pay-as-you-go schemes—although it is by definition impossible to have a defined pension if one has a funded scheme. That is a choice that people should be given.
All I ask is for choice. I do not ask for the abolition of any of the Government's proposed alternatives. I am suspending my judgment with bated breath until we know more about the stakeholder pension, the details of which at present are blissfully obscure. I am a fair minded woman. I am willing to hold back any bombshell of destruction on the stakeholder pension until I know what it involves.
All I ask the Government to do is to allow people to choose. I though: that this Government believed in choice. Let it remain among the range of options. But of course if people are to make a real choice, they must have the information to enable them to do so. We are all being made dizzy by the Minister's brilliant spin statistics. She is brilliant at it, is she not? But penetrate the glossy magazines and try to find verification of the claims that are made. I shall expand on that point on the next amendment.
In this amendment we ask the Government to have the courage not to put before the people of this country glossy generalisations but precise information to enable the people of this country to make a free choice. Is that not what democracy is about? They need to know. There must be a comparison. No doubt you are much cleverer than I am on this, but I do not know whether any of you can tell me in precise terms to what degree, if at all, the alternatives will be inflation proof; or exactly what the charges will be. We have had a discussion about that; we shall return to it. It is apparently still a matter of argument with those whom the Government are trying to entice to introduce stakeholder pensions. But these matters can profoundly affect the reliability of the pension which people draw at the end of their contributory period. We ask for comparative tables. What will people get for how many contributions in each case?
Over personal pension schemes, we discovered that when it came to their final pension contributors were losing £1 out of every £4 that they had carefully saved. We are told, "We shall not repeat that on the stakeholder pension, or anything else". But the Government have not spelt out by exactly how much each person's final pension will be reduced by the charges that have been levied.
Again we have the question of portability. I know that the Government are appreciative of the importance of that. They tell us about the flexible labour market in which we live, and how we have to adjust, and so on. But let people choose between the absolute portability which SERPS offers, as Eagle Star, has pointed out, and the as yet undefined and unequal portability of other schemes.
I ask the Government to do a very reasonable thing. I ask them to say, "Yes, we acknowledge the strengths of SERPS as everyone else has done. We shall not try to force people out of a state second pension into their earnings related stakeholder pension. State pensions will be flat rate, and we shall then deliver blessings to the very poor". I should hate to feel that this Government, with all their worthwhile ambitions to raise workers and incomes out of poverty, should be visualising that over the next half century there might be people living on £3,000 or £4,000 a year. I hope that our minimum income policy will have done something; if it is not doing something it should be increased. No one in this country should have to earn a living to the tune of £3,000 to £4,000 a year. Instead of tailoring our pensions provision to the existence of pay poverty, we should proudly declare, just as we have clone about child
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poverty—and we all welcome it—that this Government are determined to abolish pay poverty; and let who will squeal.
I ask the Government: please consider very carefully the need for choice; and the need for that choice to be informed. We do not want any mis-selling of government alternatives through lack of information; and I am sure that this Minister will rise to the challenge that I throw down at her. I beg to move.
Earl Russell: It is a delight to listen to the noble Baroness, Lady Castle of Blackburn. When she tells us that we are all so much more intelligent than she, she says exactly what Einstein said to the postgraduate—and she deserves to be believed just about as much. I first listened to the noble Baroness 41 years ago, I think, and her ability as a speaker has done nothing but improve since then.
I must admit that, when I begin to think about SERPS, I start feeling like Laocoon. I will not make a speech about SERPS now because I think that the Minister is about to do that. It is possible that we might agree with some of the Minister's comments; I will listen to him and find out.
I will take up just one thing that the noble Baroness said. She gave us a very ruthless either/or about the earnings-related principle: either it is a good thing or it is not. I do not think that it is quite that simple. The earnings-related principle is a bit like driving at 70 miles an hour: it is perfectly all right on an open road, but in a dense crowd it carries risks. I think that such a distinction is legitimate.
I want to address the last part of the first paragraph of the noble Baroness's amendment, which says,
"as enacted in the Social Security Pensions Act 1975 or to such modification of it as may be prescribed".
I am sure that the Minister knows exactly what I will say about those words. I appreciate that, in order to get things on to the agenda and the Order Paper of the House, one includes open-ended statements of that sort. However, that paragraph says that the Secretary of State may do whatever he or she likes.
The noble Baroness has been Secretary of State, and I am sure that she understands that Secretaries of State should not be led into temptation. These open-ended powers mean that, were this matter to be put to the vote on some future occasion, we would be authorising absolutely anything. If there is any question of the measure being put to the vote—perhaps later in our proceedings—I hope that that paragraph will no longer be included.
Lord Higgins: Listening to the persuasive speech of the noble Baroness, I begin to wonder how I have disagreed with her so much for so long. As the noble Earl pointed out, the noble Baroness's eloquence has, if anything, improved over the years. Certainly what we have heard this afternoon could reasonably be described as vintage Castle.
The noble Baroness made a rather persuasive speech and I disagreed with only one part of it. She suggested at one stage that one could not have a funded final salary

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scheme, whereas several occupational schemes are like that. However, they have a very different structure from SERPS. The noble Baroness complained about spin doctors and I began to wonder whether she had been engaged in a little spin doctoring herself. An article in The Independent on Sunday and the front page of yesterday's edition of The Times carried headlines such as "Blair facing defeat over leftover pensions". Members of Labour's influential National Policy Forum are to force a vote on the party's policy on pensions, and I am not sure about the outcome of those deliberations.
The noble Baroness made the point about keeping options open. In their document Partnership in Pensions, the Government spend a considerable amount of time spelling out the many advantages of SERPS—which were recapitulated by the noble Baroness in her opening remarks. For example, the Government point out the low administrative costs involved—and that is an important issue. The noble Baroness rightly pointed to the issues of portability and inflation proofing.
In their paper Partnership in Pensions the Government go to considerable lengths to say that they will substitute for SERPS a state second pension—although the extent to which that state second pension will have the advantages that the noble Baroness outlined for SERPS remains extremely uncertain. In particular, the Government do not propose to introduce the state second pension in one step; they propose to delay it for some considerable time. In the meantime, SERPS will presumably continue as it is.
The noble Baroness made the crucial point that, if the Government intend to introduce a state second pension—which may, in its own right, be desirable—and if they intend to introduce stakeholder pensions, they have not explained why the option of SERPS should not remain open to those who wish to continue with that arrangement. I do not know that we have really had an explanation, but no doubt the Minister will give us one this evening.
Another important point made in the opening speech is that it is crucial that people are able to evaluate one pension option against another. If one were to do that, SERPS is clearly more advantageous in a number of areas. The argument that this is an earnings-related pension is, as has already been pointed out, not a reasonable argument for its abandonment—not least because the stakeholder pension will clearly be in the same position.
The Committee requires a reasoned argument as to why SERPS should not be advanced as a continuing option for those who wish to make the kind of provision with the advantages that SERPS offers—which were outlined clearly by the noble Baroness, Lady Castle of Blackburn.
4.15 p.m.
Lord McIntosh of Haringey: My noble friend Lady Castle is notoriously resistant to flattery—indeed, she is scornful of it, as television interviewers have found to their cost on many occasions. However, she is entitled to recognition, and she must be recognised for
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the fact that her legislation of 1978 introduced a wonderful scheme. I was as angry as she and many other Members were when it was cut and diminished in its effectiveness and its justice by the Conservative government in 1986. I feel as angry about that now as I did at the time—I shall never get over it.
The then Conservative government changed the scheme from an entitlement based on the best 20 years of working life to an average over the whole of working life—from 25 per cent to 20 per cent. of reckonable earnings. That was immensely damaging. To the extent that my noble friend defends what she introduced originally, I agree entirely with her comments.
However, what we propose is better than returning to the 1978 version of SERPS. My noble friend's amendment would give individuals the choice of contributing to the state earnings-related pension scheme as originally enacted in 1975. This would be an additional choice available alongside the Government's proposal for the state second pension and existing contracting-out arrangements. It seems to me that my noble friend is suggesting another form of concurrent pension scheme membership—an issue on which we had much debate when we considered the proposal for stakeholder pensions.
As to what I think are the secondary issues of the complexity of the scheme and choice, I must stress that such a system would be extremely complex for the state and for pension providers to operate. It would also be difficult for individuals to understand. It would be costly both to the state and to individual contributors. It would mean double provision by the state: the state would provide two separate second-tier pension arrangements—SERPS and the state second pension—and the facility to contract out would remain so that rebates would be payable. That is not the best way to encourage saving for old age, and the cost implications for the state would be enormous. It will come as no surprise that individuals opting for this choice would have to pay a much higher level of contribution than that proposed under the new state second pension arrangements. SERPS was significantly more costly than the state second pension will be.
For those, I admit, secondary reasons, we are not attracted to the idea of opening up another choice or of going back to the original SERPS before it was diminished by the Conservative amendments to it.
However, there is a much more important reason. It is that what we are proposing is a better solution particularly for those most in need. The Government's approach is to build a modern and affordable pensions system which will ensure that everyone has the opportunity to achieve a decent income in retirement. We are committed to helping those in most need, which is why we are reforming SERPS and introducing a state second pension which targets help at those on low incomes in a way that SERPS never did. My noble friend Lady Castle acknowledged that under our proposals any employee with earnings below £9,000 will receive a pension as though he or she were earning £9,000, provided that he first earned over the lower earnings limit.

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The provision relates not only to those who are earning in the ordinary sense. Carers and long-term disabled people with broken work records will also receive flat rate credits to the state second pension, which for many will be worth far more than the original best 20 years provision in SERPS; not just better than SERF'S is now, but better than SERFS even as it was when my noble friend introduced it.
Those earning up to £9,000 and who have contributed for a full working life will be about £50 a week better off under the state second pension. Those earning between £9,000 and £18,000 a year will receive a more modest increase. Those earning more than £18,000 will not receive an increase.
That is targeting with a vengeance. It is using the available resources far more for those in need than would ever be provided under the SERPS scheme. My answer to those who ask why we do not provide the extra choice is not only technical in that it would be confusing and unnecessary to have an extra choice, but that the choice would not be real or valuable to those most in need about whom those of us on this side of the committee are most concerned.
Together with our proposal for stakeholder pensions, this more accurately reflects the current labour market conditions and can therefore go much further in achieving security and decency of pro vision in old age in a way that SERPS—even 1998 SERPS—can no longer do.
My noble friend made a number of points which I want to answer. She said that our pensions are not inflation-proof. All occupational and personal pensions accrued since April 1997 are inflation proof in line with prices up to a cap of 5 per cent, which is well above the current inflation rates. All contracted-out pensions are inflation-proof. As regards choice, the Government never tried to tell individuals which form of pensions vehicle was best for them. We believed that they should be given the right advice so that they can make the right choices. But the decision is a matter for individuals and their independent financial advisers. We are committed to offering choice, but not a choice which would be too complex in the way she suggested.
My noble friend said that our policy is to phase out SERPS. On the contrary, SERPS will be improved by giving more help to the low paid, to carers and to the long-term disabled with broken work records. In stage two of the state second pension, benefits will be flat rate, but no one will be forced to join a privately funded pension. In other words, there is a place for flat-rate pensions and there is a place for earnings-related pensions. That choice will be different for different people.
My noble friend asked about the rules for the state second pension on revaluation and indexation. Earnings on pensions which have accrued will be revalued in line with average earnings up to the point of retirement. When state second pensions are awarded and in payment they will be indexed in line with prices.
My noble friend complained about the lack of information. The Government are working on a range of proposals which will enable individuals to gain a better
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idea of their prospective rights. We intend to introduce a combined annual statement of their overall provision which is clear and easy to understand.
The second part of my noble friend's amendment deals with the suggestion that the Secretary of State should publish tables to help individuals choose if they want to make contributions to the state scheme. I acknowledge that that sounds sensible, but in fact it is riddled with difficulties. We would have to collect the information. We would have to establish from every pension administrator or provider the specific level of contribution required to produce a certain level of benefit, which would be a huge burden on business. The information would quickly become out of date, and it would be unreliable in money purchase arrangements because the level of the fund depends crucially on market performance. In salary-related schemes, it would be more difficult because of the redistributive nature of the provision and the fact that pension levels depend of the level of salary and not on the level of contribution.
I as much as anyone in the Chamber appreciate and sympathise with the motivation behind the amendment. I hope that I have been able to convince my noble friend that what we are producing builds on the original SERPS and produces something which is better for those most in need. To go back to SERPS as an alternative at this time would be regressive rather than progressive in taxation terms.
Lord Higgins: I listened with great interest to what the Minister said and want to make a couple of points. He spoke of the 1998 SERPS; that is, the existing situation. Will he clarify the position of those in that scheme as the second state pension is gradually introduced? A number of people will want to stay in SERPS. At what stage will they be deprived of that option and what will be the situation of those who have not yet retired and those who have already retired?
Secondly, what will be the cost of the proposed arrangements for a state second pension—leaving on one side the issue of discounting the future value—compared with the cost of continuing SERPS in its present form?
Lord McIntosh of Haringey: The answer to the noble Lord's first question is that when a state second pension is implemented SERPS will end in the sense that no further pension will be accrued under it. However, pension rights already accrued under SERPS will be protected and paid in full. Therefore, any individual who works and contributes to both SERPS and the state second pension will receive a second pension based on both schemes on retirement.
As regards costs, the table is complicated and I do not have the ability to explain it at this Dispatch Box. Some of it is almost three-dimensional. Will the noble Lord allow me to write to him and place a copy in the Library of the House?
Lord Higgins: Yes, of course. I would be happy to do that. On the noble Lord's first point, am I to

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understand that effectively SERPS will become what one might call a paid-up pension and that the whole operation ceases at that point?
Lord McIntosh of Haringey: Yes. No further pension will be accrued under SERPS when the S2P comes in, which is not until April 2002.
Baroness Castle of Blackburn: The silence of large sections of the Committee on this issue just shows how complicated the whole pensions field is.
It has interested me, hearing Lord McIntosh's reply to me, to see how obscure and difficult the Government find telling the facts. May I on this point please ask Lord McIntosh if he will send me a copy of the relative costs that he is going to give to Lord Higgins? I would be delighted. If he can give them in a letter, for heaven's sake why can he not give them to the people at large? That is what I am asking; I am asking that everybody should be able to make these comparisons, and of course they cannot. I do not think even the Ministers can, or at least they will not.
I am not going to pursue the argument at this stage. It would be an abuse of the kindness of the Committee to make this a one-woman debate. I will therefore withdraw my amendment at this stage, unsatisfied as I am, and return to the matter later.
Amendment, by leave, withdrawn.
Baroness Amos: I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Public Health
4.31 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hayman): My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Health. The Statement is as follows:
"Madam Speaker, the new White Paper which I am presenting to the House today is called Saving Lives: Our Healthier Nation; and that is exactly what it is about. It spells out how we want to save lives by stopping people getting ill in the first place.
"We are aiming to save 300,000 lives between now and the year 2010, by reducing the death rate from cancer in people under 75 by at least one-fifth; by reducing the death rate from coronary heart disease and stroke in people under 75 by at least two-fifths; by reducing the death rate from accidents by one-fifth; and by reducing the death rate from suicide by one-fifth.
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"Those are ambitious targets which should mean that we become a healthier nation. They are bigger reductions than we suggested in the Green Paper; and unlike the Green Paper, these tough targets now apply not to people aged under 65 but to people under 75.
"They are targets backed by action: on cancer—action against smoking, action to improve diet, action to improve screening uptake and quality, action to modernise cancer scanners and equipment, and action to improve treatment; on heart disease and strokes—action on smoking, diet, blood pressure, and exercise, action to cut heart attacks, and action to improve rehabilitation.
"But that is only part of the story. We are not only setting tougher targets than the last government; we are explicitly aiming to do something quite different. Poor people are ill more often and die sooner. So we are going to tackle the inequalities in health which grew under the last government. Our policies are designed to improve most of all the health of the least healthy. The National Health Service has a big part to play, but our strategy requires a three-way partnership between the whole government, local communities, and families and individuals. None can succeed without the others. We reject the idea that individuals are powerless victims of their fate. But we also reject the Tory idea that individuals are entirely to blame for their own poor health.
"We need to use all the means at our disposal to make it possible for everyone to lead healthier lives. Unemployment, low wages, poor housing, crime and disorder, lack of education and environmental pollution all make people ill. The Government are taking action to tackle them all. The windfall levy, opposed by both Tories and Liberals, is providing jobs and training for young people; and 400,000 more people are now in work. Low pay is a health hazard—so we will improve the health of over 2 million people and their families by our introduction of the national minimum wage. This autumn those families and many others will be helped further by the working families' tax credit. Many thousands more will benefit from having a decent home to live in as a result of our increased investment in new and better homes for people who are badly housed. And improved educational standards are providing economic opportunity and pathways out of social exclusion.
"So the Government will play their part, but so too must communities. In some areas whole neighbourhoods are made unhealthy by poverty, pollution, crime and disorder. So we must target effort on those neighbourhoods. The most deprived areas are being helped by the extra effort and extra funding that flow from regeneration schemes, from health action zones and education action zones, from lottery funds going into healthy living centres, from the replacement of sub-standard GP premises, from the Sure Start programme for children, from the Healthy Schools project and from our £96 million Public Health Development Fund.

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"We want to work with community organisations, local councils and health bodies to make sure these programmes are delivered on the ground. Every health authority will have to draw up and implement a health improvement programme which identifies and meets the particular health and healthcare needs of its area.
"That is because priorities differ in different parts of the country, with different individuals and groups having different problems; for example, respiratory disease in areas of heavy industry or the higher incidence of heart disease or cancer in certain ethnic groups. Local councils, businesses and voluntary organisations will all be involved in developing and implementing these plans.
"Fluoridation illustrates the new approach. The White Paper makes it clear that we will conduct an independent expert review of the safety and benefits of fluoridation. If it shows that fluoridation is beneficial, local authorities will be given new powers to require water companies to fluoridate where there is local support for doing so.
"We also propose to strengthen the public health profession and to develop extended roles for health visitors, community and school nurses and midwives.
"The new primary care groups will also enable GPs and practice nurses to draw upon their unique relationships with patients to help to promote better health. That is what many are doing already.
"So we want action by government and action by communities. But that cannot be the end of the story. Individuals and families must also play their part. Smoking is the biggest single cause of avoidable death and the biggest single cause of inequalities in health. We have a twin-track strategy to stop the tobacco companies recruiting new smokers, and to help existing smokers to give up the habit. Unlike the Tories, we accept the overwhelming evidence that tobacco advertising helps to get children addicted—so the Government intend to play their part by banning advertising from December. But we also accept that individuals need help giving up. That is why we are making nicotine replacement therapy available free to poor smokers who want to give up.
"This is a recognition of the fact that up to now most health promotion strategies have actually widened the health gap, because the better off have taken more notice than the worst off. We need to develop strategies which have most impact on the least healthy, and that is one reason why the White Paper announces our decision to replace the Health Education Authority with a new hard-hitting health development agency, with a much bigger role in working out and delivering those approaches that will work best.
"Individuals and families can help one another. That is why we are launching a health skills programme that will give young people first aid skills and health information. It is why we are launching our expert patients programme to help people with chronic diseases like asthma and diabetes to manage their conditions better.
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"This will be good for the NHS and good for patients, as fewer complications mean better health and less demand on GPs and hospitals, with resources used to tackle the highest priorities.
"This White Paper sets out long-term plans for improving the health of the nation and reducing inequalities in health; and these really are long-term plans. Their full benefits will only show up in a decade or more. That is the time-scale involved, but that is no reason for delay. It is all the more reason for getting on with it: 300,000 lives saved—300,000 reasons for action.
"Fifty-one years ago this week the National Health Service, which Nye Bevan founded, came into operation. We all benefit from the far-sightedness of that Labour government. They cut inequalities in access to healthcare but, by themselves, they could not reduce inequalities in health, but common justice requires that we do.
"Members opposite representing areas where people are comfortably off and pretty healthy should recognise that ours is a simple but difficult aim. We want to help to make sure that the standard of health of the people they represent in Surrey or Sutton Coldfield is shared by the people we represent in Barnsley or Bethnal Green. That is what we mean when we say we want to end the divisions which mar our society—a genuine "one nation". I believe that that is what all decent people want to see, wherever they live and whatever their own state of health. That is why I commend this White Paper to the House".
My Lords, that concludes the Statement.
4.39 p.m.
Earl Howe: My Lords, I thank the Minister for repeating the Statement which I welcome, as I do the evident seriousness of purpose with which the Government are addressing those important issues.
I should say at the outset that I believe the Government are right to regard poor health as something which originates from a range of social and socio-economic factors such as housing as well as from causes which are more directly health related, such as smoking. Any credible plan to tackle public health must look across government as a whole and must involve society at every level.
In the short time that I have had to study the White Paper, it is rather difficult for me to comment on the detail of it. However, I should like to pick up on one or two points arising from what the noble Baroness said.
The Green Paper issued in February last year laid some considerable emphasis on the role of government, local government and individual responsibility. I was rather sorry that the Statement sought to portray the policy of the last government as focusing exclusively on the third of those matters. Incidentally, I do not know whether I am alone in finding the presence of barbed party political comments in the Government's Statement to be somewhat out of place. But we seem to be seeing rather a lot of those, in particular from the Department of Health.

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It is surely right for government to promote better health and to require health authorities to set appropriate targets in health improvement programmes. That very much follows the path set by the last government in The Health of the Nation White Paper of 1992. Nevertheless, without a recognition on the part of individuals that it is their choice of lifestyle which will have a major bearing on their own state of health, the whole exercise will inevitably falter.
The Green Paper spoke in terms of a national contract for better health. I wonder whether the Minister will enlarge on that concept today. In particular, what does the White Paper say about some of the major underlying causes of better health, such as good diet, food safety, exercise, moderate alcohol intake, sexual hygiene and so on?
The executive summary is critical of what it describes as the scattergun approach of the last government. But it was surely absolutely right for that government to lay emphasis, as they did, on the key causes of better health. I am unclear as to the extent to which the present Government's approach will permit that emphasis to be renewed. The fact is that the last government set themselves targets in 21 areas. Today's White Paper reduces that number to four.
The Government are to be commended on targeting their efforts most strongly on less affluent areas of the country. However, will the Minister say what that implies for the transfer of resources from what is termed middle England to poorer urban areas? How much money is to be retargeted from one to the other?
Again, in passing, I cannot help regretting the assumption in the Statement that Conservative Members of Parliament only represent healthier and wealthier areas of the country and are therefore, by implication, ignorant of the difficulties that tend to characterise poorer areas. Conservative MPs are aware of and sensitive to those issues, as are MPs of any party. Conservative MPs represent many deprived areas and, on this side of the House, we have every wish to see the nation as a whole benefiting from those initiatives. However, I believe that we are entitled to ask what the Government's policies will mean in practice in terms of the redistribution of the Department of Health's budget.
In taking through the recent Health Bill, now the Health Act, Ministers laid considerable stress on the need to iron out health inequalities, a theme which the Statement picks up. In answer to that point, on this side, we are all in favour of such an ironing out, as I said before, so long as it involves a levelling up.
It is somewhat ironic that as a result of devolution, we are likely to see three different standards of health implemented in the three countries of the Union outside Northern Ireland. Does the Minister recognise that one of the measures most conducive to the process of levelling out would be a government commitment to ensure that the availability of certain key groups of medicines is not prejudiced by unnecessary barriers? I am thinking in particular of statins, which is a class of drugs which has a proven value in reducing the risk of heart attack, atypical antipsychotics for the treatment
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of schizophrenia and cytotoxic drugs. For all of those, there is a marked disparity around the country in terms of the funding made available for them by health authorities.
The Secretary of State expressed the ambition in May to make our cancer services the best in the world and he added:
"We know this will cost money".
I applaud those sentiments but the inescapable fact is that the level of spending per head in the USA on cytotoxic drugs is about five times that in the UK. In Germany, it is over twice as much; and in France, nearly three times as much as in this country. The equivalent comparison for statins is equally stark. Will the Minister tell the House what more the Government propose to do to ensure that patients receive the drugs they need when they need them?
Osteoporosis is another important area of concern. The UK has the lowest number of bone density scanners in the European Union, a situation described by the National Osteoporosis Society as vastly inadequate. Will the Minister comment on that and say what action the Government propose to take?
Will she comment also on the targets for mental health? In particular, will she correct me if I am wrong in interpreting the targets set out in the White Paper as implicitly equating the state of mental health in this country with the incidence of suicides and that suicides and what are termed "undetermined injuries" are the only worthwhile measures in that area? I find that proposition instinctively difficult to accept. Finally, will the noble Baroness say what further primary legislation is implied by this White Paper?
I am supportive of the Government in the ambitions that they have articulated in the White Paper and wish them success in achieving the targets that they have set. I have no doubt that noble Lords will wish to hold the Government to account as the months and years pass and we see the fruits of the Government's efforts.
4.47 p.m.
Lord Clement-Jones: My Lords, I join the noble Earl in saying that I too have a great deal more reading to do of the White Paper and the attendant response to Sir Donald Acheson. But I also thank the Minister for repeating the Statement made in another place. Although the White Paper is making a belated appearance, nevertheless it is making an extremely welcome appearance. In particular on these Benches we welcome the fact that public health is now being treated as core to the health department. We welcome too some of the imaginative initiatives set out in the White Paper.
The Secretary of State said recently that promoting better health is not just a matter for the NHS or for social services; this is a job for the whole Government. The White Paper re-emphasises that, saying that it requires a three-way partnership between government, local communities and families and individuals. We welcome that partnership.
We also welcome the fact that there is indeed a new landscape. I believe that the treatment of public health issues is different under this Government. They link

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public health with social conditions. That was not done explicitly by the previous government. Therefore, I give this Government credit for that.
Health inequalities have widened over the past 20 years. However, the test is the implementation of the Acheson report and its 39 recommendations. Obviously, at a glance there is a great deal of response in the White Paper to the Acheson report's recommendations. But will the Minister be explicit as to which of the 39 recommendations have been accepted by the Government? They cover a wide range of areas; for example, tackling poverty, education, employment and transport. That is a wide variety of tasks which the Government are setting themselves.
In his report Sir Donald wanted the Government, above all, to put women and children first. Last week the BMA published a report which showed that the United Kingdom ranked 18th for deaths in early childhood. It is quite clear that public health policies should concentrate in particular on the first five years of life. There are correlations between low birthweight babies, future poverty, under-achievement and crime. Those are serious links.
Despite talk of joined-up government, however, the key question is whether the Treasury and the DHS will buy into the Acheson agenda. Is the Welfare Reform and Pensions Bill really working to improve public health? How did the withdrawal of benefit from lone parents contribute to improvement in public health?
We welcome the extension of some of the targets such as those for cancer and the other three areas. But why are there no national targets in other areas despite the responses to the Green Paper and the key issues raised by Sir Donald Acheson, such as the reduction of income inequality? If there is no target for a particular aspect of public health policy do we not risk being unable to measure progress? Therefore, does not the Acheson report risk the fate of the original Black report? Do we not need targets to understand what kind of vision the Government have in all areas?
As regards existing targets, what are the financial implications, particularly concerning cancer? It was recently estimated by CERT that in order to put the original targets in place a minimum of an extra £170 million was needed. The same is true for other targets such as coronary heart disease, mental illness and accidents.
We particularly welcome the development of health action zones and health improvement plans, which we discussed as the Health Bill went through this House. That means that we shall not be repeating some of the mistakes of The Health of the Nation which, despite many good intentions at government level, did not really reach down to grassroots level. I believe that the health action zones and the health improvement plans will do a great deal to make sure that the targets, limited though they may be, will reach the levels required. Those targets need to be locally owned. There are some signs that the voluntary sector is not becoming involved in the health action zones as they should be. I believe that East London and Hackney health action zones are a particular case. Will the Minister comment on that?
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We welcome the health development agency, as far as it goes. But does it mean that it is effectively a public health commission? For instance, will it have relationships with Scotland, Wales and Northern Ireland in the public health area? Will it be charged not just with overseeing best practice in England, but also best practice across the country? Who will now carry out health promotion campaigns? Will the agency also spread best practice between health action zones, which is so important in order to make sure that resources are used in the most effective way?
The White Paper mentions primary care groups. But will public health doctors be involved in the formulation of policy and its implementation in those primary care groups? We welcome the introduction of health impact assessments. But will they operate right across the board for all national government policies, and who will carry them out? I wonder what that will show if we subject it to the Welfare Reform and Pensions Bill and a public health assessment.
We welcome the fact that the Government have expanded their policy on children's safety. Although widely trailed, sports medicine is not contained in the White Paper. Can the Minister comment as to whether a sports strategy will be provided later in the year? One of the key areas for accidents is those caused during sporting activities.
A key aspect of public health is risk management and the communication of risk. We need to have a communications policy in place. That also was trailed, but I can see no sign of it in the White Paper. Can the Minister comment on whether the department will be taking on board the work done by the previous Chief Medical Officer as regards the language of risk? That would help enormously in terms of avoiding future problems such as BSE, E.coli and GM foods.
Finally, in common with the noble Earl, I suggest that a number of elements require legislation. What undertakings can the Minister give as regards early legislation? I thank her in advance for her reply. I realise that I have raised a number of questions. I would not like the Minister to believe that we do not welcome many aspects of the White Paper. We have started down a road which is quite a long one. The results may not be evident for some years, but it is very important that we set off in the right way with a very clear understanding of what the Government are trying to achieve.
Baroness Hayman: My Lords, I am grateful for the contributions of the noble Earl and the noble Lord and, perhaps most of all, for the recognition by the noble Lord, Lord Clement-Jones, that he raised a wide range of questions. I shall do my best to answer the broad issues raised by both speakers.
As regards his remarks about inequality, that ties in with the issue that the noble Earl, Lord Howe, raised about there being real differences in approach to those matters. We cannot avoid recognising those differences. They are reflected in the attitude of previous Conservative governments to the Black report and of this Government to the Acheson report.

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The noble Lord, Lord Clement-Jones, asked about work to take forward the health inequalities agenda together with the White Paper, which makes it quite clear that we have dual aims for a public health strategy. One is improving the health of the whole population and the other is improving the health of those who are worst off and most deprived so that we narrow the gap that has been widening in previous years.
Together with the White Paper we have published another action report on reducing health inequalities. It recognises in particular the range of government activity necessary if we are to make a real impact on poor health as well as on health services. That means work to tackle poverty and deprivation, poor housing, lack of facilities, and providing access to fresh food at reasonable prices and decent public transport. In those areas people suffer from multiple deprivation which is reflected in ill health. That is why we have a separate and parallel publication on the action that we are taking.
For example, the social exclusion unit concerned with teenage pregnancies recognises the need to tie up issues concerned with social security, financial support, access to work as well as access to information and services. For example, investment in education can have an enormous effect on the health of individuals.
The noble Lord, Lord Clement-Jones, asked whether it was a matter of women and children first. Women are certainly key determinants as regards the health of families. There is much international evidence that investment in the education of women results in the improvement of health of children and populations. That is something that we have to recognise. The Sure Start programme reflects that recognition. It is recognised in the targeting of work within health action zones and in the funding for smoking cessation services. There we find the answers to the questions of the noble Earl, Lord Howe, about targeting resources to the areas where there is most need. I agree with him that we are here seeking to level up rather than level down.
The noble Lord also asked about equality of access to effective medicines. We are taking action, for example, on psychotropic drugs in terms of reference to the National Institute for Clinical Excellence to make sure that the same evidence base is used by health authorities. On the issue of statins, we have the National Service Framework for Coronary Heart Disease. Looking at the National Service Framework for Mental Health, we see that we recognise the need to focus on a whole range of services to improve mental health.
The noble Lord made the point that reducing suicides is a rather crude measure of improvement in mental health services. The National Service Framework for Mental Health will address the unacceptable variations in service across the country. However, we recognise that health services alone cannot prevent suicides.
This is a clear, focused document on saving lives. The interim report of the national confidential inquiry into suicide and homicide by people with mental illness, directed by Professor Louis Appleby, found that there is scope for improvement in providing services which are integrated and which do not leave people suffering from
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mental illness unsupported at times when they are most vulnerable. Having a suicide reduction target will require a concerted effort towards primary prevention, secondary prevention and treatment which I believe will have an effect throughout the provision of care for those suffering from mental illness.
On the issue of whether there are too few targets at national level, it is our belief that four national targets, focusing on the four major causes of premature death and avoidable ill health, will be tougher for the Government but that it is right to focus on delivering on those. If we are to deliver on clear targets, it is necessary to work across a whole range of activities.
I recognise that the White Paper is a big document which people have not had a long time to study, but it clearly shows, in the partnership that we are seeking, how the allocation of responsibility between the individual, the local community effort and national government will be tied together. However, there is scope in local health improvement programmes to set targets that address the specific local health issues that arise.
The noble Lord, Lord Clement-Jones, asked whether there would be a sports strategy. The Department for Culture, Media and Sport is developing a sports strategy, to be published later this year, to promote greater scope for participation in sport and physical activity for all. I believe that the noble Lord was approaching the problem from a different viewpoint. I was looking at the issue of exercise as an important determinant of good health; he was looking at the risks in exercise and sport in terms of causing injury.
That leads to another element in the strategy which is the improvement in the first aid skills of the population as a whole, which can be as applicable on the sports field as at home or in school. Out-of-hospital care delivered by people who know the basics, at least, of first aid will be a tremendous help in a variety of situations.
As the noble Lord suggests, risk is a difficult area. It is included in the White Paper. Currently, the department is developing principles for producing policy and is using risk analysis to interpret information. Earlier the noble Lord mentioned the extremely important initiative to try to ensure that departments across Whitehall—including the Department of Health—and individuals can base their personal decisions, as well as government decisions, on well evidenced information. I believe that the communication of risk is one of the biggest challenges for our scientific and political communities. At the moment, that is not carried out in a consistent manner.
As regards the issue of legislation, the White Paper will be followed by secondary legislation to convert the Health Education Authority into a new health development agency. It is not our belief that other legislation is necessary to implement the White Paper. A great deal of other actions by a wide range of people are required in order to do that, but they do not depend on legislation.
5.06 p.m.
Baroness Gardner of Parkes: My Lords, the issue of fluoridation is mentioned on page four of the Statement. At a time when 2.5 million fewer people have National Health Service dentistry than when the Government came into power, at a time when the most under-privileged children have deplorable dental health and suffer unnecessary pain from decaying teeth, why are the Government suggesting an independent expert review; yet another review? Can the Minister tell us what form that review will take and whether it will include any pilot studies? How long will that delay the introduction of fluoridation? Will the matter be settled before the next general election? How can the Minister say,
"Fluoridation illustrates the new approach"?
Is the new approach to avoid decision-making, to delay again and to review again and again? When shall we see such legislation and help for the desperately unhappy children suffering dental pain?
Baroness Hayman: My Lords, I respect the commitment of the noble Baroness to this area. I believe that she knows that I personally share her views on the benefits of fluoridation. However, we should deceive ourselves if we thought that our views were shared by everybody. We want to tackle dental health inequalities and we want to end the current legislative impasse. It is no good pretending that everything has been working satisfactorily up to now.
Since 1985, 55 requests from health authorities have been turned down and nothing more has happened. We want to overcome that. There is a view that the evidence on the safety of fluoride is based on studies conducted some time ago. That is why we have asked Professor Jos Kleinen at the NHS Centre for Reviews and Dissemination at the University of York to lead the review. The report is due early next year. Once we have that report, and if there is no doubt about the safely of fluoridation, we can take the kind of action that we believe would be effective.
At an optimum level of one part per million fluoride, dental decay in children is reduced by between one-third and one-half. We want a targeted programme to tackle dental health inequalities. Some 25 local authority areas now fluoridate their water. If another 25 local authorities fluoridated their water—say, in the North-West, East London, East Midlands, Southampton and Bristol—we would make an enormous impact on the problem. No other oral health promotion measure is anywhere near capable of reducing the rates of tooth decay in deprived areas to the levels in affluent areas. That is why we believe that we have to find a way of negotiating ourselves out of what has been an impasse for many years and take effective action. If the matter takes a few more months but produces more legitimacy for the policies of the future, I believe that will be worth while.
Baroness Pitkeathley: My Lords—
Baroness Carnegy of Lour: My Lords—
Earl Russell: My Lords, it is the turn of the other side.
Lord Hunt of Kings Heath: My Lords, there are another 17 minutes. I believe it is the turn of this side.
Baroness Carnegy of Lour: My Lords, I want to speak on fluoridation. Are noble Lords in agreement? The Government say that they will give local authorities power to force independent water companies to fluoridate water if the local community agrees. I agree with my noble friend and with the Minister that that is highly desirable, but as the Minister says, opinions differ. Does that mean that local authorities will be able to conduct surveys on the matter? If at present a water company fluoridates water, but the local community does not want its water fluoridated, will local government be able to force that company to stop fluoridating the water?
Baroness Hayman: My Lords, I may have preferred the question from this side!
It is important that we understand the different levels of consultation that will have to be gone through. First, we shall have to undertake a review and make sure that the evidence exists. Then we must make sure that local authorities rather than health authorities—they have not so far been a successful mechanism in this regard—have the powers to take forward fluoridation. Also, because the water company and local authority boundaries are not the same, we must discuss with the national body which represents water undertakers the technical implications of taking forward this policy in areas where, for example, the majority are opposed to it.
We need to break the deadlock that presently exists. Also, when we transfer from health to local authorities, the form of public consultation on fluoridating the local water supply will have to be decided. We intend to introduce a legal obligation on water companies to fluoridate where strong local support exists for doing so.
Baroness Pitkeathley: My Lords, does my noble friend agree that one of the most welcome aspects of this far-reaching and welcome White Paper is the extension of the age range that it covers to those who are under 75? Does she agree also that old people can benefit just as much from health education, from fitness programmes and better nutrition as younger people, but too often are ignored and expected to deal with their ailments as a consequence of old age? In her response, can the Minister also assure me that the provision of better health for older people will include their mental health as depression, leading to self-neglect and even suicide, is more common in older people than is currently acknowledged?
Baroness Hayman: My Lords, my noble friend is right to point out that we have extended the age range in terms of targets. We must recognise that there is not a sudden point in terms of age after which people can no longer benefit, either from health education—there are many important ways in which people can be given the information to enable them to improve their health—or from a range of services. Again, the extent of the importance of exercise and access to it in maintaining good health may differ in nature and scale depending on one's age, but exercise can be an important component for the elderly as well as for schoolchildren. My noble

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friend is also right to point out the mental health aspects that can affect older people. Targeting policies to reduce suicides covers all age groups.
Earl Russell: My Lords, the Statement was surely correct that low pay is a health hazard. Will the Government therefore consider the hypothesis that no pay is a greater health hazard? To that end, when they conduct their health impact assessment, will they collect information on the health of those disentitled to social security benefits?
Baroness Hayman: My Lords, the Acheson inquiry into inequalities in health showed that poor health is associated with low income; that is, low income whether from benefit or in terms of a low wage.
Earl Russell: My Lords, I said "disentitled" to social security benefit, not "on benefit".
Baroness Hayman: My Lords, I apologise to the noble Earl. That takes us into the area of looking at entitlement to benefit as a potential health hazard.
We have said that the health impact assessment programme will be carried out across the board, assessing major policies for their impact on health and health inequalities. We are already applying that assessment to policies assessing fuel poverty and the New Deal for 18 to 24 year-olds. I shall ensure that disentitlement to benefit and its potential impact on health assessment is taken into account by my colleagues in the Department of Social Security.
Lord Jenkin of Roding: My Lords, is the Minister aware that I share the distaste expressed by my noble friend on the Front Bench for the unpleasant "barbs" which the Secretary of State saw fit to include in his Statement, which was otherwise positive and forward-looking? Can the noble Baroness point to any other Statement by any former Secretary of State for Health in which it was argued that health inequalities were the fault of the poor? That is a monstrous accusation to address to anybody.
Is the noble Baroness also aware that I regard the Acheson report as a great improvement on the rather unfortunate Black report which I had to receive a good many years ago? Its research was sadly flawed and its remedies, I was advised, appeared to involve the spending of billions of pounds on abolishing the class system. Is the Minister aware that I regard the detailed proposals in the White Paper as a great deal more practical than the Black report and that I hope that they will succeed? If the Minister is right in arguing that it will take many years, I am sure that is wise. In the mean time, can she describe to the House what measures the Government will put in place to monitor the targets she announced?
Baroness Hayman: My Lords, we need to monitor progress. We are setting ourselves interim targets and every health improvement area will contain specific targets. There were targets in the tobacco White Paper
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for reducing the number of people in this country who smoke. We shall be evaluating progress at a regional and local level in regard to the different targets.
I do not want to enter into a spat across the Dispatch Box in relation to the relative commitment of individuals to good health. We made explicit our commitment not only to improve the health of individuals across the board, but also to reduce the existing inequalities—not a phrase that was popular or acceptable in the Department of Health for many years. Those inequalities have increased rather than reduced over the past 18 years.
Lord Bruce of Donnington: My Lords, the Government are to be congratulated on reasserting the undoubted experience of society as a whole. The health of the individual, while depending in part on the efforts to maintain good health made by the individuals themselves, is fundamentally dependent on society as a whole; and society as a whole is fundamentally involved in the health of the individual. At last, after many years of experiments—no doubt conducted in good faith—into the way in which the health service should be organised, we have an examination of the fundamental causes which reside in society. Aneurin Bevan himself pointed that out in much detail in that very great work of his, In Place of Fear, which was published in 1952.
We now have the opportunity to reassert the priorities in the nation as a whole as regards maintaining good health. Plans to relieve poverty and the fundamental causes of poverty and ill health are now matters for our consideration. I am very proud to be on the same Benches as a government who are now going to make this effort to emphasise the real priorities and give people some purpose in living again; indeed, to give them a fundamental sense of security in place of fear.
There will have to be a reassertion of priorities. One will not have to pay too much regard to private interests which are inevitably involved in the provision of, for example, pharmaceuticals or even ordinary diets. All these things will have to be reassessed. I am very glad that we have reasserted this. I am also very glad, as I am sure we all will be in due course, that perhaps some purpose in life has been restored.
Baroness Hayman: My Lords, I do not think that I need answer the specifics of my noble friend's contribution. However, I believe that the whole House recognises that he has perhaps a longer time-frame and perspective on the National Health Service through personal experience; and, indeed, as I remember, through being in Parliament with Aneurin Bevan when the original legislation to establish the National Health Service was introduced. We are now 51 years on from that time, but it has transformed the social landscape of this country in many ways. It has transformed the way in which we think of ourselves as a society.
The challenge that this White Paper and the inequalities that still exist give to this Government goes beyond the provision of service to the question of access to good health for all our citizens. It is an enormous challenge and one which demands action covering a wide range of people from the individual, through local

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communities, to government. But there are enormous prizes to be won because there is much deprivation to be fought.
Baroness Thomas of Walliswood: My Lords, I was most interested in what the Minister said about international examples in respect of the benefit to be obtained by educating women. I have had some experience of that myself in one of the most deprived countries in the world. Does the noble Baroness agree that one way to ensure that individual women get the messages that they need to receive for the improvement of the health of their families is to work at the lowest level, on an absolutely face-to-face basis, with individuals? Can the Minister tell us what aspects of the Government's programme would respond to that need; in other words, to what I would call the "outreach element" of such measures?
Baroness Hayman: My Lords, a range of activities in the White Paper would respond to that particular need. Some of them relate to the development of healthy living centres, not as buildings and bricks and mortar but as regards inter-community access to health information. It is fascinating to see the uptake of NHS Direct from women, including from women with young children; indeed, an enormously high proportion of callers are looking for information and advice.
Most of all, I would answer the noble Baroness by focusing on the role of community nurses, health visitors, school nurses and midwives. They gain great respect from the people with whom they deal. They have tremendous opportunities, often at very crucial times in people's lives, for making interventions which have real impact. A whole range of areas is important in this respect, although not especially mentioned in the White Paper. I refer, for example, to the provision of prison health services, especially those for women in prison. There is the opportunity to make a difference there. That is also the case in schools, where children can be introduced to the concept of cooking healthily, or to the concept of taking responsibility for their own health—be it sexual health or health in relation to drugs and alcohol—or the health of others by knowing the fundamentals of first aid. Those are very individual people-oriented activities, which can make an enormous difference.

Welfare Reform and Pensions Bill
5.25 p.m.
House again in Committee.
Baroness Castle of Blackburn Baroness Castle of Blackburn moved Amendment No. 44AB:
After Clause 18, insert the following new clause—
MINIMUM LEVEL OF PENSION
(" . In section 44(4) of the Contributions and Benefits Act, for "£66.75" there shall be substituted "£75".")
The noble Baroness said: This amendment stands in my name and that of my noble friend Lady Turner. As
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Members of the Committee will soon appreciate, this is an extremely modest amendment. I quite genuinely hope that my noble friend the Minister will take it seriously in the light of its potential for evening-out the pensions provision in this country.
The amendment provides that the basic state pension, which we know is payable as of right to its contributors, shall be raised from its present figure of £66.75 to £75 a week. We have done this because the basic pension has slipped back badly since the days when Labour were in office in 1974. The introduction of the earnings link by that government for the operating of that basic pension meant that, by this year, the pension would be worth £90.50 per week. It would have been so if the noble Baroness, Lady Thatcher, had not abolished that earnings link.
I am not pretending that any government can afford to restore to pensioners at a stroke the whole of the extra money of which they were then robbed. We are not asking for that; the amendment does not bring us anywhere near to restoring to pensioners the figure that they would have had. Indeed, it only goes one-third of the way. We have done this because we are realists. We know that governments have economic difficulties and that they must act economically realistically. But this is not just an arbitrary figure that we have picked out of a hat. As my noble friend the Minister well knows, it is the figure that the Government say ought to be paid when basic pension additions are means tested.
The Government have said that no pensioner can be expected to live on less than that figure, but they are not prepared to say that pensioners should, as of right, have at least £75 a week restored to them. We are not talking about the £90.50 that they would otherwise have received; we are talking about a mere £75 a week. We have taken the Government's figure and this is what should be paid to pensioners under a means-test assessment of pensioners' needs. Of course, it would be theirs of right.
The Government have always said that their aim is to target what money is available to those who need it most; in other words, to the poorest pensioners. But I remind the Minister that by the Government's own admission—by some of her own admissions—the poorest pensioners are not getting the £75 to which the Government have attached the income support figure. Why is that? It is because on the Government's own figures 1 million pensioners have refused to accept, or apply for, the income support to which they are entitled. This quite rightly alarmed the Government and alarmed the noble Baroness, Lady Turner, myself, and I am sure many other Members of this Chamber. These poorest pensioners are some of the most elderly, the most frail and the most in need of the money. Why are they not claiming it?
Last year the Government told us that they would inquire into this and try to solve the puzzle of why 1 million of the poorest pensioners in this country were not claiming the £75 a week income support to which they were entitled. Last year in another place Harriet Harman, then Secretary of State for Social Security, told the Chamber that the Government took

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this problem so seriously that they were going to appoint a whole team of personal advisers who were going to sit down with each individual pensioner and help them to fill in the forms. That must be because the pensioners could not fill in the forms. Having seen some of those forms, I would not be surprised if that was part of the answer to the mystery. But where are those personal advisers? Are any in post yet, and what would be the cost?
What staggers me is the way the Government are always ready to find money to prevent some people getting it. They are prepared to pay an extra £5 per recipient per week for the administration and means-tested benefits over and above what it costs to administer the basic pension. That is to stop some people getting it as a right although they may have contributed to it. We on this side—most of us anyway—think that the Government have a contract when they set up a contributory scheme and tell people that they are obliged by law to contribute to their upkeep when they are old. If people have fulfilled their part of the legal obligation, the Government must fulfil their part; namely, to give them that for which they thought they were contributing. But some of them are not to get that, so that—the Government say—all the money can go to the poorest.
I asked some questions about this in the Chamber at an earlier stage. I asked what the Government are doing to discover the answer to the mystery. I have no doubt at all what the answer is. Part of the answer is that even poor people have their dignity. Even poor people do not like the stigma of dependency and of charity. They like to feel that they have earned something as of right. I said that I thought that was part of the answer; but if the Government had a better one, why did they not tell us what it was? We were told last year that the Government were setting up nine pilot schemes to study what was preventing people applying. I hope that today the Minister will tell us what has happened to those pilot schemes. The reports will, of course, be published. I hope that we will not just be given the Government's spin-doctored analysis of the findings. Let us see what those pilot scheme reports say. We are not children. We have a right to judge for ourselves what the answer is. Personal advisers have vanished into thin air. Pilot schemes lie shrouded in mystery. We do not know what the Government are spending on them. We do not know when we will get them. Questions were asked in another place—I think it was yesterday—about what was happening and the answers were astonishingly evasive.
I should like something definite from the Minister this evening. We are told that we cannot afford it and that it is fine having fine principles but that if we are to spend money wisely, it must be "targeted". Incidentally, that was a favourite word of the noble Baroness, Lady Thatcher. She must be listening to it with delight. We shall be told perhaps by the Minister—I hope not, as this is getting a little tattered and irrelevant—that to restore the pension to the level it was before the earnings link was dropped would be prohibitive and that the Government have better uses for the money. But I am not asking for that. Will the Minister please not answer
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with one of her prepared solutions? Will she answer my amendment which states that we want pensioners to have £75 a week as of right? I shall tell her where the money could come from. The Government Actuary has published a recent report—I have forgotten the exact date—about this year's uprating of the basic pension. The Government Actuary announced that the National Insurance Fund had a surplus over and above what the Government Actuary thought was necessary of no less than £5.9 billion. So how dare the Government say that the money is not there?
Let us not forget that that money was contributed by the very people who are now asking the Government to fulfil their part of the bargain, or at least a modest section of it. That £5.9 billion would more than cover the cost of what this amendment is seeking. In fact, it would take only half that £5.9 billion to increase the basic pension to £75 a week. So how can anybody who believes in restoring human dignity to everyone not want to see those million poorest pensioners brought into the glow of this financial improvement? How can anybody who lectures us about the need to get rid of the dependency culture dare to insist that we have to make that £75 a week means-tested because we cannot afford it? I hope I have convinced the Minister that we can and that she will therefore accept this amendment gladly. I beg to move.
5.30 p.m.
Baroness Hollis of Heigham: As the noble Baroness has explained, the purpose of the amendment is clear. It would immediately increase the basic state retirement pension to £75. As the pension paid to a married woman on the basis of her husband's contributions is linked to the rate of the basic pension, this would also be increased to £45, giving a total rate for a couple of £120 per week. As my noble friend said, this would increase the pension to the level of the minimum income guarantee which this Government introduced to help the poorest pensioners from this April.
I think the Committee will understand why the noble Baroness tabled this amendment. But I am sure that the Committee will also understand that the key problem with this amendment is that it will give extra money to people who do not need it. Much of the money would go to well-off pensioners—many of whom, I suggest, are sitting in your Lordships' House today—who do not need more—and at a time when we all know that there are many pensioners in Britain who need help far more.
Given that the purpose of the amendment is to increase the basic pension to the level of the minimum income guarantee, while better-off pensioners would gain, the poorest—those on income support—would see no gain at all. As my noble friend said, we would be spending some £3.8 billion—and every penny of that would be going to better-off pensioners and not one penny would be going to the poorest pensioners, who currently get their income topped up to £75 a week in any case.
My noble friend was contemptuous of the word "targeting". I can understand that; the word has a history with which many of us feel unhappy. But it was her

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noble friend, my noble friend and her colleague in the first Labour government of 1945 who said that socialism is about priorities. Targeting is about priorities; and priorities are about targeting. If my noble friend believes in priorities, she must accept that there comes a time when one has to prioritise, to target, and to put money where the need is greatest; and that is with the poorest pensioners.
As a result of the minimum income guarantee, from April single pensioners who have savings of less than £3,000 and an income below £75 a week have their income topped up to the £75 a week level. The guarantee is higher for older pensioners: £77.30 for single pensioners over 75, and £82 for single pensioners over 80. As a result, about 65,000 pensioners who have been just above the level of income support until now are eligible for this extra help for the first time.
Perfectly properly, my noble friend put two specific questions to me. The first question was what has happened to the missing poorest pensioners. No one in the Committee would dispute that their needs are greatest, but we are not getting the response for the take-up of income support that we wish. Currently, some 76 per cent of eligible pensioners claim the income support entitlement; we should like to see that figure considerably improved.
Our research from the nine pilot studies and from the experience of personal advisers shows that part of the reason for lack of take-up is that many more pensioners than we anticipated have capital which takes them above the capital rules, even though their income may be below income support levels. As a result, about half a million pensioners have capital, and half of them have capital of over £20,000. In other words, it is their choice; it is an understandable choice—they are choosing not to draw on their capital to make good their income. But their capital disqualifies them from income support because the income support rules cut out at £8,000 for a single pensioner. So the first reason is that many pensioners have substantial capital which they are reluctant to touch. But it is there for a rainy day and it could be argued that it is appropriate to expect them to draw on their capital rather than to expect taxpayers to raise that income.
We are aware also—my noble friend is right—that there are problems about complexity; that there are problems about ignorance of the benefit; and that there is a dislike of officialdom. People have sometimes applied in the past for a different benefit—for housing benefit or the like—have been rebuffed and feel that there is no benefit available to them. That is why we have been working to see whether key events, trigger events—for example, reaching a certain birthday or receiving attendance allowance and so on—will allow us to piggy-back entitlement to income support on those key events.
We expect to publish the pilot results that my noble friend asked for in the autumn. We shall look at the implications at that stage. I hope very much that we shall have my noble friend's experience to draw on when we come to see how best we can encourage take-up.
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My noble friend's second question was that the £3.8 billion, which would be the cost of her amendment, could be afforded because of a surplus in the National Insurance Fund. The independent Government Actuary recommends that the fund should carry a minimum balance at all times of no less than 17 per cent of benefit expenditure. That effectively works out at about £8 billion. The current surplus is about £5 billion. Given that, I hope that my noble friend will accept that we are not inappropriately storing up money which could be distributed to pensioners across the board, irrespective of their income, irrespective of their need.
We have also said that we expect to update the level of the minimum income guarantee over time in line not with prices but with earnings, so that the poorest pensioners remain, so to speak, in the slipstream of the general increase of national prosperity, and rightly so. In the Budget the Chancellor announced that in a year's time that will be precisely so. That will mean that another 20,000 pensioners who are at present just above the threshold for income support will become entitled to it.
We believe that these are substantial improvements. We can only make a difference to the poorest pensioners. For example, a pensioner couple over 80 years-old will be more than £8 a week better off in real terms over the two-year period. We can only make this kind of improvement and this kind of difference because we are concentrating the extra help on those who need it most, rather than giving money to those who already have perfectly adequate second pensions.
I know that my noble friend does not agree with the Government's approach. She would like a general increase across the board, irrespective of need. If that happened, we could not at the same time lift the poorest and seek to reduce some of the inequalities between poor and rich that have grown over the past 20 years, particularly among pensioners. We believe that the right way is to target the poorest pensioners—or, in my noble friend's words perhaps, to prioritise the poorest pensioners. We believe that is the right way to help them and I urge the Committee to reject the amendment.
5.45 p.m.
Earl Russell: Before the Minister sits down perhaps I may ask her a question. She put considerable weight on pensioners having savings above the capital limits; can she tell the Committee when those capital limits were last uprated?
Baroness Hollis of Heigham: The alignment for going into residential care and so on was raised about two or three years ago—in 1995, I think—by Kenneth Clarke when he was Chancellor of the Exchequer. The capital limits for other areas of income support affecting pensioners were last raised in, I think, the late 1980s.
Lord Higgins: This has been an illuminating debate in many respects. Perhaps I may put two specific points to the Minister. She well knows our objections to some aspects of the minimum income guarantee; can she tell the Committee to what extent she believes that people

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will now be in receipt of the minimum income guarantee who did not previously take up the basic pension plus the same amount of income support?
My second point runs with that made by the noble Earl. I have raised it frequently, recently on the Tax Credits Bill. As she rightly said, a large number of people do not take up their pension entitlement or, more accurately, their income support entitlement, because of the capital limits. But the whole set of capital limits across the Government's social security policy—right the way through to the ones we discussed a few days ago in relation to the working families' tax credit—are seriously out of line with each other. If the Minister wants more people to take up their benefits, that is probably the most important aspect. One knows full well that when some people are down to £3,000—or, at the most, £8,000—they are very reluctant to give that up because it gives them finally an aspect of security for which they have saved all their lives. So far as concerns this side of social security, the limits are way out of line with the rest of the structure.
Lord Haskel: It is unfortunate that my noble friend Lady Castle should attack the Minister on the take-up of income support. My noble friend the Minister has fought very hard to try to get income support taken up by everyone. She was instrumental in raising the matter when in opposition, and in government she has worked diligently to see why people are not taking up this benefit and to encourage them to do so. So one should speak up in her defence.
Speaking as a potential recipient of the extra £10 proposed by my noble friend, of course we should all like to have the extra amount. I think I understand and sympathise with what my noble friend is attempting to do. She is attempting to restore matters to what they might have been. We should all like to turn the clock back; certainly the Government would like circumstances to be different. But we have to deal with things as they are, not as they ought to be. At present, the poorest people need to have their low level of pension topped up by means of income support. A minimum income guarantee will be in place next year; and there will be arrangements for a second pension. So it is to be hoped that this situation will not arise in the distant future. But meanwhile, these are the ways in which poor people can presently benefit. It is a very sensible way to handle matters.
Baroness Hollis of Heigham: I did not expect to return to the Dispatch Box on this matter. However, this is Committee stage, and I was invited to do so by the noble Lord, Lord Higgins.
On the first point, we seek to increase the take-up of pensioners' entitlement to income support by repackaging it, relabelling it, calling it a "pensioners' entitlement" and so forth, because we want people to claim what is their entitlement. As I said, our best estimate is that the current take-up is about 76 per cent. We should like to be able to deliver, by means of the minimum income guarantee, a take-up of at least 85 per cent. Beyond that level it may be very hard to reach
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people. That is the measure by which we are seeking, through the minimum income guarantee, to make a difference to the current arrangements under income support.
The noble Lord's second point related to capital limits. He asked whether I agreed that they were out of date. I can confirm the dates that I gave to the House. The residential homes limit was raised by Kenneth Clarke in 1996, but the upper limit to the income support capital rule was increased from £6,000 in 1988 to £8,000 by 1990. So our memories were correct. It is one of the situations that the Government are keeping under review.
Baroness Castle of Blackburn: First, I should like to answer the point made by the noble Lord, Lord Haskel. I am the first to admit that the Government and the Minister are trying extremely hard to get the million poorest pensioners to take up income support. They made a great point of their poverty in the election, the manifesto and indeed in another place in a speech by Harriet Harman a year ago. "We must never", she declared, "forget the very poorest pensioners. So we are setting up pilot schemes", and the rest of it.
But I would also say this to the noble Lord, Lord Haskel. Various Labour governments of whom I was a member—1964, 1966 and 1974—were equally concerned with the problem of take-up. We went to all sorts of effort. We changed the name from "national assistance" to "supplementary benefit"; we looked into what might be holding people up. Margaret Herbison, the Secretary of State at the time, was a most warm-hearted woman who poured all her energies into trying to get a better take-up. But it was because we came up against the difficulty of people saying, "We don't want your daft means test", that we decided that we had to move progressively towards lifting pensioners above the need to apply for means-testing—hence the earnings link and SERPS.
Without keeping the Committee too long, I also want to say this to the Minister. I have always admired her powers as a magician. She can pull more rabbits out of hats than anybody I have ever seen on the Front Bench. She did it again today: "Oh, we do know one of the reasons", she told us—"probably one of the main reasons, why the poorest pensioners"—"poorest" is the Government's word—"are not taking up their entitlements. It's because they've got all this capital stashed away". Why have we not heard that argument before? It is the first time I have heard it—that in fact these desperately poor pensioners have behind them such funds and they do not want to have to eat into them. So I am withdrawing the amendment; and I warn the Minister that we shall return to the attack.
Amendment, by leave, withdrawn.
Schedule 2 [Pensions: miscellaneous amendments]:
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 44B:
Page 93, line 41, at end insert—
("13A. Section 150 of the Administration Act shall be amended as follows.

(1) In subsection (1), after "prices" insert "or earnings".

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(2) In subsection (2), for "Where it appears to the Secretary of State that the general level of prices" substitute "Where it appears to the Secretary of State that the general level of prices or earnings".

(3) In subsection (2)(a), after "beginning" insert "and, in the case of the first of the sums specified in section 44(4) of the Contributions and Benefits Act and the sum specified in column 3 of paragraph 5 of Part IV of Schedule 4 to the Contributions and Benefits Act, not less than the percentage by which the general level of earnings is greater at the end of the period than it was at the beginning".")

The noble Baroness said: I rise to move the amendment standing in my name and that of my noble friend Lady Castle of Blackburn. Again, we are returning more thoroughly to the whole issue of the earnings link.
The value of the basic pension is crucial for today's pensioners. As we know, it had been intended originally that it should rise in line with the wages index. It was a basic element in the Castle Plan introduced by my noble friend in the mid-1970s. Since 1980, however, the earnings link has been broken. As a result, the basic pension fell from 22.6 per cent of average earnings in 1980 to 17.4 per cent in April 1996. It is set to fall to 10.8 per cent by 2020, when many of today's pensioners will still be alive.
Nevertheless, the basic pension is the biggest element in many pensioners' incomes today. The fall in the relative value of the basic pension during the years of retirement would matter less if pensioners' other incomes could be expected to rise in line with earnings. However, occupational pensions, once in payment, are seldom increased by more than the rate of inflation and in most schemes even that is not guaranteed. It is only the basic pension that has ever been linked to earnings. The restoration of that link is the only practicable way of ensuring that all pensioners will receive a share of increased prosperity, which was the original intention. It would also fun the manifesto pledge that the basic pension will be retained as the foundation of pension provision.
The point may be made, as it was in regard to the previous amendment, that to increase the basic pension in this way would not only benefit the poorer pensioners; everyone would stand to benefit. Yes, but of course pension incomes are subject to tax and the better-off would have to pay tax on it. Moreover, an increase in the basic pension would obviate the need for means-testing, which as my noble friend Lady Castle has indicated, has been a major drawback in getting poorer pensioners to apply for means-tested benefits such as income support. Other alternative methods of increasing pensioner incomes would not deal with the issue of getting people to apply for means-tested benefits.
We are really talking about the social insurance scheme. The intention of social insurance was originally that everyone would benefit, everyone would pay a contribution and there would be a minimum benefit for everyone. We have, moved away from that. We are certainly moving very far away from it if we are now concerned only with providing increases for poorer pensioners and expecting other people to provide for themselves, ultimately through the private insurance system.
We may be told that other countries in the EU—notably Germany—are looking at pension provision and seek to emulate what we have been doing in this country. However, I suspect that Herr Schroder in Germany will have a tough fight on his hands if he seeks to alter the present generous pension provision for which his citizens have paid. I believe that there is a case for returning to the original Castle Plan concept. As doing it all at once might be too much, a phased approach could be adopted because, as my noble friend Lady Castle said, no one expects the Government or any government to make up the difference all in one go.
Nevertheless, the principle is important. We are now talking basically about a system of social insurance instead of a system in which there is special provision for poorer pensioners and in the end everyone else is expected to provide for themselves through the private insurance market. Ultimately that will not prove to be a satisfactory scheme. In the mean time, the poorer pensioners do not benefit as much as they ought and are reduced to looking at possible means of supporting their income through means-tested benefits which many find unacceptable. I beg to move.
6 p.m.
Lord Goodhart: The noble Baroness made a case with which we are familiar and sympathetic, as everyone must be in view of the poverty of many people who are of pensionable age, particularly those who are well past that age.
However, my party was persuaded some years ago that the earnings link was no longer sustainable. We published a policy paper in 1993 which accepted that. I refer to the report of a working party which I chaired and of which my noble friend Lord Russell was a member. We accepted that the earnings link could not remain. The demographic figures were not acceptable. There is expected to be a continuing increase in the proportion of the population who are of pensionable age. There has already been a considerable increase and, so far as one can tell, it is likely to continue. It is due in part to longer life-spans and in part to a relative fall in the birth-rate which means that there will be fewer people to support those in old age.
We reached that conclusion with considerable regret, but nothing that has happened in the past few years has led us to change our minds. Therefore, reluctantly we accept that we cannot go back to the pre-1980 situation, even when one takes into account the increase in the pensionable age for women which will equalise pensions at the age of 65 for both sexes.
On the other hand, we also believe that it is not possible simply to leave matters on the footing that there will be a basic pension which will be maintained in real terms and will form a smaller and smaller proportion of average earnings, topped up, if necessary, by a minimum income guarantee which is, arguably, a disguised form of income support.
That is why we regard it as a matter of considerable importance that alternative arrangements be made. I am anxious to know, first, what the Government see as the likely level of pension that will be paid to someone who

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has qualified with full contributions for the proposed state second pension. We hope that it will be fixed at a level above the present basic pension. As I understand it, it is the Government's intention that the level of the state second pension should be linked to earnings rather than prices.
It is also why we believe that it is important that people should be encouraged and, where appropriate, required to take out funded pensions, the stakeholder pension being an appropriate vehicle; that they should be required to contribute themselves, and that employers should also be required to contribute to the stakeholder pensions. Only through such a structure will it be possible to provide an adequate level of pension for those on low or lower-middle incomes.
Therefore, while we do not feel able to support the noble Baroness's amendment, we are also unhappy with the alternatives that have so far been promised by the Government. In particular, we are unhappy at the fact that taking out a stakeholder pension will not be compulsory and therefore it will not be possible to require employers to make contributions to the pension.
Lord Higgins: I first debated the concepts which underlie the amendment as long ago as 1964. In my maiden speech in another place, I put forward the idea that, although the contributory principle was important, a group of people had been left out of the national insurance scheme when it was first established. They were not allowed to contribute. I argued that they were entitled to that part of the national insurance pension which was not covered by contributions. Alas, when I was fortunate to get a Private Member's Bill—No. 1 on the list—and introduced it, the then Labour government carried out a filibuster all night under the leadership of Dick Crossman and Douglas Houghton. The noble Baroness was a member of that Government. The filibuster succeeded—disgracefully, I thought at the time, and still do. My Bill was defeated. However, I am happy to say that when we came into office in 1970 the first thing we did was to give pensions to the over-80s who had been left out of the scheme. I still believe that that was right.
The concepts are complex and, in replying to the previous debate, the noble Baroness described the matter as "repackaging", as regards the minimum income guarantee. I am fearful, as was the noble Baroness, Lady Turner, about the future of the basic state pension. I believe, as she does, that it ought to form the bedrock of our system. The move towards a minimum income guarantee, which is means-tested, may be in danger of being considered as a substitute for the basic state pension, although those who have contributed over the years feel they are entitled to it and should not be subject to a means test.
As regards Amendment No. 44B, the present situation is very different from that in 1964. At that time, the state pension was the important thing. There has been an enormous increase in occupational pensions since that time. Of course, they tend to be much more earnings-related, although it is still the case that, to the extent that the national insurance pension is not up-rated
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in line with earnings rather than prices, there will be some who fall behind the general level of prosperity in the country as a whole.
What worries me about the amendment, if it were to be pushed at this time, is that it would increase the pressure on the Government and more particularly on the Treasury to do away with the basic state pension. For the reasons I mentioned, it would be a more expensive operation than now. Therefore, as the noble Lord, Lord Goodhart, said, it is right that we should maintain it and uprate it in line with prices. But I believe that there are dangers in going further than that.
Having said that, the issue is a very important one. I am worried about the way in which we are moving closer and closer to means testing. It is important to maintain the right of people to contribute to what is not, as the noble Lord, Lord Goodhart, points out, an insurance scheme. We must move towards a situation of steady improvement. I do not believe that this amendment should be accepted.
The Earl of Clanwilliam: I entirely agree with the aim of the amendment moved by the noble Baroness, that pensions should be increased in line with earnings. The noble Lord, Lord Goodhart, referred to the stakeholder pension and compulsion. I do not know whether this is the right moment to mention it, but for seven years I have been advocating compulsory pensions in this country at a lower level. That is the only way that those in the bottom range, the 6 million to 8 million people who are not contributing now, will ever be persuaded to do so. The simple fact is that in their opinion their earnings are not high enough for them to consider providing themselves with a pension. If they do not do it now they will become a serious burden on the rest of the population in future. Therefore, rather than speak in support of the noble Lord, Lord Goodhart, I recommend that there should be compulsory pensions.
Baroness Hollis of Heigham: The new provision introduced by the amendment moved by my noble friend Lady Turner seeks to restore the link whereby the basic state pension and related increases paid for dependants are uprated each year in line with the growth in earnings or prices, whichever is the higher. We understand the strength of feeling associated with a return to the earnings link. Equally, my noble friends will be aware of the position of the Government and will not be altogether surprised by my response to the proposed new provision.
I remind the Committee that the automatic annual link between earnings and the basic pension was in place for only five years between July 1974 and November 1979. Before that, for quite a few years it was not uprated at all. Even when the earnings link was in place, on two occasion in those five years the rate of price inflation exceeded the rate of growth of earnings. Therefore, in those years of the late 1970s the basic pension was uprated in line with prices, and this continued to be the case under the Conservative government from 1980 onwards.
We have looked carefully at what would be involved in restoring the earnings link. That was one of the very first things that we looked at when the Government were

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returned to office. The cumulative cost would exceed £10 billion after five years and reach £10 billion each year in less than 15 years. They are huge sums of money. I am sure that the Committee understands that, with costs of that magnitude, we must be extremely careful in considering whether such spending provides the best value for those in need. As with the previous amendment, none of this would benefit the poorest pensioners who are entitled to income support and have insufficient capital to disqualify them from that benefit.
The basic state pension will continue to be uprated each year at least in line with prices. It will not be means tested or privatised, as the previous government's basic pensions plus proposed. The basic state pension remains the basic-building block of the pensions system. Beyond that, we have concluded that we must concentrate our help and available resources on the poorest pensioners, largely single women over 70 years of age, often widows, who by virtue of their life chances have not had the opportunity to build up a pension in their own right.
6.15 p.m.
Lord Higgins: Can the Minister make clear to what timespan the commitment she gives is related? Is it related to an indefinite period of a Labour government, should that happen—it may not—or merely this Parliament?
Baroness Hollis of Heigham: This is a commitment of the Labour Government. Obviously, should we be replaced by a government of a different persuasion we would be unable to honour that commitment.
The reason why we now have a problem with the poorest pensioners, largely women, is that they worked at home without wages. They were not in the labour market and therefore were unable to build up a pension. Compared with the 1960s and 1970s, today about 70 per cent of all women work and, including those who work part-time, three-quarters are over the lower earnings limit and will build up a second pension in their own right. I am sure that my noble friend will be pleased that one of the by-products of the minimum wage is that it will raise above LEL at least three-quarters of a million women, both part-timers and full-timers, who were below it. As a result, they will acquire and be able to build up pensions in their own right. In future, those who become the poorest pensioners, or who have been so in the past, will be able to build up a pension entitlement in their own right.
The problem of pensioner poverty and the need to go for the minimum income guarantee, with all its complexities—I accept that entirely—is one that we hope will be overtaken by our response through the state second pension, the stakeholder pension and the capacity of those in the past who have not been eligible to join those pensions, either by virtue of crediting in through carers' responsibilities and the like or by earning enough by means of the national minimum wage, to qualify by virtue of their contributions.
In addition, not only are we increasing income support by the minimum income guarantee but we are also providing immediate help with winter fuel
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payments, which have been increased to £100. Ten million pensioners benefit from that. We have introduced income tax changes, such as the minimum tax guarantee, which mean that two-thirds of pensioners pay no tax at all. We have also introduced free sight tests and plan to legislate for minimum concessionary fare schemes. As a result, we have produced a package over the lifetime of this Parliament of an additional £4 billion for pensioners. Over and beyond that, we seek to build up the two-tier pension: the state second pension unfunded to replace SERPS but with a more generous redistributive effect than SERPS could ever achieve.
I turn to the first question put to me by the noble Lord, Lord Goodhart: what are the implications of the state second pension? I take an individual who is mid-way between the lower earnings limit of £3,500 and £9,000. The figures that I give are relative to earning levels in 2050. In real terms, if someone is earning £6,000 his basic pension together with current SERPS is £45. With basic pension plus state second pension the figure is £84. Therefore, in real terms the extra help provided by the second state pension for someone on £6,000 a year at 2050 is £39 a week. Those sums can be done all the way up. The lower the income the more generous the entitlement provided by the second pension in comparison with SERPS. It pays all those earning between £3,500 and £9,000 as though they were earning £9,000 and gives a pension accordingly.
The second point raised by the noble Lord, Lord Goodhart, in a way supported by the noble Earl, Lord Clanwilliam, related to compulsion. The noble Lord, Lord Goodhart, spoke to an amendment moved, I believe, by my noble friend Lady Turner on the previous Committee day that sought a compulsory contribution from employers.
Lord Goodhart: I believe that it was my amendment.
Baroness Hollis of Heigham: I do not challenge the noble Lord's memory; I am sure that his knowledge about the ownership of his property is far better than mine. However, that proposal was supported by my noble friend Lady Turner, who has often pressed me on this point in the past and has spoken to it very effectively. Obviously, this does not arise in the case of the state second pension. It is an unfunded pension and therefore the employee's contribution does not arise. Our research suggests that as to the stakeholder pension, which is funded, between two-fifths and three-fifths of employers appear to be willing to contribute. I suspect that that will depend on the other versions of pension schemes that employers currently offer and what options are available. That certainly is what our research seems to suggest.
We have considered whether the employer's contribution should be made compulsory, but even occupational pension schemes are not compulsory. To make the employer's contribution compulsory when he is required to provide a stakeholder pension scheme would probably, we thought, be a step too far.
As for the point raised by the noble Earl, Lord Clanwilliam, that individual employees should be required to contribute to a pension scheme, we entirely

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share his sentiments, as I am sure does the whole Committee. Our difficulty is that, frankly, the poorest people cannot afford to contribute to a pension scheme at the same time as they are seeking to juggle a mortgage and the costs of young families. Equally, it is difficult to see how one could make compulsion run for someone who is self-employed and who sees it as more appropriate to invest the money in the business rather than a pension plan. The Government have not finally closed their mind on that point. We shall keep the issue open and representations will continue to be made to us. At the moment, it appears that we would not be able to help those who most need it, because they cannot afford it and are therefore dependent on state support, such as the minimum income guarantee.
As I have said, we are legislating for stakeholder pensions. We will introduce a new state second pension which will ensure—together with what we know about women's entry into the labour market and the new floor of the national minimum wage—that the problem of poorest pensioners being dependent on income support will gradually wither. We believe that in the meantime it is right that they should be our highest priority. As a result, I hope that my noble friend Lady Turner will withdraw her amendment.
Baroness Turner of Camden: I thank my noble friend for her response, but she will not be surprised to learn that I disagree with her. There is a philosophical difference between us. As I made clear earlier, I am a supporter of a system of social insurance, in which everybody pays a contribution and a minimum provision is made for everybody, but those who are well enough off can plus it up—as was the case with the Castle Plan. The basic pension should be sufficient to afford reasonable maintenance even for the poorest pensioners. We have moved significantly away from that concept and I deeply regret that.
The provision in the Bill is not the policy on which the Labour Party went to the election in 1992, when we proposed to the electorate that we would make SERPS into a national pension plan to which the self-employed could belong and which would gradually restore the earnings link to the basic pension. I would still like to see that plan introduced, but we have moved substantially away from it and we now have a very different set of proposals before us.
I am grateful to the noble Lords, Lord Goodhart and Lord Higgins, who have contributed to the debate. I agree with the noble Lord, Lord Goodhart, about compulsory second-tier pensions. There should be a system under which the employer pays something and the employee also has to pay something. Without that, many people will reach retirement age with inadequate pension provision. I was not aware of the efforts made by the noble Lord, Lord Higgins, back in 1964, but I noted that he was sympathetic to some of the points that I made, even though he does not agree with the restoration of the earnings link.
I do not agree with the Government's approach to the whole issue. The poorest pensioners will not benefit as much as we would like to see them benefit, even with
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the new proposals. I do not like the fact that the scheme depends on means testing, because many people will not wish to put themselves forward for means-tested benefits for the reasons that were advanced earlier in the debate by my noble friend Lady Castle. However, there is little point in pressing the amendment at this time. I shall consider what has been said and decide whether a version of it should be advanced on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Clause 19 [Orders in England and Wales]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 45:
Page 24, line 31, leave out ("have effect") and insert ("not have effect until the Law Commission have undertaken a review of the Matrimonial Causes Act 1973 and have reported on the extent to which it is appropriate to give legal force to pre-nuptial agreements.")
The noble Lord said: This is a probing amendment. In the light of the recent confusion over the Lord Chancellor's proposals for no-fault divorce, we wish to clarify the Government's position as it relates to pension sharing in the Bill and possible future legislation to recognise prenuptial agreements.
I appreciate that the matter is currently under review by the Lord Chancellor's Advisory Group. Much concern about the potentially unfair aspects of pension splitting would be removed if individuals could choose a prenuptial agreement to govern what would happen in the event of divorce. We feel that, given the potential impact on the sharing of family assets on divorce, this matter should be debated.
The Government have consistently stressed that pension-sharing orders will be only one option available to the courts when considering the division of assets on divorce. Given the substantial nature of the pension asset when compared to other financial assets, it is a near certainty that pension-sharing orders will become common in practice. While prenuptial agreements are a relative novelty in the United Kingdom, the Government's move to make the sharing of assets on divorce more statutory would seem—certainly to me—likely to encourage their growth. I would welcome the Minister's view on that matter and an indication as to whether the Government are of the opinion that prenuptial agreements would make a fundamental difference to pension sharing.
The Earl of Buckinghamshire: I rise in support of my noble friend Lord Astor. I wish to make three points. First, I wish to confirm that the assets involved in pensions are significant. If people own a house, the pension is probably the second most significant asset that they build up. If people unfortunately do not own a house, the pension will be the most significant asset.
Secondly, prenuptial agreements are relatively rare in this country. I suspect that they will continue to be relatively rare in the future and will be used mainly for second marriages where children from the first marriage have aspirations to some assets.

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Thirdly, it would be interesting to know whether we could learn anything from what happens in other countries—for example, the United States of America, Canada and Australia. I understand that in Canada a prenuptial agreement can be taken into account by the courts if it reaches certain standards. The situation in the US is less clear cut and pension splitting seems to be more a matter for negotiation. Where it is taken into account, it is heavily legislated for under regulations for both approved and unapproved schemes.
Having said I wished to make three points, I shall make a fourth by congratulating my noble friend Lord Astor on having the courage to go into two subject areas—divorce and the complexities of pensions in the Bill.
6.30 p.m.
Baroness Berners: too, support the amendment moved by my noble friend Lord Astor of Hever. I wish to ascertain the Government's attitude to the pre-nuptial agreements which now affect pension sharing as opposed to the financial arrangements on divorce.
The Earl of Clanwilliam: The noble Lord, Lord Astor of Hever, has a galaxy of support.
If discussion on pre-nuptial agreements is taking place with the Lord Chancellor, it seems sensible for the sharing of the family assets, which is the major activity, as my noble friend Lord Buckinghamshire said, to be referred back until such time as findings of the Lord Chancellor are delivered to us.
Baroness Hollis of Heigham: I am very sorry about this. The amendment would delay the introduction of pension sharing almost indefinitely, if the outcome of the Law Commission review on pre-nuptial agreements had, first, to be determined before we could proceed with this. In the White Paper on pension sharing, published in February 1997, the present Opposition said simply, "We will legislate as soon as possible".
The real impetus for pension sharing came from all around this Chamber. I remember vividly the debates in which not only Lady Seear, but also the noble Baroness, Lady Young, and others contributed. The Government are determined to see the project through. I have been teased on more than one occasion, perfectly reasonably, from the official Opposition Benches about not having proceeded more expeditiously with pension sharing, given that we made such a noise about it while in opposition. Yet the effect of the amendment would be to delay it further.
The amendment would prevent the implementation of pension sharing until the Law Commission had undertaken a full review of the Matrimonial Causes Act 1973. There are two main points to make. First, the resources and expertise of the Law Commission are fully committed to reviewing other areas of the law which urgently need reform. The commission has recently agreed a new programme of work with the Lord Chancellor which was announced on 17th June. The focus will be commercial and company law, in particular looking at developing a commercial code
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setting out the principles and rules governing commercial transactions. That is regarded as the highest priority at this time. Issues associated with that have been raised frequently in this House. The programme contains no family law issues. So without additional resources there would be no scope for the Law Commission to commence a review of the Matrimonial Causes Act.
Secondly, and more importantly, there is no evidence of general dissatisfaction with ancillary relief provisions of the Matrimonial Causes Act which would justify such a review. Past governments, as well as the current Government, have adopted an evolutionary approach to this area of the law. Pension sharing is one such example.
Finally, the amendment would not delay the implementation of pension sharing in Scotland. I am sure that if the noble Lord, Lord Astor, were minded to pursue the point he would wish to ensure that there was parity of treatment across the United Kingdom; otherwise we should have pension sharing in Scotland but not in England and Wales.
The amendment specifically refers to giving legal force to pre-nuptial agreements as a justification for commissioning the review of ancillary relief law which the noble Lords seem to have in mind, in the belief that pension sharing would lead to more pre-nuptial agreements—I presume that that is the thinking underlying it—as a possible way of protecting assets from subsequently being available to the matrimonial pot. We have no reason to think that. Pensions are already part of the financial settlements on divorce. As noble Lords will recall from those debates in 1995, they can be offset against other assets, or earmarked currently. What we are doing, and what the House was persuaded to say to the other House, was that pension sharing was an additional choice to couples and to the courts in seeking to achieve the fairest disposition of assets at the point of a marriage break up, and the financial settlement with divorce.
It may not always be the right solution. Offsetting, or earmarking may be more appropriate. Nor do we say that the division has to be 50:50; it can be 10 per cent or 90 per cent depending on the family circumstances. But to withhold from the financial pot what can be for many people their biggest financial asset, the pension—greater even than the matrimonial home—was demonstrably unfair in particular to those older women who had invested their lives often in supporting their husbands and their husbands' careers. That was why this House pressed the issue on the other place. That is why I should be sad to see further delay when so many of the associated pressure groups such as Fair Shares, are urging us to go faster rather than more slowly—and, perhaps I may say to the noble Lord, Lord Goodhart, even to contemplate making pension sharing retrospective.
Given that pressure, I should be sorry if we had to pursue this amendment. It is the case that pre-nuptial agreements have been the recent subject of public consultation in our paper, Supporting Families. As chairman of the ministerial working group on the

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family, the Home Secretary recently published a summary of the responses to that paper, including those on pre-nuptial agreements. No decision has been taken yet on whether the proposal to make pre-nuptial agreements legally binding will be pursued further. But I am sure that as the Lord Chancellor considers the way forward, he will note noble Lords' suggestion that the Law Commission should be asked to consider this issue in detail.
To conclude, I do not believe that there is a case for delaying the introduction of pension sharing. Many people out there, I have to say mainly women, would not thank this Chamber for delaying their right of access to some decent security, in particular as they come towards old age. I believe that this House will welcome its implementation during the lifetime of this Parliament. We hope to implement it around the year 2000. I do not believe that this will put additional pressure on pre-nuptial agreements, but if that were to be the case I am sure that our consultation exercise, and the reflection on the issue that is currently under way, will take those points on board. If necessary, we can look at the matter then. Knowing as I do that the noble Lord supports the principle of what we are doing, I hope that he would not wish to delay the matter further.
Lord Astor of Hever: I thank the Minister for that reply. The noble Baroness may have misunderstood the point of my amendment. I began by saying that it was only a probing amendment. I merely asked for clarification of government opinion. I did not seek to delay the Bill.
I am grateful to my noble friends Lord Buckinghamshire, Lord Clanwilliam and Lady Berners for their support. I agree with my noble friend Lord Buckinghamshire that the subject of pensions and pension sharing is unbelievably complex.
I sought clarification. The Minister has given me a full answer. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 19 shall stand part of the Bill?
Lord Astor of Hever: We do not oppose Clause 19 quite as much as the three "p"s in the word "oppose" on the Marshalled List imply.
As pension sharing was hardly touched on at Second Reading, the clause provides me with an opportunity to put on the record that the Opposition support the principle of pension sharing which is fair and affordable to both spouses and which takes account of the interests of children. We shall work constructively with the Government to improve this part of an otherwise bad Bill. Having carefully scrutinised the Bill, we shall be raising a number of concerns where we do not believe that the Government have properly thought matters through.
I trust, therefore, that the Minister will give careful thought to our amendments on pension sharing.
Clause 19 agreed to.
Schedule 3 [Pension sharing orders: England and Wales]:
[Amendments Nos. 46 to 57 had been withdrawn from the Marshalled List.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 58
Leave out Schedule 3 and insert the following new Schedule—
("SCHEDULE 3 PENSION SHARING ORDERS: ENGLAND AND WALES
1. The Matrimonial Causes Act 1973 is amended as follows.
2. After section 21 there is inserted—
"Pension sharing orders.
21A.—(1) For the purposes of this Act, a pension sharing order is an order which—

(a) provides that one party's—

(i) shareable rights under a specified pension arrangement, or

(ii) shareable state scheme rights,

be subject to pension sharing for the benefit of the other party, and

(b) specifies the percentage value to be transferred.

(2) In subsection (1)—

(a) the reference to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation,

(b) the reference to shareable state scheme rights is to rights in relation to which pension sharing is available under Chapter II of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation, and

(c) "party" means a party to a marriage."

3. In section 24 (property adjustment orders in connection with divorce proceedings, etc), in paragraphs (c) and (d) of subsection (1), there is inserted at the end ", other than one in the form of a pension arrangement (within the meaning of section 25D below)".
4. After section 24A there is inserted—
"Pension sharing orders in connection with divorce proceedings etc.
24B.—(1) On granting a decree of divorce or a decree of nullity of marriage or at any time thereafter (whether before or after the decree is made absolute), the court may, on an application made under this section, make one or more pension sharing orders in relation to the marriage.
(2) A pension sharing order under this section is not to take effect unless the decree on or after which it is made has been made absolute.
(3) A pension sharing order under this section may not be made in relation to a pension arrangement which—

(a) is the subject of a pension sharing order in relation to the marriage, or

(b) has been the subject of pension sharing between the parties to the marriage.

(4) A pension sharing order under this section may not be made in relation to shareable state scheme rights if—

(a) such rights are the subject of a pension sharing order in relation to the marriage, or

(b) such rights have been the subject of pension sharing between the parties to the marriage.

(5) A pension sharing, order under this section may not be made in relation to the rights of a person under a pension arrangement if there is in force a requirement imposed by virtue of section 25B or 25C below which relates to benefits or future benefits to which he is entitled under the pension arrangement.
Pension sharing orders: duty to stay.
24C.—(1) No pension sharing order may be made so as to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor.
(2) The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
Pension sharing orders: apportionment of charges.
24D. If a pension sharing order relates to rights under a pension arrangement, the court may include in the order provision about the apportionment between the parties of any charge under section 37 of the Welfare Reform and Pensions Act 1999 (charges in respect of pension sharing costs), or under corresponding Northern Ireland legislation."
5. In section 25 (matters to which the court is to have regard in deciding how to exercise its powers with respect to financial relief)—

(a) in subsection (1), for "or 24A" there is substituted ", 24A or 24B", and

(b) in subsection (2), for "or 24A" there is substituted "24A or 24B".

6. In section 25A(1) (court's duty to consider desirability of exercising power to achieve clean break), for "or 24A" there is substituted ", 24A or 24B".
7.—(1) Section 31 (variation, discharge etc of certain orders for financial relief) is amended as follows.
(2) In subsection (2), at the end there is inserted—
"(g) a pension sharing order under section 24B which is made at a time before the decree has been made absolute."
(3) After subsection (4) there is inserted—
"(4A) In relation to an order which falls within paragraph (g) of subsection (2) above ("the subsection (2) order")—

(a) the powers conferred by this section may be exercised—

(i) only on an application made before the subsection (2) order has or, but for paragraph (b) below, would have taken effect; and

(ii) only if, at the time when the application is made, the decree has not been made absolute; and

(b) an application made in accordance with paragraph (a) above prevents the subsection (2) order from taking effect before the application has been dealt with.

(4B) No variation of a pension sharing order shall be made so as to take effect before the decree is made absolute.
(4C) The variation of a pension sharing order prevents the order taking effect before the end of such period after the making of the variation as may be prescribed by regulations made by the Lord Chancellor."
(4) In subsection (5)—

(a) for "(7F)" there is substituted "(7G)",

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(b) for "or (e)" there is substituted ", (e) or (g)", and

(c) after "property adjustment order" there is inserted "or pension sharing order".

(5) In subsection (7B), after paragraph (b) there is inserted—
"(ba) one or more pension sharing orders;".
(6) After subsection (7F) there is inserted—
"(7G) Subsections (3) to (5) of section 24B above apply in relation to a pension sharing order under subsection (7B) above as they apply in relation to a pension sharing order under that section."
(7) After subsection (14) there is inserted—
"(15) The power to make regulations under subsection (4C) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."
8. In section 33A (consent orders), in subsection (3), in the definition of "order for financial relief', after "24A" there is inserted ", 24B".
9. In section 37 (avoidance of transactions intended to prevent or reduce financial relief), in subsection (1), after "24," there is inserted "24B,".
10. After section 40 there is inserted—
"Appeals relating to pension sharing orders which have taken effect.
40A.—(1) Subsections (2) and (3) below apply where an appeal against a pension sharing order is begun on or after the day on which the order takes effect.
(2) If the pension sharing order relates to a person's rights under a pension arrangement, the appeal court may not set aside or vary the order if the person responsible for the pension arrangement has acted to his detriment in reliance on the taking effect of the order.
(3) If the pension sharing order relates to a person's shareable state scheme rights, the appeal court may not set aside or vary the order if the Secretary of State has acted to his detriment in reliance on the taking effect of the order.
(4) In determining for the purposes of subsection (2) or (3) whether a person has acted to his detriment in reliance on the taking effect of the order, the appeal court may disregard any detriment which in its opinion is insignificant.
(5) Where subsection (2) or (3) above applies, the appeal court may make such further orders (including one or more pension sharing orders) as it thinks fit, for the purpose of putting the parties in the position it considers appropriate.
(6) Section 24C above only applies to a pension sharing order under this section if the decision of the appeal court can itself he the subject of an appeal.
(7) In subsection (2), the reference to the person responsible for the pension arrangement is to be read in accordance with section 25D(4) above."
11. In section 52 (interpretation), in subsection (2), for "and" at the end of paragraph (a) there is substituted—
"(aa) references to pension sharing orders shall be construed in accordance with section 21A above; and".").
The noble Baroness said: Before I talk specifically about this large group of amendments, I should set the scene by drawing noble Lords' attention to some recent developments which have made these necessary.
The Lord Chancellor recently announced that it was no longer the Government's intention to implement Part II of the Family Law Act 1996 in the year 20(X). The 1996 Act would, if implemented, introduce a new divorce process to England and Wales. Noble Lords who have taken part in those debates will know that

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Part II proposed to save saveable marriages; to promote conciliatory attitudes to divorce; and to seek above all to ensure the well-being and welfare of children.
Information meetings were to be a key element of the new divorce process established by the 1996 Act. Over the past two years, the Government have been piloting different types of information meetings in an effort to find one that meets our aims—which are: to save marriages when we can, to engender a conciliatory culture in which marriages that are going to break up may proceed to divorce and to care for the children of marriage. Regrettably, the preliminary findings of the pilots were disappointing. There have been 14 pilots involving 7,000 people in information meetings. Some 90 per cent of the people concerned found those information meetings useful, but only 7 per cent went on to mediation; only 13 per cent went to marriage guidance counsellors; and I am afraid that 39 per cent said that they were more likely to see a solicitor. That was not the original intention of the meetings.
In the light of that research, the pilots and those findings, the Government have decided that it would be premature to implement Part II in the near future. We will await the final results of the research and consider whether any further research should be instituted before forming a view about what the next step should be in this important area of social policy. Those results will be available in the spring of 2000.
The decision to delay implementation of Part II of the Family Law Act 1996 beyond 2000 has a significant consequence for the pension sharing provisions in this Bill. The pension sharing provisions in the Bill are currently drafted on the basis that the Family Law Act will have been implemented. That is why mention is made of the "statement of marital break-down" and the "period of reflection and consideration", for example, which are created by Part II of the Family Law Act.
However, we can no longer assume that the new divorce process set out in the Family Law Act will be implemented before we are ready to bring the pension sharing provisions into force—which we want to do as soon as possible. Therefore, we must change the Bill almost belt and braces style so that pension sharing can be made available under today's divorce law as well as under the new procedures that would be established by the Family Law Act—otherwise the one would depend upon the other and we would push pension sharing into the long grass.
Therefore, we have brought forward a package of amendments—I apologise for their number—Amendments Nos. 58 to 69 and 144 to 166. Under these amendments, pension sharing would be made available under current divorce law as established by the 1973 Act in its present form; and it could be made available under the divorce law that would be established by the 1996 Act if, as remains possible, Part II of the Family Law Act is implemented before pension sharing. In addition, the amendments would allow for the divorce law to be changed to that of the 1996 Act after the pension sharing provisions had come into force under the current divorce law. With these amendments in place, all three possible eventualities are covered: that
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Part II does not come into force; that Part II comes into force before pension sharing happens; or that Part II comes into force only after pension sharing has been established.
These amendments, therefore, are largely technical and apply only to England and Wales. They simply allow pension sharing to happen whatever divorce law is in force—the 1973 Act or the 1996 Act. Scotland has separate legislation that is unaffected by the Lord Chancellor's announcement. Noble Lords should note that the principal effect of the amendments is to restructure the pension sharing provisions in the Bill—that is, to bring them within the concurrent ambit of the 1973 Act—and not to change their substance in any significant way.
Having said that the amendments are largely technical, we recognise that they are also complex. That is why we have tried to assist noble Lords by producing a set of supplementary explanatory notes that describe the Government's amendments in more detail.
Because I think that they are important, I will turn now to the substance of the amendments, beginning with Amendment No. 58 which concerns Clause 19 and Schedule 3 to the Bill. Amendment No. 58 provides a new version of Schedule 3 to replace the Schedule 3 in the current print of the Bill. That is necessary in order to ensure that we can proceed with pension sharing under the framework of the Matrimonial Causes Act 1973. In my following comments, references to Schedule 3 will be to the new schedule that would be inserted by Amendment No. 58.
Schedule 3 amends Part II of the Matrimonial Causes Act 1973. The clause gives courts in England and Wales the power to make pension sharing orders in relation to proceedings for divorce or nullity of marriage. The provisions in Schedule 3 will allow pension rights to be treated like other assets when a couple divorces or the marriage is annulled. The provisions will allow a proportion, or all, of the value of the pension to be transferred from one spouse to the other as part of the overall financial settlement.
There are six main points to be made about the amended schedule. The first is a general point. There is only a small difference between the substance of this new schedule and Schedule 3 as it appears in the current print of the Bill. That is because there is no longer a distinction drawn between divorce and nullity. Under the Family Law Act, the procedure for ending a marriage by divorce would have been very different from the procedure for ending a marriage by annulment. Under the Matrimonial Causes Act, the procedure is broadly the same and the relevant powers of the court to grant financial relief are identical.
Secondly, the schedule places pension sharing within the framework of the existing divorce law in England and Wales. A pension sharing order will be able to be made on or after the granting of a decree of divorce. This follows the pattern of the other principal types of ancillary relief order set out in the Matrimonial Causes Act 1973. The court may make an order before the divorce is finalised, but the pension sharing process will take effect only after the decree of divorce has been made absolute.
Thirdly, as under the current Bill, pension sharing orders will be subject to a stay period. No action should be taken on the order during that period. This will allow either party to appeal it. The pension sharing order will be stayed at least until the end of the appropriate period for giving notice of appeal. So pension sharing orders will not become effective until both the decree of divorce has been made absolute and the stay period has expired.
Fourthly, although appeals up to and beyond the point of implementation of the pension sharing order will be possible, the court will not be able to set aside or vary an order that has taken effect when it would adversely affect the pension scheme. The court will be able to make such further orders as it thinks fit to put the parties in the position it considers appropriate.
Fifthly, the couple must meet the pension scheme's administrative charges arising from pension sharing. When the couple shares by order, the court can apportion the administrative expenses arising from the share between the couple in a way that is just and equitable. If the court chooses not to exercise this power, the member spouse will be expected to pay the charges. The question of who pays should be seen as an aspect of the overall financial settlement.
Sixthly—and finally—the Bill restricts the combination of ear-marking and pension sharing orders and the making of multiple pension sharing orders in relation to any given pension. This is an important provision because we want to encourage couples to achieve a clean break if that is appropriate for them. We need to be fair to both parties—former spouses should not have several bites of the cherry and the scheme member's remaining pension should be safe from the former spouse. We also need to protect the position of previous spouses. A simple illustration may be where a man and his second wife are getting a divorce. At his first divorce, his first wife was granted an ear-marking order. If the second wife were now granted a pension share before the ear-marking order had come into effect because the husband is still below pension age, the husband's pension fund would be reduced, which, in turn, would reduce the first wife's retirement income. She would lose out through no action of her own.
I turn now to Amendment No. 69 which would create a new clause to follow the current Clause 22. Our amendments to the pension sharing provisions begin from the assumption that pension sharing is most likely to be made available—at least initially—under the current divorce law that is contained in the Matrimonial Causes Act 1973. However, this outcome is not yet certain. If, contrary to our present expectations, Part II of the Family Law Act were to be implemented before the pension sharing provisions in this Bill had commenced, the pension sharing provisions would be technically defective—largely as a result of the other amendments that we have tabled for debate today.
To guard against that, this amendment proposes the insertion of a new clause in the Bill—Amendment No. 69—which would give the Lord Chancellor the power to make consequential amendments to any provision in Part III of the Bill that had yet to be
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commenced. That would include Schedules 3 and 4. This would enable the Lord Chancellor to make any technical amendments, such as renumbering sections and changing internal references, that would be needed to ensure that the law would work as Parliament had intended. The power would be available only if any of the amendments to the financial relief provisions of the 1973 Act, as amended by the 1996 Act, were to be brought into force before the implementation of Part III of this Bill.
We recognise that this is a power that should be subject to proper scrutiny by Parliament. Noble Lords will note that subsection (2) of the proposed new clause, Amendment No. 69, makes it clear that the exercise of this power would be subject to affirmative resolution by both Houses of Parliament. The Delegated Powers Scrutiny Committee considered that that was an appropriate safeguard for the use of the power. We were of course happy to concur.
The amendments to Schedule 4, Amendments Nos. 61 to 67, amend and refine the earmarking—or more properly "attachment"—provisions that were inserted in the Matrimonial Causes Act 1973 by Section 166 of the Pensions Act 1995, which we all remember with affection. These amendments are minor and cover small drafting corrections or deal with minor technical matters. The provisions of this schedule complement those already considered in Schedule 3.
Members of the Committee may have noticed that Amendments Nos. 1 to 4 and 25 in our supplementary explanatory notes appear to be missing. In fact, the House authorities felt that the small consequential changes to the Bill which would be brought about by these amendments should be achieved through the reprinting process.
The amendment to Clause 22 is consequential on the other changes being made to the Bill and to the 1973 Act as a result of the shift away from the new divorce law structure which will be established by Part II of the Family Law Act 1996. The effect of this amendment is described in detail in the Government's supplementary explanatory notes.
I turn to Clause 79, which is also affected by our main amendment to the draft Bill. It gives effect to the consequential amendments in Schedule 12. It also gives the Secretary of State powers to revoke or amend any secondary legislation as necessary following the coming into force of specified provisions in the Bill.
The Government have put forward two sets of amendments to Schedule 12 which it would be appropriate to consider now. Amendments Nos. 145 to 151 are all minor, technical consequential amendments to provisions in Schedule 12 which would make pension sharing available under the Matrimonial and Family Proceedings Act 1984.
Amendment No. 152 is more complex. It is a prospective amendment to the Family Law Act 1996 which has two purposes. First, numerous prospective amendments to the 1973 Act are contained within Schedules 2, 8 and 10 to the 1996 Act. If we work from the assumption that pension sharing will be brought into force before Part II of the Family Law Act, the

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amendments to the 1973 Act which are contained within the 1996 Act will need to be changed because, if they are not, they will be technically defective.
The second purpose of this amendment is more important. It puts forward substitute sections for the 1973 Act which would replace those inserted by Schedule 3 to the Bill as amended. The effect of Amendment No. 152 is to ensure that pension sharing can be made available under the Family Law Act 1996 if Part II of that Act is brought into force after the pension sharing provisions have been commenced.
Clause 80 sets out the transitional provisions which are needed for the whole of this Bill. Amendment No. 153 deletes subsections (3) to (5) of the clause. These subsections were originally included to cater for the possibility that Part II of the Family Law Act 1996 might be brought into force before pension sharing, with the aim of preventing people from re-opening financial settlements arising from divorces which were granted before the implementation of pension sharing. However, if Part II were to be implemented before pension sharing, similar provision to prevent any retrospective action could be made under Clauses 83 and 78(5).
Amendments Nos. 154 to 158 are minor and consequential on Amendment No. 153.
Clause 83 provides powers for the Secretary of State and the Lord Chancellor to bring different parts of the Bill into force at different times. Amendments Nos. 161 and 162 make technical changes to this clause which are consequential on the decision to move from the divorce law framework of the Family Law Act 1996 to that of the Matrimonial Causes Act 1973.
Clause 84 sets out how the different provisions in the Bill extend to different parts of the United Kingdom. Amendments Nos. 165 and 166 are consequential amendments to Clause 84.
Finally, I apologise to the Committee for the great length of time it has taken to move this set of amendments. However, as they were not introduced in the other place, I felt it important to lay them out as fully as possible. Given the additional commentary from the Dispatch Box, I appreciate that Members of the Committee may prefer to return to many of the issues at the Report stage after they have had time to reflect on their implications. If I can help in the meantime, I am happy to do so. I commend this package of amendments to the Committee and I beg to move.
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58A:
Line 14, at end insert (", and
(c) is made in terms to be prescribed in regulations")
The noble Lord said: I thank the Minister for explaining in such detail the changes, or "restructuring" as she called it. Although she said that there were seven provisions, she concluded by saying, "Sixth and finally", so perhaps she would respond to that point.
With regard to Amendment No. 58, I understand the three-tier proposals to cover all eventualities. They are for the most part structural, but they appear complex. I believe that my noble friend Lord Buckinghamshire will agree with that. I recall the words of Harriet Harman, the then Secretary of State for Social Security, in a foreword to the original consultation paper on pension sharing on divorce, published in June 1998. She expressed the view that
"The challenge is now to make pension sharing work in practice—to translate broad principles into practicable and workable arrangements in areas—pensions, family and tax law—which are notorious for their complexity".
I hope that pension sharing will not prove to be too onerous a burden on pension schemes and that the principles, practicality and workability are borne in mind by the Government.
Because the Family Law Act 1996 is unlikely to be in force before the pension sharing provisions, the qualifying agreement provisions will not be brought into force until the divorce provisions of the Family Law Act 1996 are brought into effect. Divorcing couples will still be able to come to an agreement about any pension assets, but that will now be contained in a consent order. I want to remind the Government that, whether or not pension sharing is decided by court order, consent order or qualifying agreement, it is absolutely vital that agreed precedents are in place for pension sharing provisions.
We have seen the problems that have arisen from poorly drafted earmarking orders. The standardisation of procedures for pension sharing can only benefit the parties involved from both a cost and administrative viewpoint. I also remind the Government about the need for education and training for all those involved in the new process.
The Government have emphasised the need for simplicity. It looks as though pension sharing is becoming a very complex process. All those involved in pension sharing need reassurance on this point and I should be grateful if the Minister could give that.
Paragraph 4 inserts new Sections 24B, 24C and 24D in the Matrimonial Causes Act 1973 in its present form. As we understand it, new Section 24B gives courts in England and Wales power to make pension sharing orders on or after the granting of a decree of divorce, or nullity. With one exception, this new section replicates new Sections 24D and 24E, which were to have been inserted by paragraph 4 of Schedule 3 to the Bill. The exception is that the courts will not be under an express obligation to make, so far as is practicable, all pension sharing orders in relation to the marriage on one occasion. That obligation was derived from the amendments to the Matrimonial Causes Act 1973 by the Family Law Act 1996 and is no longer appropriate due to delay in the implementation of that Act. We should like an assurance from the Minister that this change to the Bill will not cause further administrative burdens for pension arrangements by involving them in protracted negotiations regarding a pension share.
Paragraph 10 inserts a new Section 40A into the Matrimonial Causes Act 1973. We understand that paragraph 10 replicates paragraph 9 of the existing

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Schedule 3 to the Bill. We should like clarification from the Minister of the meaning of Section 40A(2), which states:
"If the pension sharing order relates to a person's rights under a pension arrangement, the appeal court may not set aside or vary the order if the person responsible for the pension arrangement has acted to his detriment in reliance on the taking effect of the order".
What, would "detriment" mean in these circumstances? We would not like to see trustees or managers of pension schemes being put in a position where they had to unravel a pension sharing order that had already been carried into effect.
Can the Minister confirm that Amendment No. 69 is merely a structural device? Will it merely facilitate the bringing into force of pension sharing if Part II of the Family Law Act 1996 is brought into force before the pension sharing provisions?
As the other amendments are highly technical and consequential, we want to read carefully what the Minister said about them. It seems to me at this stage that most of the changes are legal tidying up, and we shall not object to them.
As the Minister has explained in such detail the Government's proposals with regard to the new schedule, we shall not oppose its insertion.
7 p.m.
Lord Goodhart: The noble Lord, Lord Astor of Hever, has ranged rather more widely than the amendment would normally provide for. It might therefore be convenient if I spoke briefly on our reaction to this group of amendments.
The Minister has shown her usual formidable ability to explain extremely complicated legislation clearly and rapidly, and I congratulate her on the way in which she has clone it today.
It seems to us that the Government are right not to be proposing to introduce Part II of the Family Law Act in the near future. Part II of that Act was certainly well meant and well worth a try, but there is no point in ignoring the bad results of the pilots. Therefore, I accept that the amendments are necessary in order to bring pension sharing into effect before Par: II of the Act is introduced—if, indeed, it is ever introduced. One can see now that it may well never come into force.
Pension sharing is an idea whose time has come. Indeed it has taken a long time about it, because it is an issue that to my knowledge has been in the air for at least 20 years. It is undoubtedly extremely complicated, but the version that the Government have come up with, after very wide consultation, is one that we broadly accept. There may be further questions about it which we shall need to look at on Report, but we have not put forward any significant amendments of our own at this stage.
Lord Habgood: I take the opposite view from the noble Lord, Lord Goodhart. He said that the research done for the Lord Chancellor seemed to show conclusively that the noble and learned Lord was right in postponing implementation of the Family Law Act. We could avoid a great deal of the complexity of what
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we have just heard if the Act were implemented. I do not believe, on the basis of the report, that there is any good reason for postponing it.
I find the reaction of the noble and learned Lord to the report strange. The report that he was given was designed to help plan the information meetings as a preliminary part of the divorce process under the Family Law Act. The report produced some very useful information. What it could not do, and what the researchers said quite explicitly it could not do, was to give any guidance on the take-up of the various services, because the research situation was an artificial one in which a different law was operating: people would respond differently to the offer of mediation, counselling or whatever under those artificial circumstances.
It has been said again and again that the take-up of mediation was only 7 per cent. What the noble and learned Lord the Lord Chancellor has not reported is that of those who attended information meetings 57 per cent said that they would consider mediation and only 39 per cent said that they would be likely to consult a solicitor. Those figures have not been publicised. They do not support what the noble and learned Lord has said, and it seems to me that the Committee should at least express some regret, as I want to, that this decision has been made and has created all these additional complications for us in the Bill.
Baroness Fookes: Before we embarked on the detailed consideration of the Bill I thought that I thoroughly approved of the concept of sharing pensions on divorce. I still do in theory, but I must admit that I am utterly dismayed by the complexity of the provisions put before us this evening, and the necessary changes which the Minister has made have served only to make it even more complex for me. Unlike the noble Lord, Lord Goodhart, I failed to follow all the arguments of the noble Baroness. Indeed, to use a very blunt, everyday phrase, it is now all as clear as mud to me. I shall certainly wish to reserve my position on this matter and look at it again at more leisure.
I am dismayed by the general trend in proposed legislation to become ever more complex, ever more difficult for the ordinary person to understand. It goes very much against the grain with me. I had hoped to see legislation that was much clearer and simpler. The trend seems to be entirely in the opposite direction, and that depresses me no end.
The Earl of Clanwilliam: I do not think that anybody in the Committee disagrees with pension sharing.
It is a great disappointment that my noble friend Lady Young is not present, and that Lady Seear is no longer with us. They were very important in the formulation of the Bill.
I wish to ask the Minister about only one point, with regard to the new Section 40A(4) of the Matrimonial Causes Act 1973. The judge, who must be able to administer the pension sharing arrangement in his chambers, is the one who can reconcile the

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disagreements and know the full extent of the family assets, and therefore find some better method of dealing with the exchange. Am I correct in saying that under that section the judge has the ability amicably to restore order in the family assets?
Baroness Berners: I too support the amendment. As the three-tier system proposed by the Government to cover all eventualities could be so complicated to administer or be understood by the clients, may we be assured that time will be given to work on simplification by training and education before the Bill is enacted in order to avoid protracted negotiations at the time of pension procedures?
The Earl of Buckinghamshire: I do not want to take up too much time, but I agree with my noble friend Lady Fookes about the complexity of the provisions. Probably if we were starting afresh we would not start from this position. Therefore, it is inevitable that we are dealing with a complex issue, and complex remedies are required.
I agree with my noble friend Lord Astor about new Section 40A(2) on pension sharing. I am not entirely sure that I read it in the same way as he does. I certainly agree with his view that trustees and managers of pension schemes and their advisers do not wish to be put in a position in which they must unravel pension sharing orders which are already being implemented. I do not believe that the industry wants anything to do with pension sharing or divorce, but I guess that that day has passed.
The Earl of Onslow: I remember when my noble friend Lady Young and the noble Baroness, Lady Hollis, were hunting as a couple to produce this effort at pension sharing. We were all moved by what they said and totally convinced by the attitude and line of country which they were following.
This matter is complicated beyond measure. I ask in a spirit of pure inquiry why it is not possible to say to a pension company that one-third of Mr X's pension will go to his ex-wife, to be attached to the pension records. That is all that happens. I cannot understand why the matter must be so much more complicated so that it will make even more money for lawyers. That is what will happen as a result of the complications of this schedule.
7.15 p.m.
Baroness Hollis of Heigham: This was a helpful debate. Again, I apologise to the Committee because I realise that I may have failed in seeking to clarify the position, as I had hoped to do. I accept that Members of the Committee will wish to return to this matter. I should be happy to follow up any issues which your Lordships wish to raise through correspondence and to do so before we reach Report stage.
Perhaps I may do my best to respond to the points raised. The noble Lord, Lord Astor, asked me where my six points had got to because he thought I had seven
790
points. That may have been because I was speaking rather quickly, mindful of the time of the Committee. However, on page 4 of my speech notes, it says there are six main points to be made on the amended schedule. My sixth was a "sixth and finally". I counted them again and I still think there are six points. We must wait to look at the efforts of the editors of Hansard to see whether the noble Lord is right.
I turn to some more serious points. The first point the noble Lord raised is that problems have arisen from poorly drafted earmarking orders. There have been problems and we recognise the importance of consistency and simplicity of approach, which has been called for by many Members of the Committee this evening. Therefore, the Government will be consulting publicly later this year about the information which should be contained within both pension sharing and earmarking orders and whether it would be appropriate to prescribe the format of those orders. Power exists already under Section 40 of the Matrimonial and Family Proceedings Act 1984 to prescribe the content and format of court orders.
The second point raised by the noble Lord, Lord Astor, and supported by the noble Earl, Lord Clanwilliam, is the need for education and training of all those involved. Plans are already being made for the training of court staff and judges in England and Wales by the Court Service and the Judicial Studies Board respectively. The training of solicitors, barristers and other advisers is for their professional bodies, but the Government are willing to help; for example, by preparing written guidance. In addition, we expect to provide information for the public closer to the time when the pension sharing provisions are to be implemented.
Thirdly, the noble Lord, Lord Astor, supported by the noble Lord, Lord Goodhart, asked what is meant by "detriment" in new Section 40A(2). The purpose of the provision mentioned is to protect the pension arrangement in exactly the way mentioned by the noble Lord, Lord Astor. The policy of the Bill is to avoid the unravelling or unpicking of a pension sharing order which has been implemented or on which implementation has begun.
Under new Section 40A, it will not be possible for the court to vary or discharge an effective pension sharing order in response to a successful appeal out of time if the person responsible for the pension arrangement has acted to his detriment on reliance of the taking effect of the order; if, for example, the pension arrangement has incurred any costs which are not recoverable from the parties or the order has been implemented to the extent that the pension debit and credit has been created, any reversal of which would create additional costs for the pension arrangement, the pension sharing order cannot be discharged; nor the terms of it altered.
We need that to protect the pension arrangement. If it were possible to vary the terms of the pension sharing order which is already, in effect, spent because it has been implemented by the arrangement, there could be an obligation to recreate a situation—for example, to

791
rebuild a fund—which could not be recreated. Liabilities may thereby be incurred, with compensation possibly having to be paid to the pension member.
The noble Lord, Lord Astor, will wish to note the provision in that new Section 40A(4) which makes it clear that the court has the power to disregard any claim of detriment made by the pension arrangement if the court believes that detriment is insignificant. It could be argued, for example, that writing a single letter on the pension share to the former spouse was a cost to the pension arrangement and therefore a detriment, and that the court could not vary or discharge the effective order in response to a successful appeal out of time. However, the court will be able to disregard such a claim as insignificant, thus allowing an alteration to the terms of the order to go ahead in appropriate circumstances.
I have taken some time with that, but it is a point which was raised by several Members of the Committee and I felt that it should be explained in greater fullness.
I welcome the support of the noble Lord, Lord Goodhart. Our parliamentary draftsmen should be on their toes because his scrutiny of every Bill so far has scored a bull's eye. Our failure has been, if not to the Government's detriment, to the public's gain.
The noble Lord, Lord Habgood, suggested that we have been deterred too easily by the research which suggests that we should abandon Part II of the Family Law Act. Like the noble Lord, I read the summary of the research in progress of June 1999. Reading it, I was persuaded that the present arrangements which we had conceived were not working as we had hoped. We all wanted mediation to work but, for various reasons, that was not the case. Couples were coming at different stages in their divorce or unsettled marriage process. Couples wanted particularised information available to them. The partners of many people were not prepared to go for mediation and, therefore, it broke down. We all wanted to make mediation available to couples in the hope of saving marriages where possible and reducing acrimony where that was not possible. But it is clear that the procedures proposed by Part II of the Family Law Act were not as effective as we had hoped. We shall revisit that issue with further research and it may well be that we cart be as optimistic as the noble Lord asks, but, at present:, the research does not support that case.
The noble Baroness, Lady Fookes, said that this matter is complex and that I had wonderfully added to those complexities this evening. Pensions are always complex because they are technical. For those who have the language—and I do not have that language—they appear as obvious as changing a language code between French and German. They have to be correct. That means that one must give an elaborate explanation rather than winging it.
The reason that our discussions this evening have been complex is not because pension sharing itself is any more complex than pension structures and arrangements in general; rather, it is because we are trying to do something different; namely, in trying to see what the future may hold for Part II of the Family Law Act, we have covered three possible contingencies.
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The first is that Part II of the Family Law Act may come into force before pension sharing does; secondly, that it may come into force after pension sharing; or thirdly, that it may not come into force at all. With this sequence of amendments, we are seeking to ensure that all three possible contingencies are built into the framework of legislation. I suggest that that is what is complex, rather than pension sharing itself. Certainly, by bringing the matter under the Matrimonial Causes Act 1973, we do not add to its complexity. The difficulty is that we are trying to cover all three possible options.
Finally, the noble Earl, Lord Onslow, asked why we could not simply make provision for one-third of the pension and attach a note to that effect to the pension records. Where a pension is being paid or a pension pot is being accrued or where there is earmarking, the flagging, about which the noble Earl spoke, can be carried out. The point is that some people will want that and others will not. The proportion will vary whether the ex-spouse's share remains within the scheme or goes outside it. It will all depend on discussions and negotiations between the couple and pension managers.
That is why the matter is complex. The possibilities facing couples involved in divorce proceedings have to be sufficiently sensitive to the situations that they face. That is why a simple tag of one-third to her and two-thirds to him will not do. Life would be easier if it would. We want to make sure that the arrangements best suited to their personal circumstances, including financial arrangements, are available to them and to the court, if the court believes that that is the fair solution. In the light of that, I hope that the Committee will accept these amendments. I am very happy to follow up any detailed points through correspondence.
Lord Astor of Hever: I thank the Minister for that reply. I agree that it has been a very helpful debate. These are very complex issues. It is important that we return to them in greater detail at Report stage.
I welcome the fact that the Government have recognised the importance of simplicity of approach and that they will be consulting publicly. I believe that my noble friend Lady Fookes and the noble Earl, Lord Onslow, made very valid points about the complexity of these matters. I have two questions for the Minister. I imagine that training will be voluntary rather than mandatory. It is very important that enough people go on the courses to understand the complexities of pension sharing. What kind of take-up does the Minister expect?
She is trying to simplify the whole matter. As I understand, she is legislating for all contingencies thus enabling the Lord Chancellor to choose which way to go. Can the Minister clarify those two points?
Baroness Hollis of Heigham: The noble Lord's description was exactly right because that is what we are doing. Plans are being made for the training of court staff and judges in England and Wales. I have every reason to believe that they will all be expected to

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undertake that training in so far as they have to address the issues. Training facilities for barristers is a matter for their professional bodies.
Lord Astor of Hever: I thank the Minister for that answer. What constraints are there on the Lord Chancellor for the way in which he chooses particular provisions?
Baroness Hollis of Heigham: Choosing what, exactly?
Lord Astor of Hever: The noble Baroness said that there were various contingencies and that the Government were legislating for them all and then it would be for the Lord Chancellor to choose which way to go.
Baroness Hollis of Heigham: As I tried to explain in response to the contribution to the discussion by the noble Baroness, Lady Fookes, subject to parliamentary approval, pension sharing will go ahead. It may do so following the introduction of Part II of the Family Law Act. It may go ahead before the introduction of that legislation. However, it may go ahead without there being a Part II of the Family Law Act. Therefore it must remain within the framework of the Matrimonial Causes Act 1973 or any subsequent codification of that law.
Those are the three options available to the Lord Chancellor. He is reflecting on them in the light of research findings and the consultation exercise that is now taking place. Having had a discussion with him earlier today, I believe it is fair to say that it is genuinely a fair question. As the noble Lord, Lord Goodhart, said, it would be foolish to go ahead and implement Part II of the legislation and not give pension sharing the protection of coming within the umbrella of the Matrimonial Causes Act 1973. The research which has taken place so far shows that the information process which we offered leading to mediation has not been the success that we all hoped for.
Lord Astor of Hever: I am grateful to the Minister for that reply. The government amendment has raised many complicated issues. I am sure that the Committee will want to revisit them at Report stage. I beg leave to withdraw the amendment.
[Amendment No. 58A, as an amendment to Amendment No. 58, by leave, withdrawn.]
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58B:
Leave out lines 29 to 32
The noble Lord said: The provisions of Schedule 3 mean that a court can no longer treat a pension as a marriage settlement, as in the leading case of Brooks v. Brooks in 1996. Mr Brooks was entitled to benefit under a non-contributory pension scheme set up by his company. The scheme provided for him on retirement to elect to give up part of his entitlement to fund the pension for his widow after his death and, in the event of his death, before or soon after retirement, for a lump
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sum to be paid at the discretion of the trustees of the scheme to a class of potential beneficiaries including his spouse and children at his death.
The scheme was designed only to provide benefits for Mr Brooks and his immediate family. It was entered into at approximately the time of his marriage. The company is regarded as the settlor. The funds provided by the company were treated by the court as a settlement which made future provision for the husband and was nuptial as it incorporated benefits for the wife.
We would like to see courts retain the right to treat pensions similar to that contributed to by Mr Brooks as marriage settlements capable of variation by them. That would retain an existing power of the courts and therefore widen the range of remedies available to the court in individual cases. It is unlikely that this remedy would be used very frequently because it applies only to a small number of pensions, and pension sharing is likely to be the favourite remedy. I ask the Minister to say why the Government do not want to retain that method of dealing with pensions on divorce. I beg to move.
Baroness Hollis of Heigham: This amendment seeks to delete the provisions of the new Schedule 3 to the Bill as inserted by Amendment No. 58 and others, which will prevent pension sharing in England and Wales by variation of a marriage settlement.
Courts have the ability to vary any part of a marriage settlement when the parties divorce. Pension sharing by variation of a marriage settlement is one way in which the courts in England and Wales have found to share a pension effectively. I am thinking in particular of the case of Brooks v. Brooks 1995, which the noble Lord quoted to illustrate his point where the husband's pension rights were varied to provide an income for his wife. It is a 1995 case which was reported in 1996, in case there is any misunderstanding.
I do not believe that it would be right to accept this amendment. The Bill is intended to produce a single system of pension sharing which is as simple and inexpensive to operate as is reasonably practicable. The system will produce certainty for the courts, for the parties whose marriage is being ended and for the pension providers who administer the division of the pension.
Preserving the expensive and uncertain remedy of pension sharing by variation of a marriage settlement would frustrate these aims. While there is a place for pensions of the type concerned in Brooks v. Brooks under the present law, they will simply be an unnecessary complication under the new law of pension sharing. Given the responses of the Committee to the previous amendments, I would have thought that simplicity had its attractions. I invite the noble Lord to withdraw his amendment.
Lord Astor of Hever: I thank the Minister for that reply. She has clarified thoroughly this very complicated position. I beg leave to withdraw the amendment.
[Amendment No. 58B, as an amendment to Amendment No. 58, by leave, withdrawn.]
Baroness Amos: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

General Pinochet
7.30 p.m.
Lord Carter: My Lords, with the leave of the House and in my capacity as Chief Whip, I shall take this opportunity to remind the House that the case of General Pinochet is still before the courts. Committal proceedings will commence on 27th September. All speakers in the debate on the Unstarred Question are reminded to observe the guidance on sub judice set out on page 74 of your Lordships' Companion to the Standing Orders. All matters relating to the current extradition proceedings in the case of General Pinochet remain sub judice. In this tricky matter, I hope that all noble Lords speaking in the debate this evening will err on the side of caution in following the sub judice rule.
Lord Lamont of Lerwick Lord Lamont of Lerwick rose to ask Her Majesty's Government what were the circumstances and background of the arrest of General Pinochet; what was the role of the police, the Crown Prosecution Service, Ministers and the Diplomatic Service; and what has been the effect on Anglo-Chilean relations.
The noble Lord said: My Lords, I am grateful to the noble Lord, Lord Carter. The greatest offender against the sub judice rule has been the Government, and particularly Mr Peter Mandelson who made remarks on television immediately after the arrest of General Pinochet that were clearly extremely prejudicial to justice. I should be interested to hear what rebuke was administered to him.
Of course, I shall abide by the sub judice rule and I shall say nothing about the issues in the committal proceedings which are to take place in September. However, I have been informed by Mr Davies, Clerk of the Parliaments, that I am entitled to comment on the decision of the Home Secretary to let extradition proceedings continue, as currently there is no appeal pending against that decision.
The tactics for the arrest of Senator Pinochet are redolent of the diplomatic methods of the Borgias. The 83 year-old former Chilean head of state was accepted into this country on what he believed to be a diplomatic passport, escorted through a VIP lounge paid for by the British Government, and on 16th October, at a very late hour, while still under the effects of an anaesthetic after an operation, arrested by armed police.
The noble Lord, Lord Williams of Mostyn, has denied to me in. Parliamentary Questions, that Senator Pinochet was arrested by armed policemen. I have here a sworn affidavit by a captain of the Chilean Army, who was present m the room when Senator Pinochet was arrested. He specifically observed that four of the officers were armed. It seems extraordinary that the reputation and the
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demonisation of Senator Pinochet should be such that, even aged 83 and under the effects of anaesthetic, four armed officers were required to arrest him.
The arrest was greeted with dismay by present and former heads of states in many countries. It was condemned by Felipe Gonzales, the former Prime Minister of Spain, and by President Menem of Argentina. George Bush called the proceedings against the senator a travesty of justice, and even the Pope made representations to the Government that the senator should be returned to his own country.
Most significantly, the arrest was roundly condemned by the Government of Chile, largely consisting of opponents of General Pinochet. Former President Aylwin and the present president of Chile, President Frei, called the arrest an interference in the internal affairs of Chile and an obstacle to reconciliation.
There are many disquieting features concerning the arrest that give rise to questions of collusion between the British and Spanish authorities. Senator Pinochet was initially detained under a warrant which was subsequently shown in the High Court to be wrong in law. The senator's lawyers wrote to the Home Secretary about the warrant, but the Home Secretary did not deign to reply. In the mean time, the Crown Prosecution Service went to Spain to advise the Spanish authorities on the warrant. In passing, I note that that is a form of co-operation not practised by the Irish Government in relation to the British Government pursuing terrorists in Ireland.
On the Friday before the arrest of General Pinochet, two telephone calls were made to the Foreign Office, one from the Chilean Embassy inquiring about rumours that the general may be arrested. The Chileans were informed that the Foreign Office would contact them again on Monday. On the same day, the police contacted the Foreign Office to find out whether Senator Pinochet enjoyed diplomatic immunity. At that point, why did the Foreign Office not go back to the Chilean Embassy? Why did the British Government consider that they had a greater obligation to the Spaniards than to the Chileans, unless there was some collusion between the two countries?
The reputation of British justice and its integrity have been severely damaged by this case. A judge concealed his involvement with one of the parties to the court case. That judge has never apologised. He still hears cases. At a new hearing, made necessary by that event, a completely different verdict was given. Three British courts have given three completely different rulings. The High Court decided that Senator Pinochet enjoyed sovereign immunity; the Law Lords, at their first hearing, decided that he did not enjoy sovereign immunity; and at their last hearing, the Law Lords decided that he enjoyed partial immunity.
Many may think that the obvious confusion of the judges is an argument why the Home Secretary should have been cautious about giving authority to proceed in this case. The Government maintain that the case of Senator Pinochet is a matter for the courts only. But it is not. The courts decide whether a person can be extradited under the law. The Home Secretary decides

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whether he should be extradited. The Home Secretary has wide discretion, as shown by his decision not to extradite an alleged IRA bomber to Germany.
On 24th March this year, the House of Lords gave a clear hint to the Home Secretary that in view of the dramatic scaling back of the charges to those after 1988 only, he ought to reconsider his authority to proceed against General Pinochet. The Home Secretary chose not to take that hint.
Justice has to be related to a time and a place. The senator's case can properly be considered only by Chileans in Chile. The decision of the Home Secretary is an affront to the sovereignty of Chile, a country with its own system of courts and its own democracy.
Twenty-eight years ago Chile was in a situation of near civil war. Terrible things were done on both sides—no one denies that—but the Chileans themselves subsequently decided to deal with that in their own way, as we have decided to deal with our problems in Ulster in our own way. Like us, they had a peace process and an amnesty; they had a reconciliation commission that was a model for South Africa and a number of people were given prison sentences.
The torture convention was never intended to be used in the way now permitted. No one suggested in 1988 that it modified sovereign immunity. It was never intended that someone should be extradited from country A to country B to be charged with offences in his own country, country C, against his own nationals. An important feature of this case is that none of the charges currently against General Pinochet involves citizens of this country or of Spain.
When my noble friend Lord Patten introduced the convention to the House, he made it clear that it was not intended to operate retrospectively. It has taken three court hearings to re-establish that point. He also said that the purpose of our accession to the convention was not to instigate a retrospective witch hunt against those alleged to have committed torture in the past. But that is exactly what has happened in this case.
This case illustrates some of the drawbacks in extradition proceedings. At no time has the senator been allowed to challenge in a British court the substance of the charges brought against him. They are taken at face value, even though former President Aylwin and former British ambassadors to Chile have said that there was no policy of torture in Chile after 1988. It is worth noting that Amnesty International alleges further cases of torture under both Presidents Aylwin and Frei, both of whom would now be well advised to reconsider their foreign travel plans.
The British are not in a strong position to lecture other countries on how to deal with torture. This Government have let out of jail over 270 terrorists, many of whom are murderers, maimers, torturers, bombers and killers of children. The Government have done that in the name of peace and reconciliation, as the Chileans have made decisions for their country in the name of peace and reconciliation.
When I drew the attention of the noble Lord to parallels between Northern Ireland and Chile, he replied that Ulster is unique. Chile is also unique. That is why it can be judged only by Chileans. On 24th March 1999, Lord Browne-Wilkinson said:
"It may well be thought that the trial of Senator Pinochet in Spain for offences all of which related to the state of Chile and most of which occurred in Chile is not calculated to achieve the best justice".
As I understand it, he was saying that he had to interpret the law, but he was admitting that there may be a conflict between law and justice. If there is a conflict between law and justice, surely that is for the Home Secretary to resolve.
Even the statute of the proposed international criminal court, which does not exist, acknowledges the right of home countries to conduct their own trials on their own territory. As a matter of principle, to let courts in one country put the government of another on trial, is tantamount to an assertion by the first country that the second is subject to its authority. If international law requires the trial of General Pinochet in an outside country, then it must require trials of butchers from many other places.
But Chile is a small country with no great leverage or influence on Britain; and Britain does not care. No one expects Britain or Spain to hold a top Chinese leader for massacres in Tibet; or to hold former Russian officials for extradition to Latvia. The decision of the Home Secretary was selective, hypocritical, arrogant and an unjustified interference in the affairs of a friendly country. The action should never have been allowed to start and I hope that at some stage in the future—he will have other opportunities—the Home Secretary will take steps to free a man who is a political prisoner in this country.
7.42 p.m.
Lord Clinton-Davis: My Lords, that was an extraordinarily ill-advised speech. It ignored the warning that the Chief Whip properly gave at the beginning of this debate, and a noble Lord of the experience of the noble Lord, Lord Lamont, ought to have known better.
The fact is that the noble Lord brought into question the issues that underlie this matter which will be properly dealt with by the courts. The defenders of General Pinochet have decided to come to this House tonight en masse. It will be interesting to hear what they have to say without, I hope, breaching that important warning.
This is a juridical matter of the greatest importance. It is a matter which is seminal in terms of international humanitarian law which has evolved. It is an important consideration which the courts have to address and it is improper for this House to venture an opinion as to the rights and wrongs of the proceedings at this stage. I am a lawyer. It is vital in a democracy that we respect those tenets of law that have been so flagrantly violated by the noble Lord, Lord Lamont, in his speech tonight.
It was inevitable that the noble Lord would have to do that. I should like to enter into a debate as to what happened in Chile in 1973. I was there shortly before on a parliamentary visit. I saw some of the events that

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were emerging at the time which gave us great concern. But I do not propose to do that. Nor do I propose to go into what happened in November 1973.
The noble Lord—inferentially perhaps—excused what happened at that time. I do not believe it to be excusable. It was not simply that General Pinochet took power. Many people assisted him in that direction. There were no political prisoners at the time of President Allende. It was not an efficient government; I concede that. But it was not a government who flagrantly denied the very essence of democracy, which I thought the noble Lord would himself have sought to uphold.
It is important, as we face the few days ahead when the courts will adjudicate on a matter of great importance, that we do not imperil those proceedings by making statements which are injudicious—as was the noble Lord's speech. I hope that the Government of Chile will understand the due process of law in this country and that the decision of the courts will be respected. Ultimately, if the court decides, as the noble Lord said, that there is a case which merits the consideration of extradition, the matter will have to be dealt by the Home Secretary. I do not envy him that position, but I am sure he will cope with it.
However, I do not believe that it is right to seek to intimidate the Home Secretary—nor will he be intimidated—by the sort of ill-advised speech we have just heard. I am surprised that a politician of the experience of the noble Lord should indulge in a speech of that kind. I hope, that some of his supporters will not express similar views tonight. I should have liked to have said much more, but I am confined by the four-minute limit, which I will respect:. I do not agree with the noble Lord, Lord Lamont, and he ought not to have tabled this Motion.
7.45 p.m.
Baroness Thatcher: My Lords, my noble friend Lord Lamont has done the House a service by initiating this short debate on a matter of great importance to Britain's reputation, to Chile's stability and to the orderly conduct of international relations. I shall try to deal with each of those matters while seeking to avoid remarks about the case itself.
Britain's reputation should be of vital importance to the government of the day. Our reputation sustains our interests. The Pinochet case has sullied that reputation. Senator Pinochet came here last September as a long-standing friend of Britain. Though I shall not go into the details, I can say that without President Pinochet's considerable practical help in 1982, many more of our servicemen would have lost their lives in the South Atlantic. The country thus owes him a great debt.
After leaving power he was accordingly received here as an honoured guest on a number of occasions. Similarly, on 22nd September last year, when he entered Britain on a diplomatic passport charged with a special mission by the current Chilean President, he was accorded all the privileges of an ambassador, including
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the protection of the Metropolitan Police Diplomatic Protection Squad.
However, some weeks later the general was arrested in hospital at dead of night, when under heavy sedation following a serious back operation. There is a widespread suspicion that there had been collusion between the British and Spanish authorities prior to the arrest, when the Chileans were not given the warning they might have expected about the imminent risk. That inhumane arrest was in any case made on the basis of an unlawful warrant. Senator Pinochet was then held for six days illegally under that warrant. Those circumstances left Britain's reputation for loyalty and fair dealing in tatters.
Secondly, I want to speak about the situation in Chile—this country's oldest and truest friend in Latin America. The great majority of Chileans, even the political opponents of Senator Pinochet, feel wounded at the way we and the Spanish have treated them. They are right to do so. Until the Senator's arrest last October, Chile had achieved three remarkable successes, all of them in large measure due to former President Pinochet.
First, it had seen the total defeat of communism at a time when that ideology was advancing throughout the hemisphere. As Eduardo Frei, the former Christian Democrat president of Chile put it: "The military saved Chile". Secondly, Chile has seen the establishment of a thriving, free-enterprise economy which has transformed living standards and made Chile into a model for Latin America. Thirdly, Chile is also remarkable because President Pinochet established a constitution for a return to democracy, held a plebiscite to decide whether or not he should remain in power, lost the vote (though gaining 44 per cent support), respected the result and handed over power to a democratically-elected successor.
Chile thus enjoyed prosperity, democracy and reconciliation—until we and the Spanish arrogantly chose to interfere in her affairs. So far, the Chileans have behaved with great restraint. But we should not assume that this will continue, particularly if Senator Pinochet, who is not now in the best of health, were to die in Britain or is taken to Spain. Anything that happens then will be the direct responsibility of this Government and, in particular, of the Home Secretary.
My final point concerns the implications of the Pinochet case for the conduct of international relations, which are essentially based on trust between nation states. This trust has now been shattered by the prospect of the courts in one country seeking the extradition of former heads of government from a second country for offences allegedly committed in a third country.
Senator Pinochet is, of course, being victimised because the organised international Left are bent on revenge. But on his fate depends much else besides. Henceforth, all former heads of government are potentially at risk; those still in government will be

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inhibited from taking the right action in a crisis, because they may later appear before a foreign court to answer for it—
Lord Carter: My Lords, perhaps the noble Baroness would be kind enough to give way.
Baroness Thatcher: My Lords, I am nearly at the end of my speech.
Lord Carter: My Lords, I should just like to remind the noble Baroness that this is a timed debate and the limit for each speaker is four minutes. The noble Baroness is now in her seventh minute. I wonder whether she could now bring her remarks to a close.
Baroness Thatcher: My Lords, I am very close to the end and I very rarely take up the time of this House. It will now take me longer because the noble Lord interrupted me in the middle of a sentence.
Henceforth, all former heads of government are potentially at risk; those still in government will be inhibited from taking the right action in a crisis, because they may later appear before a foreign court to answer for it and—this is where I was when I was interrupted—in a final ironic twist, those who do wield absolute power in their countries are highly unlikely now to relinquish it for fear of ending their days in a Spanish prison. This is a Pandora's box which has been opened—and unless Senator Pinochet returns safely to Chile, there will be no hope of closing it.
7.52 p.m.
Lord Howe of Aberavon: My Lords, I am grateful to my noble friend Lord Lamont for giving us this opportunity to discuss the matter and to the noble Lord, Lord Clinton-Davis, for giving me the opportunity of making one point clear. Yes, there are questions of law involved in this case which were considered by this House previously and which will be considered by the magistrates' court in due course. There are also questions of policy and discretion, which are solely for consideration by the Home Secretary. Everything that my noble friend said is entirely relevant to that process.
The most important feature about the case was stated by the noble and learned Lord, Lord Browne-Wilkinson, when he said that it was of considerable general importance as this is "the first time" ever in the world, as far as one can see, that a national court,
"has refused immunity to a former head of state on the grounds … that [there can be] no immunity against prosecution for certain international crimes".
It is the "first time" because international law is changing very rapidly. But the fact that it is the first time for this kind of question to arise underlines the huge importance of the Home Secretary applying himself to his questions with far more responsibility and objectivity that he has done. He has already considered the matter once when allowing the case to go ahead to the magistrates' court, and he will have another opportunity of doing so when the latter has reached its decision. All these factors are still relevant.
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I recollect that I had the privilege of going to Chile in March 1990 as the representative of Her Majesty's Government, to attend and welcome the inauguration of the democratically-elected President Aylwin in place of President Pinochet. It was a profoundly moving experience; indeed, a profoundly democratic experience. The people were rejoicing at the restoration of democracy. By chance, I had the opportunity to be in Chile last March on the very day when General Pinochet became Senator Pinochet—the next stage in the transition process of peace and reconciliation.
Of course, one has to recognise the legitimacy of extending international law, but, against that, one has to set the hazards and dangers of trying to intervene in the process of reconciliation in a country as finely balanced as Chile has been. It is that which the Home Secretary has failed to do and it is something that he needs to do properly. There is an additional reason for him to do it properly; namely, the observations of the Law Lords in this House about the huge transformation of the case since it first appeared before the Home Secretary for his consideration.
The noble and learned Lord, Lord Browne-Wilkinson, said that there had been a,
"substantial reduction in the number of extraditable charges"—
specifically, from 30 to three. The noble and learned Lord, Lord Goff, said that the "great mass" had been excluded and the noble and learned Lord, Lord Hope of Craighead, said that there had been a,
"profound change in the scope of the case".
Finally, the noble and learned Lord, Lord Millett, said that the decision now transformed the case which the Secretary of State had to consider.
It is my argument, and the argument of all of us who have intervened from this side of the House so far, that the Home Secretary has failed to take proper account of those matters and that he should now find an opportunity of doing so. If he fails to do that, this country will be putting at risk the progress already made in Chile.
The last of these alleged offences took place more than 10 years ago. The warrants under the Extradition Act were first issued on 16th October of last year. The Divisional Court heard the habeas corpus application 10 days later and, within six weeks, the House of Lords had also heard the case. So the case was proceeding with the expedition that was appropriate. Since then, because of the judicial hazards, months have passed and the case, having been last heard by the House of Lords on 24th March, still has months to go before it reaches the magistrates' court at the end of September. All that time it casts a shadow over relations between three friendly countries which are struggling to maintain good relationships.
More important still, as my noble friend Lady Thatcher pointed out, an 83 year-old former head of state, whose health cannot be getting any better, is entering the ninth month of house arrest in this country. One cannot fail to contemplate the parallel with the case of Rudolf Hess. I hesitate to contemplate the consequences. If the senator should die in our custody, someone whom others seek to present as a monster will

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become a martyr. So why is the delay taking place? Who is responsible? What are Her Majesty's Government doing? Even if they are not themselves in control—I understand that—what are they doing to persuade others who do have an even closer interest in a speedy outcome? I have in mind the Crown Prosecution Service on behalf of the Spanish Government, the lawyers representing Senator Pinochet himself and the Government of Chile. Decisions will have different consequences for all these people but none of them has any interest in delay, least of all this country in any further delay in these proceedings. So, what have Her Majesty's Government done? What are they doing in the context of the other parties to this case to expedite an early resolution of this desperate saga? Prolongation can do nothing but harm to everyone concerned.
7.57 p.m.
Lord Monson: My Lords, when I put my name down to speak last Thursday, I could not have imagined that I would find myself in such distinguished company. I, too, should like to thank the noble Lord, Lord Lamont, for giving us the opportunity to debate this important subject. I should like to commend him on the assiduous way in which he has been pursuing the matter these past months by means of a stream of questions for written answer.
Although I have some first-hand knowledge of the Spanish-speaking Caribbean, I have never visited South America proper, and am as far from being an expert on that particular continent as can be imagined. I intervene only because, as an Englishman, I have been ashamed at this country's treatment of someone who, whatever may have happened elsewhere in years gone by, was a much-needed friend and ally of ours in 1982, and someone who had on numerous previous occasions been welcomed in this country, not only by the previous administration but also by the present administration. Not even the moss ruthless Bedouin chieftain would invite an honoured guest into his tent and then seize and shackle him.
In contrast, the French refused the general a visa, as any self-governing country is perfectly entitled to do for any reason that they choose. Although this refusal by the French demonstrated a degree of double standards in that France has often tolerated and even welcomed heads of state, or former heads of state, who make General Pinochet look like a boy scout, at least the French position is vastly more honourable than the current British one. All the more so in the light of the massive covert help given by General Pinochet to Britain during the fight to liberate the Falkland Islands, without which there could have been hundreds more British casualties, as the noble Baroness, Lady Thatcher, has just pointed out. Indeed, much of the task force might have been sent to the bottom of the South Atlantic, the islanders might still be enslaved, and General Galtieri might still be reigning in Buenos Aires.
The Government are claiming, in justification of their refusal to send General Pinochet back to Chile, that the executive cannot and must not interfere with the judicial process. Why in that case are the British Government,
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in conjunction with EU governments, urging the Turkish Government to overrule the Turkish judiciary in the matter of Mr Öcalan?
Finally, the Question asks about the effect of this policy on Anglo-Chilean relations. We know that relations are already damaged, not least because of the unhappy cancellation of the vital air link between Chile and the Falklands—and the damage is likely to get worse. This is not primarily because of General Pinochet himself, towards whom public attitudes in Chile vary enormously, but because it appears to the Chileans that Britain is siding with the former colonial power in what seems like that power's attempt to reimpose a degree of colonial control over Chile.
8.1 p.m.
Viscount Cranborne: My Lords, I think that it has become clear during the course of this debate so far that the Government stand accused of lack of wisdom, inconsistency and perhaps above all the desire to make obeisance to the political gods which they worshipped at university in the 1960s.
We have seen great changes in many countries in the past decade or so, as my noble friend Lord Lamont has pointed out: in South Africa, in the former countries of the Soviet empire, and indeed in Chile. We ourselves of course are trying to bring conflict to an end in the Province of Northern Ireland.
Perhaps a feature of the more successful of those transitions—particularly in South Africa and in Chile, and, indeed, we hope in Northern Ireland—has been the effort to reconcile two previously warring sides: white and black in South Africa; Nationalist and Unionist in Northern Ireland; and the forces of liberal democracy and former Communists in Chile.
In order to build a new future, the countries concerned have suggested that it is better to look for reconciliation rather than revenge. That has been their choice. When they have occasionally looked for revenge, that has been their choice too. As a number of my noble friends have pointed out this evening, Chile is now a successful example of the wisdom of attempts at reconciliation rather than revenge. It is a judgment that a sovereign state has made for itself.
I have to ask, along with my noble friends, therefore: by what right do we interfere in that settlement and risk reviving the very divisions which are now being healed in a country learning to build for the future, and to build successfully? Even if we did not owe Chile a debt of gratitude—which indeed we do—even if we did not want to imperil our trade, do we really think it wise in the name of humanity for the Home Secretary to fail to exercise his discretion—because of his former views for which he campaigned so stridently in the 60s—to second-guess Chile's own decision to reconcile and look to the future?
8.4 p.m.
Lord Belhaven and Stenton: My Lords, I am full of admiration for my noble friend Lord Lamont in his persistence in inquiring into this deplorable affair. I agree with every word he said and every word which

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my noble friend Lady Thatcher said. I shall try not to repeat what has been said because I had better make up a bit of time. Many obstacles have been put in the path of my noble friend—mostly legal—but he has rightly persevered. After all this time we have a right to know how this matter of the arrest and detention of Senator Pinochet came about. Without a doubt it has been to the detriment of our relations with Chile and also with practically the whole of Latin America.
Perhaps I might be allowed to begin with a quotation from holy scripture, the Gospel of St. Matthew, the words of our Lord in the Sermon on the Mount,
"Judge not that ye be not judged for with what judgment ye judge, ye shall be judged and with what measure ye meet, it shall be measured to you again".
We should not set ourselves up to judge other nations, especially after we and our allies have recently been responsible for a ferocious bombing campaign in Europe where hospitals, bridges and people have been destroyed, livelihoods wrecked and cluster bombs and depleted uranium bombs and missiles exploded in the heart of Europe. We know that there are given reasons for this and now is not the time to go into them. But what I ask is, how can we judge General Pinochet after what we have done? He had his reasons too. I do not intend to go into them except to say that they are at least as good as the reasons that our Government and media gave for the bombing of Yugoslavia.
One would expect Amnesty International to be in favour of amnesties, yet it is evidently not in this case. It is the guardian angel growing horns and devil's hooves. In this country we have given amnesty to a large number of IRA murderers and yet we appear to deny the right of the elected government of Chile to grant an amnesty to an ailing 84 year-old ex-president. While I am on this subject, why is it that the criminal executioners and torturers of the IRA are not indicted by the War Crimes Tribunal? We are searching Yugoslavia and indeed the whole world for war criminals and yet we need look no further than in our own country.
I must ask Her Majesty's Government whether they are prepared to stand by while this case goes on, like Jarndyce v. Jarndyce. Our law really has not improved much since Dickens' day. Do they not foresee what will happen and what may be said if Senator Pincochet, who is an old man, dies in custody in this country? It is a dreadful prospect and I ask them seriously to consider it because unless they do something it is likely to happen. For those of us who love this country and its great traditions the shame of it will be hard to bear.
8.7 p.m.
Lord Thomas of Gresford: My Lords, a head of state is criminally responsible for acts of torture committed by his subordinates if it is proved that he knowingly presided over a regime of institutionalised torture conducted by them. This long settled rule of international law is incorporated in a number of international conventions and most recently, in 1998, in
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Article 28 of the Rome Statute for an International Criminal Court, to which of course this country was a consenting party.
This is the background to the arrest of General Pinochet. His criminal responsibility, if any, is a matter for a court with the appropriate jurisdiction to determine. Two weeks ago the Chilean College of Medicine reported that at least 200,000 people had been tortured by government forces during the 17-year rule of General Pinochet. But the question is, did General Pinochet have any inkling that this degree of torture was going on under his rule?
Among the 5,000 documents that were released last Thursday, 1st July, by the United States Government, there is the following CIA report 10 days after the coup, on September 21st 1973—the period referred to by the noble Lord, Lord Clinton-Davis. This is of course 15 years before the matters into which the magistrate is inquiring, and therefore is not sub judice. The report said that at that time—10 days after the coup—
"The prevailing mood among the Chilean military is to use the current opportunity to stamp out all vestiges of Communism in Chile for good. Severe repression is planned. The military is rounding up large numbers of people, including students and leftists of all descriptions, and interning them. 300 students were killed in the technical university when they refused to surrender in Santiago, the capital.
This Government have simply responded to an extradition request from Spain, which is, like Britain, a party to the European Extradition Convention. If proper information is provided under that convention it is the duty of this country in international law either to extradite General Pinochet—or to put the necessary procedures in operation—or to prosecute him.
I have some experience of extradition procedures from a case which lasted some seven years through the English courts before my client was extradited. It so happens that the leaders of General Pinochet's legal team acted for the territory then requesting extradition in that case. There is nothing they will not have learned about the tenacious use of extradition procedures which will certainly ensure that General Pinochet remains comfortably in his Wentworth home this time next year and beyond.
But what about prosecution? If the proper machinery is put in motion in this country, there is no bar whatever to General Pinochet being prosecuted at the Old Bailey or anywhere else for conspiracy to torture under Section 134(1) of the Criminal Justice Act 1988 for offences committed after 29th September of that year. Whether General Pinochet be guilty or innocent, justice would be immensely swifter, as many noble Lords have asked, and certainly less expensive. The same witnesses who will now occupy months before the extraditing magistrate would give exactly the same evidence in the same period of time but before a British jury. Extradition requests have been received from not only Spain but France, Switzerland and Belgium. The English courts have the same jurisdiction as any of those countries.
There is much to be said for removing the fate of General Pinochet from the delays of extradition hearings, with the inevitable procedural appeals, from

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the unfettered and sole discretion of the Home Secretary, which has been so much criticised, and ultimately from the Spanish judge or judges who may, in some far off time, get round to trying him. His supporters in this country should welcome putting the question of his guilt or innocence into the hands of the ordinary citizens of this country within a reasonable framework of time. The fairness of a British jury and its complete independence of political motivation, particularly where no British citizen is involved, as here, is surely a matter that is not in question. This is a job for the Crown Prosecution Service and not for Mr Straw.
As for Anglo-Chilean relations, do the people of Chile really want him back? It is my belief that the return of the General will exacerbate the domestic problems of Chile. Noble Lords will recall how the present Commander-in-Chief, General Ricardo Izurieta, travelled to London without informing the democratically elected President, Eduardo Frei, to affirm to anyone who would listen that General Pinochet is not guilty of any charges of torture or other crimes against humanity, a position which was contrary to the civilian government. They were arguing that no trial should take place in Chile. I believe that the courts of democratic and free countries should decide the General's fate.
8.12 p.m.
Viscount Astor: My Lords, we believe that if there is a case to answer, it should be answered in Chile. General Pinochet has always been the bogey man of the British Left since the early 1970s. The Left has always seen Allende as a socialist hero and has never forgiven the man who toppled him. It chooses to forget that at that time Chile was in chaos and facing social and economic collapse—anarchy. It was against that background that General Pinochet came to power and, in effect, a civil war ensued. I do not intend to say any more about those years, except to say that, as we have seen recently, civil wars are nasty, brutal affairs where innocent civilians are caught in the middle.
General Pinochet returned the country to multi-party democracy in 1988; a stronger country, where the rule of law prevails and economic prosperity flourishes. Democracy can be a fragile institution. Many countries in South America do not have democratic government. Argentina now has democracy because the generals fell; and the reason the generals fell was because my noble friend Lady Thatcher stood up to them when they invaded the Falkland Islands. My noble friend's prompt action defeated the junta; and then its own countrymen threw it out. That influenced regimes all over that continent; the democratic process was restarted and snowballed faster than ever before.
What are the views of the Chilean people and what messages are the Government by their action sending to that continent? I say the wrong ones. The Chilean Government, the political parties, the armed forces, even the trade unions are united in agreement that if there is a case to be answered, it should be answered in Chile. They regard the arrest and the treatment of this case by the Government as an attack against Chilean sovereignty, an attack on Chilean law and an attack on
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the Chilean democratic government. The Chilean Government, among whom are those who were part of the Allende regime, have taken the stance that they request the return of General Pinochet to Chile. In his address to the Chilean Congress on 21st May, President Frei said that this was the objective not only of his government but of the nation. Only the Marxist Party disagreed.
When General Pinochet arrived in this country, he was treated as a welcome guest. When he leaves these shores, it should be to go home. What signals are the Government sending if they do otherwise? The signals are that any politician—or perhaps a member of an armed force—visiting these shores can be subjected to politically motivated proceedings instigated from a third country. What ruler in any of our former colonies will have the incentive to return his country to democracy?
If we were examining this issue with regard to extradition to the international criminal court, it would be a different matter; but we are not. If we were considering this issue for extradition back to the home country, it would be a different matter; but we are not. I repeat, if there is a case to answer, it should be answered in Chile. The Home Secretary will have discretion at various stages during this case. I hope that he will not be trapped by the mantra of old Labour.
8.16 p.m.
Lord Williams of Mostyn: My Lords, the Unstarred Question tabled by the noble Lord, Lord Lamont, asks what were the circumstances and background of the arrest; what was the role of the police, the Crown Prosecution Service, Ministers and the Diplomatic Service; and what has been the effect on Anglo-Chilean relations.
Many of the assertions that have been made—I regret to say that many of them were unworthy and ignoble—have little relevance that I could detect to the Question tabled by the noble Lord. A very significant number of wrong assertions—I put it neutrally—have been made.
Senator Pinochet was not provided with any protection from the Metropolitan Police until after his arrest. It is asserted that the first warrant was illegal; in fact, the Divisional Court specifically said that the Home Secretary was not wrong in not exercising his discretion to cancel the first warrant; that was the rule of the courts; not the executive. The noble Viscount said that it was for Chile to try Senator Pinochet. As far as I am aware, we have had no extradition request from Chile.
It is asserted without any basis at all—I utterly repudiate it—that the Home Secretary was motivated as a result of an organised international Left conspiracy bent on revenge. That is unworthy; it is wholly untrue. It will be, of course, disagreeable for me to point out that we are bound by international obligations. The extradition request to which we responded was confirmed by the Spanish Government, who, far from being part of the international Left conspiracy, are a centre-right coalition government.
It is said that Pinochet is a political prisoner in this country. That is utterly and completely wrong. It does no one any good to make that sort of assertion which,

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I am sorry to say, is wholly unrelated to the facts or the legal machinery. It was said—utterly wrongly and again without any basis of evidence—that the Home Secretary, Jack Straw, has been motivated "by the political gods of his youth in the 1960s". That is wholly untrue. When I was a student at that time—as were others in the Chamber at the moment—we did have secular gods. Because we were law students, one of them was that the rule of law is important and is not simply, I take the phrase, "dependent simply on time and place". To use another phrase, it is not "something of a conscience to be cut according to this year's fashion".
Senator Pinochet landed at Heathrow on 22nd September for a private visit. He is a Chilean citizen; no visa was required. He was granted leave to enter. He made use with his party on arrival of the VIP suite at Heathrow, which is routinely—I repeat, routinely—made available as a courtesy to former heads of state. On 14th October, the Fifth Central Magistrates' Court in Madrid contacted the Metropolitan Police via Interpol with a request to interview Senator Pinochet. On 15th October, Foreign and Commonwealth officials were informed by the Chilean Embassy that consideration was being given to his leaving on 20th October. On 16th October, the FCO was informed by the Chilean Embassy that a seat on a flight to Santiago had been secured for him. That information was passed to no one outside the United Kingdom Government—I repeat, no one.
When arrested—and I have had this checked and rechecked on a number of occasions in deference to the persistence which the noble Lord, Lord Lamont, has shown in asking his many questions—Senator Pinochet was not arrested by armed officers of the Metropolitan Police. When I receive that information from the Metropolitan Police, I, for one, accept and believe it.
The police telephoned FCO officials for advice as to whether Senator Pinochet enjoyed diplomatic immunity from arrest. They were informed that there were no grounds on the basis of diplomatic immunity for not proceeding with a provisional arrest warrant. It is well known that the possession of a diplomatic passport is not proof in itself of immunity.
I turn now to the legal structures. The noble Lord, Lord Lamont, complained quite bitterly about, and criticised, the mechanisms of extradition in this country. The noble Baroness, Lady Thatcher, criticised what had gone on; so did the noble and learned Lord, Lord Howe. The present basis of extradition in this country is entirely the Extradition Act 1989. That was passed when the noble Baroness was Prime Minister; when the noble and learned Lord, Lord Howe, was Foreign Secretary and then Deputy Prime Minister; and when the noble Lord, Lord Lamont, was Financial Secretary and then Chief Secretary to the Treasury. I make those points not in any partisan or personal way, but simply to demonstrate to the many who will attend to these debates outside this Chamber and across the world that this has nothing to do with legal devices introduced by the present Government. The Home Secretary has behaved properly in a quasi-judicial way, without fear
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or favour of criticism from Left or Right, without any political contact with his colleagues in government. I know that to be true.
It is therefore important that our friends and colleagues in South America should understand that this legislation was not brought in to be "Senator Pinochet-specific". It was introduced by the former government, of whom the noble Baroness was then the Prime Minister. These are important matters. We do our own country no service at all with extravagant language, misinformation and assertions which are simply not based on any factual evidence.
A comparison of sorts was made between Senator Pinochet's case and the case of Hess, deputy Führer to Hitler, found guilty of playing a significant part in the orchestration of the holocaust. I wonder where proportion is when we discuss these matters.
I am not qualified to observe on the charges against Senator Pinochet. I have not studied the evidence. The charges are serious. They are of torture and conspiracy to torture. I refer to what the noble Lord, Lord Thomas of Gresford, pointed out to the House. Some of his remarks were plainly not palatable to many of your Lordships. These are serious charges. Our reputation was described as "shattered". I refute that utterly. What our country's reputation internationally depends upon—and in my opinion is properly founded on; that is, if one's view is based on history rather than the convenience of the moment—is respect and reverence for the rule of law. It has not been possible, despite every effort that has been made by way of legal challenge, inquiry and inquisition, to demonstrate at all that any step has been taken that was not utterly lawful and entirely consistent with our international obligations and the regime set down under the Extradition Act 1989.
A challenge was made to your Lordships' House. The House initially came to the conclusion that many of the offences alleged against Senator Pinochet were extraditable, therefore justiciable, in Spain. Following that—the criticism of the noble and learned Lord, Lord Hoffmann, in the terms in which it was made was entirely inappropriate and unworthy—the House of Lords then ruled again. It is simply not true to say that the House of Lords sitting judicially required Jack Straw to reconsider and that he failed to do so; quite the opposite is the truth. He was invited, not "required", to reconsider, and he spent a certain amount of time reconsidering, as is perfectly well known to the lawyers representing Senator Pinochet.
In my opinion, the police in this country behaved properly. They discharged their duty in the way that they ought. They did not instigate proceedings. They are in fact the proper servants of the public good, which is the true administration of the law without fear or favour according to what the law requires.
The CPS has been criticised, although not this evening; perhaps it has been overlooked. It is, and has to be, agent for the Government of Spain pursuant to Section 3(2)(g) of the Prosecution of Offences Act 1985. That is what the CPS has been doing.

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The noble and learned Lord, Lord Howe, asked me what was happening and what had been going on between those in Chile and those in this country. On a number of occasions, senators and Ministers from Chile have come to see me. I promised faithfully, and discharged that duty, to transmit whatever they told me to officials. On 28th October last year, Chilean senators from all sides of the political spectrum came to see me. We had a lengthy, courteous and patient discussion. There was no hysteria in any of their representations. I refer to Senators Matthei, Cariola, Cordeio and Morales. On 10th November last year, I saw the Chilean Ambassador and the Deputy Foreign Minister, Mariano Fernandez and Mario Artaza. On 31st March, again at the request of our colleagues in Chile, I saw Chilean Senator Mario Cariola; and I saw again the Deputy Foreign Minister, Mariano Fernandez, with Mario Artaza and Herman Guerrero. They were perfectly content, courteous and patient in listening to what I said, which I believed to be well founded.
The Chileans, for reasons that I recognise and honour, wish their own country to have absolute sovereignty in these matters. That is a view which, I repeat, I respect, as I have always demonstrated to them. There is an alternative claim. It is the claim of obligation under international law, and it is the claim that domestic governments here are subject to the will of Parliament, which was expressed in the 1989 Act as recently as the last but: one government.
There is no conspiracy to hound Senator Pinochet here. What will do lasting, avoidable harm to our relationships with our friends and colleagues in South America is the sort of ill judged, disproportionate, hysterical language that we have heard tonight. President Frei has been quoted on one or two occasions. Perhaps I may offer another recent quotation from him: It is not the responsibility of the executive branch of government to participate in any action that does not respect the courts. That is what we have been saying, as patiently as we can, for the past eight months.
Baroness Ramsay of Cartvale: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.28 to 8.30 p.m.]

Welfare Reform and Pensions Bill
House again in Committee on Schedule 3.
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58C:
Line 35, leave out from ("marriage") to second ("the") in line 36
The noble Lord said: Amendment No. 58C covers one of the Opposition's main concerns about the Government's proposals. They have made much of their claim that pension sharing would be a one-off, clean break between two parties in a divorce. However, as they stand, the Government's proposals leave it open for there to be a subsequent application after the initial
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divorce order is made. We believe that it is utterly inappropriate for a party with a pension that may be subject to a sharing order to be unclear at the time of divorce whether a subsequent order may be made against them.
The amendment is designed to ensure that there is only one opportunity for a pension-sharing order to be made. We have based this on the principle that it cannot be right for there to be an opportunity for a retrospective application after a divorce settlement. The principle of equity is fundamental, it is alleged, to the Government's proposals. We do not, therefore, believe that it is equitable for there to be the possibility of sharing to take place, except in response to an application being made before the divorce order.
In the other place at Committee stage, the Under-Secretary of State said that this amendment was too prescriptive in that it set a time-frame in which it might not be possible for a party to initiate a pension sharing order. The specific instances he cited were serious illness or domestic violence. Perhaps a way of preserving our principle of opposing retrospective applications could be addressed by instituting a time limit after which retrospective applications may not be made.
I should be grateful if the noble Baroness could indicate whether she shares our fundamental concern here and what moves the Government may take to allay it in a practical context. I beg to move.
Baroness Hollis of Heigham: As we have heard, the amendment seeks to change those provisions in the Bill which specify when a court in England and Wales can make a pension sharing order.
Under the Matrimonial Causes Act 1973, decisions about financial arrangements are often—indeed, I was assured in the majority of cases—not reached until after divorce. A pension is just one of the assets which are to be dealt with on divorce and it is therefore necessary to enable pension sharing orders to be made to the same timetable.
The new Section 24B of the Matrimonial Causes Act 1973 is entirely consistent with the existing provisions of that Act, relating to when the court may make other types of ancillary relief orders.
Under the 1973 Act, a divorcing couple are not required to settle their financial arrangements before they get divorced. It is fairly common for those arrangements to be settled after divorce. I do not believe that it would be right to remove the additional flexibility that pension sharing will bring in a large number of cases. For example, it would require that financial arrangements, which would otherwise not have been dealt with until after the divorce had been completed, would have to be completed before the divorce in order to meet the qualifications of only one part of the assets—the pension. I hope that on the basis that all we are doing is protecting the existing situation under the Matrimonial Causes Act and the flexibility that people have, the noble Lord will withdraw his amendment.
Lord Astor of Hever: I thank the Minister for that clarification. I understand the point she makes about

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flexibility and we will carefully study in Hansard what she said. In the meantime, I beg leave to withdraw the amendment.
Amendment No. 58C, as an amendment to Amendment No. 58, by leave, withdrawn.
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58D:
Line 44, after ("a") insert ("previous")
The noble Lord said: I wish to speak to Amendments Nos. 58D to 58H. This is an area where the Opposition has serious reservations about the Government's proposals. The principle of our amendments is straightforward. It allows the sharing of a pension asset on only one occasion for the scheme participant. The purpose is to ensure that, in an age where, sadly, divorce is becoming ever more prevalent, there will not be the possibility of a further sharing of the asset when an individual remarries after the pension sharing order has been made.
In the other place at Committee stage the Government accepted the principle that if a pension was reduced by earmarking, it should not be subject to subsequent splits. The possibility of discrimination between the first and any subsequent spouses was accepted.
If an asset is split repeatedly on divorce, there is the real danger that an individual may be left with a pension that is utterly inadequate for their retirement. Indeed, given the Government's miserly proposed changes to the topping up of the scheme participant's pension after sharing, this is another serious blow to the institution of marriage.
The Government have stated that they do not believe that pension sharing will impact a couple's decision to marry. However, Malcolm Wicks, Labour Member for Croydon North in the other place and a member of the Social Security Select Committee, said that pension splitting could financially disadvantage men who had already divorced once and then started a new relationship. He said:
"The fear of having to share their already diminished pension rights with another woman, should a second marriage end in divorce, may make them feel it is not worth marrying again. A man who has had half his pension fund taken away at divorce and who is living with another woman may find she wants to marry him but his accountant may advise him against it".
The matter of apportionment of a pension will clearly be for the courts to decide. It tends normally to be the case, though, that jurisprudence evolves through repeated practice. The courts may well determine that, if a pension sharing order is appropriate in principle, the amount apportioned for a scheme participant should be the same in each case of divorce. Therefore, in the case of a subsequent marriage and divorce this could be overwhelmingly detrimental to a person's retirement planning, and particularly unfair where the individual may not be the cause of the divorce.
We are concerned with the diminution of the pension asset which, if repeatedly reduced, would mean some individuals losing all incentive to save for their retirement. Repeated pension sharing orders might
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render the asset almost worthless. The strength of our amendment is that not only does it address this problem but it is also transparent. A second or third spouse would know that the asset had been previously shared prior to the marriage. This is the only sensible course to pursue if the Government are serious about equitable treatment of scheme participants in an age of ever-increasing divorce rates.
The Opposition appreciate that this is a complex and emotive subject. Pensions were never designed to be split. But we are concerned that the supposed principle of equity under which pension sharing is being introduced is seriously compromised by the possibility of multiple sharing of a single pension asset. It is with that serious reservation in mind that I look forward to some reassurance from the Minister. I beg to move.
Lord Goodhart: Certainly, I understand the idea behind the amendment just moved by the noble Lord, Lord Astor of Hever, which addresses a problem. However, in principle I find it difficult to support the amendment as it stands because it produces a number of anomalies. Let us say that a young man has started his pension at 25, marries and is divorced by the age of 30. For the rest of his life any increase in that pension will be completely immunised against a claim by a second wife who may have been married to him for a quarter of a century. There is an anomaly as between the person who continues with the same pension and someone who moves jobs and starts another good occupational pension scheme with a new employer. That will not be immunised, whereas the old one will be.
I believe that the right way to deal with this undoubted problem is through the courts. I hope that one of the factors that the courts will take into account when deciding how to split a pension is how much of it was earned while the couple were married or living together. Therefore, if there was a second relatively brief and unsuccessful marriage the wife would not normally expect to get away with a significant proportion of the pension fund built up before the marriage began. But it seems to me that this obvious problem should be dealt with through the discretion of the courts rather than by writing this provision on to the face of the Bill.
8.45 p.m.
The Earl of Clanwilliam: I take the points raised by the noble Lord, Lord Goodhart, in two senses. First, I agree with my noble friend that the word "previous" is important in this context. It means that the pension at the time of divorce will be stopped and halved, or whatever fraction is appropriate, and those proportions will continue. Therefore, it does not matter whether either party takes out a subsequent pension. In this amendment the word "previous" refers to the particular pension and the state of its accumulation at the time of divorce.
Secondly, the noble Lord, Lord Goodhart, referred to the role of the judge. This is related to my earlier remarks in relation to new Section 40A(4). The judge dictates how the assets should be broken up; it is he who is in a position to ameliorate the situation and is aware of all the assets of the two parties. Therefore, he can

815
ameliorate the situation by agreement, not by the arbitrary system as proposed in the schedule. Therefore, I support my noble friend Lord Astor and urge the Minister to use new Section 40A(4) and allow the judge to make the disposition in this matter.
Baroness Hollis of Heigham: I thought that the noble Lord, Lord Goodharl, had fully answered all the points made by the noble Lord, Lord Astor, and that I did not need to reply. I believe that he did it splendidly. As for the observations of the noble Earl, it seems to me that the substance of his remarks, which is to leave it the courts to decide the matter, is against the push of his noble friend's amendment. I was not quite sure from where he was coming in those circumstances.
The Earl of Clanwilliam: In this context I speak for myself and am not privy to all of the wishes of the party that I support in this matter.
Baroness Hollis of Heigham: I am not surprised by the independence of mind of the noble Earl—the Committee is aware of that—but the fact that the push of his argument appears to be in a rather different direction from the conclusion of his speech. I was puzzled by the fact that all of the noble Earl's arguments appeared to be against the case put by his noble friend but he ended up supporting him.
The amendment moved by the noble Lord, Lord Astor, relates to the combinations in which earmarking and pension sharing orders may co-exist in relation to a pension arrangement or shareable state scheme rights. Amendment No. 58H seeks to restrict the powers of the courts in England and Wales to make pension-sharing orders. It attempts to prevent a pension-sharing order being made in relation to a pension arrangement which has already been the subject of a similar order, i.e. a second bite. The Bill already prevents a former spouse benefiting from a pension share in relation to a particular pension arrangement and then returning to court to seek a second pension share in respect of that arrangement. This amendment seems to be intended to prevent pension sharing by order by second or subsequent former spouses.
I have two main problems with the amendment. First, it would make it more difficult for the court to help the couple achieve a clean break. The second former spouse would still be able to seek an earmarking order and gain access to the member's spouse's pension through that route. The member spouse could be in the strange position of being able to achieve a clean break from a first spouse but not a second to whom he was linked by an earmarking arrangement.
Secondly, this amendment would limit the member spouse's scope for negotiation. Member spouses might prefer to see their pensions divided for a second time to achieve that clean break, especially if they wish to marry again or perhaps because they would rather keep some other asset untouched. As the noble Lord, Lord Goodhart, said, it may be that the first share of the pension is very small because the marriage has lasted for only a year or two years and the substantial asset has been built up during the second marriage. Therefore, it
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would be unreasonable to expect that the only assets to go into the matrimonial financial pot would be, say, the home and other savings, but one would be required to exclude the pension whether or not the couple wished it. Overall, this amendment would limit the court's ability to make a fair financial settlement in England and Wales by removing an option which could be of significant benefit to divorcing couples.
The other amendments fall broadly into two parts. Amendments Nos. 58D to 58G also seek to prevent a pension-sharing order being made in relation to a pension arrangement or state scheme rights that have already been shared as part of a previous divorce or nullity settlement. Presumably, the aim is to protect the value of the pension for the member. Yet the result would be to deprive subsequent spouses of the benefit of pension sharing. It is not apparent that any similar restraint is sought in relation to agreements, as opposed to court orders to pension share. Amendments Nos. 59 and 60 seek to prohibit earmarking where a pension has been shared.
I now turn to these amendments in greater detail. Amendments Nos. 58D to 58G would deprive second or subsequent spouses of the possibility of sharing the member's pension on divorce and limit the options available to secure future financial settlements. A pension may very well be the most valuable asset. Some pensions will be of sufficient value to warrant being shared in more than one divorce settlement. We would not, therefore, wish to restrict the number of times a pension arrangement or shareable state scheme rights are capable of being shared in relation to different marriages.
Amendments Nos. 58E and 58G seek to remove the words "in relation to the marriage" from various provisions in the Bill. These words are included in the Bill to prevent a spouse or former spouse from obtaining more than one share of the member's pension arrangements or state scheme rights. But we do not want to prevent a subsequent spouse from being able to share the member's pension arrangement, for the reasons I have given.
Amendments Nos. 59 and 60 seek to limit the power of the court in connection with earmarking orders relating to lump sums. Under the amendments, the power of the court to make such an order would not be exercisable if the pension arrangement in question were subject to a pension-sharing order or had already been the subject of a pension-sharing order or agreement. The amendments presumably seek to protect the value of the member spouse's pension fund. If adopted, they would, in the Government's view, unreasonably limit the options available to the court to assist a subsequent spouse.
The amendments would remove a flexibility that we consider necessary. It will not be used in all cases and I have no doubt that the courts will consider carefully the sort of circumstances that noble Lords have raised. That is why the courts are explicitly required under existing matrimonial law to have regard to all the circumstances of the case, including income, earning capacity, property and other resources that each of the

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parties is likely to have in the foreseeable future. The amendments would unreasonably restrict the capacity of the courts and the couple to make the most appropriate financial arrangements, and I hope, therefore, that the noble Lord will seek to withdraw his amendment.
Lord Astor of Hever: I am grateful to the Minister for that detailed explanation of why the Government will not accept the amendment. The noble Lord, Lord Goodhart, made two points. The first was that he would find it difficult to support the amendment because of the anomalies, and I accept that that is a good point. Secondly, he suggested that the courts should be the body to take into account the amount of earnings while the spouses were living together.
I accept that pensions on subsequent marriages could be a valuable asset, as the Minister has just said, but in most instances we feel that that will not be the case.
Baroness Hollis of Heigham: I do not normally seek to intervene in the noble Lord's speeches, but I wish to point out that the average age for divorce is early 30s. A subsequent marriage could last a long time and that is the point I was trying to make. It is often the second marriage that has jointly invested in the pension that is in the husband's name.
Lord Astor of Hever: I understand that, but it was my understanding that despite Oscar Wilde's description of second marriage as a triumph of hope over experience, second marriages tend to last less long than first marriages. Our feeling is that one cannot split a crumb and pensions were never designed to be split. We also feel that the second or third spouse knows the score when she marries. In my case, my second wife knew exactly what she was taking on, for better or for worse.
I am sorry that the Minister is not more sympathetic to our amendments. We will read Hansard carefully, but in the meantime I beg leave to withdraw the amendment.
Amendment No. 58D, as an amendment to Amendment No. 58, by leave, withdrawn.
[Amendments Nos. 58E to 58H, as amendments to Amendment No. 58, not moved.]
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58J:
Line 60, at end insert—
("() No pension sharing order shall be made which is materially contrary to the interests of any child of the family.")
The noble Lord said: The amendment is designed to probe the Government's intentions and their commitment to the interests of children from first or subsequent marriages. Those interests appear to have been wholly ignored and excluded from the provisions of pension-sharing arrangements. It is essential that the courts, before they decide whether there should be pension sharing or a pension split, should consider whether that would disadvantage any child.
There can be no doubt that divorce is an exceptionally traumatic experience for all concerned. That is most true for children. Individuals who are normally reasonable and rational can, on divorce, become the antithesis.
The intention is not to add another complicated dimension to protracted legal negotiations but to ensure that there is a fundamental commitment to the interests of children; that is, that no pension-sharing order may be made that is materially contrary to their financial well-being.
We accept that the protection of children's interests on divorce is not primarily accounted for by pension legislation but rather by divorce legislation. The Under-Secretary of State in the other place made it clear that the Matrimonial Causes Act 1973 states that the first consideration will be given to the welfare of a child of the family who is under the age of 18. Lawyers could argue that, in relation to pension sharing, the Bill as it stands contains no reference to children and so there is no reason why they should be taken into account in a pension-sharing order. No legal instrument currently exists in pension sharing to protect the interests of children.
The amendment would compel the financial arrangement to be made with full recognition of the present and future circumstances of the child, to avoid potential conflicts. It is vital, as a matter of principle, that children are explicitly recognised in pension sharing, given the potential for a substantial change in the allocation of capital and revenues within the family. Furthermore, there is a growing tendency towards serial marriages, and therefore, an increase in the number of children who are likely to be directly affected by the fact that one parent's source of income is a pension. Do the Government, therefore, intend to make it possible for the courts to make pension-sharing orders that take full account of the interests of children? The Law Society has specifically asked me to seek clarification on this point.
Baroness Hollis of Heigham: I thank the noble Lord for moving his amendment so clearly. I emphasise that the Government are committed to the welfare of children. However, I am not sure that pensions legislation is the appropriate time to make that point, any more than if we were considering legislation on children we should consider access to pension rights.
The amendment seeks to guarantee that children whose parents divorce should not suffer materially if a pension sharing order is carried out. I hope that I can persuade the Committee that it is not necessary.
The current divorce law, set out in the Matrimonial Causes Act 1973, already requires the courts to give first consideration to the welfare of a child of the family when deciding how to exercise their powers. The courts already treat the welfare of children as a priority in drawing up any divorce settlement. Pension sharing, where it is used, will just be another element in the settlement. It is simply a further means of helping the court in its efforts to achieve a fair outcome in all circumstances of the case—circumstances which are always unique and often very difficult.
As such, pension sharing is covered by the existing requirement in the Matrimonial Causes Act 1973. I am not aware of any concerns about that legislation, and I do not know of any case in which it has failed to

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provide adequate protection for children. Therefore, I do not believe that it is necessary to add further provisions especially for pension sharing.
The proposed reforms of the Child Support Agency, announced to the House in a Statement on Thursday, support the one-stop shop approach to the financial aspects of divorce proceedings by allowing the maintenance for the child to be part of the overall financial settlement, including spousal maintenance, matrimonial property and pension rights. Lawyers determining the child maintenance element will do so, of course, in the shadow of the child support formula which will protect the child, given that a party who is dissatisfied with the court's settlement may after a year, on two months' notice, go back to the CSA, which will collect the CSA rare. What matters is the income flow for a dependent child in the first family from the non-resident parent. We think that that is best done through broader-based child support maintenance rather than the earmarking of a pension. The point is particularly relevant to the self-employed whose income may be far greater than any potential pension pot.
I understand the sentiments underlying the amendment. Protecting the interests of children of the family is, and should remain, the first consideration of the courts. But we believe that they are already doing that. We think that the position of children will be further protected through the proposed reforms of the CSA. We do not believe that the amendment would add anything to the satisfactory safeguards already in force. We have no reason to believe that the current situation is unsatisfactory. Therefore, I invite the noble Lord to withdraw the amendment.
9 p.m.
Lord Astor of Hever: I am grateful to the Minister for that explanation. The noble Baroness mentioned the Matrimonial Causes Act 1973 to which I referred. We were looking for a greater protection of children. However, I understand the points she made. We shall consider the points made about the CSA. In the meantime, I beg leave to withdraw the amendment.
Amendment No. 58J, as an amendment to Amendment No. 58, by leave, withdrawn.
Lord Astor of Hever Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58K:
Line 103, after ("order") insert ("following an appeal")
The noble Lord said: This is a probing amendment designed to ascertain whether the provisions of Section 3l(4D) inserted by paragraph 6(4) of Schedule 3 to the Bill are designed to deal with appeals or with any variations more widely. I look forward to the Minister's clarification. I beg to move.
Baroness Hollis of Heigham: The amendment seeks to change those provisions in new Schedule 3 to the Bill which deal with the variation of pension sharing orders before they become effective. Amendment No. 58K would limit the application of a stay period to a pension-sharing order which had been varied on appeal, but not if it had been varied other than on appeal. Our
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proposals allow for a stay period to apply in both situations. There may understandably be some confusion on the issue and it may be helpful if I set out the circumstances in which it is possible to vary a pension sharing order other than on appeal.
As noble Lords will be aware, appeals can be made against the principle that a pension-sharing order should be made; or against the content of the order. But it is also possible for an application to be made to vary an order. Such an application does not question whether it was right for a pension sharing order to be made, but seeks to vary its terms.
A court might agree to a variation, for example, where other assets came to light after the order had been made but before it became effective. A pension sharing order might also be varied if the circumstances of one or other of the parties to the marriage changed significantly before the divorce was made absolute, perhaps as a result of severe illness.
In those cases, the pension-sharing order, as varied, would take effect immediately so long as the decree absolute had been granted. This would remove the opportunity for either the member spouse or former spouse to challenge the terms of the variation. We believe that it is appropriate for there to be a stay period in the case of variations as well as when the variation arises as a result of an appeal.
I hope that on the basis of that explanation, the noble Lord will be able to withdraw his amendment.
Lord Astor of Hever: I thank the Minister for that explanation. It is a technical point and it is helpful that the Minister has set out the position so clearly. We shall consider with our advisers the points she makes. In the meantime, I beg leave to withdraw the amendment.
Amendment No. 58K, as an amendment to Amendment No. 58, by leave, withdrawn.
On Question, Amendment No. 58 agreed to.
Schedule 3, as amended, agreed to.
Clause 20 agreed to.
Clause 21 agreed to.
Schedule 4 [Amendments of sections 25B to 25D of the Matrimonial Causes Act 1973]:
The Deputy Chairman of Committees (Baroness Lockwood): In calling Amendment No. 58L, I have to point out that if this amendment is agreed to, I cannot call Amendments Nos. 59 or 60 under the pre-emption rule.
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 58L:
Page 100, leave out lines 22 to 27
The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 70B, 70C and 70D. These are also probing amendments to clarify the Government's position on allowing earmarking orders affecting lump sum death benefits even though a pension sharing order was being made in respect of the same member.
Currently the Bill prevents a pension sharing order being made at the same time as an earmarking order in respect of the same member and the same scheme. Thus the former spouse would have the choice of either a pension-sharing order or an earmarking order. As regards retirement benefits, that is reasonable, but there are circumstances where the former spouse would want an earmarking order in respect of the lump sum death benefit in addition to a pension sharing order. A typical case might be where the member had not been in the pension scheme for very long so that the value of his accrued benefits was not large, and therefore the value of the pension-sharing order to the former spouse would not be large. The lump sum death-in-service benefit for such a member could be much larger than the value of his accrued pension benefits, and a pension sharing order would not apply to the lump sum death benefit.
On the other hand, an earmarking order can apply to the lump sum death benefit as well as the pension and/or lump sum which the member will receive on retirement. Will the Government amend the Bill to allow an earmarking order relating to a lump sum death benefit to be made at the same time as a pension-sharing order in respect of the same scheme? I beg to move.
Baroness Hollis of Heigham: As we have heard from the noble Lord, the aim of these amendments is to permit a spouse to benefit from a pension sharing order and a lump sum death benefit earmarking order at the same time in relation to a single pension arrangement.
Amendment No. 58L would amend paragraph 2 of Schedule 4 to the Bill. That paragraph will insert a new restriction into Section 25C of the Matrimonial Causes Act 1973. This restriction will prevent the court in England and Wales from making a lump sum death benefit earmarking order under Section 25C of the Matrimonial Causes Act 1973 if the pension arrangement against which the earmarking order was to be made was either already the subject of a pension sharing order in relation to the marriage or had already been shared between the parties to the marriage. I should add that the Bill does not prevent the court making a lump sum death benefit earmarking order in favour of a second spouse if the pension arrangement in question has been shared by a first spouse. Amendments Nos. 70B to 70D would permit pension sharing by agreement of a pension arrangement that has already been the subject of a lump sum death benefit earmarking order.
I think the problem with the amendments is that they will devalue the benefits of pension sharing. We want to encourage "clean breaks" but we accept that, in some cases, earmarking will be fairer and the choice of the couples concerned. We consider that it is reasonable to ask spouses to choose between earmarking and sharing in relation to a single pension arrangement. Permitting both in relation to the same pension arrangement—but to different bits of it—and the same marriage will only encourage complication and expense.
I believe that the Bill strikes a balance between the clean break implicit in pension sharing and the continuing relationship inevitably intertwined with
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earmarking orders. The amendments would give a spouse the opportunity to pull in these contrary directions at once. I do not think that would be sensible, and I therefore hope that the noble Lord will feel able to withdraw his amendment.
Lord Astor of Hever: I thank the Minister for clarifying that point. I am pleased that the Government are keeping open the earmarking alternative. These are complicated issues and I would like to take advice on the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 59 and 60 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 61:
Page 100, line 31, leave out ("22A or")
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 62 to 67:
Page 100, line 48, leave out from ("arrangement",") to end of line 49
Page 101, line 4, leave out ("22A or")
Page 101, line 20, after first ("of') insert ("any of')
Page 101, line 20, leave out ("any of sections 22A to 24D above") and insert ("this Part of this Act")
Page 101, line 41, leave out ("22A or")
Page 102, line 29, leave out ("21(2A)") and insert ("21A(1)")
On Question, amendments agreed to.
Schedule 4, as amended, agreed to.
Clause 22 [Extension to overseas divorces etc.]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 68:
Page 26, line 18, leave out ("22A or")
On Question, amendment agreed to.
Clause 22, as amended, agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 69:
After Clause 22, insert the following new clause—
POWER TO MAKE CONSEQUENTIAL AMENDMENTS OF PART III
(" .—(1) If any amendment by the Family Law Act 1996 of Part II or IV of the Matrimonial Causes Act 1973 comes into force before the day on which any provision of this Part comes into force, the Lord Chancellor may by order make such consequential amendment of that provision as he thinks fit.
(2) No order under this section may be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.")
On Question, amendment agreed to.
Clause 23 [Scope of mechanism]:
Lord Goodhart Lord Goodhart moved Amendment No. 70:
Page 27, line 2, at end insert—
("() An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: I can deal with this amendment briefly because it has been accepted by the Government. Clause 23(1) says:
"Pension sharing is available under this Chapter in relation to a person's shareable rights under any pension arrangement other than an excepted public service pension scheme".
Clause 23(3) says:
"For the purposes of subsection (1), a public service pension scheme is excepted if it is specified by order made by such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the scheme".
Under the scheme of delegated legislation in the Bill, the order under Clause 23(3) at present does not require either the affirmative or negative procedure and can simply be made without notice by a Minister of the Crown.
The explanation given by the Government for not requiring a statutory instrument with either the affirmative or negative procedure was that the exception was intended to apply only to a small number of cases. It applied in particular to the pensions provided by statute for the Lord Chancellor, the Speaker of the House of Commons and a few other cases where, if there were pension sharing, it was impossible to calculate the pension debit on an actuarial basis because the pensions became payable not on reaching a particular age but on expiration of the office to which they were attached.
If the provision were as limited as that on the face of the Bill, there might have been a justification for saying that the matter could be left to an order without any parliamentary procedure. However, as drafted, Clause 23(3) could apply a good deal more widely and would give a Minister of the Crown the power to accept any public service pension scheme. That was pointed out by the Delegated Powers and Deregulation Committee which recommended that the negative procedure should be used in the case of any order made under this subsection.
I therefore tabled an amendment to that effect. The Government have accepted the proposition and have tabled Amendment No. 143B. In those circumstances, I shall in due course be happy to withdraw my amendment. I beg to move.
9.15 p.m.
Lord Higgins: The Committee will be grateful to the noble Lord, Lord Goodhart, for tabling the amendment. It arises from the points made by the Delegated Powers and Deregulation Committee and has been the subject of correspondence. The committee suggested that Clause 23 had considerable power; indeed, the issue of pension sharing generally is of considerable importance. Therefore, the Committee might wish to consider whether the Bill should be amended to provide parliamentary control of this power, at least by negative procedure.
In a slip of the tongue, the noble Lord, Lord Goodhart, said "by" negative procedure. I believe that in practice it is said "at least by" negative procedure. Nonetheless, Amendment No. 142B is designed to meet the point and we are prepared to settle for negative
824
procedure in this case. I hope that the Minister will therefore press ahead with her amendment with enthusiasm.
Baroness Hollis of Heigham: I cannot resist such an invitation. I can be brief. Clause 23 sets out the scope of the pension sharing mechanism. Pension sharing is available in relation to a person's shareable rights tinder any arrangement other than an excepted public service scheme.
Subsection (3) provides that a public service scheme is excepted if it is specified by order made by such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the scheme.
During the debate in Committee in another place, the Government stated clearly that they intended to use this power only to except the three schemes covering the great offices of state—currently, the Prime Minister, Speaker and Lord Chancellor—and in due course the First Minister and the Presiding Officer of the Scottish Parliament.
The difficulty with the pension schemes of these great offices of state is that the pension comes into payment immediately the postholder leaves office, regardless of the period of office. Since the date of leaving office can only normally be guessed at, that makes it virtually impossible to value the pension rights accurately. However, we have made clear our intention that the pension rights of all other public servants should be available for pension sharing.
Nonetheless, we accept that this power is wide and agree with the recommendation of the Delegated Powers and Deregulation Committee that its use should be subject to parliamentary scrutiny. I am pleased to say that that is why we have brought forward Amendment No. 143B to Clause 78. This amendment will ensure that the use of the power to except public service schemes from pension sharing will be subject to parliamentary scrutiny through the negative procedure. We believe that Clause 78, which generally deals with provisions for making regulations or orders under the Act, is the best place for such an amendment.
We are all agreed on this issue—I hope that the noble Lords, Lord Higgins and Lord Goodhart, and I speak for the Committee—and I hope that noble Lords will be content to withdraw their amendment and accept Amendment No. 143B.
Lord Goodhart: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 70A:
Page 27, line 2, at end insert—
("(4) The provisions in this Chapter override any provision of a pension arrangement to which they apply to the extent that the provisions of this Chapter conflict with them.")
The noble Lord said: This probing amendment is intended to provide clarity. The insurance industry has argued that the provisions in Part IV must be wholly overriding, that is, applied directly to schemes without

825
the need to amend scheme rules. This was done for the Pensions Act 1995. An announcement from the Government had led us to believe that it would be the case with these provisions, but certain provisions such as those in Clause 28 which amend the Pension Schemes Act 1993 in respect of safeguarded rights have not been made overriding. This will cause unnecessary and burdensome complications for pension scheme trustees, who will be left to make technically difficult amendments to a very large number of schemes.
The burden in time will be large. The insurance industry tells me that it will need at least 15 months from seeing the detailed requirements, which will be set out in regulations, to implementation of the provisions on pension sharing, if the legislation is wholly overriding. If it is not, a much longer period will be needed.
I should be grateful if the Minister could confirm that Part IV will be wholly overriding, so that the trustees do not have to face the unnecessary burden and complication of changing the rules of a very large number of schemes. I beg to move.
Baroness Hollis of Heigham: The amendment calls for the pension sharing legislation to override any conflicting provision in the rules of pension arrangements. Industry representatives have called for this in the past, and officials have discussed the issues with them and their legal advisers.
We understand why it would help speed up the implementation of pension sharing if pension schemes did not have to make lots of individual amendments to scheme rules before the start date for pension sharing, so we have framed the Bill in a way which makes the provisions overriding whenever it makes sense to do so. But there are some areas where that blanket approach would not make sense. These are where schemes have discretion to carry out their responsibilities in the way that suits them best.
Let me give a couple of examples. One option open to the Government was to make it an overriding requirement that a scheme responsible for discharging its liability for a pension credit should be required to offer the former spouse pension rights within the scheme. However, private schemes wanted the freedom to choose whether or not to have former spouse members. Similarly, the Government could have made it an overriding requirement for schemes to offer former spouse members a package of benefits that mirrors the benefits available to deferred members.
Again, the pension industry argued persuasively that schemes should have the flexibility to make up their own minds on these matters. Indeed, we shall be debating a later amendment designed to ensure that schemes which decide to offer internal transfers have the freedom to design a package of benefits for former spouses that suits them best.
If schemes want to have a choice on matters relating to pension sharing, such as the former spouse's package or charging for administrative costs, it follows that the legislation cannot be wholly overriding. It cannot be had both ways.
826
We think the Bill as drafted strikes the right balance. As in the Pension Schemes Act 1993 and the Pensions Act 1995, some matters are overriding and others are not. Each provision has to be considered individually and decided on its own merits.
The noble Lord pressed me in particular on whether the whole of Part IV would be overriding, like the Pensions Act 1995, as he put it. Certain parts of that Act were overriding—Part I, for instance. However, others were not. In particular, none of the new contracting out provisions which came into force in 1997 was overriding. We intend that the safeguarded rights requirements in Clause 32 shall in general terms reflect those already in place for contracted out schemes which have accrued since 6th April 1997. The schemes will have to confirm that they satisfy the contracting out requirement in order to hold a contracting out certificate. Any scheme opting to hold safeguarded rights will be required to provide assurances to the Inland Revenue that the safeguarded rights requirements are met. The contracting out provisions are not overriding, since they permit schemes to make choices about how to satisfy the requirement, and it is for scheme rules to specify which of the available choices have been exercised by the scheme. Similar provisions will apply to safeguarded rights, and scheme rules will need to explain which of the options are available to those members entitled to safeguarded rights.
However, where provisions in Part IV are analogous with provisions in the Pensions Act 1995, or, indeed, the Pension Schemes Act 1993, which are overriding, for consistency with the existing legislation we have made those provisions in the Bill overriding as well. So, for example, Clause 33, which inserts a new Part IVA into the Pensions Scheme Act 1993, is overriding since it is broadly analogous with the existing Part IV of the 1993 Act, which is also overriding legislation. Similarly, part of Clause 34 imposes requirements on schemes winding up that are analogous with provisions in Part I of the Pensions Act 1995 which, as I mentioned earlier, are also overriding.
Therefore, I realise that these are complex matters. Essentially, we are mirroring existing practice. I hope that on the basis of what I have said in an attempt fully to answer the noble Lord's point about Part IV, he will feel able to withdraw his amendment.
Lord Astor of Hever: I thank the Minister for that very full answer. I am extremely grateful to her for pointing out that parts of the Pensions Act 1995 were not overriding. I am also grateful to her for pointing out that schemes will have to confirm that they satisfy the contracting-out requirements to hold the contracting-out certificate. That is an important point.
We shall need to study carefully what the Minister said and confer with our advisers. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Clause 24 [Activation of pension sharing]:
[Amendments Nos. 70B to 70D not moved.]
Clause 24 agreed to.
Clause 25 [Creation of pension debits and credits]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 70E:
Page 29, line 36, at end insert—
("() Subsections (2) and (3) above shall not prevent the court from assessing the percentage or amount to be transferred on the basis of the past service reserve, if in the circumstances of the case the court considers this to be appropriate.")
The noble Lord said: The purpose of this amendment is to give the courts some flexibility about the method of valuation used when looking at pension sharing. At the moment, the Bill provides that only the cash equivalent transfer value—CETV—can be used to calculate the value of a pension. The Law Society is concerned that that may not yield an accurate result. Therefore, the courts should have discretion to use other methods of valuation in certain cases. That is most likely to be needed when the person who has built up the pension is nearing retirement, has a high salary and the pension concerned is substantial.
CETV is a widely used and well understood means of valuing pensions. For example, it is used if an employee changes jobs and wishes to transfer his pension from his old to his new employer. In the vast majority of cases, using the CETV as a basis of pension sharing will produce a fair result.
However, in some cases, particularly where there is a large pension or a long marriage, using CETV may result in the pension being undervalued. For a personal pension, the CETV is the surrender value and not the fund 'value. Surrender values can sometimes be as low as one-fifth of the fund value and can sometimes be nothing at all. We wish the courts to have the power, where appropriate, to use an alternative method of valuing pensions, such as the past service reserve, where it appears that CETV may not generate a fair result. We do not believe that alternative methods of valuation would be used frequently. Therefore, will the Government consider giving the courts the power, wherever appropriate, and where serious anomalies could arise in the rigid use of the standard CETV, to use an alternative method of valuing pensions? I beg to move.
9.30 p.m.
Lord Goodhart: On the last occasion I was critical of the amendment moved by the noble Lord, Lord Astor of Hever. On this occasion, I express my support in principle for it. However, I can see certain problems with it. In particular, it could lead to an increase in the cost of matrimonial litigation if one has to retain experts to argue the question as to which method of calculation is appropriate in any particular situation. Nevertheless, it is well established that there are cases in which the cash equivalent valuation might work unfairly. In such cases it would be appropriate to use one of the other recognised methods of evaluation of pension rights as the basis for the order for pension-sharing. I shall be interested to hear the Minister's response.
Baroness Berners: I support this amendment moved by my noble friend Lord Astor of Hever. I repeat his
828
question. Will the Government consider giving the courts the power, wherever appropriate, to use an alternate method of valuing pensions? What guarantee can the Minister offer that the courts will have sufficient expertise to know when it is appropriate?
Baroness Hollis of Heigham: I have some sympathy with this amendment. I am aware that the Social Security Select Committee was thinking along the same lines when it published its report on pensions on divorce in October 1998. The committee recommended at paragraph 47 of its report that the court should be given a limited discretion to cater for circumstances where serious anomalies would arise from the rigid use of a standard cash equivalent transfer valuation, a CETV of pension rights.
The Government have, of course, made it clear in the Explanatory Notes to the Bill that they intend to use the regulation-making power in Clause 26 to require pension rights to be valued for pension-sharing purposes by the tried and trusted CETV methodology. In contrast, Amendment No. 70E and the Select Committee both argue for the courts to be given discretion to depart from the CETV method.
Despite that difference in approach, the Government have some sympathy with the amendment. I believe that we all readily accept that the CETV method is not perfect. But after very serious consideration we have concluded that it is the least worse method available to us. More than that, it is probably the only valuation method that is fair to employers, pension schemes and other scheme members.
It is worth perhaps saying a few words in defence of CETV which has had something of a dark press tonight. I hope that I shall be on safe ground if I quote from the evidence of Mr Martin Slack who appeared before the Social Security Select Committee, on behalf of the Institute of Actuaries and the Faculty of Actuaries on 22nd July last year. He said:
"The CETV is a value of the benefits to which a member would have been entitled had he ceased to be in service at that point. So the fact that the CETV is valued as the leading service benefit means it is valuing a less valuable benefit than if the member stayed all the way through to retirement. I think that is the only way one can proceed because one does not know what the person's salary increases would have been had they stayed, nor whether or not they would have retired earlier, whereas the leaving service benefit is a factual benefit at the time and is the only one you can get hold of".
That is why the Government believe that it is right to use the CETV for pension-sharing purposes. There is no way of knowing when the member may leave the scheme early because of a change of job or early retirement. So it would not be fair to schemes or employers that fund the balance of costs, to place a higher value on the pension rights to be shared than the value that has actually accrued. That would require schemes or employers to meet additional costs as a result of divorce. That would be unacceptable. It would also enable some former spouses to be treated more favourably than other scheme members who transfer pension rights out of the scheme. That too cannot be justified.

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The CETV must, therefore, remain the basis for any division of pension assets. However, we accept that there are some circumstances—for example, certain schemes with fast accrual where people typically retire early—where the simple application of the CETV could be inappropriate. As we said in response to the Select Committee, we believe that, in such cases, the courts will have an adequate remedy to hand in that they could increase the share of the member's CETV to be transferred to the former spouse. So, for example, the court, in considering all the circumstances of the case, including perhaps a past service reserve valuation of the rights of a member of a salary-related scheme, may decide to transfer, say, 80 per cent of the normal CETV to the former spouse rather than 60 per cent. To make the Government's policy intention absolutely clear, it would not in any circumstances be possible to require a pension scheme or arrangement to pay more than 100 per cent of the CETV.
I hope that I have said sufficient to persuade the noble Lord that there is, in practice, much common ground between us. Our intention is that legislation will permit the court to take account of additional evidence when determining the percentage of the CETV to be shared. The difference between us is that we do not think it would be right to allow more than 100 per cent of the normal CETV to be shared. For that reason, the Government cannot accept the amendment.
Lord Astor of Hever: I thank the Minister for that reply. I am grateful to the noble Lord, Lord Goodhart, for his support. He made a valid point about the extra cost.
The Minister started by saying that the Government had sympathy with our amendment, but she then destroyed my hopes by saying that there was little common ground between us. We want to consider carefully the points that she has made. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clause 26 [Cash equivalents]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 70F:
Page 30, line 22, at end insert ("(including medical evidence)")
The noble Lord said: I rise to speak to Amendment No. 70F. This is a probing amendment to establish whether underwriters will be allowed to follow normal practice which would include taking into account medical evidence.
Pension benefits have to be valued on divorce, just as other assets, such as the home, have to valued, in order for them to be appropriately shared. When the valuation of pension benefits is that of a pension in payment, the crucial aspect of a fair valuation of the benefits—fair to the beneficiaries and other scheme members—is an assessment of the health as well as the age of the beneficiaries. Medical evidence in the form of
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information from a GP or other medical practitioner may be needed to inform the assessment and a medical examination may be necessary.
How to value the pension rights will be prescribed by regulations. In broad terms, the regulations will prescribe that the valuation should be done in accordance with the guidance of the Institute and Faculty of Actuaries on calculating the CETV. However, we believe that in primary legislation it should be made clear that pension providers may receive medical evidence of the beneficiary's health in order properly to value the pension benefits.
The nature of pensions is such that there are few circumstances when the whole pension benefit has to have a value placed on it. Pension sharing is one instance. Early retirement is an already established instance. Will the Minister confirm that underwriters will be able to use all relevant information on which they rely in assessing risk, such as medical evidence when they value pension assets on divorce? I beg to move.
Baroness Hollis of Heigham: My Lords, I welcome the opportunity to debate the issues raised by Amendment No. 70F. We have made it clear throughout our extensive consultations on pension sharing that we want to ensure that all pension rights can be shared, including pensions in payment.
We have taken a power in Clause 26 to enable us to deal in regulations with the technical issue of the calculation of the cash equivalent of pension rights. We recognise that, in relation to pensions in payment, we are to some extent entering new territory, since it is not currently possible for pensioner members to transfer the cash equivalent of their pensions out of the scheme.
However, there is no real difficulty in principle in extending cash equivalent transfer values to pensions in payment cases. At the scheme level, the actuarial assumptions involved will take account of the fact that some people will live longer than average and others will live less long. However, at the individual level, the health of the individual becomes much more important. For example, if the member is in very poor health, the absence of medical evidence may result in a significant over-estimate in the valuation of the pension assets.
The Government accept that pension sharing must be based on a fair valuation of pension rights and clearly that may not be possible if pertinent medical evidence is not available to the scheme in pensions in payment cases. The use of such information is well established elsewhere, especially in areas such as insurance, where it is important for organisations to be able to assess accurately the risks they are taking on.
I understand the noble Lord's concern that there might be scope for people to abuse the system if schemes were prevented from obtaining medical evidence. That is why we have indicated throughout our consultation that we do not intend to prevent schemes from requesting medical evidence before implementing pension-sharing orders in pensions in payment cases, where schemes feel there may be a risk of abuse.

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That is why, as I mentioned earlier, we have taken a power which could be used to deal with these matters in regulations. That power might be used to enable a person responsible for implementing a pension sharing order to obtain appropriate medical evidence.
Preparatory work on the regulations is underway and my officials are actively engaged in discussions with the pensions industry on this matter. One of the main concerns that I have asked officials to address is whether requirements in respect of medical evidence would be compatible with the European Convention on Human Rights. We do, of course, need to be satisfied that any future regulations will be reasonable and sound in all respects, including the Convention angle. Meanwhile, I hope that the noble Lord will agree that this matter is one which could properly be dealt with in secondary legislation, and agree to withdraw the amendment.
Lord Astor of Hever: I thank the Minister for that full reply and indeed for acknowledging that medical evidence may need to be accepted where it is needed. I am also happy to hear that the Minister's officials are in discussion with the insurance industry. In the light of that good news, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 agrees to.
Clause 27 [Reduction of benefit]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 71:
Page 31, line 3, at end insert—
("() Following an award against a scheme member of one or more pension debit orders, the scheme member shall be entitled, within permitted contribution limits, to rebuild the pension rights foregone as a result of the order or orders.")
The noble Lord said: This is a probing amendment to clarify that scheme members will be allowed to rebuild their pensions following one or more debit orders. Will the Minister confirm that current tax rules will be amended, so that this is possible? Will the Minister also confirm that this will be done under the Finance Bill if it is not dealt with in this Bill? I beg to move.
The Earl of Clanwilliam: It is only right that, if someone suffers a debit through no fault of his own, he should be allowed to reinstate that debit so that his pension accumulation does not suffer.
9.45 p.m.
Baroness Hollis of Heigham: Amendment No. 71 is a major amendment intended to enable a member of an occupational pension scheme whose pension has been shared to rebuild the pension rights transferred to the former spouse when permitted within the permitted contribution limits. However, as I am sure Members of the Committee will be aware, the Government have already gone a considerable way to meeting the concerns that have been expressed with the easement that they announced in the other place. Essentially, that easement allows moderate earners—that is, people earning up to £22,650 a year—fully to rebuild within permitted contribution limits.
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The amendment seeks to go further than the easement announced by allowing all members of occupational schemes, irrespective of their earnings, to ignore the pension share when rebuilding their pension rights up to the maximum permitted under Inland Revenue rules; in other words, everyone would be free to rebuild within the 15 per cent annual employee contribution limit.
It is important to be clear about the scale of the problem that this amendment seeks to address. First, the easement we have announced will cover the majority of occupational pension scheme members and target help on those who most need it. Of those who remain with earnings above £22,650, the statistics suggest that more than half of them will be under the age of 35 at the time of divorce, with ample time to rebuild within Inland Revenue limits or to save for their retirement in other ways. Originally, our best estimate of the proportion of scheme members who would be partly or wholly constrained by the tax limits from rebuilding their pensions was between 5 per cent and 10 per cent But the easements announced in the other place would reduce that number by half; that is to say, to between 2.5 per cent and 5 per cent of this group.
If our estimate of around 25,000 pension sharing cases affecting occupational pensions per annum is proved right, that means that between 600 and 1,250 people only—perhaps 750 or 1,000—would be affected each year and not all of those would have the resources, or be willing, to rebuild their pensions fully, even if the tax constraints were removed. Therefore, in reality, we are concerned at most with a few hundred people.
The Government are not persuaded that it would be right to create special rules for this small group of people. We have chosen to link the rules that will enable a pension share to be ignored, for tax purposes, to the rules for people changing jobs. We are building on arrangements that have long been in place. We have avoided creating special tax rules for divorcing couples. To introduce special tax rules for a few hundred people, as argued for in the amendment, could be seen to be unfair and as positive discrimination in favour of this particular group.
I can assure Members of that Committee that, because of the numbers involved, the Government do not seek to resist the amendment on grounds of cost—
Lord Astor of Hever: Can the Minister say why she is so certain that this will affect only a few hundred people?
Baroness Hollis of Heigham: Yes. I am sorry; I tried to cover this. We believe that something like 25,000 pension sharing orders will affect occupational pension schemes. Within that, we know that the average age of divorce is under 35, which means that people usually have 30 years of working life to rebuild their pension. We also know that under 5 per cent—indeed, between 2.5 per cent and 5 per cent—already have no head space within which to do so. Putting all of that together and excluding those people who cannot afford to rebuild because they are only just above the £22,000 threshold, our figures suggest that we are talking about only a few hundred people who might wish to rebuild their scheme

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but are prevented from doing so by virtue of the fact that they have no head space within which to do so. That is the basis for our figures.
Given that explanation, I emphasise that it is not a question of finance because the cost would only be about £1 million a year annually, although that would build up thereafter. It is primarily a matter of principle. However, I have to say that we cannot ignore the risk that a concession to divorcing couples would create pressure for special treatment for other groups, which could involve a significant loss of tax revenue.
I should also add that the amendment makes no direct reference to finance legislation, although it seeks to influence the tax approval arrangements for pension sharing. I do not believe that it would be appropriate to amend the Bill in a way that would bring it into conflict with the tax arrangements for pension-sharing that have been agreed in the other place.
I recognise that the amendment addresses one of the major concerns that has emerged since we published the draft Bill in the summer of 1998. The Government have listened to those concerns and the distance between us has reduced, so to speak, by more than half. However, we have not been persuaded that it would be right to take the extra step required by the amendment. Nevertheless, we shall continue to listen carefully to representations on the issue and to keep the matter under review. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Astor of Hever: Does that mean that the Government might return with an amendment of their own on Report?
Baroness Hollis of Heigham: No, it certainly does not. All I am saying is that any such figure—I refer to the figure I have given of £22,650—is obviously one that the Chancellor would want to keep under review, as he does all other figures in terms of income related benefits, upper earnings limit, lower earnings limit, tax thresholds and the like. I meant no more than that.
Lord Astor of Hever: I am grateful to the Minister for her reply. I accept that the easement announcement that was made in the other place will be of some help. This amendment constitutes a major point, as the Minister said. We shall want to consider carefully what she said and possibly return to it on Report. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 agreed to.
Clause 28 [Effect on contracted-out rights]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 71A:
Page 31, line 42, leave out ("rights under the scheme become") and insert ("right to the pension becomes")
The noble Baroness said: These government amendments, Amendments Nos. 71A to 71D, make a number of minor drafting changes to Clause 28, which deals with the effect of a pension debit on contracted-out rights. It may assist the Committee if I remind it that
834
contracted-out rights are those rights built up by people who have opted out of SERPS and have an occupational pension or personal pension that replaces SERPS.
It has been suggested by some pension experts that the current draft of the clause does not accurately reflect the policy intention and its relationship with Clause 27 is unclear. We have given careful consideration to their concerns and as a result have decided to introduce these government amendments to clarify the policy intention.
Clause 27 provides for effect to be given to a pension debit by reducing a member's pension rights by the appropriate percentage. Clause 28 complements this by providing for the reduction of the member's contracted-out rights, along with any other rights shared, by the appropriate percentage.
Amendments Nos. 71A to 71D are designed to iron out any potential inconsistency between Clause 28 and Clause 27. In particular, Amendment No. 71C is intended to make it absolutely clear that a scheme is only obliged, in relation to the guaranteed minimum pension, or GMP as it is usually known, to provide a GMP which has been reduced as a consequence of the pension debit, rather than the full GMP.
This is a group of technical amendments that addresses the concerns expressed by some expert commentators on Clause 28 of the Bill. I beg to move.
Lord Astor of Hever: I am grateful to the Minister for that explanation. I understand that these are technical amendments to tidy up the wording. We shall want to read carefully what she has said, but as things stand we shall not oppose the amendments.
The Earl of Clanwilliam: Does it not appear that the provision in Clause 27 would answer the problem raised by the noble Baroness in Clause 28?
Baroness Hollis of Heigham: I am not sure that I take the noble Earl's point.
The Earl of Clanwilliam: Does not the provision in Clause 27 which would allow members to rebuild their pension rights solve the problem that is addressed by Amendment No. 71C?
Baroness Hollis of Heigham: I am looking for guidance on this. I am not sure whether the noble Earl is correct. I think that I had better write to him to follow up his point in detail.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 71B to 71D:
Page 31, line 44, leave out ("shall be") and insert ("is, subject to subsection (1A),")
Page 31, line 45, at end insert—
("(1A) Where the earner is in pensionable service under the scheme on the day on which the order or provision on which the pension debit depends takes effect, his guaranteed minimum in relation to the scheme is reduced by an amount equal to the appropriate percentage of the corresponding qualifying benefit.

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(1B) For the purposes of subsection (1A), the corresponding qualifying benefit is the guaranteed minimum taken for the purpose of calculating the cash equivalent by reference to which the amount of the pension debit is determined.")
Page 32, line 1, leave out ("subsection (1)") and insert ("this section")
On Question, amendments agreed to.
Clause 28, as amended, agreed to.
Clauses 29 and 30 agreed to.
Clause 31 [Mode of discharge of liability]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 72:
Page 33, line 40, leave out subsection (1)
The noble Lord said: I rise to move Amendment No. 72 and to speak to Schedule 5 stand part.
The means by which trustees may discharge their liabilities towards a former spouse must be unambiguous and effective. Funded schemes can choose whether or not to provide the pension share within the scheme or externally. Can the Minister confirm that if a scheme transfers out of a pension scheme under the default option—in other words, without the former spouse's consent—and if a trustee has acted reasonably in the circumstances, the trustee will be given a valid discharge by the legislation? I beg to move.
Baroness Hollis of Heigham: Yes. The answer, very simply, is that the trustee will be given a valid discharge.
Lord Astor of Hever: I thank the Minister for that very satisfactory answer. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31 agreed to.
Schedule 5 [Pension credits: mode of discharge]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 72A:
Page 105, line 2, at end insert (", and
(c) they are to be discharged by the trustees or managers of the scheme in a manner which they deem appropriate")
The noble Lord said: I rise to move Amendment No. 72A. We have some concerns about the benefits to which former spouses will be entitled as the result of an internal transfer. Mast schemes will probably wish to mirror preferred pensioner benefits, but some may not. It is important to ensure that schemes can provide a package of benefits for the former spouse if an internal transfer is chosen. The overriding principle must be that of equivalent value, with a cash equivalent proportion ordered or agreed. We seek the Government's clarification on this point. I beg to move.
Baroness Hollis of Heigham: Amendment No. 72A seeks to amend Schedule 5, which is concerned with the way in which a pension scheme or arrangement can discharge its liability for a pension credit. The pension credit is the share of the pension scheme member's pension that passes to the former spouse.
One of the ways in which a pension scheme can discharge its liability for a pension credit is by conferring "appropriate rights" under that scheme on the former spouse. In layman's terms, one could perhaps
836
simply call that an "internal transfer" of the rights that have been shared as they stay within the scheme from which the pension credit was derived.
Paragraph 5 of Schedule 5 defines what is meant by "appropriate rights". As currently drafted, it includes two provisions which are designed to safeguard the interests of the former spouse. First, the rights must be conferred from, and including, the day on which the pension sharing order takes effect. The second safeguard is that the value of the rights conferred must be equal in value to the amount of the pension credit.
Amendment No. 72A seeks to impose a third condition which would enable the trustees or managers of the scheme to discharge their liability by conferring rights in the scheme in a manner in which they deem appropriate.
The noble Lord has explained that this is a probing amendment to tease out the extent to which the Government believe that the trustees or managers should be free to design the package of benefits to the former spouse. I am happy to reassure the Committee that that is indeed our intention. With one exception, which I shall explain in a moment, we want schemes that offer "internal transfers" to be able to choose the arrangements that suit them best. The key safeguard, already enshrined in paragraph 5 of Schedule 5, is that the value of the package of benefits offered must be equal in value to the pension credit.
However, as I have just mentioned, there is one exception, and that relates to pension credits derived from contracted-out rights, which are called "safeguarded rights" in the Bill. As the Committee will be aware, the Pension Schemes Act 1993 and the regulations made under it impose extra conditions on contracted-out rights. To give a simple example, protected rights built up in a personal pension to replace SERPS rights cannot be used to provide a pension before age 60 and cannot be commuted to a tax-free lump sum.
The Government believe it is right that where part of the pension credit is derived from protected rights, that part of the pension credit—the safeguarded rights part—should be subject to similar restrictions. So, for example, if the former spouse becomes a member of the same personal pension scheme as her ex-spouse, she too should not be able to draw a pension from her safeguarded rights until age 60 and, like her ex-husband, should not be able to take a tax-free lump sum from that part of her personal pension fund. Imposing similar restrictions on the safeguarded rights is fair to both parties, protects the interests of the taxpayer and will ensure that those rights continue to be used for the purpose for which they are intended: to provide a secure income in retirement.
To conclude, with the exception of some restrictions in respect of safeguarded rights to be set out in regulations, schemes will be free to offer the package of benefits that best suits them. It is not the intention that schemes will be required to offer former spouses benefits that mirror those offered to early leavers. So the amendment is unnecessary.

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I hope that I have clarified the Government's intention sufficiently to persuade the noble Lord to withdraw his amendment.
10 p.m.
Lord Astor of Hever: I asked for clarification, and the Minister has answered fully the points that I made. I am glad to have the assurance that she gave. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 agreed to.
Clauses 32 to 45 agreed to.
Clause 46 [Effect of state scheme pension debits and credits]:
Lord Higgins Lord Higgins moved Amendment No. 73:
Page 51, line 17, leave out subsection (1)
The noble Lord said: We have already had an extensive debate on the various arrangements for pension sharing, to which my noble friend Lord Astor of Hever has given a considerable amount of intensive study. We now turn to a part of the Bill dealing with a particular aspect of pension sharing; namely, the sharing of state scheme rights.
One well understands that in regard to divorce and pension sharing the accumulated rights of individuals in, for example, a particular occupational scheme or a personal pension scheme may be allocated in the ways that we have discussed. But even more complex considerations arise in regard to the sharing of state scheme benefits.
We could appropriately have tabled amendments to leave out Clause 43 or Clause 44. However, it seemed to us that Clause 46 might be an appropriate one on which to have a rather general debate on the way in which a married couple's assets in the state scheme might reasonably be divided between them in the event of divorce. This is effectively a paving amendment so far as discussion of Schedule 6 is concerned.
Schedule 6 contains a series of provisions on the effect of so-called state scheme pension debits and credits. That appears to be a method that the Government have in mind to allocate the various entitlements that either member of a married couple may have. Having studied Clause 46 and Schedule 6, I am far from clear how the arrangement will proceed.
It would seem that, so far as category A retirement pensions are concerned, there will be reductions in the additional pension and, similarly, between the two parties involved there will be a reduction in the shared additional pension. I am not clear why there is an additional pension. Perhaps the Minister will explain, first, why that is the case and, secondly, why the pension should be reduced so far as pension sharing is concerned.
The considerations which arise in the case of the state scheme are different from those which arise otherwise. Both individuals concerned may have contributed towards the state pension scheme, although in a number of cases that may not be true. Perhaps the man will have
838
a scheme and his wife may have a related pension, particularly with, for example, widow's benefits, although that is not relevant in the present context. Since this is a complex area, it would be helpful if the noble Baroness could spell out the way in which she foresees the rights in the state scheme being divided and why there should be additional pensions on the one hand and reductions in them on the other.
One could have raised the matter on the earlier clauses in this part, but it seemed to us an appropriate point at which to raise these important issues. I beg to move.
Baroness Fookes: Can the Minister say what happens with the spouse who has been divorced and has the credit in the pension sharing arrangements? What happens if she dies either before retirement age or soon after? Is the credit then lost for ever to the spouse who gave the credit in the first place? Presumably his pension, whether it is state or occupational, will be less than it would have been by virtue of the pension sharing arrangement. I should be grateful if the Minister could deal with that. It may be in the document somewhere, but I have not been able to find it.
Baroness Hollis of Heigham: Amendment No. 73 removes subsection (1) of Clause 46 which gives effect to Schedule 6—an essential component of our pension sharing proposals which provide for the sharing of SERPS rights. Schedule 6 inserts four new sections into the Contributions and Benefits Act 1992.
Lord Higgins: Did I understand the noble Baroness to mention SERPS rights?
Baroness Hollis of Heigham: Yes. In particular, paragraph 2 covers how and when an additional pension should be reduced when a person's SERPS rights become subject to a pension debit. That is what we are talking about, SERPS and the additional pension. Paragraph 3 of Schedule 3 covers how and when a person will become entitled to a shared additional pension and whether a shared additional pension can subsequently become subject to a pension sharing order or provision.
The effect of Amendment No. 73 would be to prevent pension sharing of SERPS. Yet the Government believe it is both right and fair that SERPS rights, just like other second pension rights built up in occupational and personal pension schemes, should fall within the scope of pension sharing.
Perhaps I may widen the subject. When we were debating pension sharing on divorce during the passage of the 1995 Act, and then subsequently when the Green Paper came through from the previous Government, I remember the noble Lord, Lord Mackay, the predecessor of the noble Lord, Lord Higgins, being emphatic. He was determined not to go ahead with any scheme which denied the capacity to pension share SERPS. We always expected that the sharing of SERPS would be that much more complicated than a funded scheme where there is a CETP and a straightforward package.

839
We believe it is right to apply it to SERPS. It is a basic right underpinning pension sharing that there should be no built-in bias for or against any one type of scheme. The decision whether or not it is appropriate for any particular pension to be shared will depend on the individual circumstances of that case and must rest with the courts.
The noble Lord, Lord Higgins, pressed us on why SERPS should be shared when the wife might have her own pension rights. The courts or the divorcing parties will take account of all the assets, including any pension rights that she might have, whether state or private.
The noble Baroness, Lady Fookes, asked what would happen if the former spouse acquired a pension share as part of a divorce settlement and then died. She asked whether that pension share would revert back to the spouse. I will write to the noble Baroness if I have got it wrong, but my understanding of the policy is that that pension share would be part of her assets which would have been taken by her, for example, in lieu of part of the matrimonial home. Just as if she died but the matrimonial home or part of it or some savings had been made over to her, it would not revert to the former spouse unless she so willed it. It would go to her next of kin or her dependants in the usual way. Unless I have been misinformed, in which case I shall write to the noble Baroness, it would be perverse to hold that something that had been traded in lieu of other more tangible assets should revert back to a former spouse. With those points, I hope that the noble Lord, Lord Higgins, will feel able to withdraw his amendment.
Lord Higgins: I had somewhat misunderstood the scope of this particular schedule. As the noble Baroness has rightly pointed out—now I understand it rather better—the schedule is concerned with SERPS. The sidenote, which is not part of the Bill, refers to "Reduction of additional pension". Effectively, that is a reference to SERF'S, if I understand it correctly. If that is so, I am not entirely clear why that is being reduced. I had thought initially that this schedule referred to the basic state pension, but the noble Baroness indicated that that is not so. However, one would have thought that the basic state pension was among the various pensions that might reasonably be shared.
Baroness Hollis of Heigham: At the moment, a widow acquires rights to the basic state pension through her husband's national insurance. 'That pension is acquired through his rights rather than any of her own. It is not an additional pension in the same way as SERPS.
Lord Higgins: I well understand that it is not an additional pension, but the point I make—which may reflect my lack of comprehension in this particular matter—is that, according to my understanding, among the pensions that may be shared is an entitlement to the basic state pension As the noble Baroness rightly points out, it may be that the wife is entitled to a form of pension as a result of the husband having contributed. Therefore, if there is a divorce it seems appropriate for that to be shared in some sense.
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One curious feature of the state pension scheme is that a husband may get a wife's pension although he has not contributed any more than a single individual. That was a basic curiosity in the original Beveridge scheme. If, as the Minister has explained, this schedule is concerned solely with SERPS, I am not clear where the provisions in regard to the basic state pension appear in the Bill. If one is to include SERPS, surely one includes the basic state pension as well.
Baroness Hollis of Heigham: I am slightly baffled by the noble Lord's remarks. Pension sharing applies to those pensions other than the basic state pension, whether it is SERPS, occupational pensions, private pensions and, in due course, stakeholder pensions. Those pensions are part of the matrimonial assets that go into the pot to be shared in the divorce. The state basic pension is not available in the same way. If the husband died the widow would inherit those pension rights and they would continue. The same applies to pension sharing. The widow will keep her own rights irrespective of what happens to her after the divorce. The state pension is secure in her own right, whether she is widowed or divorced, and is not subject to pension sharing; in other words, she reverts essentially to being a single person.
Lord Higgins: I believe that I understand what the noble Baroness says. However, the husband gets a larger pension than the wife. If there is to be an equitable split, I am not quite sure why some adjustment is not made in that respect. Am I right in thinking that there is no provision whatever in the legislation now before us as far as concerns the basic state pension?
In order to speed up matters, perhaps I may turn to another relevant point. Clearly, we are here to legislate for the long term. It is intended that these provisions shall continue in perpetuity.
However, the debates that we had earlier referred to the fact that SERPS will be abolished and a second state pension will be introduced. What is the Government's thinking and will the schedule cover that point in the future? We are talking about a five-year time-scale, but I presume that the Government intend to legislate for the next 20 years or so.
10.15 p.m.
Baroness Hollis of Heigham: Very simply, it is the Government's intention that pension sharing should apply to all second pensions, including state second pensions. Even though they are unfunded like SERPS, they have an asset value. Stakeholder pensions, which are funded like other money-purchase schemes, will also be included. With the state single pension, the issue of pension sharing does not arise, because following divorce the spouses revert to the status of single persons.
Lord Higgins: I am now beginning to see the position more clearly and I hope that I am right in thinking that the Bill contains no provision as far as the state pension is concerned.
Baroness Hollis of Heigham: There does not need to be at this stage, because the state second pension does

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not exist. As and when legislation is introduced to set up the state second pension, it will contain appropriate clauses to cover the point if the Bill does not do so. The noble Lord pressed me on the Government's policy intent, which is that pension sharing should apply to all second-tier pensions, because they are part of the matrimonial domestic property of the family and both parties have contributed to it.
Lord Higgins: I am grateful to the Minister for clarifying that point which I clearly had not fully understood before. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 46 agreed to.
Schedule 6 agreed to.
Clauses 47 and 48 agreed to.
Lord Higgins Lord Higgins moved Amendment No. 73A:
Before Clause 49, insert the following new clause—
COMPENSATION SCHEME FOR WIDOWS AND WIDOWERS NOT INFORMED OF PROSPECTIVE REDUCTION IN SERPS
(" .—(1) The Secretary of State shall by regulations establish a scheme to compensate persons who are widowed after 5th April 2000 and who have not been able to make alternative provision to make good the reduction in the additional pension then payable to them as a result of the enactment of section 19 of the Social Security Act 1986, because of the provision of inadequate or misleading information by the Department of Social Security.
(2) If no regulations are made under subsection (1) before 5th April 2000 then the Contributions and Benefits Act shall be amended in accordance with subsections (3) and (4).
(3) The following provisions shall cease to have effect—

(a) section 39(3);

(b) section 48C(3);

(c) section 51(3);

(d) in Schedule 5, paragraphs 4(3), 5A(3) and 6(4).

(4) The following words shall be omitted—

(a) in sections 48A(4)(b) and 48B(2)(b), "half of",

(b) in paragraph 5(2) of Schedule 5, "Where the husband dies before 6th April 2000",

(c) in paragraph 6(3) of that Schedule, "but before 6th April 2000".

(5) Regulations under this section shall be contained in a statutory instrument which shall be laid in draft before, and subject to approval by resolution of, each House of Parliament.")
The noble Lord said: We change gear rapidly now from a series of amendments on pension sharing, which were very complex, to Amendment No. 73A on the issue of SERPS, which has attracted much public attention.
The history of the matter is well rehearsed: way back in 1986, the then Government decided that it would not be appropriate to continue the arrangement whereby the widow of a person with an entitlement to SERPS continued to receive the full amount. Effectively, it was suggested that there should be a cut in the widows' pension. That was of course a matter of great controversy at the time, although I understand that the Government do not propose to change that arrangement.
Remarkably, the further problem has arisen that the arrangements that were announced in 1986—this is a non-partisan point—seem not to have been implemented. Consequently, several individuals were under the wrong impression as to how much pension their widows would receive.
In addition, the situation of wrong information being provided to people has continued almost to the present day. I understand that as late as April the department was still misinforming individuals as to the true situation. That has given rise to a great deal of concern. An individual will not have made the arrangements he might otherwise have made had he realised the position with regard to his wife's pension if she became widowed.
The Government have made a number of announcements on the issue. The first reaction of the noble Baroness in this House was to say that she was taking legal advice. One presumes that that has taken place. It would be helpful if we could know the advice that the Government received. It is a matter of considerable importance. A number of difficult legal issues arise.
Similarly, Age Concern has referred a case to the parliamentary ombudsman, who announced on 29th March that he would investigate whether there was a case of maladministration to be held against the DSS. He said that he would report in good time before the change came into effect in April 2000.
One of the causes of concern is the length of time it appears to take to make decisions. Without criticising the parliamentary ombudsman, it would be appropriate for him to take account of the fact that we are debating this Bill and that it is a matter of grave concern. To say that he will take from June 1999 to April 2000 to reach a decision when all the facts can be ascertained in a much shorter time does not seem an appropriate time-scale. While the legislation is going through, it is possible for the House to express a view on the appropriate solution—I stress again that I do not make a partisan point—to a difficult situation where individuals are in danger. Clearly some have suffered because of the wrong information received.
There is the difficulty of establishing whether an individual has asked for this information and has received the wrong information by telephone, or more simply by correspondence. One would hope that the ombudsman could refer to that. Leaving the ombudsman issue to one side, one would have thought it appropriate for the Government to express a view in advance of the Bill becoming law. I understand that Mr Stephen Timms, the Minister in another place, confirmed that compensation is to be paid to anyone who can establish that he or she received advice that did not reflect the change from April 2000 and as a result acted to his or her detriment. Clearly there are two problems in establishing it. First, individuals have to demonstrate that they were misinformed. It would be helpful to know from the Government what record is kept of telephone conversations on these matters in the context of our other debates about the computer. I understand that records are kept of telephone conversations between

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individuals and the department. Secondly, in the context of Mr Timms' remarks, it would be necessary for the individual to show that as a result he acted to his detriment; or, more accurately, did not act and as a result suffered.
We are clear that if those two conditions can be fulfilled—that an individual can demonstrate that he was misinformed and suffered as a result—it is already established, and recorded clearly in Hansard of 8th March 1999, that that is the Government's intention. The Government have presumably given a great deal of thought to these matters. As in the case of the passported benefits in relation to the Tax Credits Act 1999, which is now on the statute book, there has been a great deal of interdepartmental discussion—not least between the Department of Social Security and the Treasury because the financial consequences may be considerable. The noble Baroness said on 4th May that the DSS was considering delaying the change. Is that still in the Government's mind and, if so, over what sort of time scale?
My amendment seeks to suggest that we should treat this as a matter of urgency and that the position with regard to compensation should be established before we conclude our consideration of the Bill. This is obviously a preliminary debate—we have Report and Third Reading stages to come—and we must consider at what stage it might be appropriate to press these matters to a Division.
It is a matter of concern, and we realise that the Government must consider it carefully. However, it does not seem to us at all unreasonable that we should ask the Government to make a decision while the House has an opportunity to take a view on what it thinks would be an appropriate response on behalf of the individuals concerned.
Lord Rix: As be noble Lord, Lord Higgins, said, the Minister of State, Stephen Timms, has made a number of promises in another place about a compensation scheme for widows and widowers who were not informed of the prospective reduction in SERPS. I believe that telephone calls to the Benefits Agency are recorded and kept for a maximum of six months.
This amendment seeks to place such a compensation scheme clearly on the face of the Bill. I welcome that, and I thus offer my support to the noble Lord. Unfortunately, the phrase "how long is a piece of string?" keeps entering my mind in regard to such compensation. My Amendments Nos. 91A and 92A are more specific in this area. However, I will withhold any further comments about them until later. I, therefore, support the noble Lord, Lord Higgins, in whatever decision and direction he may take.
Earl Russell: This amendment is very similar to Amendment No. 91A standing in the name of the noble Lord, Lord Rix. However, it is a good deal less sweeping than our Amendment No. 92D, which we shall come to later. If the noble Lord, Lord Higgins, should be minded to press the matter to a Division at a later
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stage, we will remember that half a loaf is better than no bread—indeed, it may be a good deal more than half a loaf.
At least the facts of the matter are reasonably clearly agreed as they were set out by the Minister on 4th. May and on other occasions. It is agreed that a change was introduced by the Social Security Act 1986 and that the change was not communicated adequately to those who would suffer from it. It is also agreed that that remained true until at least this April.
The last time we discussed this issue, the Minister said that she had not yet discovered why the misinformation was disseminated. If she has now made that discovery, I will listen with interest. The crucial point that the noble Lord, Lord Higgins, made clear is that, as a result of the misleading information, a great many people have done what they otherwise would not have done and—more importantly—have not done what they otherwise would have done. In fact, many people have not made provision for their spouse's widowhood, which they most undoubtedly would have made had they known what the law was.
Knowing the law relating to social security is extremely difficult. Except for the present Minister, who is extraordinary in this respect, there are few of us, even Ministers, who outside the Chamber taken by surprise would know exactly what the law on social security was. So if Ministers do not know, how can we expect husbands making ordinary provision for their ordinary families to know when they have been told otherwise by people whose business it is to give them honest information? Outside public life, that would give rise to a strong claim to compensation.
The Minister knows that I am not inclined to make anything of the point that the country party has turned into the court and Treasury party. That happens all the time. However, I believed that Mrs Beckett's remark,
"I advise anyone who is married to a man who is lingering on 5th April 2000 quickly to shove a pillow over his face because it will halve the pension entitlement if the husband dies on the following day",
was perhaps taking the freedom of opposition to a rather extreme extent. The legal position would be interesting were anyone to take that advice—
Baroness Hollis of Heigham: I think that she would enjoy parliamentary immunity!
Earl Russell: That is just what I was about to say, but I was about to add that the pleading of parliamentary privilege might tend to bring that doctrine into discredit and might lead to as much political loss as legal gain. I believe that prudent Ministers do not let it come to that point.
In the past, the Minister has made distinctly encouraging noises on the subject. I have heard them and I have been distinctly encouraged. But distinctly encouraging noises and legally binding commitments where the Treasury is in the wings are not the same things. The Division Bell concentrates the mind wonderfully. The noble Lord, Lord Higgins, has allowed a stay of execution. We await developments.
10.30 p.m.
Baroness Fookes: I welcome the amendment in the name of my noble friend as a first stab at dealing with what I regard as a serious problem. It is intolerable that a department of state should allow the situation to occur. As the noble Earl said, it is difficult for ordinary people to understand the law and they rely on what they are told by officials of the state.
However, I am concerned about the necessity for proof because I suspect that in many cases it will not be forthcoming. That does not make the problem of the person involved any the less. Indeed, I should think it would be even more frustrating if he knew that compensation was available but remained beyond his reach because he was unable to offer sufficient proof. I should have thought that a more drastic solution was called for, even to the point of deferring the operation of the scheme. I await the Minister's reply with interest.
Baroness Hollis of Heigham: Never has an amendment tonight been awaited with such interest. I suspect that never shall I disappoint so many people at once on one amendment. It relates to the provisions reducing inherited SERPS for widows and widowers similar to those put forward in another place. It is not dissimilar in principle to the issues raised in your Lordships' House at Question Time.
The proposed new clause would prevent implementation of the changes to inherited SERPS unless the Government have introduced a compensation scheme by 5th April 2000. The noble Earl, Lord Russell, the noble Lord, Lord Rix, and others make an alternative suggestion later.
The changes to inherited SERPS were introduced by the previous government 13 years ago. The stated intention was to bring SERPS into line with occupational pensions, where it is the norm to inherit half of the scheme, and so to ensure a level playing field between occupational schemes and state provision.
The implementation date for the changes, which apply to widows and widowers above state pension age and widows below state pension age, was set for the year 2000, 14 years after the original legislation. This should have given people who might be affected plenty of time to alter their financial arrangements.
It is common ground that those changes were not well handled by the previous administration. The noble Baroness, Lady Fookes, talked about the present situation being intolerable. What was intolerable was the situation that the Government inherited. The noble Lord, Lord Higgins, says that if the Government do not come up with a satisfactory answer he will press the amendment to a Division. That is a bit rich, coming from the party which created this horrendous mess in the first place, and with huge costs that we seek now to address.
Earl Russell: Speaking for a party not involved in this, I wish to say that we know this Committee is amply populated with pots and kettles. Need we waste time saying so?
Baroness Hollis of Heigham: I rather think so, because the pressure is on the Government to solve a multi-billion-pound problem which we have inherited and which we only registered as a problem towards the end of last year. Yet we are being pressed, when over the past 14 years the previous administration failed to take action or do what they should have done.
I take the point made by the noble Earl, Lord Russell, who is not in the major Opposition party or the Government, but the Government are being put on the defensive, to produce a solution involving multi-billions which was created by the previous administration, who are quick to criticise us for not coming up with a solution and very slow to apologise either to the Committee or to people at large for the mess they created, the failure to publicise and the inadequacy, therefore, of people's subsequent financial arrangements.
I was not seeking to make party political points, but it would well behove the Opposition, who in government introduced this change—that is their privilege—and then failed to publicise it, and continued to give misleading information for nearly 14 years, to take some responsibility for their actions, instead of seeking to turn the matter around on this Government for having failed to respond quickly to what an ombudsman may or may not currently be contemplating.
It is unwise, imprudent, ungenerous and unfortunate of the noble Lord, Lord Higgins, to try to turn the issue into one of this Government's incompetence, as opposed to his Government's maladministration.
Earl Russell: In the light of the fact that the misinformation has gone on under both parties, the remarks of the noble Baroness, the Minister, remind me of the marginal rubric in the UN delegate's notes: "Weak point. Shout."
Baroness Hollis of Heigham: On the contrary, the previous administration introduced this change, and therefore had a responsibility for publicising it. We did not, and we did not know that it had not been publicised. There is a total difference in our situation, and I am surprised that the noble Earl, Lord Russell, does not accept that there is a difference—and a qualitative difference—between us.
We are well aware that this matter was not handled well, and we are very concerned that people have been worried about the reduction and the misleading information that some have received. But the costs of delaying or phasing in the change are substantial. To give an example, the cumulative cost of delaying the reduction would be more than £5.5 billion by 2010, and there would be a continuing cost of around £1 billion a year for some time after that. Those are the sorts of sums we are talking about.
If one were starting afresh with that sort of money to put into pensions, it is not immediately obvious that the pressure point one would seek to address would be to bring a SERPS 50 per cent pension up to 100 per cent for widows. To reverse the change, or to introduce an open-ended compensation scheme—the noble Baroness, Lady Fookes, was absolutely right about that; it would

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be an open-ended compensation scheme—would have the same early effect, but with a bill for expenditure in the future that would continue to increase.
There is a very real issue of proof. The noble Lord, Lord Rix, asked me about telephone calls. No record is kept of telephone calls, any more than a record is normally kept of conversations at the desk. Paper records are kept for about six months. But if someone assented that he had received that misleading advice, I suspect it may well be the case that the Government would have to prove that he had not, rather than the contrary, because there would be no evidence to counterbalance it.
Lord Rix: That happened to me. I made two telephone calls—one in 1992, just before my heart operation and one in July of last year, during the currency of this Government. I received misleading information from the Benefits Agency in Newcastle. It appears that I have no means of proving that. But the Minister now seems to be saying that the Benefits Agency would have to prove that it had not received the call, rather than the other way round. I assure the Minister that I did make the call; otherwise I should not have entered into the SERPS debate in the first place.
Baroness Hollis of Heigham: I accept entirely that the noble Lord, Lord Rix, did indeed make those calls. I was using that as an example to show how difficult it would be to meet the standard of proof suggested by the noble Baroness, Lady Fookes.
At present, no one has suffered any financial loss as a result of those changes because they do not take effect until April 2000. The Government, including the Minister of State, have made it clear on several occasions that they will consider claims for compensation from individuals who have received incorrect information and have subsequently either acted to their detriment or failed to act to their benefit.
As I said, we are considering which of those two routes is the better to follow or whether there is a third route which we have not yet explored. Several different responses have been given this evening and a variety of other suggestions has been made. But reversing the change, opting to defer it or giving full compensation to people who claim, whether there is evidence or not, that they have been affected or given misleading advice, would produce significant and heavy costs. We cannot take that decision lightly. We are considering the matter carefully and we shall make an announcement in due course. It is no good the noble Lord being indignant with me about bringing information to the Committee. The Government have to make a choice on this extremely expensive issue which involves billions of pounds. The Government will not be rushed into making that decision in order to fit in with the timetable of this or any other Bill. We must do what we believe is right and prudent. We shall make an announcement in due course. On that basis, I ask the noble Lord to withdraw his amendment.
Lord Higgins: I did not move this amendment in any way in a partisan spirit. I accept fully that there have
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been problems with regard to misinformation both under the previous government and under the present Government. It is important that we should debate this matter in that way.
There are two issues: the first is the original change way back in 1986; and the second is the question of bad information being given to individuals who, had they had the right information, might have made different decisions and who have suffered as a result of the bad information they have received.
Lord Rix: I speak from personal experience. Sometimes those bad decisions were taken at the time when it was the law of the land. When I went as secretary-general to Mencap, where pay was not exactly over-generous, I decided to take an early pension. But I did that because at that time, the law of the land said that I would received SERPS and that if I died, my widow would also receive full SERPS. In other words, I took a pension many years before I should have done so on the understanding, as the law was at that time, that my widow would receive a full pension. I took that decision then.
Therefore, it is quite clear that those of us who paid in from 1978 to 1986 were doing so when the law of the land said that our widows would receive full SERPS. I am totally at a loss to understand how the noble Lord's government could overturn that in 1986 or how it could be supported by the present Government at this time. It seems to be a simple matter of contract which is completely overridden by retrospective statute. At the moment a mutual company is in the courts facing a bill for £1.1 billion for trying to argue against the need to pay terminal bonuses which it had contracted to make on certain life pensions. If the court finds against the life company, it will be in exactly the same position as would be this and the previous government if they too found themselves in court today.
Earl Russell: Is the noble Lord, Lord Rix, telling us that this Whitehall farce is not as funny as some others that he can remember?
Lord Rix: Taken as a plot for a Whitehall farce, it might have been seen as totally unacceptable.
10.45 p.m.
Lord Higgins: I am not going down that particular route. There are two issues. The first relates to the initial decision and the second to the wrong information which, it is abundantly clear, was given both under the previous government and the present one. As regards the initial decision, that was debated at the time and Parliament took a view on it. A period of 14 years elapsed before that decision came into effect.
The basic point which the noble Lord, Lord Rix, made in the first part of his intervention a moment ago relates to that decision. His particular amendment is rightly to be discussed separately from this one because he seeks to raise issues other than those I am dealing with now. The noble Baroness will correct me if I am

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wrong, but my understanding is that the Government are in no way proposing to reverse at this stage the decision taken in 1986 as regards basic policy.
The second issue is the action which people failed to take, as the noble Earl pointed out, when receiving wrong information. There again, one must accept that that has happened under both governments. Ultimately, Ministers are held responsible. I leave unasked—I do not expect an answer—what happened to the officials who were responsible. Presumably, in many instances they have retired.
But having discovered that mistakes have been made both by this and the previous government, the question remains as to what it is right to do about it. Clearly, because the deadline is rapidly approaching and is only a matter of a few months away, it is important that a decision should be reached so that people know where they stand.
There are various solutions as regards compensation. The proposal put forward in the amendment tabled by the Liberal Democrats, which it is more appropriate to discuss separately, will be very expensive whereas the cost of my amendment is not clear because we do not know what the Government have in mind.
I put this point in the tone I used for my opening remarks. I do not believe that it is unreasonable to say that if as much information as we are going to receive is now available, Ministers should make up their minds as quickly as possible. My amendment seeks to encourage them to do so. As regards previous amendments to the Tax Credits Bill, the noble Baroness viewed with scepticism my attempts to encourage her to make rapid decisions. There is no reason why a decision should be delayed beyond the date I have suggested in my amendment. The sanction suggested is perhaps not entirely appropriate. We can turn to that at a later stage.
I turn to the question of the records. I am somewhat surprised by what the Minister has said about telephone calls. She will recall that with regard to the problems that arose with the payment of pensions and the breakdown of the department's computer, a number of people telephoned the department. My understanding is that in those circumstances a record is kept of such telephone calls. Am I wrong in recollecting that that is so?
In situations where there is clearly a record in writing, perhaps the department keeps the letters for only six months, but it is likely that those who received letters may have retained letters written more than six months ago. I pay tribute to the fact that the Government in another place, and the Minister in this House, have indicated that they propose to do something about this matter. They are not proposing to say, "Bad luck, that is the end of the matter". They intend to devise a system of compensation. However, I do not understand why there is a problem in devising such a system within a reasonable time-scale, at any rate before 5th April, which is the limit set in the amendment.
As the noble Earl, Lord Russell, pointed out, there are difficulties here. Whether people receive a full widow's pension or half a widow's pension will depend
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arbitrarily on the exact date. That matter would not raise particular problems if they have had 14 years to prepare for such an event, but if not, it will raise problems.
With regard to Amendment No. 73A, the amendment in the name of the noble Lord, Lord Rix, or that tabled by the Liberal Democrat Benches, I hope that it will be possible to press the Government to make a decision that is acceptable to the House. If this is not resolved before the Bill passes, the danger is that the House will not have an opportunity to express a view on what is clearly a highly unsatisfactory situation, on which I make no partisan point. However, we ought to try to resolve it within a reasonable time-scale.
I was hoping that we might have some further response from the Minister. If not, I shall reserve the right to return to this at a later stage. We shall consider the reply given by the Minister, but it seems that simply to say, "Wait and see", when the House will not be in a position to take a view opposite to or different from that of the Government would not be a satisfactory position. Somewhat reluctantly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 49 [Bereavement payments]:
Lord Higgins Lord Higgins moved Amendment No. 74:
Page 54, line 16, after ("day") insert ("or a bereaved person aged between 60 and 64 when the spouse died")
The noble Lord said: We have already outlined the problem that has arisen in this case. In Amendment No. 74, we are seeking to suggest that those in this unsatisfactory situation may be in a more difficult position if the person who is bereaved and who expects to receive a pension is, so to speak, up against a deadline. I hope that the Minister can give a sympathetic answer. I beg to move.
Lord Addington: I want to add the support of these Benches to the noble Lords physically on my left.
Lord Rix: Venturing into the detail of this part of the Bill is for me, as an amateur in these matters, rather like a boy scout with a first aid badge attempting brain surgery. But I wish to speak to the bereavement payments as a whole in the amendments before us.
Like other Members of the Committee, I welcome the fact that widowers will now receive bereavement benefits. But as I said at Second Reading, I am at a loss to understand why this reform, which was necessary to meet the principle of equal treatment of men and women, should also mean that widows will lose £500 million a year by the year 2020. It is a case of giving a little with one hand and taking away a lot with the other.
I am convinced by the arguments for extending the new £2,000 bereavement payment to people above state pension age, including women aged 60 to 64. The logic, such as it is, seems to me that, as the old payment was not paid to pensioners, therefore the new one will not be paid either. But as Age Concern and others pointed out, older people have the same needs on bereavement as people aged under pension age without dependent children.

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To me, such a decision sits oddly with the Government's aim of targeting benefits to those who need them, unless there is evidence, which I have yet to see, that those over pension age are, as a group, less needy than those under pension age. In general, nothing will be paid to any pensioners when they suffer bereavement. I am therefore sympathetic to the aims of those amendments which extend the eligibility of the bereavement payment. In particular, there is a strong case for extending eligibility to women aged 60 to 64, at least until the state pension is equalised between 2010 and 2020.
I welcome the fact that bereavement payment has been doubled. Its value should now be protected so that it does not wither on the vine. But, in spite of this seemingly generous gesture, I am still concerned that women widowed in the future are liable to be short-changed. For example, as we have just heard, they might lose half of their late husband's. SERPS, and will not receive the additional bereavement tax allowance from April 2000. If we are building for the future, as I am sure is the intention, I am certain that those yet to be bereaved deserve greater fairness and greater security.
Baroness Amos: Amendment No. 74 is aimed at extending eligibiLty for the bereavement payment. It would allow people widowed between the ages of 60 and 64, at any time before or after the new scheme comes into force, to claim the £2000 bereavement payment. I should first make it clear that the clause will extend existing policy and allow men aged 60 to 64 widowed after the new scheme starts to claim bereavement payment. And when the pension ages of men and women are equalised at 65, women in this age group will also qualify.
The group that the noble Lord intends to help—widows aged 60 to 64—are pensioners. But bereavement benefits, like the widow's benefits they are replacing, are there to provide a measure of compensation from the national insurance scheme for men and women who have lost a spouse while still of working age.
The noble Lord, Lord Rix, talked of the Government's commitment to targeting benefits to those who need them most. Other measures are in place to provide that support for pensioners and this Government have done much to build on that. In discussions this evening we have already talked about the minimum income guarantee. Our proposals are based on a clear set of principles and our reforms focus help from the state where and when it is needed most. We are spending £140 million more in the first year to ensure that this happens from the start.
The amendment would appear to allow retrospective claims from any widower aged between 60 and 64 when his wife died. That might mean, for example, giving the lump sum payment to an 80-year old man widowed 20 years ago. I should remind Members of the Committee that the bereavement payment, like the current widow's payment, is intended to be paid immediately on bereavement. The principle is that it
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helps with immediate costs at the time of greatest need. Offering the benefit retrospectively to people whose need for immediate support has passed would undermine that principle.
Under the new bereavement payment that we are introducing, each year thousands of men will receive a benefit that they could never claim before; thousands of women will get double the amount they would get at present. The amendment would weaken the principles that underpin our reforms. On that basis, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Higgins: I believe that the Committee will be grateful to the noble Baroness, Lady Amos, for clarifying the position with regard to this particular amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11 p.m.
Lord Addington Lord Addington moved Amendment No. 75:
Page 54, line 21, leave out ("and") and insert ("or
() that the person was of pensionable age and in receipt of income support; and").
The noble Lord said: I intend to take the most direct approach possible on this amendment. If a person, no matter what his age may be, is on income support, he is receiving benefit to bring his income up to an acceptable level. Thus the logic behind the amendment is that, if that person is bereaved and there is a benefit available for covering the costs of bereavement, surely there is a case for making that payment available to someone who is on such a level of income that he is in need of income support.
I hope that we shall receive, shall we say, a warmer reception for this amendment than we have received for many of the other amendments that we have moved so far this evening. I beg to move.
Baroness Amos: The noble Lord's amendment appears to be aimed at extending eligibility for the bereavement payment to widows and widowers of pensionable age who are receiving income support. Although I understand the noble Lord's concerns, I am afraid that I shall disappoint him. I believe that this amendment is the wrong way to address such concerns. It goes against a principle that has been at the heart of the widows' benefit scheme since it was devised by Beveridge. Widows' benefits have always been an insurance against unexpected death in working life. They are not compensation for the inevitable fact that all of us will die. They are, and always have been, intended for people of working age; and this will continue under our proposals.
The purpose of the bereavement benefit, as with the widow's payment it will replace, is to provide immediate help to those of working age in meeting unexpected costs which arise on bereavement. We recognise the great importance of having swift, non-means-tested help at such a time. That is why we have doubled the value of the payment. Of course, pensioners also need support and we are fully committed

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to that aim. On bereavement, the social fund is available to help the poorest pensioners—and others—with funeral expenses.
I could go into some of the detail of the Government's other achievements with respect to pensioners but, bearing in mind the lateness of the hour, I shall not, unless noble Lords wish me to do so. However well intentioned, the amendment would undermine the fundamental principles of our reforms. On that basis, I ask the noble Lord to withdraw it.
Lord Addington: When we receive a response which states that the amendment would not fit into the Beveridge scheme, I always feel that we should perhaps have moved slightly further on than that. The noble Baroness also referred to "unexpected death". I cannot help thinking that people are living rather longer than they did when Beveridge was devising his scheme. Therefore, the example of not fitting into the existing scheme is something that we should be looking at rather more thoroughly than is the case at the moment. I heard the noble Baroness's answer and reserve my position to return to this subject at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 76:
Page 54, line 24, at end insert ("or was making voluntary contributions")
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 82. The amendment refers to the qualifications for bereavement payments which appear in Clause 49. That clause contains various provisions. For example, the proposed new Section 36(1) states that,
"A person whose spouse dies on or after the appointed day shall be entitled to a bereavement payment",
if the person concerned satisfies various conditions. The proposed new Section 36(1)(b) provides entitlement to bereavement payments if,
"the spouse satisfied the contribution condition for a bereavement payment specified in Schedule 3, Part I, paragraph 4".
We suggest that bereavement payments should also be made if the people concerned have been making voluntary contributions. The noble Baroness, Lady Amos, has already been helpful in setting out the provisions of this clause. However, it seems to me that voluntary contributions might also be a reasonable qualification for entitlement to a bereavement payment. We would appreciate her comments on that. I beg to move.
Baroness Amos: The purpose of these amendments is to allow a widow or widower to qualify for the new bereavement benefits by virtue of voluntary contributions. The actual effect of the amendments would be to secure entitlement to bereavement benefits by payment of any voluntary contribution. I am not sure from what the noble Lord said by way of introduction that that was the intention behind this amendment.
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Contribution conditions for the bereavement payment are no different to those which apply to the current widows' benefit scheme. We intend simply to carry them over to the new bereavement benefits. As far as voluntary or Class 3 contributions are concerned, it is already possible for them to count as paid contributions. Therefore a person may improve his or her contribution record by paying Class 3 contributions and so protect his or her right to a basic retirement pension or bereavement benefit for a spouse. These voluntary contributions may be paid up to six years after the relevant year, or longer in exceptional cases. Furthermore, a widow or widower can pay Class 3 contributions towards his or her late spouse's contribution record for the purpose of gaining bereavement benefits.
I can therefore assure the Committee that voluntary contributions will count for bereavement benefit purposes either if the late spouse has paid voluntary contributions to protect the benefit rights of his or her partner or if the partner seeks to make up the record to gain benefit rights. I hope that the noble Lord will be reassured by my explanation and will feel able to withdraw the amendment.
Lord Higgins: I am grateful for the explanation given by the noble Baroness. I am not quite clear whether she proposes to accept the amendment or whether she is simply saying that it is unnecessary.
Baroness Amos: I am saying that the noble Lord's amendment is unnecessary.
Lord Higgins: In that case there seems little point in pressing it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russell Earl Russell moved Amendment No. 77:
Page 54, leave out lines 25 to 28
The noble Earl said: This amendment seeks to leave out some words from the Bill. I will, if I may, read those words as that makes the point as clearly as it can be made. The words are as follows:
"A bereavement payment shall not be payable to a person if that person and a person of the opposite sex to whom that person was not married were living together as husband and wife at the time of the spouse's death".
That restricts the bereavement payment to those who had been through a ceremony of marriage. The purpose of this amendment is to extend it to those couples who are, in the words of the Bill,
"living together as husband and wife",
without having gone through a ceremony of marriage.
Those words are quite sufficiently restrictive. The status of cohabiting is clearly known to social security law and has been so since the National Assistance Act 1948. I am grateful to the noble and learned Lord now on the Woolsack for helping to clarify these points during debates on the Family Law Act 1996. So there is no danger of uncertainty if this amendment were adopted; it is perfectly clear what my amendment means.
I do not understand—particularly in this day and age—why the Government have seen fit to introduce this restriction. Most of us know from our own social experience—if not from reading, then from statistics, from Social Trends or other more academic sources—that many couples who live together without a ceremony of marriage are just as much regular, established couples as any others we know. There is no clear outward difference, except in the ceremony.
Why should those who have not gone through a ceremony—which, however much it may concern some people from a religious point of view, is not a matter of great secular concern—be penalised in this way? I cannot see that the state has an interest in what is basically a matter of religious concern. It is a matter in which some degree of separation of Church and state seems to be perfectly legitimate.
It is also a point which may be of electoral concern. We are told by Social Trends that 20 per cent of couples who live regularly together are cohabiting without marriage. My own experience, from looking at the names on the electoral register when I was canvassing in the last election, is very much in line with Social Trends' findings. For once in a blue moon, my sample must have been not untypical.
If the Bill is left in its present form the Government are saying to large numbers of potential voters, "You are not getting anything from us. You will have to look elsewhere". Purely in political terms—quite apart from any question of justice—that is extremely unwise advice for a government to give to the voters. There is no case in justice why cohabiting couples should not receive a bereavement payment; there is no case in terms of sheer political expediency for taking this line. It is out of line with the developments which are rapidly taking place. I do not see why the Government have taken up the position they have. It is a quite unnecessary restriction.
I hope that they will see fit to change it. When advice has ultimately reached the Minister—by what the noble Lord, Lord Newton of Braintree, once described as "that curious process of osmosis by which information reaches Ministers in this House"—she may be able to do something about it. Obviously this is not the kind of question on which one wishes to divide the House at this time of night; on the other hand, it is a serious question of principle; it is a question about what is the purpose of the state; it is a question about equality; it is a question about non-discrimination; and it is a question of sheer human need. I very much hope that the amendment will be taken seriously and will be successful. I beg to move.
Baroness Amos: Our intention with bereavement benefits is to continue, as now, to base entitlement only on legal marriage between couples at the time of death and for entitlement to end when a person remarries or lives with another person as husband or wife.
We believe that a scheme based on marriage is right for two primary reasons. First, marriage is the basis, the cornerstone, of the contributory benefits system. This applies not only to this benefit but to others—for example, to war widows, to public sector pensions and
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to many other benefits. Secondly, marriage provides a straightforward method of deciding whether benefits should be paid. It would be far more difficult and intrusive to administer and police the benefits if they were extended to unmarried couples.
Our intention is to provide the new support on bereavement in as direct and simple a way as we can. We have as far as possible maintained the current conditions of entitlement while extending the benefits to widowers. So, as with widow's benefit, entitlement to the new benefits will be based on legal marriage.
The noble Earl, Lord Russell, raised a number of wide-ranging points with respect to issues of principle and equality. These are general issues which I am sure this place will continue to debate. However, on the basis of my comments about the cornerstone of the contributory benefits system, I hope that the noble Earl will feel able to withdraw his amendment.
11.15 p.m.
Earl Russell: I understand what the Minister says: that the provision is based on current conditions of entitlement. That is not a matter of dispute between us. I also accept that marriage has been, as the Minister put it, a cornerstone of the contributory principle. But the Government, and not least the Prime Minister, tell us almost daily how much the world has changed since Beveridge. This is one of the ways in which the world has changed most. The status of cohabiting couples is quite different now from what it was in 1948. One can now include one's unmarried partner in one's Who's Who entry. I can think of plenty more symbols of that change. I shall not bother to produce them at this time of night.
The Minister then falls back on the argument that this proposal would make it much more difficult to police the benefit. But in all other social security law cohabiting and marriage are taken as being of equal status. It is one of the principal ways in which social security law differs from the law in regard to other ministries. We came up against this issue over and over again in debates on the Family Law Bill. If the Department of Social Security can manage it for practically every other benefit under the sun, I do not see why it cannot manage it for this one. Bringing this provision back in this form, in this day and age, is a thoroughly retrograde step, and one for which, whether it concerns the Government or not, they will lose a considerable number of votes—and rightly so.
I do not intend to divide the House at this time of night. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 49 agreed to.
Clause 50 [New allowances for bereaved spouses]:
[Amendments Nos. 78 to 82 not moved.]
Baroness Crawley Baroness Crawley moved Amendment No. 82A:
Page 56, line 16, leave out ("pensionable age") and insert ("age 60, if the bereaved spouse is a woman, or age 65, if the bereaved spouse is a man,")
The noble Baroness said: This amendment stands also in the names of my noble friend Lady Lockwood and other noble Lords. I shall speak also to Amendments Nos. 86 and 89 in this group.
Amendment No. 82A is a probing amendment. It seeks clarification of the Government's thinking in this area. I know that my noble friend the Minister is only too aware of the financial problems that face very many women in Britain in their old age. Women face inequality in pay structures and have a history of low pay and interrupted, dislocated working lives. That is especially true of women with children.
While I am aware of the Government's important initiatives to reverse the sorry saga of women's pay inequality—for example, through the introduction of the national minimum wage and the working families' tax credit—the reality remains that women face an unequal struggle in their older years, despite the international legal obligations of equality in pension rights.
Amendments Nos. 86 and 89 reflect what I believe is the experience of bereavement. We all need look no further than our own families to know that bereavement has its own uniquely difficult timetable. People's reaction to the trauma and pain of bereavement depends on individual circumstances, but those of us who have suffered or observed the bereavement of a surviving spouse at close quarters know that it takes at least a year to feel any sense of normality returning to one's life. Physically, mentally, emotionally, a year makes sense.
That is why those Members of the Committee who put their names to Amendments Nos. 86 and 89 believe that 52 weeks is a far more appropriate time-scale for the period of a bereavement allowance than the 26 weeks in the Bill. Therefore, I hope that the Minister will give positive consideration to the two amendments. I beg to move.
Baroness Pitkeathley: I support the amendment on the grounds that it is unreasonable to expect someone to be able to adjust to the trauma of bereavement in only six months. Almost everyone who has suffered a bereavement understands that the year's anniversary is a turning point. That applies to the practicalities of learning to cope in a different way of life, especially for older women who have not been used to dealing with the practicalities of finance, household matters and so on. It also applies most particularly to the emotional trauma. I hope that the Minister will be able to support the spirit of the amendment.
Lord Rix: I too am concerned at the effect of Clause 50 which brings in the new bereavement allowance. I do not think the clause has had the attention it deserves because it hides the abolition of the contributory widow's pension. There are therefore a number of amendments on the Marshalled List which I support and which would improve a bad clause. As with Clause 49, I welcome the fact that the allowance will be paid to men as a result of the European Court case.
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My main objection is that this is worse than salami slicing. A contributory benefit is being hacked and chopped at with a vengeance. The widow's pension is being replaced with a time-limited benefit of just six months. That change drives a coach and horses through the contributory principle. What about the millions of men who have been contributing to national insurance, some voluntarily, in the expectation that their widow will get a widow's pension? From 2001 many will not and they will never know what they should have received. As I said at Second Reading:
"Widows seem to be something of an easy target. They do not know when they will be bereaved and they probably will not know what they could have expected under the old dispensation".—[Official Report, 10/6/99; col. 1601.]
The Government have made much play of their commitment to women's issues, and I wonder whether the Minister's conscience has been pricked by the negative impact on the future income of many bereaved women, in particular those without dependent children. Women already have lower incomes than men. This measure simply makes matters worse.
It is a similar argument to the one which we will debate when it comes to my amendment on SERPS for widows. It may, I fear, yet end up with the Government in the European Court of Human Rights challenged on the legitimacy of cutting back on benefits to which people have already contributed.
One final point: if the Government are determined to enact Clause 50, I believe that at a minimum they must extend the allowance from six months. It is absurd to think that six months is long enough to cope with the effects of bereavement. As Age Concern has noted, the representations on this point made by them and all others on the consultation paper. Support in Bereavement, have apparently been entirely ignored. No one, except the Minister and her officials, seems to think that six months is long enough. I therefore support the amendments that seek to extend the duration of the allowance, as well as the earlier amendments to include those people who have made voluntary contributions.
I should add that I am pleased that additional safeguards have been included for those bereaved with dependent children, but they can be seen as mere crumbs of comfort for far larger numbers of sorrowing widows.
Baroness Turner of Camden: Amendment No. 84 in my name has been grouped with this set of amendments. The Committee will recall that on many occasions, most recently on Second Reading, I have spoken against the intention to remove widows' benefits that hitherto have been paid on a contributory basis. I understand that this is known as "modernising" widows' benefits. The Government's reason for incorporating this provision in the Bill is the need to equalise widows' and widowers' benefits so that widowers are entitled to benefits when their partners die. The modernisation consists of removing entitlement to benefits from widows over the age of 45 with no children or those who are no longer entitled to the widowed mother's allowance. Instead, both widows and widowers will receive a bereavement allowance for six

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months only, plus an increase in the basic lump sum of £1,000 to £2,000, which incidentally I welcome. In addition, the SERPS addition is to disappear.
This provision represents a significant transfer of benefit support from women to men. Childless widowers over the age of 45 will gain but childless women who are widowed after 45 will lose. They will lose more than 19 years' benefit and all the additional pension that their husbands paid for through national insurance contributions. Women with children who are widowed at an early age will be particularly badly hit. A woman with small children widowed in her 20s or 30s will probably cease to be eligible for the widowed mother's allowance, now to be the widowed parents allowance, in her late 40s or early 50s.
Currently, the benefits system recognises that someone in those circumstances will find it difficult to enter or remain in employment while the children are young, and she may well find it difficult to get a job when they leave education. The provision in the Bill means that someone in these circumstances, who has perhaps been out of the labour market for 20 years, must sign on for jobseekers allowance at an age when other women are preparing for retirement.
When these issues have been raised previously the Government's case has been put to the House very ably by my noble friend the Minister. However, she knows that do not accept it. It is my belief that those who frame these policies think that things have changed for women far more than they have. It is true that many more career opportunities are now open to women than 30 or 40 years ago, but one has only to look at any gathering of professional or senior executive personnel to see at once that women still constitute a tiny minority of the better paid. Nicola Horlick is so exceptional that she is a constant news item.
The EOC report contains the not unsurprising information that women still on average earn 76 per cent of male earnings. A woman who has spent a large amount of time bringing up a family—this is still a socially desirable thing to do—is not likely to find matters easy in a highly competitive labour market when she is widowed. There is also the fairly common situation in which a woman will have spent much time caring for a sick or disabled husband before he eventually dies. The opportunity that she has had to update her skills and qualify for outside employment is likely to be minimal.
There is also the argument that nowadays a number of women benefit from generous occupational pension provision. I must tell the Committee that, based on some experience of negotiating these matters, most ordinary schemes, unless they are of the top-hat variety for very senior staff, are based on the assumption that there will be state benefit in addition. The same is true of survivors' benefits, which are rarely more than one half of the original pension, again on the assumption that there will be a state benefit entitlement. Even with the better final salary-type schemes, few people nowadays manage to qualify for the Inland Revenue limit. Therefore, while private occupational pension provision may be adequate for most people, it rarely qualifies even now as generous.
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The Government further believe that to equalise widows' and widowers' benefits on the existing basis would be too costly. I question that. The widow's benefit is paid on contributions paid by the husband. It is intended to pay the widower on the basis of contributions by the deceased wife. In the light of current circumstances, since women have a more interrupted work pattern than most men, the entitlement of widowers is likely to be less and, therefore, equalisation will not be quite so expensive.
I return to my main theme. This is a contributory benefit. If we are to depart entirely from the social insurance concept with which we have lived since Beveridge and return to the days of means testing, and ultimately to the concept of the deserving and undeserving poor, there should be a proper debate about it. It should not be done in the fashion proposed in the Bill—a snip here and a snip there in the hope that no one will appreciate what is happening. If this contributory benefit goes, what will happen to others? This is not acceptable.
My amendment seeks to maintain the system as it is. It may not be very well worded, but that is what it is about. I hope that my noble friend the Minister can be persuaded to reconsider what is proposed. As I am sure she is aware, the provisions in the Bill are opposed not only by the Widows' Advisory Trust, of which I am a trustee—one would expect it to oppose them—but by the Trades Union Congress. Doubts have also been expressed by the Child Poverty Action Group and the National Association of Citizens' Advice Bureaux. I await my noble friend's response with interest.
11.30 p.m.
Earl Russell: The Government's proposals are the downside of equality, the argument being that if one believes in equality, both sexes after a bereavement should be equally required actively to seek work. I can understand the logic of that, but I also understand, and feel considerable sympathy for, the argument of the noble Baroness, Lady Turner of Camden. I am not sure that equality has yet gone that far.
There is also a problem, as there was with the SERPS amendments, of legitimate expectation. Many people have made provision for their spouses on the assumption that there would be a continuing widow's pension. If that is to change, people should have notice of it in good time so that they can make provision in advance to leave their spouses sufficiently well provided for when the time comes. The notice period contained in the Bill will not do that.
I am also worried about another issue. I had hoped to table a further amendment, but it has not yet been drafted. I hope that it will be ready on Report. At the moment, we have considerable age discrimination in employment. The effect of cutting the bereavement allowance to six months will be that after that people will be expected actively to seek work.
As things stand, if a woman is widowed at 50 and she has been the sort of wife who has stayed at home looking after children and keeping the house, she will have no qualifications or recent work experience. She

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will not find it easy to get work, and the numbers in receipt of income support will increase. The statistics will not look good and people will start to ask questions of the Government.
I know that a code of practice has been issued on age discrimination, but it has not yet made much difference. Before any change to the bereavement allowance comes into force, we need to have in place proper legislation with teeth against age discrimination in employment. Beyond that considerable problem, I see all the arguments between equality and positive discrimination running round in a circle. Those arguments are a revolving door and governments never quite get the provision right.
Amendment No. 86 would extend the six-month period to a year. That is a simple and straightforward amendment to which the noble Baroness, Lady Pitkeathley, spoke movingly. We on these Benches will undoubtedly support that amendment. We need further amendments, not all of which have been tabled. We need one to defer the commencement of the clause and one that requires a commencement condition of legislation on age discrimination in employment. I would be happy to discuss with other interested parties what other safeguards we need.
I accept the principle in the abstract of what the Government are doing, but I do not think that we are yet ready for it. We have not had enough notice, and I do not think that we have adequate safeguards. So I hope that between now and Report stage there will be a little more thinking. We need it.
Lord Higgins: Concern has been expressed in all parts of the Chamber about the Government's proposals. The Government propose to extend benefits to widowers as a result of the case which was brought in the European Court of Human Rights. However, the hand of the Treasury was immediately seen. It was felt that somehow the money must be clawed back. The noble Baroness, Lady Turner, referred to it being snipped here and snipped there. It gives cause for concern. Amendments have been tabled from different parts of the Chamber ranging from extending the period from 26 weeks to a year. Amendment No. 88 extends it to two years.
The idea that a reasonable adjustment can be made by a bereaved person within 26 weeks is not reasonable. One must hope that the Government will think again on these matters.
At the other end of the scale, the amendment in the name of the noble Baroness, Lady Turner, extends the period up to pensionable age. It seeks to restore the previous position.
We all have to consider carefully between now and Report stage the right answer. However, it is clear from the whole Committee that what the Government propose is not the right answer. I hope that we shall have a reply from the Minister now. If not, we shall need to return
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to the matter at Report stage. The Committee should express a view on what is appropriate in these circumstances.
Baroness Hollis of Heigham: As Amendment No. 82A is a probing amendment, I shall briefly explain why the clause is drafted using "pensionable age" rather than "age 60 for women and age 65 for men". I should first make it clear that Clause 50 will allow men and women aged between 45 and pensionable age when they are widowed to claim bereavement allowance. Pensionable age is now defined in the Pensions Act 1995 which, as I am sure noble Lords are aware, is the legislation which will phase in equal pension ages for men and women. That is why it is drafted in the way that it is. The other amendments before us make three different proposals dealing with the length of time for paying the new bereavement allowance. Amendments Nos. 86 and 89, tabled by my noble friends behind me, suggest that the benefit should be paid for a year instead of six months. Amendments Nos. 85 and 88 propose a period of two years. But I should like to start with the first amendments on the list, Amendments Nos. 83, 84 and 87.
These amendments would, as we have heard, remove the time limit from bereavement allowance completely. In effect it would be the status quo. Our reforms, as set out in this Bill, focus help from the state where and when it is most needed, while helping those who can support themselves to do so. For example, we are spending an extra £140 million in the first year, to meet real need. Around 40,000 new widows and 15,000 new widowers each year will gain from the new bereavement payment—which at £2,000 will be double the existing widow's payment.
We are meeting the needs of families, by providing a weekly benefit for both widows and widowers with dependent children—the widowed parent's allowance will have the same entitlement conditions and be paid at the same rate as the existing widowed mother's allowance but will be available equally to mothers and fathers. In other words, the bereavement payment doubles the lump sum from £1,000 to £2,000 and extends it to men. The widowed parent's allowance has the same entitlement conditions as the widowed mother's allowance but also extends it to men. Both of those, I should have thought, are to be widely welcomed around the Chamber.
We shall be giving extra help to those who are aged 55 or over at the start of the new arrangements and who are widowed in the first five years after the changes are implemented. That is part of my response to the points made by the noble Earl, Lord Russell, about giving people notice. We are indeed having a five-year transitional arrangement in which widows will be able to claim income-related help without signing on for work or being expected to be available for it. There will also be a special premium in income-related benefits to help ensure that their income will remain at the level of the six months' bereavement allowance.
However, the core of the difference between us is not the bereavement payment—everyone welcomes the fact that it is to double. It is not the widowed parent's

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allowance that will replace the widowed mother's allowance, because everyone welcomes the extension of that benefit to men as well as women. The core of the debate is the six-month bereavement allowance.
The first amendments with which I am dealing would extend continuing support for widows in the form of the bereavement allowance until pension age, regardless of their circumstances or income. I believe that there is a generational shift that perhaps we have not all grasped entirely. Today, as many women are in work as men, 98 per cent of married women have had a job and 70 per cent of married women are in work while married. Increasingly, it is easier for women to find work than for men and women have no dependants. So why do we expect men, as widowers, to be in the labour market, available for jobseeker's allowance and actively seeking work? Why do we assume that men must find their own way in the harsh world outside but that women—who are as likely now to be in work as men and who are at least as likely as men to find it easy to work, particularly when they become older—are somehow dependent, are unable to make their way in the world and must seek certain privileges?
A woman nowadays may have a generous occupational pensian as a result of her husband's death and is therefore in no financial need. She may be in work—possibly earning an adequate salary or better—and she may have no dependent children. Why should that woman, simply because she is a woman, receive a widow's pension from age 52, 55 or whatever until retirement age? I do not understand why that should be the case.
That was the situation in Beveridge's day—of course it was—because women performed essentially unwaged work in the home. Nowadays, there are many women in the labour market earning over the national minimum wage and acquiring their own benefits in their own right. They find it at least as easy as men to get into work and, for the most part, they are widowed while they are in work. Why should such women be treated differently from any man in a similar situation? I do not understand that thinking, which I suggest—with all respect and courtesy—belongs to a different generation. That is not the experience of today's generation or of today's women.
When widows' benefits were introduced, widowers were not included in the system because it was assumed that they would return to work after the loss of their wife. I cannot accept that the situation for men has deteriorated to the extent that they, too, now need a benefit for life. It is also clear that the situation has improved for women, and it is much more likely that they will be in employment.
The noble Earl, Lord Russell, said that a woman would have to "go into work". I gently suggest that she is already in work and that bereavement happened to her while she was in work. As soon as she is ready—be it in a month, two months, three months or six months—she will want to return to work. Work is not a new activity for her: she has been doing it for the past 20, 30 or 40 years. It is just that, somehow, our social security system has not caught up, largely because it
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was shaped in the days when women did not go out to work. We must reform that system in ways that are fair to men and women alike and which also reflect the world in which we live.
I shall give another example. In the age group covered by bereavement allowance—between 45 and pension age—it is assumed that the widower will be in work and will find it easy to work and the widow will not. Is that not the assumption that lies behind the views expressed this evening? That is simply not true. Of those aged between 45 and retirement age—which, admittedly, is five years later for men at present—there are more widows in work than widowers: 54 per cent of widows and 53 per cent of widowers are in work. Far from women needing support and being dependent, more of them are in the labour market and they have a better standing in the labour market than men. Yet we appear to be saying, like the Victorians, that women are clinging to their husbands like weeds upon a wall. I believe that that is no longer the case.
In the light of that, we believe that the provision of a benefit for life, regardless of circumstances—whether the woman has a pension, a salary or dependent children—can no longer be justified. We believe that we should help at three particular points. The first is immediately on bereavement when there are costs and unexpected stress and hardship. Hence, the payment of £2,000. The second point of stress is where there are children to be supported. The third point of stress is a six-month period when the widow is getting her act back together and deciding how to spend the rest of her life.
We identify those three points of stress, but we are not saying that a woman who has been in work, has been bereaved and can return to work more easily than a widower should none the less have a widow's pension automatically, as of right, irrespective of financial need, irrespective of whether she has dependants and irrespective of her circumstances just because she is a woman and therefore a widow and therefore needs more protection than a man. I do not believe that that is right. I believe that the world has changed and that we should not provide such protection as though widows are dependent and cannot make their own way.
I turn to the other two sets of amendments which would extend the period of time for widows and widowers to receive bereavement allowance. Those of the noble Lord, Lord Higgins, propose a two-year period while my noble friends behind me suggest one year. Unlike the previous amendments, Amendments Nos. 83 and 84, these proposals acknowledge the principles behind the Government's reform. They merely challenge whether six months is the appropriate time as opposed to one or two years.
As I said, we believe that the current system does not distinguish between those who need continuing help and those who do not. Those who are earning a decent living or have a large occupational pension or life insurance see the greatest benefit and the poorest widows see the least: 35,000 widows see nothing of their widow's benefit because they immediately lose income support; and widowers receive no help at all.

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The amendments accept this. They recognise that it is no longer appropriate to pay a life-long benefit to widows and widows without dependent children regardless of their circumstances. So the argument here is not so much on the basic principles, but on where the line should be drawn.
The Government are sensitive to the needs of those people who have recently become bereaved. We believe that six months is about right. We believe that it balances sensitivity to the needs of recently bereaved people with a recognition that after a period of readjustment people can, for the most part, return to the job they were holding. The length of that transitional period was something we considered very carefully when we first drew up our proposals.
We believe that the six months is about right. However, I have listened to the debate and was moved in particular by the speech made by my noble friend Lady Crawley. We shall reflect on what has been said tonight and consider the matter.
It is important to recognise that we are doubling the bereavement payment. It is important to recognise that we are extending the bereaved parent's allowance to men and women alike. As regards the six-month bereavement allowance, we shall consider whether the period is right. Men and women should be treated alike because today they are equally likely to be in work—indeed, she more likely than he. They will have equal access to the labour market and will equally have built up their benefit contributions.
That is the world in which we now live and why we are making these long-overdue changes. We are meeting the need where it lies at the immediate point. The basic amendments which would retain the present situation, even when the world in which those pensions were shaped has been transformed around us, is no longer viable. Therefore, I hope that my noble friend will feel able to withdraw the amendment.
Earl Russell: I should like to congratulate the Minister on that speech. It is one of the best I have heard her make. The pride and egalitarianism behind it reminds me vividly of my noble friend Lady Seear at her best.
I understand and admire that emotion. Its annunciation is a major step towards the achievement of equality and I am pleased to hear it for that reason as well as for its rhetorical and intellectual quality. But it is not quite the whole story.
I hear what the Minister says about there being more widows than widowers in work. I also hear what the noble Baroness, Lady Turner of Camden, says about statistics on equal pay. Those are both facts. We need to put these together before we have any sort of coherent figure.
I take the point of the reproach to me by the Minister about the woman not being in work and going out to work. I understand that this is no longer the normal picture. I accept that, and I welcome it. But I think all of us, including the noble Baroness, would agree that
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there still are in the whole country many such people who have not yet come into the cultural change in which the noble Baroness has been quite rightly rejoicing.
So the question between us here comes down to one of timing. There I think there are some real issues. The pace of change, especially when it is a major cultural change of this sort, and the legislative steamroller driving it, is something on which we need some thought. I hope it is right that it should be a male voice saying this and a female voice resisting it. I think that is a good thing.
I am extremely grateful to the Minister for her promise to think about this again. I would be happy to take part in any discussions, formal, informal or otherwise, that may take place, and I await the results with a great deal of interest.
Baroness Turner of Camden: I am sure that my noble friend the Minister will not be surprised to hear that I disagree very profoundly with a number of the statements that she made. I was not speaking against equality. On the contrary, I am in favour of equalising the benefits. What I am not in favour of is taking benefits away in order to equalise, which is what is happening here. I suggested that it would not cost an awful lot to equalise on the basis of my amendment.
I do not agree that things have changed as much as my noble friend apparently thinks they have. I gave a number of instances of low pay and the disparity in male and female earnings which still exists. I also drew attention to the fact that many women before they are widowed have spent time out of the workforce, often looking after disabled or ill husbands. That is a very common experience.
It seems to me that a number of the points I made were not taken proper account of. There is also the very strong point that this is a contributory benefit, as I said earlier, and husbands contribute in the belief that if anything happens to them their wives will benefit. I disagree with its simply being removed as yet another snip away at the system of social insurance, which we have lived with for a long time and which I support.
Of course, it is not my intention to press the amendment to a vote this evening, but I shall consider carefully what has been said, because I certainly intend to return to it on Report.
Baroness Crawley: I thank the Minister for her reply. I agree with the noble Earl, Lord Russell, that my noble friend is indeed a great and robust champion of equality, and always has been. I particularly appreciate the sympathetic way in which she said she could perhaps look again at our amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 83 to 89 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 90:
Page 57, leave out lines 26 to 32
The noble Lord said: The amendment would effectively remove subsection (5). This is an extraordinarily precise provision, suggesting that the

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weekly rate of bereavement allowance payable to a person who is under the age of 55 at the time of the spouse's death should be reduced by 7 per cent multiplied by the number of years by which that person's age at that time was less than 55 and, even more precisely,
"any fraction of a year being counted as a year".
It is curious that subsection (5) states that the allowance shall be,
"reduced by 7 per cent. of what it would be apart from this subsection".
I simply do not understand how that provision is expected to work. I beg to move.
Baroness Amos: The age-related scale which this amendment world remove is a longstanding arrangement. It was first introduced in 1971. Those who are aged 55 on bereavement, subject to the entitlement conditions being rnet, receive the full rate of widows' pension. Those aged between 45 and 54 on bereavement receive a percentage of the full rate. That follows a principle that has long underpinned the widows' benefit scheme. Those who are widowed later on in life have less opportunity to build up their own provision for retirement. Therefore, they may need more financial help than those widowed at a younger age.
We have considered the options carefully and believe that, for a number of reasons, it is right to carry over that arrangement to the new bereavement allowance. It is likely that it will be more difficult for those in the older age groups to adjust and the age-related scale provides extra help for them to do so.
Bereavement allowance will give them the breathing space they need before supporting themselves through occupational pensions and other income before returning to work. Of course, we are not expecting them to do it alone. For those younger widows and widowers who are not in work, our welfare-to-work programme
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offers a comprehensive range of help and support, including advice on employment, training and benefits which will help them to return to, or seek, work.
Our reforms focus help from the state where and when it is most needed, while helping those who can support themselves to do so. I do not believe that this amendment is consistent with those aims and I urge the noble Lord to withdraw it.
Lord Higgins: I understand the longstanding tapering arrangement to which the noble Baroness referred. I am not clear why subsection (5) includes the words,
"of what it would be apart from this subsection".
Baroness Amos: Subsection (2) provides for the weekly rate of bereavement allowance. Subsection (5) applies to bereavement allowance the rules which relate the amount of benefit to the age of the claimant when the spouse dies. The full rate of benefit is reduced by 7 per cent for each year that the claimant is aged under 55 at the date of bereavement. I should be happy to write to the noble Lord with examples of how that would work.
Lord Higgins: I still do not understand why it says,
"of what it would be apart from this subsection".
That seems to me to be inconsistent. Perhaps the Minister, in writing, will spell that out to me in some detail. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 91 not moved.]
Clause 50 agreed to.
Baroness Amos: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at two minutes before midnight.