HL Deb 06 July 1999 vol 603 cc759-95

5.25 p.m.

House again in Committee.

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 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 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 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 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.

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 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 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 moved Amendment No. 44B:

Page 93, line 41, at end insert— ("13A. Section 150 of the Administration Act shall be amended as follows.

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 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 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 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 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 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 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 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.

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 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 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 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—

  1. (a) provides that one party's—
    1. (i) shareable rights under a specified pension arrangement, or
    2. (ii) shareable state scheme rights,
  2. be subject to pension sharing for the benefit of the other party, and
  3. (b) specifies the percentage value to be transferred.

(2) In subsection (1)—

  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,
  2. (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
  3. (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—

  1. (a) is the subject of a pension sharing order in relation to the marriage, or
  2. (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—

  1. (a) such rights are the subject of a pension sharing order in relation to the marriage, or
  2. (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)—

  1. (a) in subsection (1), for "or 24A" there is substituted ", 24A or 24B", and
  2. (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")—

  1. (a) the powers conferred by this section may be exercised—
    1. (i) only on an application made before the subsection (2) order has or, but for paragraph (b) below, would have taken effect; and
    2. (ii) only if, at the time when the application is made, the decree has not been made absolute; and
  2. (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)—

  1. (a) for "(7F)" there is substituted "(7G)",
    2. 780
  2. (b) for "or (e)" there is substituted ", (e) or (g)", and
  3. (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 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 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 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 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 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 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 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 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 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 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. 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 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 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 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.