Lords Sitting of 8 November 1999

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

Lord Gavron
Robert Gavron, Esquire CBE, having been created Baron Gavron, of Highgate in the London Borough of Camden, for life—Was, in his robes, introduced between the Lord McIntosh of Haringey and the Baroness Blackstone, and made the solemn Affirmation.

Telephone Services: Use by Government Departments
2.42 p.m.
Lord Jacobsasked Her Majesty's Government:
What measures they have taken to ensure that Government departments are taking advantage of the low prices available in the United Kingdom for internal and overseas telephone calls.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, each government department is responsible for ensuring that it achieves best value for money from all the goods and services which it procures, including telephone services. Advice and services to departments on achieving best value across the range of information technology and telephony services are available from CCTA—the Government's Central Computer and Telecommunications Agency.
Lord Jacobs: My Lords, I thank the Minister for that reply. As the Government are leading a crusade for lower prices in Britain, will they insist that government departments, such as the Foreign Office, use an alternative supplier to British Telecom for overseas calls, thereby saving the taxpayer 60 per cent off the lowest BT prices? Furthermore, will the Minister inquire why, in the House, noble Lords pay the standard BT rate of 20p per minute for calls to the USA rather than 4p per minute, which is the rate offered by alternative suppliers?
Lord Falconer of Thoroton: My Lords, as I said in my Answer, it is at present for each individual department to try to obtain the best deals available. The advice given by CCTA to the departments states that,
"The increased competitiveness of the UK telecommunications market offers the opportunity to drive down telecommunications costs by taking advantage of the various discount schemes offered. However, departments also need to be more creative in the way they negotiate with suppliers, challenging them to provide innovative solutions to the delivery and charging of the telecom service".
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In July this year we announced the setting up of the Office of Government Commerce, which is designed to have a central buying agency role for all of government. The CCTA will be transferred to that office on 1st April. Therefore, we are doing everything possible to try to ensure that the Government obtain the best value. The cost of telephone calls from this House is a matter for the authorities of this House rather than for the Government.
Lord Avebury: My Lords, have the Government investigated the use of Internet telephony, which would save the Foreign Office even more money than my noble friend's suggestion?
Lord Falconer of Thoroton: My Lords, as I said, the advice given by CCTA to government departments is that they should investigate innovative solutions to the delivery and charging of those kinds of services.

EU Inter-Governmental Conference
2.44 p.m.
Lord Moynihanasked Her Majesty's Government:
Whether they intend to publish a White Paper in advance of the forthcoming European Union Inter-Governmental Conference.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, yes.
Lord Moynihan: My Lords, I welcome that extremely helpful and succinct reply from the Minister. What important assurance can she give that, at the forthcoming IGC, the Government will agree to give up our second Commissioner only if we are compensated through vote reweighting in the Council of Ministers? Does the Minster accept that, far from emerging from Amsterdam with an agreement that will give Britain greater weight in the Council of Ministers as promised by the Foreign Secretary, the Government's position resulted instead in a situation where we are legally bound to give up our second Commissioner by 2003 in a treaty which only envisages a satisfactory vote reweighting formula?
Baroness Scotland of Asthal: My Lords, we do not accept the noble Lord's suggestion that the Government have failed in that respect. Our position remains as it was at Amsterdam. We believe that it is in the interests of a more efficient Commission that large member states should be prepared to give up their second Commissioner when the EU expands, provided that a satisfactory agreement is achieved on the reweighting of votes in the Council.
Baroness Williams of Crosby: My Lords, on this tenth anniversary of the fall of the Berlin Wall, may I thank the Minister for her detailed and satisfactory reply to the noble Lord's Question? Does she not agree that, if we are to achieve the great project of making

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the European Union correlate to the whole of Europe—eastern and central Europe as well as western Europe—changes in institutions are absolutely necessary? Will she further agree that to follow a policy of what is called "national individual flexibility" would destroy the whole spirit and nature of the European Union? Does she accept that it would be far better to emphasise the importance of subsidiarity and of the significance that national parliaments can play in scrutinising and examining European legislation?
Baroness Scotland of Asthal: My Lords, I certainly agree with the noble Baroness that participation and co-operation is a better way forward. The IGC rightly concentrates on the institutional changes necessary for enlargement, which will be a challenging position. We are going to consider the size and composition of the Commission, the weighting of votes and the possible extension of qualified majority voting. We are looking at the mechanisms which will enable us to deliver well for ourselves and for Europe.
Lord Phillips of Sudbury: My Lords, does the Minister agree that one of the problems vis à vis the European Union and the British public is that very little is known by so-called ordinary citizens about Europe? Will the Government therefore contemplate publishing a summary of the White Paper referred to in the Question in plain English and to make it accessible to ordinary people, thus enabling many more to relate to and understand what is going on in Europe?
Baroness Scotland of Asthal: My Lords, I hear what the noble Lord is saying. Of course, we shall take those matters into consideration. Nevertheless, we hope that when the White Paper is issued it will be written in plain English so that we may all have the benefit of the information contained therein.

Young Offenders: Activity Courses
2.48 p.m.
Baroness Sharpiesasked Her Majesty's Government:
Whether they consider activity courses for young offenders a success.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, recent Home Office evaluation of probation programmes that use demanding physical activities points to a range of positive outcomes. The best practice identified will help probation services to improve their work. However, we shall not know the full position until the results of reconviction studies are available. We do not consider that activity-based programmes should be either seen or used as a soft option. They must be part of a programme tailored specifically for
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individual needs from the Government's programme, which is designed to reduce reconviction and offending rates.
Baroness Sharpies: My Lords, whilst I thank the noble Lord for that reply, does he not agree that very many millions of pounds are spent on the various projects without definite results? Would he perhaps like to follow the example of the Simon Weston Spirit, based mostly in Liverpool, which has been extremely successful in its work to help young offenders to mend their ways?
Lord Bassam of Brighton: My Lords, I am grateful to the noble Baroness for the information that she provides. I am sure that that is an example which the rest of the country will seek to follow. We believe that our programmes are successful. Some three thousand plus people are placed on them annually and the indications are that the reconviction rates are on a parallel with other levels of reconviction rates for other forms of sentencing. Therefore, we believe that on evaluation those programmes have merit. Clearly, we need to keep them under review at all times.
Lord Dholakia: My Lords, will the Minister accept that the reoffending rates among unemployed youngsters are twice as high as among those with jobs? Will he consider the initiative taken by the Ministry of Defence to include ex-offenders in the services? Also will he consider whether a similar initiative can be taken by other government departments; and whether employers can be encouraged to ensure that targets are set in employing ex-offenders?
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord for his comments on the activities of other departments. Clearly, in order to advise further in this area, we must wait to see how the two pilots being conducted in the youth offender institutions are working and, following from that, how effective they have been and what value and merit they have.
Lord Cope of Berkeley: My Lords, the Minister said that the reoffending rates for the activity courses were in parallel with other forms of punishment. However, earlier he seemed to say that we do not know what the reoffending rates are. I became a little confused as to what is the exact position. When will a full evaluation of the courses become available?
Lord Bassam of Brighton: My Lords, reconviction studies thus far show that prison and community sentences are roughly equal in terms of reconviction rates. Our What Works initiative will focus on every aspect of the probation service's work with offenders on those matters which have been proven to reduce reoffending. That programme aims to ensure that all probation practice is based on evidence of success. We are conducting careful research and evaluation as to what works and we believe that that pragmatic and sensible approach will provide us with the best way forward in that area. We are confident that over the

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next 12 months we shall continue to see dramatic progress. Clearly, it is in the interests of us all to ensure that those programmes work; that they are effective; and that we bring down the reconviction rates. That is very important.
Baroness Masham of Ilton: My Lords, I read in the Yorkshire Post today that the Army is to recruit in young offender institutions in Wetherby and Dover. Will the Government consider extending their courses to within the young offender institutions?
Lord Bassam of Brighton: My Lords, I thought I had answered that question when I responded to the noble Lord, Lord Dholakia. I believe that it is something which we must keep carefully under review. It is obviously an important departure and we shall look to see how successful it is in the future.
Baroness Trumpington: My Lords, will the Minister agree that it is important that young people should be prevented from becoming offenders in the first place? Perhaps I may ask him whether the Government support such organisations as DIVERT—I am sorry that my noble friend Lord Elton who is its chairman is not in his place—which seek to provide sporting and other activities to children who may otherwise get into trouble?
Lord Bassam of Brighton: My Lords, I believe that the noble Baroness makes a very important point; that is, that we must ensure that young people do not get into the offending habit. Therefore, it is in the interests of us all to support those projects which carry out that important work.
Baroness Sharples: My Lords, can the noble Lord tell us what is the cost per annum?
Lord Bassam of Brighton: My Lords, costs vary according to how one judges these matters. However, I shall try to give the noble Baroness a range of the unit costs. They vary considerably from £33 per participant who starts the programme. As far as we can identify it, the average cost of a place provided was £379. The average cost per participant who starts is £468. The average cost per completion is £730.
Lord Mackay of Ardbrecknish: My Lords, will the Minister join me in condemning those Labour local authorities which over many years have refused to allow the military to recruit at schools, job fairs and the like? Does that not seem illogical in the light of the Government's decision on offenders?
Lord Bassam of Brighton: My Lords, the question seems somewhat wide of the subject with which we are dealing this afternoon. Clearly, that is a matter to which the Employment Service may wish to turn their attention.
Baroness Blatch: My Lords, will the Minister say whet her there has been any evaluation of the scheme at
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Applecross on the west coast of Scotland, which is a joint venture between his department and the Ministry of Defence?
Lord Bassam of Brighton: My Lords, this is indeed tricky. We shall try to find the answer for the noble Baroness if we can. As far as I am aware, we have been looking closely at the Venture Trust project at Applecross in Scotland. Currently, we have agreed funding until 31st March next year. Obviously, funding beyond that date will be dependent on recent research and the reconviction study which has now been completed.

Powers of Entry to Private Premises
2.57 p.m.
Baroness Blatchasked Her Majesty's Government:
Which statutory instruments giving powers of entry to private premises have come into force since May 1997.
Lord Bassam of Brighton: My Lords, no central record is kept and the research required to verify that information and provide a definitive list would be a disproportionate burden on resources. However, an initial survey has indicated that some 35 statutory instruments giving powers of entry to private premises may have come into force since May 1997. As an indication of the scale of the work involved in researching that area, the noble Baroness may be aware of the major and time-consuming inquiry into powers of entry conducted by Mr David Mitchell, formerly Parliamentary Under-Secretary of State at the Department of Trade and Industry, between 1979 and 1980. It identified some 700 powers and led to new criteria for central scrutiny of proposals then being introduced.
Baroness Blatch: My Lords, does the Minister not agree that that is an astonishing Answer? The Question asks only for the number of statutory instruments since May 1997. The same question was asked of the Library in this House, which furnished the answer within 24 hours. Moreover, do the Government have any plans to take powers of entry for enforcement purposes to remove those people who take residence without permission in private property?
Lord Bassam of Brighton: My Lords, perhaps the noble Baroness will phrase the second part of her point again so that I may be clear about the information she requires.
Baroness Blatch: My Lords, do the Government have any plans to take powers of entry for enforcement purposes to remove people who have taken up residence without permission in domestic private property?
Lord Bassam of Brighton: My Lords, dealing with squatters, as I know from personal experience, is not

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an easy task. However, we believe that the law is entirely adequate in that regard and has been strengthened by successive governments.
Lord Borrie: My Lords, will the Minister agree that with the advent of modern technology, especially computers, much commercial activity is now carried on from private premises and that if powers of investigation are required in order to combat commercial fraud, illegal cartels, insider trading and the like, it is necessary that there should be adequate powers to enter private premises where more and more commercial activity is now carried on?
Lord Bassam of Brighton: My Lords, I am advised that there was a recent decision by the Divisional Court, the implications of which the Government are considering very carefully for the future.
Lord Cope of Berkeley: My Lords, the Minister and his officials have been able to conduct at least some research into the number of powers of entry taken since 1997. Will the Minister therefore undertake to publish in Hansard the list of such powers taken since 1997, both resulting from statutory instruments and primary legislation? It would be helpful to all of us to see the nature of such powers.
Lord Bassam of Brighton: My Lords, I am more than happy to assist the noble Lord as far as I possibly can. I have eight pages of lists of statutes and statutory instruments dating back to 1991. It might assist all of us if those were put into the Library. I undertake to do so at the earliest opportunity.
Lord Glentoran: My Lords, does the Minister not agree that it is a serious matter to introduce legislation which is contrary to, and which limits, the rights of the individual? I refer to future legislation as well as to that recently passed. Statute 2170, for example, gives the right to any person who appears suitable to the Secretary of State to enter, at any time, premises, and so on. Does the Minister also not agree that the fact that the Government do not even think that it is worth keeping note of what they are doing is pretty disgraceful?
Lord Bassam of Brighton: My Lords, I cannot possibly agree with the noble Lord. We do keep a note but not a running total. We have ensured that adequate checking measures are in place to look carefully at the extent of such powers, which are commonplace throughout statutes introduced by governments of both persuasions. I refer, for example, to the Police and Criminal Evidence Act, the Environmental Protection Act and the Food Safety Act of 1990, all of which contained extensive powers of entry. It is not just our Government who put such matters in place, but governments historically. They
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are there for a value and purpose—to ensure that we enforce and uphold statutes and enforce the law properly.
Lord Clinton-Davis: My Lords, is it not remarkable that the Opposition should be suffering from such acute amnesia about the practices of their own government?
Lord Bassam of Brighton: My Lords, I am drawn to the conclusion that from time to time there is amnesia in this House.

Welfare Reform and Pensions Bill
3.1 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the Commons amendments and reasons be now considered.
Moved, That the Commons amendments and reasons be now considered.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS, COMMONS AMENDMENTS TO THE WORDS RESTORED TO THE BILL BY THE COMMONS' DISAGREEMENT TO CERTAIN OTHER LORDS AMENDMENTS AND COMMONS AMENDMENTS IN LIEU OF CERTAIN OTHER LORDS AMENDMENTS AND MOTIONS TO BE MOVED ON CONSIDERATION OF COMMONS REASONS AND AMENDMENTS
[The page and line refer to HL Bill 62 as first printed for the Lords.]

LORDS AMENDMENT
1 Before Clause 1, insert the following new clause—
("PART ZI

ADDITIONAL PENSION

  ADDITIONAL PENSION FOR WIDOWS OR WIDOWERS
  .—(1) The Secretary to State shall by regulations make provision for one or more of the following—

  (a) to substitute, in any provision of the Contributions and Benefits Act which relates to additional pension for widows or widowers, for any sum payable by way of such pension as is derived from the contributions of a deceased spouse, such higher sum as may be prescribed;

  (b) to substitute, in any such provision, for any prescribed reference to the year 2000, a reference to such later year as may be prescribed;

  (c) to establish a scheme to compensate persons who are widowed after 5th April 2000 and who suffered loss as a result of any action or failure to act in reliance on incorrect information received from a Government department with respect to the reduction in the additional pension payable to them as a result of the enactment of the former section 19 of the Social Security Act 1986.

  (2) If regulations under subsection (1) are not in force on 5th April 2000, then until such time as such regulations are in force, the provisions of the Contributions and Benefits Act to which paragraph (a) of that subsection apply shall continue to have effect as in force on that date.
  (3) No regulations shall be made under subsection (1) unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.").
  The Commons disagreed to this amendment but proposed the following amendments in lieu thereof—
  1A Before Clause 48, insert the following new clause—
  ("Additional Pensions

  PRESERVATION OF RIGHTS IN RESPECT OF ADDITIONAL PENSIONS
  .—(1) The Secretary of State may by regulations make such provision as is authorised by one or more of subsections (2) to (4).
  (2) The regulations may provide for any prescribed provision of Part II of the Contributions and Benefits Act (contributory benefits) which relates to additional pension for widows or widowers to have effect, in relation to persons of any prescribed description, with such modifications as may be prescribed for securing—

  (a) that any such additional pension, or

  (b) in the case of any provision of Schedule 5 to that Act (increase of pension where entitlement is deferred), that any constituent element of an increase provided for by that Schedule,

  is increased by such percentage as may be prescribed (which may be 100 per cent.).
  (3) The regulations may amend (or further amend) any prescribed provision of Part II of the Contributions and Benefits Act falling within subsection (2) by substituting for any reference to the year 2000 (or any year previously substituted by virtue of this subsection) a reference to such later year as may be prescribed.
  (4) The regulations may make provision for and in connection with—

  (a) the establishment, for a prescribed period, of a scheme for dealing with claims made by persons on the grounds that, in reliance on any incorrect or incomplete information provided by a government department with respect to the SERPS reduction (however that information came to their knowledge), they

  (i) failed to take any, or any particular, relevant steps which they would have taken, or

  (ii) took any steps which they would not have taken,

  had they instead received correct and complete information with respect to that reduction; and

  (b) securing that, where persons have made successful claims under the scheme, surviving spouses of those persons (or, as the case may be, those persons themselves) will not be affected by the SERPS reduction.

  (5) In subsection (4) "relevant steps", in relation to a person, means steps towards safeguarding the financial position of that person's spouse in the event of the spouse becoming that person's surviving spouse or (as the case may be) towards safeguarding that person's own financial position in the event of that person becoming a surviving spouse (whether or not, in either case, that person was at any material time already married); and "the SERPS reduction" means—

  (a) (in the context of subsection (4)(a)) the operation of any of—

  (i) the provisions of section 19 of the Social Security Act 1986, or

  (ii) the provisions of Part II of the Contributions and Benefits Act reproducing the effect of those provisions.

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  (b) (in the context of subsection (4)(b)) the operation of any of the provisions of the Contributions and Benefits Act mentioned in paragraph (a)(ii) above or of section 39C(4) or 48BB(7) of that Act.

  (6) Regulations under subsection (4) may, in particular, make provision—

  (a) with respect to the time within which, and the manner in which, claims under the scheme are to be made;

  (b) for requiring claimants—

  (i) to supply such information in connection with their claims as may be prescribed or reasonably requested by any person for the purpose of dealing with their claims,

  (ii) to attend interviews at such time and place as may be reasonably specified by any person for that purpose;

  (c) for a claim to be disallowed where the claimant fails to comply with a requirement imposed by virtue of paragraph (a) or (b) above and does not show within the prescribed period that he had good cause for that failure;

  (d) prescribing—

  (i) matters which are or are not to he taken into account in determining whether a person does or does not have good cause for any failure to comply with any such requirement, or

  (ii) circumstances in which a person is or is not to be regarded as having or not having good cause for any such failure;

  (e) prescribing the conditions which must be satisfied in relation to any claim in order for it to be a successful claim under the scheme;

  (f) with respect to—

  (i) the manner in which decisions under the scheme are to be made (which may include authorising decisions of any prescribed description to be made by a computer), and

  (ii) the time within which, and the manner in which, such decisions are to be notified to claimants;

  (g) for provisions of Chapter II of Part I of the Social Security Act 1998 (social security decisions and appeals) to apply in relation to decisions under the scheme with such modifications as may be prescribed;

  (h) for provisions of Part II of the Contributions and Benefits Act to apply in relation to—

  (i) surviving spouses of persons who have made successful claims under the scheme, or

  (ii) persons who have themselves made such claims.

  with such modifications as may be prescribed.
  (7) If no regulations under this section are in force on 6th April 2000, then until such time as any such regulations come into force—

  (a) any provisions of Part II of the Contributions and Benefits Act which (whether alone or together with other provisions) would otherwise result in a reduction of one-half in the amount payable by way of additional pension in cases where a person's spouse dies after 5th April 2000 shall be taken—

  (i) as not applying, or

  (ii) as providing for the full amount to be payable by way of additional pension,

  as the case may require; and

  (b) in Schedule 5 to that Act—

  (i) any provision which is expressed to apply in relation to deaths occurring after that date shall not apply, and

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  (ii) any provision which (with or without any other limitation) is expressed to apply in relation to deaths occurring before 6th April 2000 shall be taken as applying also in relation to deaths occurring on or after that date.

  (8) No regulations shall be made under this section unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.
  (9) In this section "prescribed" means prescribed by regulations under subsection (2), (3) or (4), as the case may be.").
  1B Clause 83, page 86, line 26, after ("sections") insert ("(Preservation of rights in respect of additional pensions),").
  Baroness Hollis of Heigham: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1A and 1B which substitute a new clause in lieu of the clause which your Lordships inserted at Report. The new clause essentially builds on the clause introduced by the noble Lord, Lord Rix. I am sure that the entire House would like to pay tribute to the noble Lord for his amendment.
  As I said at Report when I accepted his proposal, the Government agree that this Bill must make some provision for dealing with the inherited problem of SERPS for widows and widowers. We simply needed to make some further amendments to the clause to ensure: first, a legislative base for the solution on which we finally decide, and secondly to provide protection in the meantime for all those who may be affected.
  The clause provides the power to introduce regulations which allow the Commons to do one or more, that is a "mix or match", of the following: to vary the percentage of inherited SERPS for some or all widows; to postpone the 50 per cent change to a specified later date, or to run a protected rights scheme—the new clause sets out, in effect, the ground rules for such a scheme.
  Noble Lords can rest assured that legislation will be securely in place to enable those problems to be addressed. The regulations will be subject to the affirmative procedure so there will be opportunity to scrutinise and debate them in full.
  I emphasise once more that, whatever happens, no one will see their 100 per cent SERPS entitlement reduced before arrangements are in place to protect those who were misadvised. My right honourable friend the Minister of State said in another place that we will not leave people in a situation where regulations come in overnight; there will be reasonable warning of changes which will be phased in.
  As noble Lords are aware, I had hoped to be able to announce our decision as to our way forward on this matter before the Bill completed its passage through Parliament. However, I cannot yet do that. We are determined to get it right. We still need to do further work on this. We will make a further announcement soon. In the meantime, the clause as amended gives us all the powers the Government and the House might need to introduce a satisfactory solution to the problem based on the amendment tabled by the noble Lord, Lord Rix. I beg to move.
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  Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 1A and 1B in lieu thereof.—(Baroness Hollis of Heigham.)
  Lord Rix: My Lords, I am delighted that the other place has seen fit to approve of the amendment which I moved in your Lordships' House. I am grateful to the Minister for her kind words.
  I express only two regrets. I refer to the fact that the other place chose to turn my half page amendment into two-and-a-half pages, which perhaps shows verbosity. At the same time I am rather sad that I have been removed from star billing at Clause 1 to Clause 48. However, with those two regrets I am happy to accept the amendments from another place.
  I have a final word for the Secretary of State. I would ask that when reviewing the possibilities of compensation and probably taking into account the views of the Ombudsman, he will pay particular attention to the needs of those who paid into SERPS from 1978 to 1986 when it was the law of the land.
  Lord Higgins: My Lords, the House will be grateful to the noble Lord, Lord Rix, for his initiative in promoting the original amendment which, as he rightly points out, has been increased in size and verbosity by the Government.
  Earlier on, the Minister stated that she hoped to let us know the final decision before the matter passed into legislative form at the conclusion of our debates. She has now said that she is unable to do so. We understand; this is a highly complex matter. It is more important to get the matter right than for it to be done in a hurry.
  On the other hand, the original amendment moved by the noble Lord, Lord Rix, and that which we now have before us from the Government, effectively set a deadline on these deliberations. We hope that that deadline is not broken and that the many people who have problems in this area will know, at any rate by next April, what the Government now propose.
  I believe that the Minister, in a slip of the tongue, referred to the "inherited problem of SERPS" rather than "the problem of inherited SERPS". Both are perhaps true. We have inherited a problem due to the action of both Governments. However, there is also the problem of people who, as widows, inherit their SERPS. The Government have now made clear that they go along with the decision of the former Government—which they previously strongly opposed—to make changes in this respect.
  Perhaps I may pick up some of the points made in the debate in another place last week by Mr Rooker. I have great respect for him. he is clearly suffering considerably in dealing with these problems. However, from what he said it seems clear that the Government now accept that there is a legal liability to the extent that people were misled on the matter.

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  In that context, perhaps the Minister can tell us whether she understands that that legal liability, or the ability of people to bring action against the Government, will be wholly superseded by the legislation now proposed by the Government or whether those who feel they should take legal action will still be able to do so, even after the Government's proposals are made.
  Could she also tell us the present state of play as to when she anticipates that the Ombudsman's report is likely to become available? This is not her immediate responsibility but presumably she has some information on the subject. In particular, could she tell us whether we are likely to have such report before the Government make a final decision on the matter or whether their decision may be made in advance of us knowing the view taken by the Ombudsman?
  The clauses now before us give the Government power to make regulations with regard to this problem. In another place, on 3rd November, at col. 367 of Commons Hansard, Mr Rooker set out various options. One was to vary the rate of inherited SERPS for some or all widows—I presume under the new legislation, now widowers also. A second was to postpone indefinitely the change to cut widows' benefits to 50 per cent. As has been pointed out, that would involve an extremely large sum of money—something over £5 billion.
  The third choice—the alternative now being considered— is a "protected rights scheme". The Minister referred to that and the clause is before us in that respect. But I must confess, looking at the amendment as it now stands, that I am not at all clear what form that protected rights scheme might take, and in particular whether there would be problems with regard to the standard of proof which might be required from those claiming such protected rights. In short, this was something that came up last week in the other place and we did not discuss the alternative.
  As your Lordships will eventually need to take a view on whatever the Government come up with, because the matters are to be under the affirmative resolution procedure, it would be helpful, by way of a trailer, if the Minister could tell us what kind of protected rights scheme the Government now envisage. In particular, could the Minister deal with the problem of proof as to whether someone was misled and as a result did not make provision for their widow which they might otherwise have done?
  Finally, I come to the question of who pays. The Minister in the other place seemed to indicate that whatever the costs of putting right this problem, none the less they would be borne by people in the SERPS scheme. One would have thought, as the noble Earl, Lord Russell, has pointed out previously, that as this was a failing by government, the cost would come from the general exchequer rather than from any alteration in the amount of money in the SERF'S scheme at the moment; for example, the surplus in the National Insurance Fund.
  Clearly before this Bill becomes law we will not know what the Government are going to do. But it would be extremely helpful, in anticipation of
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  whatever decision they eventually make, if the noble Baroness could elucidate some of the points I have just made.
  Earl Russell: My Lords, I shall not detain the House more than a moment beyond when I first see the noble Baroness, Lady Strange, in her place.
  I should like, first, to thank the noble Lord, Lord Rix, for his persistence in this subject. I am delighted to see it rewarded. It is a good illustration of Aristotle's maxim that it is important that legislators should be subject to the laws which they themselves make. As a guarantee of good legislation, it is vital.
  Secondly, I pay tribute to my honourable friend Mr. Rendel who was first responsible for spotting this issue and who has also had a great deal to do with putting it on our agenda. In addition, I thank the Minister for providing us with a real model of how business should be conducted. If that model had been followed on other issues, we might not have such a contentious afternoon before us as we probably do.
  This amendment, as it stands, is an old friend of my late noble friend Lady Seear because, "the Secretary of State may do whatever he likes". It is one of the greatest conferments of flexibility in any parliamentary provision that I can remember seeing for a long time. I understand, with the time-scale before us, why the Secretary of State wanted to claim the flexibility. But now he has been given his declaration of indulgence to say he can do whatever he likes, I should like to know what he would like to do. Presumably he will have to take a decision before 5th April next. Other people will need to react to that decision and make whatever provision is necessary to accommodate it.
  The Secretary of State has given himself the options of a higher rate, individual compensation and deferment of the introduction of the provision. The Minister spent a great deal of time in the course of our proceedings dwelling on the difficulties of any scheme of individual compensation. I understand what she said. The problem of proof, especially when dealing with compensation arising out of telephone conversations, is considerable. If that standard of proof were applied strictly, many people may fail to obtain the compensation they deserve. If it were applied loosely, it could be open-ended to the point of some alarm. So the preference of these Benches would still be for deferment. I understand that the Minister is not willing to consider the 10 years for which this party pressed. But if she were willing to go so far as considering five years, that may help the situation considerably. With thanks to all those who have taken part in this, I await the Minister's reply.
  3.15 p.m.
  Baroness Hollis of Heigham: My Lords, I should like to answer the points raised, but I may need to follow this up in correspondence because it is important that the wording of my replies is accurate.
  In response to the query raised by the noble Lord, Lord Higgins, the basis on which legal action could be taken is if someone suffered financial loss having been

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  misled. The noble Earl, Lord Russell, is right when he says that the degree of financial loss suffered would be difficult to establish on an individual basis. The options on the table therefore include the possibility of deferral—whether five or 10 years is still up for discussion; of individual compensation with all the problems that go with it; or protected rights.
  The noble Lord, Lord Higgins, asked what "protected rights" means as to some extent it is a new phrase coming into the agenda. It means that those who demonstrate that they were misadvised and therefore acted to their detriment will have their national insurance record amended to ensure that a surviving spouse will inherit 100 per cent of their SERPS. The difference between that and compensation is that it is not a question of how much actual loss was suffered, but that their position would continue to be the same as though the 1988 changes had not come into effect. That is what is meant by "protected rights".
  However, I repeat that no decision on which system, or any mix or match of these strategies, has yet been taken. Your Lordships will be aware that it is technically complicated in terms of trying to assess the degree of loss that people may have suffered. It is also extremely expensive, running between £5 billion and £10 billion. I was grateful for the recognition of that by the noble Lord, Lord Higgins. It is important to get it right. Clearly, until we have got it right, the situation that exists pre-April 2000 continues. That was the point of the amendment of the noble Lord, Lord Rix.
  The noble Lord, Lord Higgins, also asked who will pay. The cost comes from the National Insurance Fund. Of course, the Government stand behind that fund. I assure the noble Earl, Lord Russell, that no decision has been made on whether deferment will be five or 10 years; whether it will be protected rights, individual compensation or any mix or match. We are trying to establish a scheme which both properly addresses the problems facing those who would otherwise have made different arrangements and who have suffered a financial loss as a result, and being prudent in our role to protect taxpayers' interests. That is what we are seeking to do.
  Finally, like others, I thank the noble Lord, Lord Rix. This point was first picked up in 1995 when my noble friend Lady Gould tabled an amendment to the Pensions Bill of that year. It was flagged up by the Box, but then was quickly forgotten until it was resurrected recently. Given that fact, I hope that your Lordships will be content when I ask the House not to insist on Amendment No. 1, to which the Commons have disagreed, but to agree with the Commons in their Amendments Nos. 1A and 1B in lieu thereof.
  On Question, Motion agreed to.

  LORDS AMENDMENT
  3 Clause 1, page 1, line 21, at end insert ("but there shall be no requirement to take out a stakeholder pension in the form of an annuity by a specified age").
  The Commons disagreed to this amendment for the following reason—
  3A Because it is inconsistent with the condition that a stakeholder pension must have tax exemption or tax approval.
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A.
  Moved, That the House do not insist on its Amendment No. 3 to which the Commons have disagreed for their reason numbered 3A.—(Lord McIntosh of Haringey.)
  Lord Higgins: My Lords, this amendment relates to the question of annuities, which we debated at some length during earlier stages of the Bill. I think that the answer given by the other place to the amendment we put forward; namely, that,
  "it is inconsistent with the condition that a stakeholder pension must have tax exemption or tax approval"
  is most interesting.
  The main point made during earlier debates was that the present rule, whereby those who have to take their pension are required to do so at the latest by the age of 75, is a matter of considerable concern, not least because the average age of the population is getting steadily higher and a number of people find that the rule is to their disadvantage. The debate in another place was rather curtailed because of the guillotine. It was clear throughout the debates that Ministers seemed to be complaining that they could not give specific answers because there was a guillotine when in fact the latter had been imposed by the Government.
  However, having said that, perhaps I may concentrate on the answer which has now been given. It is of course the case that those taking out pensions receive tax relief when they contribute towards the pension, although it is also the case that they are taxed on that pension when they receive it. So, to that extent, the arrangement we have is asymmetrical. The Government have indicated that they are considering the issue. I wonder whether I may press the Minister further as to whether it is likely that they will reach a decision in the near future.
  The main objection put forward by the noble Baroness, Lady Hollis, during the previous debate was that if people were not compelled to take an annuity they might spend the money and become a charge on public funds. I should have thought that that could be overcome if people were only allowed to take the sum, other than by an annuity, to the extent that the annuity which remains ensures that they are above the level of income support. It is also true to say—this is implicit in the Government's reason—that not only must you not become a charge on public funds but also, to some extent, you must take an annuity because if you cannot take it with you, you cannot leave it behind you. The concern increasingly in people's minds is whether the tax relief given is something which ought to bar people from taking a form of pension, other than an annuity, providing they do not become a charge on public funds.

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  I merely wish to ascertain whether the Government's thinking has moved forward since the matter was debated in another place. It seems clear to me that something must be done, at least as far as concerns the 75-year rule.
  Lord McIntosh of Haringey: My Lords, as he said, the noble Lord did debate this matter at some length when it was last before the House. At that time, we said that the Government were in the process of reviewing the drawdown rules. That is indeed the case, and the review includes consideration of the whole issue of mandatory annuity purchase. However, I do not want to raise the noble Lord's hopes too high. We are reviewing these issues on a not quite continuous basis, but on a frequent and regular basis.
  From the fact that a review is taking place, the noble Lord should not draw the conclusion that we have accepted his arguments about annuities. The arguments are very fundamental. Indeed, I can put the main argument in one phrase: pension funds must be used to provide pensions. This is a deal. Pension contributions are made with tax relief. The noble Lord is right to say that the tax relief is on the contributions and not on the ultimate pension. Just before the election, the noble Lord's party suddenly came forward with the quite unexpected suggestion that the tax relief should be on pensions and not on contributions. That had never been debated anywhere and was a totally new proposition, which would have had huge inter-generational benefits and disbenefits that were never debated at any time. Presumably—God forbid!—if the noble Lord's party had won the election, that would have been a manifesto commitment which we might have been stuck with.
  That is not the case here. There is a great deal of continuity in public policy of governments of both complexions. The public policy issue here has not changed. If you have gained tax relief for pension contributions, in the end that must be used for pensions; in other words, to ensure that you do not become a burden on the public purse. There are all sorts of ways in which that can be modified. The drawdown contributions introduced in 1995 were certainly a compromise. However, from the fact that a review is taking place, I do not wish the noble Lord to draw the conclusion that there is any agreement with the arguments that he and other noble Lords put forward when the Bill was previously before the House.
  On Question, Motion agreed to.

  LORDS AMENDMENT
  20 After Clause 18, insert the following new clause—

  WAR PENSIONS FOR WIDOWS: ENTITLEMENT
  (" .—(1) A widow in receipt of a widow's pension under any of the enactments mentioned in subsection (2) (" the DSS pension"), and in receipt of a pension paid under the Armed Forces Pension scheme shall on remarriage or when living together as husband and wife with a member of the opposite sex, only retain the Forces Family Pension (attributable).
  (2) The enactments referred to in subsection (1) are—

  (a) the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983, and any order reenacting the provisions of that order.

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

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

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

  The Commons disagreed to this amendment for the following reason—
  20A Because it involves charges on public funds, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
  Baroness Strange Baroness Strange rose to move, That this House do not insist on their Amendment No. 20 to which the Commons have disagreed for their reason numbered 20A, but do propose Amendment No. 20B in lieu thereof—
  20B After Clause 18, insert the following new clause—

  WAR PENSIONS FOR WIDOWS: ENTITLEMENT
  (" .—(1) Subject to subsection (2), a widow in receipt of a widow's pension under any of the enactments mentioned in subsection (3) ("the DSS pension") and in receipt of a pension paid under the Armed Forces Pension scheme shall on remarriage or when living together as husband and wife with a member of the opposite sex only retain the Forces Family Pension (attributable).
  (2) Subsection (1) does not apply to a widow in receipt of a basic pension under section 44 of the Social Security Contributions and Benefits Act 1992; and a widow in receipt of such a pension who has remarried or is living together as husband and wife with a member of the opposite sex may not retain the Forces Family Pension (attributable).
  (3) The enactments referred to in subsection (1) are—

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

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

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

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

  The noble Baroness said: My Lords, I beg to move that the House do not insist on their Amendment No. 20 to which the Commons have disagreed for their reason numbered 20A, but do propose Amendment No. 20B in lieu thereof.
  Last week your Lordships sent this amendment about the attributable forces' family pension being for life, regardless of future marital status, back to the other place. It was debated there last Monday and I am most grateful to all the honourable Members in the other place who supported it—though, alas, not enough of them did so. The honourable Member for

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  Windsor said that it was a very narrow amendment and that it was "ring-fenced". It is; it deals only with 2,650 ladies, not all of whom are going to remarry at once. However, if passed, it would be to the Government's financial interest to persuade them so to do.
  After much thought, we decided on a new amendment to restrict the provision still further. This excludes specifically any lady in receipt of the state retirement pension. The purpose of Amendment No. 20B is to allow any younger widow the chance of starting a new life, with a new husband and a new father for her children, without financial hardship. If the lady is over 60, the chances are that her children will be able to stand on their own feet.
  There is no legal, procedural or technical reason why acceptance of this amendment should compel the Government to make consequential changes to the occupational schemes of other groups of public pensioners. There is no uniform standard of provision across public service schemes from which acceptance of this amendment would represent an unprecedented departure. There are already significant variations in scheme regulations and funding arrangements; for example, death in service provisions for firemen and police are more generous than those currently available to service widows.
  It is also claimed that, on ground of equity, similar provision would have to be made at significant extra cost for the much larger group of service widows who draw pensions under the main provisions of the Armed Forces occupational pension scheme. Over 80 per cent of those 68,000 service widows will be the widows of pensioners who died in retirement of natural causes. Most are elderly ladies who are not left with young children. This amendment could not possibly include them. This is not a case of "ping-pong"; it is simply a question of honour and of what is right. We believe that this new clause removes any possibility of doubt or of expansion beyond the 2,650 ladies concerned.
  Last week my noble friend Lord Northbourne talked of the importance of fathers and families. he was supported by the noble Earls, Lord Mar and Kellie and Lord Longford; the noble Viscounts, Lord Hood, Lord Brentford and Lord Bridgeman; the noble Baroness, Lady Young; the noble Lords, Lord Warner, Lord Ahmed, Lord Sheppard of Liverpool and Lord Ashbourne; and my noble friends Lord Alton, Lord Rosslyn, and Lord Listowel; the noble Lady, Lady Kinloss, and myself. Although the debate was restricted to two minutes per speaker, we all felt that the importance of a father in a family mattered so much that we had to speak. None of us exceeded our two minutes; some of us even spoke for less.
  I have already spoken of the children of war widows who visited your Lordships' House two weeks ago who are the very children to whom this amendment might mean much: four and five year-olds, Matthew and Dominic Beale, Charles Auckland, who came in a
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  pushchair and told his mother I was a nice lady, and Jennifer Fox who wore a party dress, and how pleased they all were when the Doorkeepers and some of your Lordships spoke to them, turning their faces to father figures, like sunflowers to the sun. I beg to move.
  Moved, That the House do not insist on their Amendment No. 20 to which the Commons have disagreed for their reason numbered 20A, but do propose Amendment No. 20B in lieu thereof. —(Baroness Strange.)
  3.30 p.m.
  Baroness Buscombe: My Lords, we are sympathetic to what the noble Baroness, Lady Strange, has said. This matter has now been debated in the other place where the Opposition indicated that they are supportive of this proposal on the understanding that it is strictly ring-fenced to relate to post-1973 war widows of servicemen who die or who are killed in the line of duty while still serving. That said, we do not think that it is right to return it to them at this stage. It is our hope and expectation that the Under-Secretary of State in the other place, Mr Rooker, will do as he said in debate and,
  "metaphorically hotfoot it from this debate to the MoD to say what has been said here and in the other place, and ensure that that is properly addressed in the review".—[Official Report, Commons, 3/11/99; col. 390.]
  In addition, I feel that it is important to press the Minister for assurance that this review is real, given the reasons stated for the Commons disagreeing to this amendment; namely,
  "Because it involves charges on public funds, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient".
  We are concerned that this reference to the review is inconsistent with the reason stating a concern that there may be a charge on public funds.
  Earl Russell: My Lords, we on these Benches have supported the noble Baroness, Lady Strange, at every stage of proceedings and we continue to do so. We think that the present treatment of war widows rests on a series of assumptions about the position of women which, in this day and age, are totally indefensible. Because I have repeated that argument at every stage of the Bill, I shall not repeat it now. I hope that the House will take it as read.
  I shall instead turn my attention to the reply given at the previous stage when we considered this matter by the noble Baroness, Lady Symons of Vernham Dean, who I am happy to see present. She argued that it was absolutely impossible for the MoD to do what was wanted. If she will forgive my saying so, she reminded me of one of my academic colleagues some 40 years ago. The college said then that it was absolutely impossible for it to pay the staff more often

  1167
  than once every two months. Some of us expressed some surprise at this view and a deputation was sent to look at the accounting system, led by a professor who was a specialist in accountancy. he reported that he had heard that such an accounting system had once existed, but he had never hoped to have the privilege of actually seeing it in operation!
  I wondered whether some such remark as that might possibly apply to the defence of the Ministry of Defence, for in effect its argument was that it did not really deny that what was being done to war widows was an injustice; it said that it could not rectify that injustice for fear it might have to rectify some other injustices too. That is the defence of the Crewe limerick:
  "A man in the restaurant at Crewe
  Once found a mouse in his stew
  Said the waiter, "Don't shout,
  Don't wave it about
  Or the rest will be wanting one too".
  In making this defence, the MoD has impaled itself on a fork: for either its argument is correct—in which case it will have to rectify the other injustices also—or it is not correct, in which case it is of no force. In neither case does it constitute an argument for resisting this amendment.
  The key question here is: is this amendment ring-fenced? The noble Baroness, Lady Strange, has dealt with that point; I shall deal with it a little further. It is, of course, true that the essential injustice of denying a widow the right to remarry or cohabit extends beyond war widows. On the other hand, it is equally true that it has been recognised, I think in every century, that the widows of members of the armed services killed in the line of duty have a quite special claim to consideration.
  The noble Baroness, Lady Symons of Vernham Dean, invoked the fire service, the police and the Civil Service. I know that members of the Civil Service have a thankless job, but it is not normally regarded as part of their responsibility to be killed in the line of duty. Members of the fire service and the police may sometimes end up being killed in the line of duty. I am sure that they have a great claim on our consideration when they do, but it is not of the very object of the exercise that some of them will. You cannot go to war without contemplating casualties in your own forces; not even in the days of sanitised war by Cruise missiles can you do that. If the object is to send people into a situation where you expect some of them to get killed, you must have a special consideration for them. The reason you must do this is essentially that otherwise you do not succeed in recruiting.
  I was interested in an item which appeared in this morning's newspapers. The text I have here is from the Independent although the article also appeared in other papers. The article states that there are,
  "concerns that the British Army is now too small to meet its commitments".
  The result is that it has begun recruiting direct from prisons and young offender institutions. I am told that this has happened before but it is becoming more systematic. The paper reports that,
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  "CritFics claim that the scheme is scraping the bottom of the barrel because the Army cannot find enough recruits through traditional methods".
  The noble Baroness shakes her head. If she wishes to intervene, I shall be happy to take the intervention. I think that if anything remotely resembling this is actually the case, rather than going to such lengths would it not be a great deal simpler and probably cheaper to accept this amendment? It is not the identical amendment which was moved before. When another place pleads privilege—as it did—we must accept that, and the noble Baroness, Lady Strange, accepted it. But those who remember the arguments about Scottish tuition fees will remember that it remains in order to table a somewhat different amendment to see whether another place may take a different attitude.
  I listened to much of the debate in the other place. One could say that, in a sense, this amendment was considered. But it was grouped with a great many others and any consideration it received was properly described as cursory.
  This is not even a case of asking the other place to think again; it had a great deal to think about last Wednesday. I should like the other place to think about this matter. If the noble Baroness, Lady Strange, chooses to press the amendment to a Division, we will support her.
  Lord Campbell of Alloway: My Lords, perhaps I may ask the noble Baroness, Lady Strange, about a very simple point of construction. Can she clarify whether the proposed entitlement in subsections (1) and (2)
  "when living together as husband and wife with a member of the opposite sex"
  —requires amendment to the provisions, schemes and enactments referred to in subsection (3)(a) to (d)?
  Baroness Strange: My Lords, I think it does. If people are discovered to be cohabiting or living together, the pension is taken away from them. Whether they are remarried or cohabiting, in either event they lose the pension.
  The Lord Bishop of Wakefield: My Lords, perhaps I may speak as, I think, the only diocesan Bishop in the Church of England whose father was killed during the last world war. Therefore, my mother, as a war widow, brought up her only child in the kind of difficulties which many Members of your Lordships' House will understand. I am very grateful to the noble Baroness, Lady Strange, for the enormous sympathy and understanding that she has consistently shown to those families which have found themselves in this predicament.
  I welcome also the contribution made by the noble Earl, Lord Russell, in his plea that this House should specially consider the particular situation in which those who have suffered because of things which have been done on behalf of all of us find themselves. They should receive from us all—in this House and as a nation—the utmost consideration.

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  I shall listen very carefully to how the Minister responds to this part of the debate. If, as I think I heard rightly, there may be some way in which consideration is given further to this matter, I hope that I shall find myself able to accept the Government's stance. But if that is not the case, I hope that every consideration will be given to those war widows who, through no fault of their own, often find themselves in a most difficult situation—emotionally and economically—for the simple reason that their husbands have given their lives for their country.
  Baroness Park of Monmouth: My Lords, yet again, I wish to strongly support the amendment. The noble Earl, Lord Russell, said almost all of what I wished to say from the service point of view. However, I should like to make two further points.
  My first point is that the problem the Army and the other services have at the moment is not so much one of recruitment—although that certainly exists—but one of retention. This is one of the issues on which retention will be judged—whether people stay or go.
  My second point is that it is all very well to say, "Let us wait for the review". First, we all know that reviews take a very long time; and, secondly, if the amendment were to meet the approval of the Commons and become law, it would not matter what the review said. If we do not pass this amendment and the review later discusses the question and says, "What a nice thing this would be", there would be no legislation to support it. Ways would be found by the Treasury not to have the legislation. This is a matter of money.
  As we are offering the other place a new amendment—yet more ring-fenced than before—I strongly urge that we should consider the effect on the services. This is an extremely important issue by which they will be judging the Government and the country.
  3.45 p.m.
  Lord Freyberg: My Lords, it is extraordinary that in the same week in which so many of us are wearing poppies to commemorate those who died in the service of their country— and in the same week that the Prime Minister and other Ministers will lay wreathes at the Cenotaph—the Government are refusing to provide current servicemen and those recently deceased with the kind of pension that will offer their widows and families lasting security.
  The Prime Minister has declared that he is keen on promoting the family and keen on modernisation. This is one area where modernising the terms of the pension of a uniquely dangerous profession in line with modern-day occupational pensions would be extremely welcome. As was said, unlike almost any other profession, the military expects those serving to train for and partake in combat and to put their lives at risk on a regular basis.
  Sadly, some young families will inevitably lose their fathers—several have in the last month. Such an eventually should be properly catered for, especially as it affects a very small number. Instead, if a war widow
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  ever considers remarrying or cohabiting, she risks losing all her pension, which is often her only financial security. Any new partner is expected to provide for children who have lost their father purely because of the nature of his profession. In other words, a widow would not be considering remarrying if her husband had not been killed or had died pursuing his work. This is outdated and unacceptable.
  My noble friend Lady Strange has forcefully articulated these arguments. I support her more than ever after reading last week's debate in the other place and the Government's worryingly poor command of the figures thrown up by this amendment. I hope that the Government will think again and not take constant refuge in the delaying tactic of a pledge to look at the matter after a review. The reform of the Armed Forces main occupational pension scheme is a longer-term project which may not address the immediate position of the small, ring-fenced group with which the amendment is concerned. Many young children could be settled into new family units. They should not be asked to wait any longer.
  Lord Craig of Radley: My Lords, I wish to speak in support of the amendment. In doing so, I congratulate the noble Baroness, Lady Strange, on her persistence on this point.
  There are three strands to the Government's rejection of the earlier attempt. Those three strands—cost, precedents and unfairness to widows of others in the public service—may be prayed in aid again, so I should like to spend a moment talking about them.
  It is said that there will be an additional cost to the public purse. The sums involved must be minuscule, particularly if the surrender of the DSS pension on remarriage is taken into account. It has been argued that the net cost cannot be quantified because there is no way of telling how many who do not remarry under the present scheme might marry again if the rules were changed as proposed in the amendment. Are we really to take that as an overriding reason for refusal? Often in similar cases of uncertainty about how people will react, there are sound statistical and actuarial methods for gauging costs. If the Government were willing, surely that would not be a reason for refusal.
  What then must be the reasons? A resort of all governments is to pray in aid the creation of precedents as a reason for refusing. In this case, that strikes me as bizarre. Several very cogent arguments have been made already during the passage of the Bill which make it clear that, if the will were there, the rationale for giving these widows what they deserve could be found.
  Let me offer another suggestion for the Government to think about. The Armed Forces are the only group of people who are excluded from the maximum working hours legislation. Why not make use of that? Let us face it: no uniform standard of provision applies across the public service schemes, in this case or in any other. Even when the much-heralded and too long-awaited MoD review is complete I would bet as a near certainty that it will not prove to conform with all

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  other public sector schemes. There will always be significant differences. I do not believe that any MoD review can change that. For that reason, the argument does not stand that there will be differences if the widows are treated in this way.
  When replying to the previous debate on this matter, the noble Baroness, Lady Symons of Vernham Dean, said:
  "While we have an enormous amount of sympathy for the women whom the noble Baroness, Lady Strange, has drawn to our attention … there are many widows whose husbands have died pursuing their duty and public service in dangerous circumstances who will feel embittered, upset and angry if this amendment is passed".—[Official Report, 27/10/99; col. 312.]
  Surely the noble Baroness, Lady Symons of Vernham Dean, who is so genuinely sympathetic to the war widows, is not suggesting that bitterness and envy among others are reasons for refusing to accept this amendment. I believe that many of those other groups would feel pleasure and gratitude that 'the Government had seen fit to help war widows in this way. I support the amendment.
  Lord Morris of Manchester: My Lords, for reasons that I have explained in previous debates on this important issue, I rise simply to assure the noble Baroness, Lady Strange, that if she takes her amendment to a Division, she will have my support.
  Lord Mackay of Ardbrecknish: My Lords, because I spoke very strongly in favour of the amendment of the noble Baroness, Lady Strange, when we discussed the matter on two previous occasions, I should say why I do not think that I will be able to support her today if she presses her amendment to a Division to send it back to the Commons. First, I could not reasonably justify the further tightening of the screw. The noble Baroness's original amendment was the correct one and that is the one that the Government should have accepted. I understand why the noble Baroness needed to ring-fence her new amendment in such a way that certain war widows would not be able to keep their pension if they remarry. However, it would be wrong to allow the Government off the principal hook, which is that they should address the whole question of the Armed Forces pension scheme and how it treats war widows who remarry.
  When we discussed this matter on the previous occasion, the noble Baroness, Lady Symons of Vernham Dean, mentioned the problem of read-across. If the Government had accepted the amendment of the noble Baroness, all other pension schemes in the public sector would rise up to say, "Me too, please". The noble Earl, Lord Russell, dispensed with that argument in his usual amusing and elegant way. However, I would say that that argument did not seem to hold water for the noble Baroness, Lady Hollis, and the Labour Opposition when they voted in favour of the restoration of war widows' pensions on second widowhood. The question of read-across did not occur to the Opposition on that occasion. I may have prayed it in aid as the government Minister, but it did not seem to matter to them at the time. It is a little rich that the Government think it matters in this case.
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  I shall repeat what I said on the last occasion that we discussed this matter:. I know what a difficult brick wall the MoD is in this regard. Without being rude to the noble Baronesses, I described the matter as one of the lassies trying to do better than the laddies; namely, trying to do better than my noble friend Lord Howe and I had done when we were in office. I wish them well. However, we shall not aid the issue by sending back the amendment before us today. All those noble Lords who heard the noble Baroness, Lady Symons of Vernham Dean, had the distinct impression that she understood and sympathised with the problem. Certainly, poor Mr Rooker—I say that advisedly—found himself in the position of having to eat his own words five minutes after having spoken them. he had been fed the figure of £15 million by the MoD, but he quickly realised that that was not the figure at all. he had to backtrack quite considerably.
  Noble Lords have pressed this matter as much as is possible at this stage. We must hope that Mr Rooker can be held to his closing statement, which I shall quote:
  "The Government have got the message both from this debate and from the one in the other place. I ask right hon. and hon. Members to trust to the review to put the maximum pressure on the MoD … I give my commitment to this as a DSS Minister—that I make urgent representations to my right hon. Friend as a result of what has been said tonight".—[Official Report, Commons, 3/11/99; col. 392.]
  I am prepared to accept that statement, but with a little warning to the Government. They will have noticed that the noble Baroness, Lady Strange, will stay with us in the next Session of Parliament. I am sure all noble Lords will join me in congratulating the noble Baroness on that. If the noble Baroness finds a way to come forward with an amendment on this issue in the next Session—and I am sure that she will be able to do so—and if the Government are still difficult, then I shall urge everyone to vote against them. However, they should now be given the benefit of the doubt.
  Earl Bathurst: My Lords, I support the right reverend Prelate in what he said on this matter. In 1942 I, too, lost my father. It seems a long time ago now. he was a Member of another place. My mother—his widow—took on his seat at Bristol Central and sat in another place for nearly two-and-a-half years representing that constituency. I remember only too well the hard work, trouble and care taken by my mother on behalf of war widows. She was president of the women's section of the Royal British Legion for a long time after hostilities had ceased. I support the noble Baroness, and if she does press her amendment to a Division, I shall certainly be in her camp.
  Baroness Hollis of Heigham: My Lords, last week the other place voted to overturn Amendment No. 20 which would allow forces widows whose husbands' death was attributable to service to keep their occupational pension for life. The noble Baroness, Lady Buscombe, pressed me on what was the meaning of returning the amendment on financial grounds, as opposed to addressing the merits of the argument. I shall draw the noble Baroness's attention to the Companion to the Standing Orders:

  1173
  "If the Commons disagree to a Lords amendment which infringes their financial privileges, the disagreement is made on the ground of privilege alone, and not on the merits of the amendment, even though the Commons may have debated the merits of the amendment".
  That illustrates that this complies with the procedures of the House rather than the substantive issue. I hope that will reassure the noble Baroness.
  This new amendment also seeks to allow these widows to keep their services attributable pension on remarriage, but excludes those in receipt of a Category A state retirement pension—that is, those who have earned a state pension in their own right.
  The Government recognise the sacrifices made by those who die as a result of their service and the need to compensate their dependants adequately, fairly and properly. They greatly value the contributions service wives make in supporting their husbands. That is why the war widows' attributable pension is rightly more generous than the other service widows' pension. The annual attributable pension for widows is 400 per cent higher than normal service widows' pension precisely to reflect that degree of compensation, respect and recognition for the loss of a husband in service.
  I understand that the Government's decision to oppose this amendment may seem unsympathetic. I hope that that is not the case, because paying widows' pensions for life is an issue that does not only affect the attributable pension widows and it does not only affect other service widows; it affects all public service widows. Service widows are not uniquely affected, even though while they remain widowed, they are uniquely—and rightly—compensated.
  The position of widows of servicemen is, I believe, similar to that of many public service widows. Many noble Lords have said that it is possible to ring-fence, or even if that is not possible, then that is neither here nor there. However, noble Lords, particularly those who have been in government, know perfectly well that, for the sake of equity and fairness the Government have to consider the read-across implications of any amendment, however sympathetic noble Lords may be to a particular group.
  I know that I seem to be arguing the thin edge of the wedge; but that indeed is what it is. The Government could not in all equity accept an amendment which ring-fenced those war widows with pensions already 400 per cent more generous than those of other service widows and not extend those rights there. Such an important matter must be considered coherently and in the proper context, which is not, if I may suggest to your Lordships, an amendment to the Welfare Reform and Pensions Bill.
  The MoD has given an assurance that the issue is being given serious consideration as part of its comprehensive review of the Armed Forces pension scheme. In response to the points made by the noble Baroness, Lady Park, my noble friend Lady Symons tells me that the MoD expects the review to be completed and the findings published and ready for consultation next summer. We are not talking about a very long period of time. This is not a delaying or
  1174
  kicking into the long grass tactic, as your Lordships might fear. There is a review; it is expected to be concluded shortly. In that context the MoD will be reviewing all the pensions, including pensions due to illness and to death in service for men and for their widows alike. It is in that context that I ask the noble Baroness not to press her amendment today.
  A further concern, identified by the noble Lord, Lord Mackay of Ardbrecknish, is that the amendment would restrict the application of the right to retain a pension on remarriage to those who had acquired a Category A state pension. That means that those who had saved and invested in their own pension would be penalised while those who had not and were dependent on their husband's pension would be protected. That would be a further very unfortunate and unfair anomaly which I am sure your Lordships would not wish to pursue.
  We are not talking about cost. We are talking about timing, context, ring-fencing and fairness. The review expects to report next summer, but in fairness to all service widows the matter needs to be considered in its full context. An amendment to a DSS welfare reform Bill is not the right vehicle. I hope that the noble Baroness, Lady Strange, will accept that the Government and the MoD especially—my noble friend Lady Symons of Vernham Dean has been present for the debate and spoke to these matters at Third Reading—have very much taken on board the concerns expressed by your Lordships. The views of this House have been heard and the issue has been well aired and will be addressed in the review, which will proceed fairly shortly and will then be out for public consultation. It is proper to consider the matter in its full context and it is equitable to do so because of the very real issues of ring-fencing and the extra anomalies that would be introduced by the amendment, which is defective.
  The noble Baroness, Lady Strange, has fought a good fight. I am confident that in her hands this issue will not go away. But when it comes back—if it comes back—let it come back in a proper context, properly reviewed and assessed and properly subjected to consultation. In the light of that, your Lordships can make a considered judgment. I hope that the noble Baroness will not now press her amendment.
  Baroness Strange: My Lords, I thank all noble Lords who have spoken in support of my amendment, particularly my noble friends Lord Freyberg, Lady Park of Monmouth and Lord Morris, my noble and gallant friend Lord Craig of Radley, and my noble kinsman Lord Russell. I should like to say this to the noble Lord, Lord Mackay. I am sorry that I am threatening him, but perhaps with any luck this may go away. I thank the right reverend Prelate for his kind and moving words and I thank other noble Lords who have spoken. I thank my noble friend Lady Hollis for the time she has spent on this issue—it was not of my choosing—and for the kind and lovely way in which she replied. I know that her personal feelings are the same as mine and the same as many of your Lordships. We are not being intransigent, difficult, or any of those

  1175
  things. We are simply putting down a marker for the future. We modified the amendment in a way which I hoped would be helpful to the Government. This is a money-saving amendment, not a money-spending one.
  If something is right, fair and true, in the long run that is what matters. I should like to ask the House to agree to Amendment No. 20B in lieu.
  4.5 p.m.
  On Question, That the House do not insist on their Amendment No. 20 to which the Commons have disagreed for their reason numbered 20A but do propose Amendment No. 20B in lieu thereof?
  Their Lordships divided: Contents, 153; Not-Contents, 140.

  Division No. 1

  CONTENTS

  Ackner, L.

  Forsyth of Drumlean, L.

  Addington, L.

  Freyberg, L.

  Ailsa, M.

  Gainford, L.

  Alderdice, L.

  Gardner of Parkes, B.

  Alexander of Tunis, E.

  Glanusk, L.

  Alton of Liverpool, L.

  Glasgow, E.

  Archer of Weston-Super-Mare,

  Goodhart, L

  L.

  Gormanston, V.

  Ashbourne, L.

  Greenway, L.

  Ashley of Stoke, L.

  Grey, E.

  Avebury, L.

  Hampton, L.

  Banbury of Southam, L.

  Hamwee, B.

  Barker, B.

  Hardinge of Penshurst, L.

  Bathurst, E.

  Harris of Greenwich, L.

  Beaumont of Whitley, L.

  Harris of Richmond, B.

  Belhaven and Stenton, L.

  Hogg, B.

  Bethell, L.

  Hutchinson of Lullington, L.

  Blyth, L.

  Hylton-Foster, B.

  Bradshaw, L.

  Ilchester, E.

  Bramall, L.

  Inge, L.

  Bridges, L.

  Ironside, L.

  Bruntisfield, L.

  Jacobs, L.

  Buccleuch and Queensberry, D.

  Jeger, B.

  Buckinghamshire, E.

  Jopling, L.

  Cadman, L.

  Kemsley, V.

  Calverley, L.

  Kilbracken, L.

  Carlile of Berriew, L.

  Kinloss, Ly.

  Carlisle, E.

  Kintore, E.

  Chalfont, L.

  Lauderdale, E

  Clancarty, E.

  Lester of Herne Hill, L.

  Clement-Jones, L.

  Lindsey and Abingdon, E.

  Cochrane of Cults, L.

  Linklater of Butterstone, B.

  Coleridge, L.

  Liverpool, E.

  Craig of Radley, L.

  Lloyd-Webber, L.

  Crickhowell, L.

  Long, V.

  Crook, L.

  McNair, L.

  Cross, V.

  McNally, L.

  Cuckney, L.

  Maddock, B.

  Davidson, V.

  Manton, L.

  Dholakia, L.

  Mar and Kellie, E.

  Drogheda, E.

  Masham of Ilton, B.

  Dundee, E.

  Merrivale, L.

  Eden of Winton, L.

  Mersey, V.

  Effingham, E.

  Miller of Chilthorne Domer, B.

  Elibank, L.

  Molyneaux of Killead, L.

  Elles, B.

  Monro of Langholm, L.

  Exmouth, V.

  Monson, L.

  Ezra, L.

  Morris, L.

  Falkland, V.

  Morris of Manchester, L.

  Fookes, B.

  Moyne, L.

  1176

  Newall, L.

  Sharman, L.

  Newby, L.

  Sharp of Guildford, B.

  Nicholson of Winterbourne, B.

  Sharples, B.

  Nunburnholme, L.

  Shaughnessy, L.

  O'Cathain, B.

  Simon of Glaisdale. L.

  Ogmore, L.

  Slim, V.

  Oppenheim-Barnes, B.

  Smith of Clifton, L.

  Palmer, L.

  Steel of Aikwood, L.

  Park of Monmouth, B.

  Stewartby, L.

  Pender, L.

  Strange, B. [Teller]

  Plumb, L.

  Suffolk and Berkshire, E

  Prior, L.

  Swansea, L.

  Rathcavan, L.

  Taverne, L.

  Razzall, L.

  Temple of Stowe, E.

  Redesdale, L.

  Thomas of Walliswood, B.

  Rennard, L

  Thurso, V.

  Rochester, L.

  Tordoff, L.

  Rodgers of Quarry Bank, L.

  Trenchard, V.

  Rowallan, L.

  Turner of Camden, B.

  Russell, E. [Teller]

  Waddington, L.

  Ryder of Warsaw, B.

  Weatherill, L.

  Saltoun of Abernethy, Ly.

  Wedgwood, L.

  Sandberg, L.

  Westbury, L.

  Sandford, L.

  Wigoder, L.

  Sandwich, E.

  Williams of Crosby, B.

  Sandys, L.

  Wise, L.

  Shannon, E.

  Wynford, L.

  NOT-CONTENTS

  Acton, L.

  Gale, B.

  Alli, L.

  Gavron, L.

  Amos, B.

  Goldsmith, L.

  Ampthill, L.

  Goudie, B.

  Annan, L.

  Gould of Potternewton, B.

  Archer of Sandwell, L.

  Grabiner, L.

  Ashton of Upholland, B.

  Graham of Edmonton. L.

  Bach, L.

  Gregson, L.

  Barnett, L.

  Grenfell, L.

  Bassam of Brighton, L.

  Hanworth, V.

  Berkeley, L.

  Hardy of Wath, L.

  Blackstone, B.

  Harris of Haringey, L.

  Blease, L.

  Harrison, L.

  Borrie, L.

  Haskel, L.

  Bragg, L.

  Hayman, B.

  Brett, L.

  Hilton of Eggardon, B.

  Brooke of Alverthorpe, L.

  Hogg of Cumbernauld, L.

  Brookman, L.

  Hollis of Heigham, B.

  Brooks of Tremorfa, L.

  Howells of St Davids, B.

  Burlison, L.

  Howie of Troon, L.

  Carmichael of Kelvingrove, L.

  Hughes of Woodside, L.

  Carter, L.[Teller]

  Hunt of Kings Heath, L.

  Chandos, V.

  Irvine of Lairg, L. (Lord Chancellor)

  Charteris of Amisfield, L.

  Clarke of Hampstead, L.

  Islwyn, L.

  Cledwyn of Penrhos, L.

  Jay of Paddington, B. (Lord Privy Seal)

  Clinton-Davis, L.

  Cocks of Hartcliffe, L.

  Jenkins of Putney, L.

  Crawley, B.

  Kennedy of The Shaws, B.

  Currie of Marylebone, L.

  King of West Bromwich, L.

  Darcy de Knayth, B.

  Kirkhill, L.

  David, B.

  Lane, L.

  Davies of Coity, L.

  Lea of Crondall, L.

  Davies of Oldham, L.

  Lincoln, Bp.

  Dean of Thornton-le-Fylde, B.

  Lipsey, L.

  Desai, L.

  Lockwood, B.

  Diamond, L.

  Lofthouse of Pontefract, L.

  Donoughue, L.

  Lovell-Davis, L.

  Dormand of Easington, L.

  McCarthy, L.

  Dubs, L.

  Macdonald of Tradeston, L.

  Elder, L.

  McIntosh of Haringey, L.

  Evans of Parkside, L.

  [Teller]

  Evans of Watford, L.

  Mackenzie of Framwellgate, L.

  Falconer of Thoroton, L.

  Mallalieu, B.

  Farrington of Ribbleton, B.

  Mason of Barnsley, L.

  Faulkner of Worcester, L.

  Massey of Darwen, B.

  1177

  Merlyn-Rees, L.

  Shepherd, L.

  Milner of Leeds, L.

  Shore of Stepney, L.

  Mishcon, L.

  Simon, V.

  Molloy, L.

  Smith of Gilmorehill, B.

  Monkswell, L.

  Stone of Blackheath, L.

  Murray of Epping Forest, L.

  Strabolgi, L.

  Nicol, B.

  Strafford, E.

  Orme, L.

  Symons of Vernham Dean, B.

  Peston, L.

  Taylor of Blackburn, L.

  Pitkeathley, B.

  Taylor of Gryfe, L.

  Plant of Highfield, L.

  Thornton, B.

  Ponsonby of Shulbrede, L.

  Thurlow, L.

  Uddin, B.

  Prys-Davies, L.

  Varley, L.

  Puttnam, L.

  Wakefield, Bp.

  Ramsay of Cartvale, B.

  Walker of Doncaster, L.

  Rea, L.

  Warner, L.

  Rees-Mogg, L.

  Warwick of Undercliffe, B.

  Rendell of Babergh, B.

  Wedderburn of Charlton, L.

  Richard, L.

  Whitaker, B.

  Roll of Ipsden, L.

  Whitty, L.

  Sainsbury of Turville, L.

  Williams of Elvel, L.

  St. John of Fawsley, L.

  Williams of Mostyn, L.

  Sawyer, L.

  Woolmer of Leeds, L.

  Scotland of Asthal, B.

  Young of Dartington, L.

  Serota, B.

  Young of Old Scone, B.

  Resolved in the affirmative, and Motion agreed to accordingly.

  LORDS AMENDMENT
  33 Clause 50, page 56, line 23, leave out ("26 weeks") and insert ("two years").
  The Commons disagreed to this Amendment but propose the following Amendment in lieu thereof—
  33A Page 56, line 23, leave out ("26") and insert ("52").
  4.16 p.m.
  Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 33 to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 33A in lieu thereof.
  Moved, That the House do not insist on their Amendment No. 33 to which the Commons have disagreed, but do agree with the Commons in their Amendment No. 33A in lieu thereof. —(Baroness Hollis of Heigham).
  Lord Astor of Hever: My Lords, we on these Benches shall not seek to overturn the Commons proposal disagreeing to our amendment to extend the allowances for bereaved spouses to two years. However, we feel very strongly that the Government have shown their true colours in regard to this important issue by preventing any debate in the other place. That indicates calculated contempt both for Parliament and for vulnerable bereaved spouses. Ministers should be utterly ashamed of themselves. It is hardly surprising that so many Labour MPs voted against the Government despite all the usual bullying.
  Baroness Turner of Camden: My Lords, I deeply regret that the other place has seen fit to disagree with the amendment passed by this House after a great deal of discussion to allow a bereavement allowance for
  1178
  two years rather than the six months originally proposed in the Bill, and have proposed one year, which was defeated in favour of the two-year option.
  During the passage of the Bill in this House, I moved amendments, which I did not press to a Division, calling for widows benefits for women over 45 to remain as of now, equalising for widowers on the same basis; namely, the national insurance contributions of the deceased spouse. I still believe that that was the right course. However, I supported the two-year amendment rather than the one-year option as being the more generous alternative.
  I have repeatedly said, and say again for the record, that it is wrong to remove by stealth the right to contributory benefits. The Government have no electoral mandate for that. There has been no public discussion of the merits of social insurance as compared with the welfare system based on means-testing. Much of the Bill is based on the removal of the right to a benefit for which contributions have been made in favour of a system of welfare benefits dependent on means-testing.
  The Government appear to be shifting from a system of social insurance, whereby people qualified for benefit for which they had paid, in favour of a welfare system whereby people do not get what they have paid for unless they can demonstrate real need. We are not talking here about the well to do, for whom the amounts involved are not even small change; we are talking about ordinary working people who, over the years, have prudently set aside money—perhaps through an occupational pension, to which they have contributed to provide a modest income when they can no longer work. Such plans have always taken account of the fact that there will be some state provision for which people have also paid.
  That is true for widows. Even if they have rights under occupational pension schemes to which the deceased spouse contributed, they are unlikely to qualify for more than half the pension that the husband earned up to the date of death—which anyway is unlikely to be a full pension at that date. The overwhelming majority of such people are not rich.
  The removal of the right to a pension has occurred with little publicity. Only recently have sections of the media woken up to the fact that it is happening at all. It is happening against the assumption that things have changed for most women more than actually they have. Despite what was said by my noble friend the Minister, 5 million women do not work outside the home. The nearly 6 million women who do so work part time. The national minimum wage—which I applaud—overwhelmingly benefits women. That shows, if we need to be shown, that women are still not the main wage-earners in the majority of households.
  If we turn away from social insurance as a way of providing for people, the only alternative is to encourage them to provide for themselves through private insurance. Many people will not do so. There are other pressures on disposable income during the middle years of life. So the future could be grim for pensioners in the next century.

  1179
  The Government seem anxious not to increase income tax at least. I understand that, but if people are forced to provide for their future or for possible future dependants through the private insurance industry, they will not find themselves better off.
  I return to my original theme. The widow's benefit for women age 45 and above was based on the contributory principle. The Government's proposal to remove entitlement to it altogether will save large amounts of money—roughly £500 million a year. That does not take into account the money that will be saved by ending the personal allowance concession for widows in their first two years of widowhood. The Government, like those preceding them, have little to learn about clawback when it comes to taxation. I do not personally object, provided the poor and vulnerable are not denied benefits for which they have paid. I believe that is happening under parts of the Bill.
  I repeat that I deeply regret that the Government and the other place have not found it possible to accept the modest two-year amendment that was overwhelmingly proposed in this House.
  Earl Russell: My Lords, with this amendment, the Minister has shown the real advantages of timely concession. We would have preferred two years to one year, but we prefer also one year in the hand to two years in the bush.
  At this stage of the Session, only issues of the very highest priority justify dividing the House—and only on those issues will we take part in doing so. We therefore accept the one year that is in the hand, with thanks to the Minister for her efforts in improving on the original six months.
  The Minister knows that we think she is not so much wrong in what she is doing as substantially premature. She and her colleagues would expect us to press her even harder than we would have done before on legislation against age discrimination in employment and on the need to make rapid progress towards equal pay. With those provisos, I leave the position as it stands and thank the Minister for a mercy that, although small, is very real.
  Baroness Hollis of Heigham: My Lords, the speech of the noble Lord, Lord Astor, was essentially to complain about the role of the guillotine in the other place. That is a little rich coming from an Opposition who, when in government, regularly used the guillotine when that suited their purpose. This was, after all, a guillotine Motion that the Opposition in the other place did not choose to oppose and did not put to the vote. I sat through the entire proceedings in the Gallery and that Motion seemed to have the consent of the other place, so the noble Lord's comments were misplaced.
  As to the amount of time spent on this issue compared with others, that is a matter of the priorities of the House. If Members of the other place chose to speak longer on one item than on another, and chose not to speak fully on this matter, that presumably reflected the importance they attributed to the
  1180
  amendments. I repeat, the guillotine Motion was not opposed. A cluster of invalidity benefit amendments were discussed by 7 o'clock. Between 7 o'clock and 10 o'clock, this matter and other widow-related issues were debated by consent through the usual channels. The comments of the noble Lord are misplaced to that extent.
  Lord Higgins: My Lords, given the size of the Government's majority in the other place, clearly they would get a guillotine Motion through—come what may. The view was taken, I think rightly, that rather than debate the issue in question, it was right to concentrate on the substance of the issue. That is what happened. None the less, throughout the debates in another place, Ministers complained that they could not give a proper answer because of their guillotine.
  Baroness Hollis of Heigham: My Lord, if the noble Lord is saying that Opposition Members did not vote against the guillotine Motion in the other place thinking that they would be defeated and would be wasting their time. I point out that that did not stop them voting on other issues that day and on other days. It was entirely up to the Opposition whether or not to challenge the guillotine Motion. They did not do so.
  I turn to the substance of the points made by my noble friend Lady Turner. Originally, we proposed a six-month period for bereavement allowance. Instead of returning to the 26 weeks in the Bill, the amendments moved in the other place by my right honourable friend the Secretary of State provided for a more generous 52 weeks—which was the length of time proposed to this House by my noble Lady Crawley, to whom we must all be indebted.
  We have held lengthy debates on the proposals. The Government believe that it is no longer possible to justify paying a widow's benefit for life regardless of circumstances—regardless of whether the widow has a generous occupation, has any dependants or has a well-paid job of her own.
  We propose instead that the new bereavement allowance should offer financial support for a limited period following bereavement, recognising that people need that breathing space. Our first proposal was six months. I thank the noble Earl, Lord Russell, for his remarks to that effect. The Government did listen and move, and they came forward with the proposal for 12 months. When that was put to the vote in this House, it had wide support.
  On Report, the amendment of my noble friend Lady Crawley was supported not only by my noble friends but also by right reverend Prelates, Liberal Democrats, most life Cross-Benchers, and even some noble Lords on the Benches opposite. The only opposition in your Lordship's House to the one-year amendment came from Members on the Tory Front Bench and on the Tory Back Benches. Now the other place has endorsed that proposal.

  1181
  Our reforms concentrate help available from the state where and when it is most needed—on immediate needs and on children and families, while ensuring that existing widows will not lose.
  Baroness Turner of Camden: My Lords, before my noble friend sits down, does she not recollect that a number of us on this side of the Chamber voted for the two-year option—including myself? That proposal was not supported only by Opposition Members.
  Noble Lords: Hear, hear.
  On Question, Motion agreed to.
  4.30 p.m.

  LORDS AMENDMENT
  34 Clause 50, page 56, line 32, leave out ("26 weeks") and insert ("two years").
  The Commons disagreed to this amendment but proposed the following amendment in lieu thereof—
  34A Page 56, line 32, leave out ("26") and insert ("52").
  Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 34 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 34A in lieu thereof.
  Moved, That the House do not insist on their Amendment No. 34 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 34A in lieu thereof.—(Baroness Hollis of Heigham.)
  On Question, Motion agreed to.

  LORDS AMENDMENT
  42 Clause 57, leave out Clause 57.
  The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill—
  42A Page 66, line 4, leave out ("two") and insert ("three").
  42B Page 66, line 23, leave out ("For this purpose") and insert—
  ("(9) In sub-paragraph (8)—

  "benefit" includes (in addition to any benefit under Parts II to V of this Act)—

  (a) any benefit under Parts VII to XII of this Act, and

  (b) credits under regulations under section 22(5) above;").

  Lord Ashley of Stoke Lord Ashley of Stoke rose to move, That this House do not insist on their Amendment No. 42 to which the Commons have disagreed, do agree with the Commons in their Amendment No. 42B to the words so restored to the Bill, butdo disagree with the Commons in their Amendment No. 42A to the words so restored to the Bill and do propose Amendment No. 42D in lieu thereof to the words so restored to the Bill—
  42D Clause 57, page 66, line 4, leave out ("two") and insert ("seven").
  The noble Lord said: My Lords, in moving the Motion, I shall speak also to my Motion No. 43D. I
  1182
  shall seek to explain that in a moment. Under the Government's proposals in the Bill no fewer than 310,000 future disabled people will lose their disability and incapacity benefits either in whole or in part. That cannot be justified under any circumstances. The purpose of this debate is to protect disabled people from these unfair impositions, especially as most of them are very severely disabled and poor. Today I do not propose the deletion of the offending clauses dealing with incapacity benefit as I did at Report stage. I do not seek to wreck the Bill. My wish is to reach an honourable compromise with the Government. It is that compromise, and that alone, that we are debating and voting upon today.
  The Government have a long list of achievements in relation to disabled people. Those achievements are impressive and the Government deserve congratulations. But they are absolutely irrelevant to this debate. It is no comfort to a disabled person who is denied his benefit, or sees it slashed, to be told about government generosity in helping some other disabled people. As always, it is the individual who counts. Many new invaluable measures have been initiated by Alistair Darling who is an outstanding Minister and one of the great successes of this Government. But I have no doubt that with these clauses dealing with incapacity benefit he has made a major political miscalculation. I understand that. We all make mistakes. However, the consequences of this miscalculation will damage hundreds of thousands of disabled people in future. Despite all the talk about constitutional propriety and the rights of each House of Parliament—some of it loose talk—I believe that it is our right and duty to try to persuade the Government to be more reasonable.
  My compromise proposals are modest but important. They seek to change from three to seven the number of preceding years during which claimants need to have paid the appropriate amount of national insurance contributions to qualify for incapacity benefit. They seek to change the disregard from £85 to £128, which is the level of the disability income guarantee, and to change the taper from 50p to 23p—the same as the standard rate of income tax. My proposals would reduce the number of disabled people affected by the Government's original proposal by two-thirds and halve their original intended savings. The proposals do not neuter the effect of the clause, as claimed by the Secretary of State. I believe that to halve the savings which the Government intended to make at the expense of disabled people is a reasonable compromise. The Government would still be able to recoup money from the better off but the poor would be protected.
  The question of the starting point of income for the purposes of means-testing—the disregard—is very important. The Government claim that they have made big concessions by changing the disregard from £50 to £85. I am glad that they have backed away from their original figure of £50, but it is incredible that they suggested it. It would have meant reducing incapacity benefit to someone with an income of as little as £6,123 per annum, which is way below the official poverty

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  line. Although Ministers are fond of quoting the figure at which all incapacity benefit is deducted, the crucial matter for most recipients is where means testing begins. That is the matter on which we should focus.
  The concession by the Government to change the disregard to £85 is inadequate. It means that a disabled person will start to lose his incapacity benefit when his total weekly income is an £85 pension, plus £67 incapacity benefit, giving an annual income of £7,943. That level of income—approximately £8,000 a year—is below the official poverty figure. That is the Government's latest concession for someone who is below the official poverty level. Some people say that as the Government have now made a concession we should be satisfied. These minor concessions are hopelessly inadequate. Any government who penalise people with an income of £8,000 deserve the opposition that they get.
  Not only do the Government begin to hit those at a low income level; they hit hard with an incredible deduction rate of 50 per cent. Incapacity benefit is already taxed at 23 per cent. If one combines that with the additional 50 per cent deduction it means that severely disabled people suffer a marginal tax rate of 73 per cent, while the top rate for a millionaire is 40 per cent. That does not make sense. The Government's provisions turn logic on its head. The position should be the reverse. Millionaires should be taxed at the 73 per cent rate and those on incapacity benefit at 40 per cent. That is the situation with which we are faced.
  My proposal for a disregard of £128 means that incapacity benefit is reduced when income starts at £10,179 a year. That income is also low, but it is much more reasonable than the Government's figure and there is greater justification for it. The Government's figure of £85 is not index-linked and therefore would be eroded by inflation. My figure is linked to the disability income guarantee and would automatically rise with inflation.
  In the House of Commons the Secretary of State promised an annual review of the figure but made no effort to put that commitment into the Bill. I know that he cannot bind future governments. However, he could make it more difficult for them to backtrack. he has failed to do so. I am pleased with the other concessions: the exemption of those with the severest disabilities—the 20,000 people who get the higher rate care component of the disability living allowance—and the estimated 22,000 people who will get the disabled person's tax credit. But although the concessions are welcome, those people are a tiny proportion of the 310,000 I mentioned earlier. So I suggest that too much should not be made of the concessions for this very small number of the most severely disabled people.
  Regrettably, the Government are trailing red herrings to justify their proposals penalising disabled people. As recently as last Wednesday the Prime Minister complained:
  "Since 1979, the number of people claiming incapacity benefit has trebled".
  He also said:
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  "As a result of our reforms, we will bring the system of incapacity benefit under control".—[Official Report, Commons, 3/11/99; co1.289]
  Let us face those statements head on. I accept, as Ministers allege, that the Tory government encouraged many unemployed people to go off the unemployment register and on to invalidity benefit, as it was then called, before incapacity benefit, via friendly general practitioners who were sympathetic to the people who were disabled. So the figure shot up. I think that that is right; that is probably what happened. But the Tory government turned off the incapacity benefit tap in 1995 and the system changed dramatically.
  Since then friendly general practitioners have had no role. Incapacity benefit claimants now have to be certified by two strict Benefits Agency doctors. Some disabled people complain that the tests are too stringent; even paraplegics, double amputees and blind people cannot qualify. That is a measure of how appallingly disabled those recipients are. They are the people we are discussing today.
  In 1995, the Tory government also tightened the eligibility test and eliminated the earnings related supplement of £15 week. That was very tough action by the Tory government of that day. But today departmental statistics show clearly that the cost of incapacity benefit is falling. So much for the stories that it is rising out of control. It is not falling just by a small amount. The forecast decline is for as much as £750 million over the lifetime of this Parliament. So contrary to what the Prime Minister said, the system does not need to be brought under control. It is already under control mainly because of the Conservative 1995 Act.
  Claims that the numbers of people and the costs of incapacity benefit would escalate without this Bill are therefore groundless. They form no excuse for the Government's proposals. I believe that penalising future disabled people for the alleged sins of the past is hardly a blueprint for welfare justice.
  However, there are more examples of creating misleading impressions. By the careful use of selective figures, the Government seek to give the impression that vast numbers of incapacity benefit claimants have occupational pensions and are well off. They impel me to visualise thousands of them driving in their Rolls-Royces to pick up their incapacity benefit. But the Government's claim that nearly half of incapacity benefit claimants are in the top 40 per cent of income distribution makes it sound as though they are well off. It is one of the arguments used constantly by Ministers. But a household with average income is also in the top 40 per cent; so the Government's claim is meaningless.
  The significant fact is that very few of the people on incapacity benefit are wealthy. Of those with occupational pensions, over 90 per cent have occupational pensions of less than £5,000, or £100 a week. And even with the addition of incapacity benefit of £3,000 a year, the vast majority hover around the poverty level. Those are the undisputed facts.

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  The Government are also trying to create an impression that these cuts to the benefits of poor people are essential for modernising the welfare state. Only the naive and the credulous could believe that. Regrettably, the Government's proposal for modernising incapacity benefit in the future is to go back to Michael Portillo's proposal of means testing incapacity benefit—a proposal rejected by his fellow Right-winger, Peter Lilley, as being too difficult for disabled people to stomach. These again are the facts. In looking to the future and in modernising, the Government are harking back to a past which was rejected on reasonable grounds.
  It would be highly significant for the future of the welfare state if a means test, such as that to be applied to incapacity benefit, were to be extended to the retirement pension. Is it or is it not to be so extended? Ministers have made announcements. We are now informed officially that there will be no means test for retired pensioners. That is an important and welcome statement by Ministers. But in the light of that statement, perhaps Ministers can explain to the House why those people leaving the workforce because severe disability makes them incapable of work are to be treated so differently and so much more badly than those leaving because of age. What is the difference? Why should those who are leaving because of disability be treated so much more badly than those leaving because of age? I can see no difference. I am open to correction but to me it is a clear case of discrimination against disabled people. Perhaps Ministers can enlighten the House.
  The other assurance that would be welcome is a commitment that the Government have no intention of getting rid of incapacity benefit altogether. Ministers say they want to relate incapacity benefit to recent work. So they intend to deny incapacity benefit, except for a tiny category, to all those who have had the misfortune to be unemployed for three years before claiming. They will not receive a single penny of incapacity benefit if they have been so unemployed. But there are various depressed areas in Britain where it has been virtually impossible to obtain a job for many years. I have spoken recently to MPs from Wales and elsewhere. They say that it is impossible to obtain any kind of job in their areas. It is the fate of many depressed areas in Britain. So why should disabled people who live in those areas be denied the benefit given to others in prosperous areas? It is what the noble Earl, Lord Russell, called the geographical lottery—except that in this lottery there are no winners, only losers. There is no "right" figure to provide. We can only make our best judgements. However, I believe that seven years is a more reasonable figure because in some areas people can easily be seeking work for that period.
  To deny disabled people their incapacity benefit on those dubious grounds is bad enough. But the real injustice becomes clear when we consider that, in many cases, those claimants have paid their national insurance contributions for some 10, 20 or 30 years. They have paid in good faith and naturally they expect
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  the benefits, but the Government shift the goalposts and now say that if you do not meet these conditions, you will not receive benefits. How can that be justified? That is a reasonable question and I do not believe there is quite such a reasonable answer.
  I have no doubt that the Government have lost the moral argument and are now trying to turn the debate into one on the constitution. Some Members of this House who opposed my proposals complain that the House of Commons has already voted on them and that I put the whole Bill at risk. They should know that that is nonsense. The fact is that the other place voted only on my amendments to delete the damaging clauses and has not voted on the compromise proposals which we are debating today. The House of Commons will only be able to vote on the compromise proposals if this Motion is carried today. If we do not vote for these today, we deprive the House of Commons of the opportunity to vote on these proposals.
  As for the allegation that I put the whole Bill at risk, there are precedents for this House returning Bills to the other place and for doing so time and time again. There is no question of the Bill being lost, at least not today, and it is right that the other place should be made fully aware of the cross-party views of this House.
  The Government are saying that it is time for this Bill, including these deplorable proposals, to be put on the statute book. I suggest to the contrary. It is time for this House to assert its view; to challenge this unjustified attack on disabled people; to declare that the Government's comment, "No compromise —full stop" is a betrayal of the dialogue of democracy, and to urge the Government, even at this late stage, to think again. I commend the amendment to the House.
  Moved, That this House do not insist on their Amendment No. 42 to which the Commons have disagreed, do agree with the Commons in their Amendment No. 42B to the words so restored to the Bill, but do disagree with the Commons in their Amendment No. 42A to the words so restored to the Bill and do propose Amendment No. 42D in lieu thereof to the words so restored to the Bill.—(Lord Ashley of Stoke.)
  The Duke of Buccleuch and Queensberry: My Lords, I wish to support the amendment moved by the noble Lord, Lord Ashley of Stoke, in his usual characteristically compelling way. The noble Lord, Lord Ashley, and the noble Lord, Lord Morris of Manchester, have rightly earned a nation-wide reputation as the most respected and knowledgeable champions of disabled people. There are no two people whose honour and integrity I more greatly admire. If they had continued to speak from the green Benches in the other place, I doubt very much whether we would have found ourselves in the mess that we are in today.
  I can honestly say that, in my 39¾ years in Parliament—partly in another place, partly in here—for the past 25 years trying, with so many other of my

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  admirable noble friends, to secure a fair deal for disabled people, this is my saddest moment. It is not because this is my last utterance in Parliament but because of the monstrously unjust actions of this Government, made only very marginally better by last week's concessions.
  One of the most worrying aspects of this episode is the further proof of the executive's ever-increasing stranglehold over parliamentary democracy. The most remarkable point about last week's rebellion in another place was not that so many defied the pressure of the Whips but that so many succumbed to it. I hope I might be forgiven for thinking that, if the Government's supporters had half as much feeling for disabled people as, they claim to have for foxes, the offending clauses in this Bill would have been strangled at birth.
  If a Conservative government had behaved like this, there would have been outraged protests and demonstrations throughout the land. If the Government persist in restricting and resisting the modest offering of the noble Lord, Lord Ashley of Stoke, they will have every reason to dread the judgment of the ballot box in 2002.
  On arrival here, one receives a warm handshake from the Lord Chancellor. I wonder whether, on one's enforced retirement from here, one receives a hug from the Leader of the House.
  Lord Rix: My Lords, since this Bill was last under discussion in this House, there has been much talk of brokering a compromise on the vexed question of how to reform disability benefits. Scarcely two weeks ago, I signed my name in support of the very proposals which are before us again this afternoon. However, for all the talk of compromise both here and in another place, it is easy to forget that thus far neither House has actually been given an opportunity to accept or to reject these compromises.
  Commentators such as Simon Jenkins, who in The Times last Friday urged the noble Lord, Lord Ashley of Stoke, to accept that it is time to give up, are quite mistaken. The debate may be well rehearsed but the options are only just being laid out before us. Only when this House and another place are given a real choice and are offered a viable alternative to the Government's cuts-led agenda, can we say that true consensus has been reached.
  Of course, outside this House, we heard the nonsensical view that to lay down a choice here today somehow challenges the democratic status of the other place. How can this be so when the "Lord Ashley/Dr Berry" compromise has never been tested in the other place? There are 8.5 million disabled people in the United Kingdom whom noble Lords on the Government Benches—for instance, the noble Lords, Lord Ashley of Stoke and Lord Morris of Manchester—have endeavoured to represent over many years, as have a steadfast number of hereditary Peers from all sides of the House, some now fortuitously restored to us including the noble Earl, Lord Russell, the noble Lords, Lord Addington, Lord
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  Swinfen and Lord Astor of Hever and, from the Cross Benches, our very own, the indomitable noble Baroness, Lady Darcy de Knayth, as well as a mere lifer, me.
  Our postbags are still full of letters from anxious disabled people. We are duty bound to act on these concerns. Why should there be any question over our mandate to attempt sensibly to revise the Bill when fewer than half the Members in another place consented to the Government's own proposals?
  Time and again I have stood up in this House and welcomed measures in this Bill which offer more help to young severely disabled people. As president of Mencap, I acknowledge that those who are born with a severe learning disability are likely to be better off under the new dispensation. I do not doubt the Government's commitment to this group and believe they have acted in an exemplary fashion in seeking to improve protection for youngsters in further and higher education and seeking to ensure that the new ONE service really is a service for disabled people. But on incapacity benefit, while I recognise the Government have moved, I do not believe that tightening contribution conditions to three years offers disabled people adequate protection and I do not believe that hitting disabled people living below the poverty line with a means test in order to finance increases for other disabled people is morally justifiable.
  As we have heard, the noble Lord, Lord Ashley of Stoke, is advancing a realistic compromise to government proposals. Instead of denying benefit to severely disabled people who have been out of employment for a mere three years, seven years at least guards against penalising those who have made every effort to find suitable work before reconciling themselves to the limitations of their disability, or those who have faced unemployment in difficult economic conditions in advance of the onset of their disability.
  As the other proposal stands, as your Lordships have heard from the noble Lord, Lord Ashley, means testing incapacity benefit will hit individuals living below the poverty line, and will withdraw benefit with a taper which is harsher than anything imposed on millionaires—some of whom are sitting on your Lordships' Benches—within our tax system. To start reducing benefit instead at £128 per week, and with a taper of 23 pence in the pound, is not generous; i t is realistic.
  It may be worth reminding the House that one of the Government's new indicators in the first annual poverty audit is a reduction in the number of working age people living in families claiming income support for long periods of time. If incapacity benefit is tightened in the way the Minister proposes, and severe disablement allowance is abolished, the Government will find that increasingly hard to achieve.
  In the same report, the Secretary of State for Social Security claims that,
  "the right policies are the policies that work".
  He pledges,

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  "to continue to listen to people on the ground, including people who are themselves living in poverty, to make sure our policies are having the right effect".

  I urge the Government to look again at what they have heard from disabled individuals and their advocates within the 500 strong organisations represented on the Disability Benefits Consortium who are key partners in delivering the fight against poverty and are aware of the situation on the ground.
  Furthermore, the report of the National Policy Forum to this year's Labour Party conference claims to "build upon the platform" of getting more help to the most severely disabled people. Perhaps the Minister can reassure the House today that threats to jeopardise this support are empty.
  It also strikes me as extraordinary that, if newspaper reports are true, the Government have threatened to trade welfare reform against Lords reform. We are talking about the lives of hundreds of thousands of disabled people, many of whom are among the poorest in our society. Decisions about their future should be taken in all conscience and in a climate of utmost seriousness, not on the basis of political calculation.
  Despite all the help that the Government have given to people with a learning disability, as well as those affected by SERPS—for which I am most grateful—and despite my high regard for the care and debating skills of the Minister, the noble Baroness, Lady Hollis, should the House divide on this matter I shall have no option than to vote with my conscience to support the fair and balanced compromises of the noble Lord, Lord Ashley. That will then offer Members of another place a genuine alternative to what is currently on offer from the Government. I urge other noble Lords to do the same.
  5 p.m.
  Lord Morris of Manchester: My Lords, I was deeply moved, as I know my noble friend Lord Ashley will have been, by the speech of the noble Duke, the Duke of Buccleuch. As ever, he was most kind and spoke as persuasively as he was brief and eloquent. he will be very deeply missed in all parts of your Lordships' House.
  Again, I also pay tribute to my noble friend Lord Ashley for his constancy and the clarity of his advocacy in moving his amendment. As he and I are reminded by our postbags every day now, their opposition to means testing incapacity benefit and changing the contribution conditions for entitlement have united the major organisations of disabled people as never before.
  Neither my noble friend nor I approach this debate with any feeling of personal animus towards those of our colleagues who were content with the Secretary of State's original proposal in the debate in this House on 13th October. Nor is there any animus on our part towards DSS Ministers. Certainly the Secretary of State knows of the warmth and kindliness of my intentions towards him personally. For as Chairman of the Managing Trustees of the Parliamentary
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  Contributory Pension Fund, elected by the House of Commons as a whole, I looked after Alistair's own pension for 10 of the past 12 years with undeviating concern for his interests.
  The plea I shall make to him today is that of a committed supporter of this administration. My purpose is not to hurt the Government, but simply to do whatever I can further to improve the Bill in the interests of disabled people and their carers. Much apart from wanting to hurt the Government, I very much want them to succeed and passionately believe that they are more likely to do so if all of us speak with total candour.
  Friendship is not friendship without candour and it is as a candid friend that I ask the Government to look again not just at the detail but also the principle involved in the proposed changes to incapacity benefit. The Secretary of State told the BBC last week that, while he had moved on "points of detail" he would not water down the principle on which his proposals were based. But how principled was it to encourage tomorrow's pensioners to save for their retirement today and, at the same time, try to impose on disabled people who have already saved for their retirement, over 30 or more years, a cut in benefit of 50 per cent of any personal pension over £50 or, as is now proposed, £85 a week?
  Ministers have spoken in parliamentary debates, as I also have done, of those who will benefit from the Bill. More especially I welcome the help proposed for 20 to 24 year-olds in full-time education. But we cannot ignore the losers under the Bill as drafted, one estimate of whose ultimate number is that it will total 310,000 disabled people.
  The Government have now created the Disability Rights Commission for which my Civil Rights (Disabled Persons) Bill first made detailed provision in December 1991. Naturally I am delighted. This and the appointment of Bert Massie to chair the commission have been welcomed all across Parliament. It was, however, Bert Massie, commenting on this Bill in The Times, who put it to the Government that:
  "cuts in entitlement to Incapacity Benefit do not force people to work if they cannot do so: they just make such people poorer".
  Even more to the point, he added:
  "If the problem is that people not entitled to Incapacity Benefit are receiving it because of the policy of the last Government … the answer is to identify those people and to improve 'the gateway' to Incapacity Benefit, not to refuse it to those to need it.".
  Labour Ministers rightly condemn the Major government for their encouragement of unjustified incapacity benefit claims from unemployed people to cut an ever-lengthening dole queue. But the proposals now before Parliament do not dispossess those who allegedly ought not to have the benefit. Instead they make life harder for disabled people who, having paid national insurance for a contributory benefit in good faith over many years while in work, could now lose a substantial part of the amount for which they thought they were insured. Whatever else this might be called, it is not a triumph for high principle. Indeed, the principle involved is no less unwholesome than the

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  detail. In the words of Sir Peter Large, than whom no severely disabled person is more widely respected here at Westminster, why on earth should we have to,
  "take from people in need to give to those in greater need"
  when the rate of increase in total social security spending has already been cut by half of what it was under the Major government?
  Again, why should we now cut the benefits of people who become unfit for work if they have saved, year by year, for very modest personal pensions at a time when the Chancellor of the Exchequer insists that the economy has never been stronger nor Britain more prosperous?
  Most disabled people are appreciative, as I am, of helpful new steps taken in their interests by Ministers all across Whitehall and, like me, they want the Government to succeed. But they say that the proposals on incapacity benefit confuse reform with retreat. They are not resistant to change, for there are many reforms disabled people want urgently to see. They want ministerial preoccupation to be with value as well as cost and disability benefits to be commended to the taxpayer not as acts of compassion, but of enlightened self-interest and moral right.
  In candid and thus—as I said—true friendship, I ask my ministerial colleagues to reflect again and to respond positively 10 this amendment.
  It was in that spirit that my good and right honourable friend Tom Clarke spoke and voted on the Government's revised proposals in another place. And let us all remember, on this side of the House, that it was Tom Clarke who led for Labour in explaining our policies for disabled people at the general election. In the House of Commons last week, in a speech of high distinction, he kept faith impeccably with what he told the electorate on our behalf. Let us also keep faith today.
  Lord Campbell of Alloway: My Lords, a wholly compelling case has been made out by all noble Lords who have spoken from their expertise, which is acknowledged not only in your Lordships' House, but throughout the whole country. Yet it is reported that honourable Members of another place have threatened to withdraw the Weatherill amendment if we insist tonight. If so, that threat is in grave contempt of your Lordships' House, and it is a slight upon the status and dignity of the bicameral process. It is a threat to which this House should not defer.
  Indeed, no second Chamber, however constituted or reconstituted, should be deprived of the option to decline to approve repugnant legislation, in particular on humanitarian grounds such as obtain in this case. As at present constituted, the House acts upon its honour to protect the interests of this vulnerable minority against oppression, for the reasons so eloquently explained by the noble Lord, Lord Ashley of Stoke. The Parliament Acts make provision for another place to have its will in due course if that is what its Members wish.
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  The business of government has, as is wholly predictable, again hit the buffers towards the end of the Parliament. No acceptable accommodation has as yet been afforded, and as I understand it, none is on offer. Many years ago, the noble Viscount, Lord Ingleby, who sat on the Cross Benches, gave me a book inscribed with gratitude for my work on the Floor of the House on behalf of the disabled. Therefore it would not have been possible for me today to sacrifice their interests on the altar of political convenience at the behest of the usual channels. This Government evince but scant concern for minorities. Their protection has now become the urgent obligation of your Lordships' House, and, I hope, the business of the Loyal Opposition.
  To defend those unable to defend themselves from unjustified attack may not be charged as "wanton confrontation". If so charged, it would not be so readily understood by the majority of the people.
  5.15 p.m.
  Earl Russell: My Lords, it is one of the annual rituals of this place that, come November, Ministers facing the exertions of the ping-pong season get an attack of constitutional heavy breathing. Like other heavy breathing, it is often done down the phone anonymously and no one in this Chamber is accountable for it. I believe therefore that I need to clear the air a little.
  So far as I know, no one anywhere in this Chamber questions the supremacy of the elected Chamber. That is true both as a matter of fact—the Parliament Acts see to that—and as a matter of justice. What is at issue between us, and has been an issue in debates for as long as I have been a Member of this House, is whether that supremacy is arbitrary in that another place, whenever it wishes, can say, "I am going to have my way, so there!", or whether that supremacy is governed by the rule of law as set out by another place itself in the Parliament Acts.
  What is set out in the Parliament Acts is not a procedure simply for another place to be able to insist, but a procedure that requires the Secretary of State to share with us the responsibility for getting his Bill on to the statute book; to bargain, to negotiate, to compromise and to seek to reach agreement. That is a perfectly fair burden to which to subject any legislator.
  This Chamber is not in the business of stopping Whipped government Bills. Whenever any Whipped government Bill fails to become law, we may say that a political misjudgment has taken place. What remains a matter of debate is whose that political misjudgment might be. The answer is usually "both" when that happens, because even if one believes that the other person has been totally unreasonable, it may be a misjudgment to fail to foresee his unreason. Therefore, I hope that we shall not have the rather petulant four year-old's "shan't play" noises that we have been hearing from time to time, but that we have serious scope for a reasonable discussion.
  Furthermore, I hope that I shall not hear any more of this mysterious threat to the Weatherill amendment. I agree with the noble Baroness the Lord Privy Seal

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  that that is not the way to proceed. It is a proposal for mutual assured destruction. On that occasion, the acronym is particularly appropriate! In any case, if any of us were to change our policy because of a threat of that sort, we should not deserve to stay here in the first place.
  I shall not repeat my arguments in detail against either of the clauses that we are debating. I understand that they are grouped together. I have argued that the first one, on contribution records, is unfair to groups which do not have an equal right to make contributions: people in areas of high unemployment; people from ethnic minorities; and people who suffer progressive disabilities, such as, for example, deafness, which interfere with their ability to work before they finally become eligible for incapacity benefit.
  I simply do not understand why the Government have insisted on this clause. It does not make any sense to me. When I listened to Mr Rooker, the Minister of State, replying to the debate on Wednesday evening, all I heard was the equivalent of the famous marginal note in the UN delegate's speech, "Weak point, shout".
  I cannot hear any clear principle. I have read what the Minister and the Secretary of State have said. They seem to be desperately worried about people who have had long periods of unemployment and then claim incapacity benefit. I simply do not understand why that worries them so much. The Minister has said that there is no question of fraud. I thank her for that. I am not certain how far that sentiment applies throughout the Government. At the last Prime Minister's Question Time, when my right honourable friend Mr Kennedy asked the Prime Minister why he insisted on this, the Prime Minister replied with a figure from the Green Paper claiming a threefold increase in the number claiming incapacity benefit since 1981.
  First, if that was the Prime Minister's reasoning, he is locking the stable door after the horse has been stolen; the horse was stolen by the previous government in the Social Security (Incapacity for Work) Act 1994. I am sure that the House will be relieved to hear that I shall not enter into a debate on that point now. However, it put a stop to that increase in the figures which have since decreased.
  Behind much of this debate is the concern of people to explain the increase both in incapacity benefit and in claims for disability benefit as a whole. Many people have been inclined to claim that there has been fraud. Attempts to find it have always come to nothing. The Minister has most generously confirmed that in the case of BIP, in which her record is an extremely honourable one. The recently-published DSS research report no. 94 found that people recognised as disabled in the past few years were recognised according to the same standard as would have applied many years ago, although the numbers so recognised had increased. The incapacity benefit leavers tracking study found that those who had been unemployed before claiming incapacity benefit were less likely to become employed afterwards.
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  The study also found—this is a very interesting finding—that people's self-perception with regard to their own health was a more accurate predictor of their employment future than the incapacity all-work test. In fact, people are probably better judges of their own health than are the Government. I am not particularly surprised to hear that, but I believe that there are those who would be.
  Therefore, why should there be such an increase in the number of people claiming disability benefits? I believe that this point is crucial to the whole of our argument. First, there is, thank God, far less stigma attached to having a disability than there was even 10 or 20 years ago. Therefore, people are willing to make a claim and to accept the label of being a disabled person when 20 years ago they would not have been. I can only regard that as a good thing. Secondly—and this is a finding of the incapacity benefit leavers tracking study—in the tightened conditions of the labour market, employers are more likely to resist employing people with lowered capacity. Therefore, those people have a greater need to claim incapacity benefit. Thirdly, it is well known that illness is a consequence of unemployment. That case is documented at length in the Acheson report; I do not need to do so now.
  The Acheson report has also found that, although mortality has fallen, morbidity has not fallen in proportion, especially among the poorer part of the population. The poverty/ill health link is much clearer than it was before. Again, that is relevant to the number of claims. We also have better diagnosis in relation to mental health illness, depression, and back pain, which accounts for one in every seven days lost from work through sickness. We have the car culture which both makes people take less exercise and puts their backs in uncomfortable postures. Here, I rely on the authority of the orthopaedic surgeon who many years ago treated my own back.
  I turn to the other clause concerning occupational pensions. At least I understand what the Government are doing although I do not accept it. They argue that they should concentrate help where it is needed most. That is a good principle, but even good principles cannot exist in monopoly. They have to share the world with other principles. Here, they conflict with other principles. First, they conflict with the contributory principle. That is not absolutely sacrosanct, but anyone who proposes to alter the conditions of a contributory benefit must shoulder the burden of proof. That is a heavy burden.
  Secondly, what the Government are doing contradicts the need to encourage private provision for pensions. That is an increasingly urgent need of which the Government are well aware and to which a considerable part of this Bill is devoted. I cannot see that it encourages people to invest money in private pensions if they know that if they become sick, 73 per cent of what they put in will be lost to the Treasury. That does not promote the usual motive for private provision.

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  Finally, what the Secretary of State has done is not equipped for uprating. The uprating is discretionary, not of right. The Minister knows what has happened to the uprating of capital limits for income support, which are equally discretionary. They have not been uprated since 1988. That is the box into which the Secretary of State proposes to put incapacity benefit for those in receipt of occupational pensions. That box is a coffin. We should not put it there.
  Baroness Kennedy of The Shaws: My Lords, when this matter was last before this House, I voted with the Government. I did so because I was reassured that the Secretary of State was looking again at the figures and I was given to understand that concessions would be made which would allay the concerns of many of us on this issue. I know the Secretary of State to be a man with a good heart and a good head. Like my noble friend Lord Ashley, I consider him to be one of the great talents in our Cabinet. However, it has been a source of great disappointment to me and to others that he has not accepted the compromise of my noble friend Lord Ashley.
  Like my noble friend Lord Morris, I am a friend of government and I speak to government as a friend. The Secretary of State has raised the level of his means test. However, even that rate fails to take full account of the huge costs incurred by many disabled people. The point about disease and frailty is that even the most powerful people are humbled by it: by not being able to do what one once could and having to rely on others for even small assistance. The depression that comes so often with incapacity creates even greater dependency. Incapacity can come to any of us: chronic arthritis striking down a school teacher or a secretary; an early stroke ending a career in nursing; neurological disease throwing out of work a father of young children.
  In his arguments, the Secretary of State has said that if the amendment of my noble friend Lord Ashley is passed, single people could have an early retirement pension of up to £23,000 before entirely losing their incapacity benefit. he went on to state that a parent with two children and a dependent spouse, for example, could have a pension of something over £30,000 before being cut off, as though those sums were extraordinarily high.
  The mistake we are making is in turning our welfare system into the American equivalent, which becomes no more than a meagre safety net in which the majority of citizens have no stake. I happen to accept that the universal principle may have to be surrendered in the face of changed circumstances. It was for that reason that I argued for the introduction of fees for higher education but that there would be a means test, set comparatively high, for those who would have to pay.
  When replacing thresholds, I believe that they have to be drawn at something other than a mean and miserable level. The reason why we must ensure that thresholds are not drawn too low is because we need to maintain commitment by the many to the welfare
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  state. The risk in going down the American road is that the majority have no vested interest in protecting the welfare system; they are no longer stakeholders.
  I have every sympathy with our ministerial colleagues who wrestle with the difficult problem of welfare reform. I believe in welfare reform, but I also believe in welfare. When we developed the welfare state in this country, at its heart was the belief that when calamity struck citizens who had contributed to the commonweal, they in their turn should be sustained by the commonweal; not with cap in hand or in ways which removed human dignity but in ways which were decent and fair.
  I cannot understand how we can justify a withdrawal rate of 73p in the pound—50p by the means test and 23p in tax—for severely disabled people. Yet, as we have heard the noble Lord, Lord Ashley, say, the top rate for millionaires remains at 40p in the pound. How can we have that kind of disparity? What are we thinking about? What is happening to our values? Are we forgetting who we are? What does "social justice" really mean?
  There is much in the Bill that is good and I would not like to see it fall. However, I cannot vote with my Government on this issue.
  5.30 p.m.
  Lord Davies of Coity: My Lords—
  Lord Stewartby: My Lords, I shall be brief. I hope that the noble Lord will be patient for a few moments. I am minded to go into the Lobby with the noble Lord. Lord Ashley, this evening, particularly on one point. I refer to the level of disregard. It seems to me that although the Government have improved the situation from their original proposals, it is still very much on the mean side.
  The only other point I make is that the more I listen to debates on this subject, the more it strikes me that incapacity benefit is not well suited to being a general source of "top-up" for income for disabled persons. We have to accept that the structure of welfare benefits generally, and particularly those available to disabled people, is complicated. In the years when one had to advise constituents in another place about benefits and their relationship to each other, particularly for the disabled, I found myself constantly confused and wondering whether I was giving correct advice.
  I hope that if the Government face a set-back on this issue, they will not be deterred from reconsidering the relationship between the benefits. In particular, I hope that they will come to a view about whether incapacity benefit should be specifically related to work and the inability of a person because of disability to undertake work, or whether there is a need for a more general supplement of a kind which would assist many of those who appear to be potentially disadvantaged by the proposals introduced by the Government.
  I shall say no more than that. However, it seems to me that many of the arguments which the Government may be using to defend their own position are narrowly focused on the purpose of incapacity benefit

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  whereas many of the arguments of those who have put the contrary case are a recognition that the incomes of disabled people, particularly those who are out of work and may have been so for a long time, are modest. The structure needs to be looked at to see how that can be remedied.
  Lord Davies of Coity: My Lords, when dealing with an issue as emotionally charged as this, it is not difficult to support what is seen to be popular. However, we all know that it is often much more difficult to support what is believed to be right.
  Some may say that this part of the debate is a watershed, a moment of truth or perhaps a crunch time. As we are likely to have other occasions such as this before 17th November, I feel that such descriptions are not appropriate. However, it would to apt to say, like the Americans, "We are now playing hardball".
  I say that because we have now reached a stage in this House where we are challenging a government elected by the British people to a point of unjustifiable conflict. We are perilously close to doing that in two ways. One is in respect of the constitutional role of this House; the other in respect of the Bill and the amendments to it.
  As concerns the first point, let us remind ourselves of why we are here. Indeed, we say it so often that we should have it, if not in our hearts, in the forefront of our heads. We are here to scrutinise and revise; to point out to the Government errors in proposed legislation; to nit-pick; to cross "t"s and dot "i"s and to challenge, but only to a certain point. The moment we go beyond that point we become dangerously close to abusing our powers, our authority and the privilege which we have been given to contribute to the lawmaking process of this land and to its people.
  If this continues, sooner or later it will become more and more evident that this country can no longer tolerate an unelected House holding the people's chosen government to ransom. Up to this point, this House has made its views known. The Government have considered those views. As we know, they have responded. Enough is enough. Now is the time to cease this protest. The whole House should support the decision of the elected Government. For those reasons alone, the Government should be supported at this stage.
  However, it is also important to address the Bill and the amendments. I shall deal with that in two ways. First, I shall say why my noble friends on this side of the House should support the Government, and secondly, why other noble Lords, particularly the Official Opposition, should also support the Government.
  I have spent most of my adult life conducting wage negotiations with employers. Never once did I obtain all I wanted, but I never expected to. Once in the realms of negotiation, you recognise that you have to compromise. I knew that I could not secure satisfaction for every demand that every one of my
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  members wished to make; but I sought to secure as much as I could for as many as I could, and, at the same time, to ensure that all those I represented sacrificed the least, in terms of both wages and conditions and job security. That was a discipline I set myself on each and every occasion. That is not universally true throughout the whole of the trade union movement. I am sure we can all remember the miners' strike of 1984–85 when the refusal of the mineworkers' leader to compromise resulted in hardship and agony for so many miners and their families as well as for so many others.
  So, what is the relevance of that to the debate on this Bill? I shall tell the House. The Government listened to the arguments advanced by this House; they made concessions and amended the Bill accordingly. Now the Bill, as acknowledged by my noble friend Lord Ashley, is generally a good one. Therefore it should be accepted. Although it may not provide all that is wanted, the vast majority of the Bill is good.
  I say to my noble friends that this Bill provides far more benefit for far more people—the vast majority being among the most disadvantaged—than the numbers the amendment seeks to protect. Therefore, if this Bill falls far more people will lose compared with those who will gain because of the insistence on pushing this amendment to a Division and winning. I hope my noble friend will withdraw his amendment. If not, I urge all my other noble friends on this side of the Chamber to vote against him.
  I turn now to noble Lords opposite. I appreciate that the role of the Opposition is to oppose. That they have done. But there comes a time in this House when that opposition must cease and I believe that that time has now come. If that is ignored, then in my view the Opposition are no longer acting as a responsible opposition. From their records and from the statements made by the Tory spokesman on social security at this year's Conservative Party conference, it is clear that this Bill is not to the liking of the party opposite, despite the advantages it will bring to many people. So it would seem that any support given to the amendment of my noble friend Lord Ashley by the Opposition will only be for the purpose of jettisoning the whole Bill. That being so, it is a very undignified stance. Indeed, it would be contrary to the understanding reached in respect of the Government's legislative programme when agreeing the Weatherill amendment.
  Earl Russell: My Lords, has the noble Lord forgotten that these proposals were turned down by the Conservatives when they were in office?
  Lord Davies of Coity: My Lords, it is true that they were turned down. It was put forward by Mr. Portillo and turned down by Mr Lilley. I am wondering whether it was with an eye on the general election that they were turned down at that time.
  As I said at the outset, the Government have been driven to play hard ball. In the circumstances, no one could blame this Government, if their proposed

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  legislation on welfare reform and pensions is further frustrated, for being less than forgiving in the wake of such destruction.
  Baroness Masham of Ikon: My Lords, I take this opportunity to pay tribute to the noble Duke, the Duke of Buccleuch and Queensberry, for all the support he has given disabled people within and without Parliament. For years the noble Duke has been president of RADAR (the Royal Association of Disability and Rehabilitation). Many people thank him for all he has done.
  Many people are becoming concerned about the meanness of spirit of the Government towards unfortunate people who have to struggle to survive. I should like the Minister to say how much it will cost to administer the means test to these severely disabled people. They will feel let down unless the House supports them tonight in asking the Government to try and understand their needs more closely than they have so far been able to do.
  5.45 p.m.
  Lord Swinfen: My Lords, the noble Lord, Lord Davies of Coity, suggested that, in what we may be proposing to do this evening, this House could be exceeding its constitutional duty. I take issue with him on that point. The House in fact is performing its constitutional duty. If this House feels that the other place should think again, it has a duty to ask it to think again. The noble Lord has not been in this House as long as I have. I can remember that when this party was in government, the House asked the government of that day—the Members in the other place—to think again.
  It may be unwise; it may be inadvisable to try and delay matters. I do not know how difficult it is to arrange government business—I have never been in the position of trying to do so. But as far as I am aware there is no constitutional reason why Prorogation, which I gather is planned for Thursday, could not be postponed. I am sure that the Government will want to get their Bill through and I for one do not want to stop them, but it may be necessary for this Bill to be amended yet again. If the noble Lord, Lord Ashley, takes this matter to a Division, I am strongly inclined this evening to vote with him in his Lobby.
  I have one question for the Minister. Why, when the Government are attempting to get people to produce their own private pension arrangements to back up what is acknowledged to be a rather low state pension, are they means-testing disabled people for incapacity benefit which is exactly the same sum as the state pension?
  Baroness Darcy de Knayth: My Lords, I shall be extremely brief. I support these amendments. It is important that there is some method of uprating, as the noble Earl, Lord Russell, clearly demonstrated.
  I reiterate something that the noble Lord, Lord Ashley, said when he so persuasively introduced these amendments; that is, the other place has not been
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  asked its opinion on the compromise amendments. In any case, the Bill has to go back to the other place because of the successful amendment of my noble friend Lady Strange.
  Lord Rowallan: My Lords, I apologise for taking up the time of the House after one and a quarter hours on this debate. However, I want strongly to speak on it.
  When I was eight I had polio and was paralysed for 18 months. Luckily, I recovered. So I know what it is like to be disabled. Many more, 8.5 million people, as the noble Lord, Lord Rix, pointed out, certainly know what it is like to be disabled. The National Health Service looks after everybody equally. So should the social security system. That is the problem with which we are dealing today.
  My father was a double amputee. As a result, I have worked for the past 10 years for all those who suffer from various disabilities. I am a life member of the Limbless Association; I am a director of SANE, the mental health charity; I am a patron of Depression Alliance, which deals with people who suffer from depression. Sadly, I shall not be able to do that too much longer from within your Lordships' House, but I shall continue my work outside.
  The disabled did not choose to be disabled. Unfortunately, they are disabled. They must be treated fairly in all ways. Because I have lost my franchise to be here, I shall not become a hooligan; I shall not vote against this Government willy-nilly until Wednesday or Thursday. But in this case I feel it is the duty of this House to ask the other place to look seriously at this problem, which has not been debated there. It is the duty of this House to revise extreme measures of any government. We have done that successfully for many years. I urge your Lordships, if this matter comes to a vote—I feel sure it will—to support the noble Lord, Lord Ashley, so that it can be seriously examined again.
  Lord Higgins: My Lords, anyone speaking in your Lordships' House in a debate on the disabled, which has had as participants those who have already spoken this afternoon, must do so with great diffidence. I speak not only of the noble Lords, Lord Ashley, Lord Rix, Lord Morris, and my noble friend the Duke of Buccleuch, but also of the noble Baronesses, Lady Masham and Lady Darcy. They have devoted their lives, in large measure, to helping the disabled. Therefore on this occasion I speak with great diffidence.
  Perhaps I may remind your Lordships that we are now dealing with two sets of amendments, which have been grouped together. One group relates to the effect on the disabled if the restrictions on contribution requirements imposed by the Government are carried through, and the second group deals with the question of whether the disabled should have their benefits reduced because they happen to have occupational pensions. I believe that the grouping of the amendments is appropriate but, none the less, it is important for us to bear in mind the fact that we are discussing two issues here. Although they may be

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  related they are, to some extent, separate. Therefore, I hope that noble Lords will feel that it is right to oppose both sets of amendments, as proposed by the noble Lord, Lord, Ashley.
  We have before us some amendments on which the House of Commons has got to support the noble Lord, Lord Ashley—
  Noble Lords: Oh!
  Lord Higgins: My Lords, I beg the noble Lord's pardon. Let there be no doubt on the matter: we will certainly support the noble Lord, Lord Ashley.
  I want to stress most strongly a point which has been made by a number of noble Lords, not least the proposer of the amendments himself; namely, that the House of Commons has not yet had an opportunity to vote on these amendments. When we discussed the matter during earlier stages of the Bill, we voted on and carried amendments to remove these two clauses, which I believe to be fundamentally wrong in principle. The matter then went to the other place and the Government came forward with totally inadequate amendments as a form of compromise. It is that on which the House of Commons has so far voted. The noble Lord, Lord Davies of Coity, seemed completely unaware of the fact that the other place has not yet had an opportunity to vote on these specific issues.
  Although I continue to take the view that these clauses are wrong in principle, I recognise the fact that there is a case for compromise. I certainly believe that the compromise put forward by the Government is totally inadequate and that that put forward by the noble Lord, Lord Ashley, is one which the House as a whole should support. It is an entirely reasonable basis on which the House may proceed. Therefore, it does not seem to me that the issue of the constitutional position of the House, or whatever, actually comes into question at this point. Indeed, it is something quite separate.
  Nevertheless, at the end of the day—and this is important—I feel bound to say that the matter rests with the House of Commons. We should give Members in the other place the opportunity to vote on these amendments. I do not take the view that it would then be right constantly to reject them. Indeed, as the noble Lord, Lord Ashley, pointed out, it is not his intention to kill the Bill. Similarly, it is not our intention to kill the Bill. Although there are a number of objectionable features in the legislation, I believe that, overall, it does things which ought to have support. Our task is to remove these particular clauses from the Bill.
  I do not think that these clauses can conceivably be regarded as reform. They are fundamentally flawed. In addition, it has been said that this is a matter upon which there will be a conspiracy of hereditary Peers, and so on. However, one has only to look at the results of the voting on the last occasion when the matter was before the House. If no hereditary Peers had voted against these clauses, the amendments against the
  1202
  Government and in favour of knocking out the clauses would still have been carried by a substantial majority. I believe that there is great opposition throughout the House as regards what the Government are doing; indeed, it is all-party opposition.
  My next point is equally important. It has been reported, not least in some press articles, that this is a measure to increase expenditure on the disabled. It is not so. These clauses do not represent a measure to increase expenditure on the disabled; they represent cuts in what has already been previously agreed for the disabled. That is the crucial difference between the two positions. In effect, we have been told by the Government, "Oh well, we have made a concession". But what has actually happened is that the Government have come forward with these proposals, which propose to take away benefits from the disabled. They have then said, "You can hang on to a little bit of what remains". That is not a reasonable deal. However, the proposition put forward by the noble Lord, Lord Ashley, would strike a reasonable balance between the two sides of the House.
  I should like to say a few words on the substance of the matters now before the House. The first set of amendments is concerned with a contribution condition. It has been the hallmark of the Government's so-called "reforms" that, as an overall effect of policy, they have undermined time and again the contributory principle. Indeed, they have extended the question of means testing time after time. What we object to most strongly in the first clause that we are discussing and which the noble Lord seeks to amend is the proposition that people who have contributed for many years but have not done so recently—very often for good reasons—should suddenly find that they lose their disability allowance. We believe that to be wrong in principle. At any rate, one should go for the compromise which the noble Lord, Lord Ashley, has proposed; namely, that it should at least be a question of whether such people have contributed over a seven-year period.
  The second set of issues relates to the question of incapacity benefit and pension contributions. I do not wish to burden the House by repeating the excellent exposition made by the proposer of these amendments as regards the way in which this will operate. It will do so by applying a ludicrously high, effective marginal rate of tax to people who cannot conceivably be regarded as well off. But there is an even stranger situation here. Under this clause, and at this very high rate of marginal tax, incapacity benefit will be taken away from people because they have an occupational pension. The whole thrust of the rest of the Bill is to say that people should make provision by way of pension. But what do we find? If you are disabled and have been fortunate enough to find a pension, you will suddenly find that you are penalised for so doing. The clause is totally inconsistent with what remains in the rest of the Bill.
  However, there is something even more curious about this proposal. If you have an occupational pension at a relatively low level, your incapacity benefit will begin to be withdrawn. Indeed, after not

  1203
  very large increases in the level of income at which this happens, it will then be withdrawn altogether. If another individual on incapacity benefit had an income from stocks and shares of, say, £2 million a year, his incapacity benefit would not be affected at all. It is a truly lunatic situation. I really do not understand why it should be so.
  There are many other arguments to deploy but, as many have already been put forward this afternoon, I do not wish to burden your Lordships' House by repeating them. However, there is perhaps one that is worth mentioning. I have in mind the question of public expenditure. We have been told, "Well, we have to make these cuts on the people who are incapacitated"—who are certainly not among the richest members of the community—"in order to pay for some of the improvements which have been made elsewhere in the welfare system". Indeed, some of those improvements will affect people who are better off and less incapacitated, if incapacitated at all. That is not a reasonable way to assess priorities.
  I conclude on this note. Like most noble Lords, I am genuinely puzzled as to why the Government should persist in retaining these two clauses. I find them completely incompatible with the overall approach which they seem to be adopting. They cannot conceivably be regarded as reform. However, as I say, while they are wrong in principle I recognise that a compromise should be agreed. I do not think that this is something which should go back and forth and endanger the Bill. However, it is tremendously important that this House should carry out its duty, which is to ensure that those in another place, who must at the end of the day have ultimate responsibility for these matters, should have an opportunity to vote on the amendments which have been put forward by the noble Lord, Lord Ashley. I very much hope that your Lordships will support them.
  6 p.m.
  Baroness Hollis of Heigham: My Lords, in supporting Amendments Nos. 42A and 42B to Lords Amendment No. 42, I shall speak also to Amendments Nos. 43A to C. Of course I am asking the House therefore to reject the amendments of my noble friend.
  It always gives me great pleasure to reply to such a balanced debate with such a variety of views as we have heard tonight. There have been three main themes advanced tonight. First, that what is being offered by my noble friend Lord Ashley is a compromise; secondly, that what the Government are doing affects people below the poverty line and, thirdly, that the other House should have a chance to consider—which it has not yet done—the amendments of my noble friend.
  My honourable friend Mr Rooker in the other place said that he was engaging with myths as much as with information. I am afraid that I am about to do the same thing tonight. First, although this measure has been alleged to be a compromise, it is not. Secondly, we have been told that it affects people below the poverty line, but it does not The statistics are quite misleading.
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  Thirdly, we are told that the Commons have not had a chance to consider this matter when they have and have made their position already clear. I shall return to that point.
  The Government have made it clear all along that the incapacity benefit reforms are based on principle, helping the 1 million disabled people who say they want to work to do so while providing the right support for those who cannot. The Government are already spending more than £24 billion a year on benefits for long-term sick and disabled people. During the course of this Parliament we expect to spend nearly £2 billion more. I repeat that this is not a cuts agenda, even though that has been alleged by some, including the noble Lord, Lord Higgins, tonight. As I say, we are spending nearly £2 billion more on disabled people in the course of this Parliament. But we believe that in doing so the greatest resources should be spent on those with the greatest needs. If we are to meet that challenge, incapacity benefit needs to be reshaped and reformed.
  I remind the House that despite some suggestions to the contrary—again from the noble Lord, Lord Higgins—no one who is currently disabled and on incapacity benefit will be affected by these changes. In response to my noble friend Lady Kennedy I also remind the House that in future 90 per cent. of those on incapacity benefit will not be affected by these changes. I say to my noble friend Lord Morris, who has alleged that incapacity benefit expenditure is not out of control because the numbers on it are falling, that that is simply a result of measures taken in 1995. When someone now reaches retirement age he or she comes off IB and goes onto old age pension. That is the reason for the fall in numbers. It has nothing at all to do with the actual caseload.
  The Government clearly have not gone as far as my noble friend Lord Ashley would like. I accept that. My noble friend presents his amendments as a compromise. That word has been much used tonight. However, his amendments are not a compromise by any definition of that word. They neuter most of the effect of this Bill, as I do not doubt that my noble friend intended they would. IB was devised as an earnings replacement benefit for those who became sick and disabled while in work and who might otherwise have remained in work. As people have said tonight, incapacity benefit was never intended to massage the unemployment figures, although it was so used by the previous government. IB was never intended to be a top-up for early retirement, although it is now being used in that way too. We are bringing back IB to its original intent, an earnings replacement benefit for those disabled while in work and unable to continue to work.
  My noble friend's proposals for the contribution conditions would allow someone to qualify for 113 who did one year's work as long as 81 years ago. That is not creating a link with recent work. That is not compensating someone who has had to leave work recently because of incapacity. Instead it makes incapacity benefit a latent unemployment benefit.

  1205
  My noble friend's proposals on occupational pensions would enable a single person to get IB with a pension—not an income—of up to £23,000 a year which would have been provided by earnings of £45,000 plus, or a couple with two children to get incapacity benefit with a pension of up to £39,000—I repeat that that is not income, wages or earnings but pension—implying preceding earnings of £60,000 to £80,000. No one in your Lordships' House—
  Lord Goodhart: My Lords, I am most grateful to the noble Baroness for giving way. But are not the figures for earnings and pensions that she has just given to us similar to the sort of figures that she mentioned in connection with the working families' tax credit when she defended the fact that government benefits were being given to people on those levels of earnings?
  Baroness Hollis of Heigham: My Lords, the working families' tax credit for a couple with two children would taper out at about £15,000 of earnings; that is, for a couple with dependent children. I refer to both partners being in work and eligible to claim childcare allowance. However, I am comparing like with like, not apples with oranges. The childcare allowance is equivalent to DLA, not IB. WFTC tapers out at earnings of between £14,000 and £16,000. My noble friend's amendment would result in IB tapering out at a pension of double that; that is, £39,000. That would have had to be preceded by earnings of £60,000 to £80,000. I am glad that the noble Lord, Lord Goodhart, gave me the opportunity to make that clear.
  By any stretch of the imagination my noble friend is not targeting those with the greatest needs. My noble friend says that he is protecting the poor. Since when has someone with a pension of £30,000 plus—and therefore with preceding earnings of double that figure—been deemed poor? My noble friend's amendments are not a compromise. The word "compromise" is a useful one. It has become emptied of meaning tonight because, as my noble friend himself said, his amendments would remove from their reach two-thirds of those affected by the proposals.
  Earl Russell: My Lords—
  Baroness Hollis of Heigham: My Lords, I did not intervene in other people's speeches and I hope that I shall be allowed to make my speech tonight.
  Earl Russell: My Lords, I am most grateful to the Minister for giving way. Does she understand that in the amendment of the noble Lord, Lord Ashley, we have conceded the principle? That is a great sacrifice. Some substantial share of the practice would be an appropriate response.
  Baroness Hollis of Heigham: My Lords, to concede the principle and then move amendments which take almost everyone out of its operation is not to my mind a substantial compromise.
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  As I say, my noble friend's amendments are not a compromise. They take almost two-thirds of those affected by the measure out of its reach and they hugely reduce the impact on most of the rest. That is why the Government cannot and will not accept them. However, the Government have listened and have moved significantly. I remind your Lordships that the Government have extended the period over which national insurance contributions have to be paid from one out of the last two tax years prior to the claim for IB, to one out of the last three. In practice, that means someone will be able to get IB, given the working of the tax years, even if they last worked four and a half years ago. To qualify, people will need only to have worked for four weeks on average male earnings—or 12 weeks on the national minimum wage—sometime within the past four and a half years. Do your Lordships really believe that is an onerous contribution condition to meet?
  The extra year that the Government amendment proposes will particularly help people with progressive diseases, who may lose their jobs some time before they are eligible to claim IB, and others with broken work records. As I promised on Report, the Commons amendment provides that people on disabled person's tax credit earning below the lower earnings limit will be able, like carers on invalid carer's allowance, to qualify on the basis of credits in the last two tax years, provided that they have paid contributions at some point in the past. That offers them real security if they stay in work. Again, the Government have listened, responded and moved.
  Turning to occupational pensions, the Government intend to raise the occupational and personal pension threshold by £35 a week, from £50 to £85—which is substantial. That figure, as my right honourable friend the Secretary of State said in the other place, will be reviewed annually so that it keeps its value. Invalidity benefit will not even begin to be reduced for a single person until their income reaches £152 a week. Despite what was said by my noble friend Lord Ashley about the poverty line, that is some £55 a week above what many of us regard as the poverty line—below half average earnings. My noble friend misled the House, possibly because he was comparing a family with children against a single person. Again, that is apples and oranges. I am sure that my noble friend did not intend to mislead the House but he certainly did, and that mistake was repeated by the noble Lord, Lord Rix.
  I repeat, the taper on IB does not even begin to come into effect for a single person, and similarly for couples, until their income is at least £55 above the poverty line that has been quoted by my noble friend. That means that single people will continue to get IB until their early retirement pension reaches nearly £11,500 a year, which is £86.50 a week higher than the disability income guarantee. A couple with two children could get £18,500 and child benefit on top of that, before they lost their entitlement to IB. On top of that, they might also qualify for DLA. Under the Government's proposals, unlike those of my noble friend, those people most severely disabled on the

  1207
  highest rate of DLA will not be affected at all. As a result of the Government's proposals, 100,000 disabled people will no longer be brought within these changes.
  Three additional points were made. The first was that the amendment of my noble friend Lord Ashley was a compromise. Although your Lordships may wish to describe as a compromise something that effectively takes two thirds of the people out of the Bill's reach, do not think that you are somehow negotiating. Your Lordships are not and we are not.
  The second point made and repeated concerned the poverty line. Given that the taper kicks in at some £55 a week over the poverty line and, on the Government amendments, would not be withdrawn for a couple with children until some £18,500 be fore child benefit and DLA, we are not talking about people below the poverty line.
  The third point—made emphatically by the noble Lord, Lord Higgins—was that the other place did not have the chance to consider the amendments and that therefore we would be doing them a favour by returning these proposals for further consideration. I do not agree. I sat in the Gallery in the other place, as did one or two other noble Lords—not for the whole debate, but I went to and fro. It was clear to me and to the House that the entire debate on incapacity benefit, which went on for some three hours, was on the whole range of amendments thereto, as well as on the government amendments. My honourable friend the Member for Kingswood, Mr Roger Berry, stated in the other place on 3rd November:
  "I have supported a compromise position, which is on the Order Paper".—[Official Report, Commons, 3/11/99; col. 321.]
  And he went on to describe it. That was just one part of an extensive debate on incapacity benefits. The other place had a proper opportunity to debate the noble Lord's amendment. It chose instead to support the Government rather than defeat them and to support the amendment of my noble friend, there advanced by Mr Roger Berry. The Commons have considered these amendments. They chose to support the Government. They considered this matter as part of the wider debate. They do not need these matters to be sent back to them.
  6.15 p.m.
  Lord Higgins: My Lords, if the Minister will allow me, the other place did not have the opportunity to vote on these amendments.
  Baroness Hollis of Heigham: My Lords, if the other place had wanted these amendments, it could have voted down the Government's proposition and voted for the other amendments on the Order Paper put by Mr Roger Berry, which were basically the same as my noble friend's amendments. The other place chose not to do so. To suggest that the Commons had neither the wit nor the intelligence to see that strategy is deeply condescending to Members of the other place. They knew what they were doing. It is an act of self-deception by your Lordships to suggest that they did not.
  1208
  The Government have a good and strong record of supporting disabled people. The Government are spending up to £2 billion more this Parliament. This is not about cuts. It is about seeking to respond to real, new and emerging need. The Government have delivered the Disability Rights Commission and are delivering the disabled person's new deal and the disabled person's tax credit—all in two years of a Labour Government. We are continuing that work in this Bill, strengthening the help given to the most severely disabled, the poorest disabled people, and to children and young people. That is a record of which we are proud.
  We believe that what we are doing in the Bill is right. We are focusing help on people who need it most. For example, children born with a severe disability—not people retiring on a generous white-collar pension of £30,000 or more. That is why, although the Government have listened and have moved quite considerably, they will not be moving any further. The Government have sought to meet reasonable concerns. They have done so and should receive credit for that. Given that the Government's concessions and compromise have taken something like 125,000 people out of the changes in the Bill, to dismiss them as some noble Lords have done tonight—including some of my noble friends—as being somehow trivial and insignificant is deeply churlish.
  The Government have listened. It is time that your Lordships listened. Ping-ponging the Bill will not bring anything further for disabled people. My noble friend Lord Ashley may believe that, but he is wrong. Ping-ponging the Bill will not bring forward any further concessions. I quote the Secretary of State:
  "There are no further changes to come. The Lords must understand that".
  Ping-ponging could delay and endanger other aspects of the Bill affecting millions of people; not just extra help for the poorest and most severely disabled but the right of bereaved men to receive for the first time widower's benefits. Ping-ponging the Bill would also risk delaying and endangering the protection of SERPS widows, which we discussed earlier this evening. Let your Lordships be in no doubt that it would also risk the right of women who divorce—as, unfortunately, half of all married women will—to receive shared pension rights, which is something for which your Lordships called. Finally, it might risk or endanger the opportunity for several million low-paid people to enter a good, cheap, safe, funded stakeholder pension scheme.
  I do not exaggerate when I say that millions of people—women, low-paid people, widowers and the poorest disabled people—will benefit from the Bill. So why are your Lordships proposing to ping-pong it when no further concessions are to be had? The House of Commons has twice—I repeat, twice—made its views clear that it supports the Government and that it supports the Bill. Ping-pong will delay the Bill; it could endanger it. It will not extract any further concessions; there are none to be had.

  1209
  As your Lordships acknowledge, the Government have the right to get their legislation through—not my noble friend's legislation; not the Tory legislation; but the Government's legislation. I ask your Lordships and my noble friend: is it not time to acquiesce with grace to the considered decision of the elected House and send a Bill, which will benefit millions of our people, on to Royal Assent?
  Lord Ashley of Stoke: My Lords, I wish to thank all the speakers who have participated in this splendid debate. We have had some marvellous contributions, nearly all of them well informed. I congratulate all speakers who have taken part. I need refer only to the brilliant speech made by the noble Lord, Lord Davies of Coity. Assuming that we were in a general election mode, it was a wonderful, rabble-rousing speech; it would have been a highly successful contribution to the hustings. Unfortunately, he got the date wrong, the time wrong and the place wrong. Apart from that it was a marvellous speech.
  The only other comment I have on the noble Lord's speech is that he boasts about having been a trade union leader. If I may say so modestly, as a young man I was too. If I belonged to a trade union with a leader who was prepared to penalise severely disabled, poor people—living on a poverty level income, on £8,000 or whatever—I would join a different trade union.
  The Minister has spoken with her usual eloquence. My noble friend is a great expert in this field. She is far more expert than anyone else in the House—with, perhaps, the exception of the noble Earl, Lord Russell. Both of them are exceptional speakers. However, I must pick her up on one or two small points.
  She began her contribution by saying that there had been a splendid variety of views. I heard no variety of views at all; all I heard was unanimous condemnation.
  Baroness Hollis of Heigham: My Lords, that will teach me to indulge in irony.
  Lord Ashley of Stoke: My Lords, there was unanimous condemnation in the House of the Government's policies—except from our great friend, the noble Lord, Lord Davies of Coity.
  The Minister said that my amendments were not really compromise. I know that my noble friend is good at fiddling figures—
  Baroness Hollis of Heigham: Never! Never!
  Lord Ashley of Stoke: My Lords, playing with figures perhaps. All I shall say is this: my amendments halve the money that the Government tried to save and squeeze out of disabled people.
  Baroness Hollis of Heigham: My Lords, that is not correct. The Government's original proposals were for £700 million. My noble friend's proposals will bring that down to approximately £190 million.
  Lord Ashley of Stoke: My Lords, the last Government proposals that I saw were £500 million.
  1210
  They were left with £350 million if my amendments were accepted. We could not lean over backwards further than that to be more compromising. I was against the principle—as was the noble Lord, Lord Higgins—of hitting severely disabled people in this way. As the noble Earl, Lord Russell, said, we gave way on the principle; we tried to compromise and to be reasonable because we recognise that the Government have this great majority in the House of Commons. That is the point.
  Another point is that my noble friend mentioned those great examples of people on incapacity benefit who have marvellous pensions of £23,000 or £30,000. For her to quote those kinds of extreme examples shows the desperation of the Government. The wages necessary to receive a pension of that kind will be somewhere in the region of £100,000 or £200,000—I do not know. It requires an enormously high salary. How many severely disabled people applying for IB will have earned that kind of vast fortune? Maybe a dozen; maybe two dozen; maybe 100; maybe 1,000—but, out of the 310,000 people that we are talking about, that is nothing.
  My noble friend seemed to be proud of excluding people from the measures in the Bill. It is a strange Bill where one has a Minister standing up to say "I am proud that this Bill does not cover these people and does not cover those people". The Bill is supposed to help people; it is to make specific provisions for IB to help people.
  Perhaps I may round off in this way. My noble friend did not dispute that the Government's concessionary position leaves some disabled people in poverty of one kind or another. Someone receiving £8,000 is not a wealthy person to be hit by these proposals. She did not deny that the tax rate for these people is 70 per cent compared with 40 per cent for millionaires. She did not deny that the concessions given by the Government relate only to some 20,000 people with the high rate of DLA and 22,000 people with the disabled person's tax allowance.
  Speeches have been made in the House by various speakers. I do not intend to go through them all. The Minister has failed to deal with them adequately. When she tries to frighten the House by mentioning all the good things in the Bill that are at risk, I shall say this: she knows that no one has been a stronger supporter of this Government than me; no one has been a stronger supporter of this Bill than me; no one has been a stronger supporter of welfare reform than me. I started my speech by saying that I admired the Secretary of State; I said how good he was and how wonderful was the record of the Government. But on incapacity benefit the Government are acting disgracefully by hitting these people. We are not jeopardising the good things in the Bill; we are simply challenging the Government for hitting people on incapacity benefit.
  I hope that the House will support my amendments. As far as concerns the future, my options are open. I commend my Motion to the House.
  6.28 p.m.
  On Question, Whether the said Motion shall be agreed to?
  Their Lordships divided: Contents, 260; Not-Contents, 127.

  Division No. 2

  CONTENTS

  Ackner, L.

  Denham, L.

  Addington, L.

  Desai, L.

  Addison, V.

  Dholakia, L.

  Ailsa, M.

  Dundee, E.

  Alderdice, L.

  Eden of Winton, L.

  Allenby of Megiddo, V.

  Elles, B.

  Alton of Liverpool, L.

  Elliott of Morpeth, L.

  Anelay of St. Johns, B.

  Elton, L.

  Annaly, L.

  Exmouth, V.

  Ashbourne, L.

  Ezra, L.

  Ashley of Stoke, L.

  Falkland, V.

  Astor, V.

  Feldman, L.

  Astor of Hever, L.

  Ferrers, E.

  Attlee, E.

  Fitt, L.

  Avebury, L.

  Flather, B.

  Banbury of Southam, L.

  Fookes, B.

  Barker, B.

  Forsyth of Drumlean, L.

  Bathurst, E.

  Fraser of Carmyllie, L.

  Belhaven and Stenton, L.

  Gage, V.

  Bell, L.

  Gardner of Parkes, B.

  Berners, B.

  Geraint, L.

  Bethell, L.

  Glanusk, L.

  Biddulph, L.

  Glasgow, E.

  Biffen, L.

  Glentoran, L.

  Birdwood, L.

  Goodhart, L.

  Blatch, B.

  Gormanston, V.

  Blease, L.

  Gray, L.

  Blyth, L.

  Gray of Contin, L.

  Boardman, L.

  Greenway, L.

  Bowness, L.

  Grey, E.

  Bradshaw, L.

  Hampton, L.

  Bridgeman, V.

  Hamwee, B.

  Bridges, L.

  Harding of Petherton, L.

  Brougham and Vaux, L

  Hardinge of Penshurst, L.

  Bruntisfield, L.

  Harmsworth, L.

  Buccleuch and Queensbarry, D.

  Harris of Greenwich, L.

  Buckinghamshire, E.

  Harris of Peckham, L.

  Buscombe, B.

  Harris of Richmond, B.

  Byford, B.

  Higgins, L.

  Cadman, L.

  Home, E.

  Caithness, E.

  Hood, V.

  Calverley, L.

  Howe, E.

  Campbell of Alloway, L.

  Howell of Guildford, L.

  Carlile of Berriew, L.

  Hutchinson of Lullington, L.

  Carlisle, E.

  Hylton-Foster, B.

  Carnegy of Lour, B.

  Ironside, L.

  Charteris of Amisfield, L.

  Jacobs, L.

  Chesham, L.

  Jeger, B.

  Clancarty, E.

  Jopling, L.

  Clark of Kempston, L.

  Kemsley, V.

  Clement-Jones, L.

  Kennet, L.

  Clwyd, L.

  Kilbracken, L.

  Cochrane of Cults, L.

  Kingsland, L

  Coleridge, L.

  Kinloss, Ly.

  Cope of Berkeley, L.

  Kintore, E.

  Cowdrey of Tonbridge, L.

  Kirkwood, L.

  Craig of Radley, L.

  Lamont of Lerwick, L.

  Cranborne, V.

  Lane, L.

  Crickhowell, L.

  Lauderdale, E.

  Cross, V.

  Lawrence, L.

  Cumberlege, B.

  Layton, L.

  Darcy de Knayth, B.

  Leigh, L.

  Davidson, V.

  Lester of Herne Hill, L.

  Dean of Harptree, L.

  Limerick, E.

  1212

  Lincoln, Bp.

  Redesdale, L.

  Lindsey and Abingdon, E.

  Rees-Mogg, L.

  Linklater of Butterstone, B.

  Rennard, L.

  Listowel, E.

  Renton, L.

  Liverpool, E.

  Richardson of Calow, B.

  Lloyd-Webber, L.

  Rix, L.

  Long, V.

  Roberts of Conwy, L.

  Longford, E.

  Rochester, L.

  Lucas of Chilworth, L.

  Rodgers of Quarry Bank, L.

  Luke, L.

  Roll of Ipsden, L.

  Lyell, L.

  Rotherwick, L.

  McCarthy, L.

  Rowallan, L.

  McColl of Dulwich, L.

  Russell, E. [Teller]

  Mackay of Ardbrecknish, L.

  Ryder of Warsaw, B.

  McNair, L.

  St. John of Fawsley, L.

  McNally, L.

  Saltoun of Abernethy, Ly.

  Maddock, B.

  Sandberg, L.

  Mancroft, L.

  Sandwich, E.

  Mar and Kellie, E.

  Sandys, L.

  Marsh, L.

  Seccombe, B.

  Masham of Ilton, B.

  Sefton of Garston, L.

  Massereene and Ferrard, V.

  Selsdon, L.

  May, L.

  Shannon, E.

  Mayhew of Twysden, L.

  Sharman, L.

  Miller of Chilthorne Domer, B.

  Sharp of Guildford, B.

  Miller of Hendon, B.

  Sharples, B.

  Mills, V.

  Shaughnessy, L.

  Molloy, L.

  Shaw of Northstead, L.

  Monro of Langholm, L.

  Shore of Stepney, L.

  Monson, L.

  Slim, V.

  Montagu of Beaulieu, L.

  Smith of Clifton, L.

  Monteagle of Brandon, L.

  Soulsby of Swaffham Prior, L.

  Morris, L.

  Steel of Aikwood, L.

  Morris of Manchester, L.

  Sterling of Plaistow. L.

  Mountevans, L.

  Stewartby, L.

  Munster, E.

  Stoddart of Swindon, L.

  Murton of Lindisfarne, L.

  Strafford, E.

  Napier and Ettrick, L.

  Suffolk and Berkshire, E.

  Newall, L.

  Swansea, L.

  Newby, L.

  Swinfen, L. [Teller]

  Nicholson of Winterbourne, B.

  Taylor of Warwick, L.

  Noel-Buxton, L.

  Temple of Stowe, E.

  Norrie, L.

  Tenby, V.

  Northesk, E.

  Teviot, L.

  Norton, L.

  Teynham, L.

  O'Cathain, B.

  Thomas of Gresford, L.

  Ogmore, L.

  Thomas of Swynnerton, L.

  Onslow, E.

  Thomas of Walliswood, B.

  Oppenheim-Barnes, B.

  Thurso, V.

  Orme, L.

  Tordoff, L.

  Oxfuird, V.

  Torrington, V.

  Palmer, L.

  Trenchard, V.

  Park of Monmouth, B.

  Trumpington, B.

  Pender, L.

  Turner of Camden, B.

  Perry of Walton, L.

  Waddington, L.

  Peyton of Yeovil, L.

  Wade of Chorlton, L.

  Phillips of Sudbury, L.

  Walpole, L.

  Pilkington of Oxenford, L.

  Weatherill, L.

  Plumb, L.

  Westbury, L.

  Prentice, L.

  Wharton, B.

  Prior, L.

  Wigoder, L.

  Quirk, L.

  Williams of Crosby, B.

  Rathcavan, L.

  Wise, L.

  Rawlings, B.

  Wright of Richmond, L.

  Razzall, L.

  Wynford, L.

  Reay, L.

  Young, B.

  NOT-CONTENTS

  Acton, L.

  Bassam of Brighton, L.

  Ailesbury, M.

  Berkeley, L.

  Alli, L.

  Blackstone, B.

  Amos, B.

  Borrie, L.

  Archer of Sandwell, L.

  Bragg, L.

  Ashton of Upholland, B.

  Brett, L.

  Bach, L.

  Brooke of Alverthorpe, L.

  1213

  Brookman, L.

  Jay of Paddington, B. (Lord

  Brooks of Tremorfa, L.

  Privy Seal)

  Burlison, L.

  King of West Bromwich, L.

  Carmichael of Kelvingrove, L.

  Kirkhill, L.

  Carter, L. [Teller]

  Lea of Crondall, L.

  Chandos, V.

  Lipsey, L.

  Christopher, L.

  Lockwood, B.

  Clarke of Hampstead, L.

  Lofthouse of Pontefract, L.

  Cledwyn of Penrhos, L.

  Lovell-Davis, L.

  Clinton-Davis, L.

  Macdonald of Tradeston, L.

  Crawley, B.

  McIntosh of Haringey, L.

  Currie of Marylebone, L.

  [Teller]

  David, B.

  Mackenzie of Framwellgate, L.

  Davies of Coity, L.

  Mallalieu, B.

  Davies of Oldham, L.

  Marlesford, L.

  Dean of Thornton-le-Fylde, B.

  Mason of Barnsley, L.

  Diamond, L.

  Massey of Darwen, B.

  Donoughue, L.

  Merlyn-Rees, L.

  Dormand of Easington, L.

  Milner of Leeds, L.

  Dubs, L.

  Mishcon, L.

  Elder, L.

  Monkswell, L.

  Evans of Parkside, L.

  Murray of Epping Forest, L.

  Evans of Watford, L.

  Nicol, B.

  O'Neill of Bengarve, B.

  Falconer of Thoroton, L.

  Pitkeathley, B.

  Farrington of Ribbleton, B.

  Plant of Highfield, L.

  Faulkner of Worcester, L.

  Ponsonby of Shulbrede, L.

  Filkin, L.

  Prys-Davies, L.

  Gale, B.

  Puttnam, L.

  Gavron, L.

  Ramsay of Cartvale, B.

  Gilbert, L.

  Randall of St, Budeaux, L.

  Gladwin of Clee, L.

  Rendell of Babergh, B.

  Goldsmith, L.

  Richard, L.

  Goudie, B,

  Sainsbury of Turville, L.

  Gould of Potternewton, B.

  Sawyer, L.

  Grabiner, L.

  Scotland of Asthal, B.

  Graham of Edmonton, L.

  Serota, B.

  Grantchester, L.

  Shepherd, L.

  Gregson, L.

  Simon, V.

  Grenfell, L.

  Smith of Gilmorehill, B.

  Hacking, L.

  Smith of Leigh, L.

  Hanworth, V.

  Strabolgi, L.

  Hardy of Wath, L.

  Symons of Vernham Dean, B.

  Harris of Haringey, L.

  Taylor of Blackburn, L.

  Harrison, L.

  Thornton, B.

  Haskel, L.

  Thurlow, L.

  Uddin, B.

  Hayman, B.

  Varley, L.

  Hilton of Eggardon, B.

  Walker of Doncaster, L.

  Hogg of Cumbernauld, L.

  Warner, L.

  Hollis of Heigham, B.

  Warwick of Undercliffe, B.

  Howells of St Davids, B.

  Wedderburn of Charlton, L.

  Howie of Troon, L.

  Whitaker, B.

  Hoyle, L.

  Whitty, L.

  Hughes of Woodside, L.

  Williams of Elvel, L.

  Hunt of Kings Heath, L.

  Williams of Mostyn, L.

  Irvine of Lairg, L. (Lord Chancellor)

  Winston, L.

  Woolmer of Leeds, L.

  Islwyn, L.

  Young of Old Scone, B.

  Resolved in the affirmative, and Motion agreed to accordingly.

  LORDS AMENDMENT
  43 Clause 58, leave out Clause 58.
  The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill—
  43A Page 66, line 27, leave out from ("(1)") to end of line 42 and insert ("Where—

  (a) a person is entitled to incapacity benefit in respect of any period of a week or part of a week,

  (b) a pension payment is payable to him in respect of that period (or a period which forms part of that period or includes that period or part of it), and

  1214

  (c) the amount of that payment (or, as the case may be, the amount which in accordance with regulations is to be taken as payable to him by way of pension payments in respect of that period) exceeds the threshold,

  the amount of that benefit shall be reduced by an amount equal to 50 per cent. of that excess.
  (1A) In subsection (1) above "the threshold" means—

  (a) if the period in question is a week, £85 or such greater amount as may be prescribed; or

  (b) if that period is not a week, such proportion of the amount mentioned in paragraph (a) as falls to be calculated in accordance with regulations on such basis as may be prescribed.

  (1B) Regulations may secure that a person of any prescribed description does not suffer any reduction under subsection (1) in any amount of incapacity benefit to which he is entitled.
  (2) Regulations may provide—

  ( ) for sums of any specified description to be disregarded for the purposes of this section;").

  43B Page 67, line 1, after ("for") insert ("the aggregation of").
  43C Page 67, line 3, after ("payable)") insert ("in respect of the same or different periods;

  ( ) for such sums or aggregate sums").

  Lord Ashley of Stoke Lord Ashley of Stoke rose to move, That this House—

  (a) do not insist on their Amendment No. 43 to which the Commons have disagreed,

  (b) do agree with the Commons in their Amendments Nos. 43B and 43C to the words so restored to the Bill, and

  (c) do agree with the Commons in their Amendment Nos. 43A to the words so restored to the Bill with the following amendments—

  43E Line 12, leave out ("50 per cent.") and insert ("the standard rate percentage of income tax")
  43F Line 15, leave out ("£85") and insert ("the level of the Disability Income Guarantee")
  6.42 p.m.
  The noble Lord said: My Lords, I beg to move.
  Moved, That this House do not insist on their Amendment No. 43 to which the Commons have disagreed, do agree with the Commons in their Amendments Nos. 43B and 43C to the words so restored to the Bill, and do agree with the Commons in their Amendment No. 43A to the words so restored to the Bill with the proposed amendments.—(Lord Ashley of Stoke.)
  On Question, Motion agreed to.

  LORDS AMENDMENT
  46 Clause 60, leave out Clause 60.
  The Commons disagreed to this amendment for the following reason—
  46A Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient
  Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 46 to which the Commons have disagreed for their reason numbered 46A.

  1215
  Moved, That the House do not insist on their Amendment No 46 to which the Commons have disagreed for their reason numbered 46A. —(Baroness Hollis of Heigham.)
  Lord Higgins: My Lords, we debated this matter at considerable length at earlier stages of the Bill. We certainly remain of the view that the arguments that we put forward then are justified. None the less, I think it is right that the Commons should concentrate on the two Motions which we have just passed. Therefore, I do not wish to oppose what the noble Baroness has just said.
  On Question, Motion agreed to.

  LORDS AMENDMENT
  53 Clause 70, leave out Clause 70.
  The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill—
  53A Page 74, line 36, leave out ("in any specified circumstances")
  53B Page 74, line 40, leave out ("and")
  53C Page 74, line 42, leave out ("a contract between the client and a third party,") and insert ("arrangements involving a third person (and not referable to any contract between the client and the worker),")
  53D Page 74, line 43, at end insert ("and

  (c) the circumstances are such that, were the services to be performed by the worker under a contract between him and the client, he would be regarded for the purposes of the applicable provisions of this Act as employed in employed earner's employment by the client,").

  53E Page 75, line 1, leave out ("the purposes of the applicable provisions of this Act") and insert ("those purposes")
  53F Page 75, line 3, leave out from ("his") to end of line 4.
  53G Page 75, leave out lines 5 to 9 and insert—

  ("(2) For the purposes of this section—

  (a) "the intermediary" means—

  (i) where the third person mentioned in subsection (1)(b) above has such a contractual or other relationship with the worker as may be specified, that third person, or

  (ii) where that third person does not have such a relationship with the worker, any other person who has both such a relationship with the worker and such a direct or indirect contractual or other relationship with the third person as may be specified; and

  (b) a person may be the intermediary despite being—

  (i) a person with whom the worker holds any office or employment, or

  (ii) a body corporate, unincorporated body or partnership of which the worker is a member;

  and subsection (1) above applies whether or not the client is a person with whom the worker holds any office or employment.").
  53H Page 75, line 14, leave out ("relevant payments or benefits,") and insert ("the specified amount of relevant payments or benefits (the worker's "attributable earnings"),").
  53 Page 75, line 15, leave out ("client") and insert ("intermediary").
  53K Page 75, line 16, leave out ("client") and insert ("intermediary (whether or not he fulfils the conditions prescribed under section 1(6)(a) above for secondary contributors)")
  1216
  53L Page 75, line 17, leave out from ("of") to end of line 19 and insert ("the worker's attributable earnings;").
  53M Page 75, line 23, leave out from ("of") to ("period") in line 25 and insert ("the worker's attributable earnings for any specified").
  53N Page 75, line 26, at end insert—

  ("( ) for aggregating any such amount, for purposes relating to contributions, with other earnings of the worker during any such period;

  >( ) for determining the date by which contributions payable in respect of the worker's attributable earnings are to be paid and accounted for;").

  53P Page 75, line 37, leave out ("third party") and insert ("intermediary").
  53Q Page 75, line 44, at end insert ("persons, whether — (i)")
  53R Page 75, line 47, after ("1988)") insert (", or

  (ii) persons of any other specified description.").

  53S Page 76, line 7, at end insert—

  ("( ) Regulations made in pursuance of subsection (3)(c) above may, in particular, make provision—

  (a) for the making of a deduction of a specified amount in respect of general expenses of the intermediary as well as deductions in respect of particular expenses incurred by him;

  (b) for securing reductions in the amount of the worker's attributable earnings on account of—

  (i) any secondary Class 1 contributions already paid by the intermediary in respect of actual earnings of the worker, and

  (ii) any such contributions that will be payable by him in respect of the worker's attributable earnings.").

  53T Page 76, leave out lines 13 to 23.
  53U Page 76, line 35, leave out ("third party") and insert ("intermediary").
  53V Page 76, leave out lines 40 to 44.
  Lord Goodhart Lord Goodhart rose to move, That this House—

  (a) do not insist on their Amendment No. 53 to which the Commons have disagreed,

  (b) do agree with the Commons in their Amendments Nos. 53A to 53H and 53L to 53V to the words so restored to the Bill, but

  (c) do disagree with the Commons in their Amendments Nos. 53J and 53K to the words so restored to the Bill.

  The noble Lord said: My Lords, these amendments deal with what were originally Clauses 70 and 71 of the Bill that came to your Lordships' House from the Commons. Those clauses caused a great deal of controversy in both Houses and indeed outside Parliament. The clauses are an attempt to block the use of single person personal service companies for tax avoidance. When I say "tax avoidance", I use 'that phrase for convenience though it is not really very accurate. The real concern is not with income tax but with national insurance contributions. In fact, the scope for avoiding income tax by the use of a personal service company is quite small. By contrast, the scope for avoiding national insurance contributions is enormous. That applies both to employers' and to employees' national insurance contributions.
  An organisation called the Professional Contractors Group has run an energetic and effective lobbying campaign on behalf of its members, who are mostly IT experts working through their own personal service

  1217
  companies. Like most lobby campaigns, some of the Professional Contractors Group's claims need to be taken with a certain pinch of salt. There is no doubt that tax avoidance is a much greater element in the formation of personal service companies than the Professional Contractors Group concedes. Indeed, that problem will become worse if the rules are not changed. I am not convinced by the claim that most IT workers will "up sticks" and move themselves and their businesses abroad. But the campaign has also made some strong points, to which I shall come in a moment.
  The Government's original proposals in the Bill as it emerged from the other place were strongly criticised by a number of senior professional bodies such as the Institute of Chartered Accountants and the Chartered Institute of Taxation. The Government accepted those criticisms—at any rate, to some extent—and came back at Report stage in your Lordships' House with a number of useful revisions. Unfortunately, those revisions were deeply flawed. In particular, it is wrong that, as those revisions provided, liability for employers' NICs should be imposed on the nominal employer—the personal service company—rather than on the real employer. That is wrong for two main reasons.
  First, it is grossly unfair on a worker who uses a personal service company, especially in borderline cases where it is uncertain whether the worker's job will be classified as that of an employee or as an independent contractor. It puts on the employee the entire risk of an adverse ruling on the status. Secondly, what is plainly now going to happen is that the clients will insist on contracting only with workers who can use their own personal service companies as an intermediary. The clients will refuse to contract with the workers directly. That, I believe, is entirely contrary to the public interest.
  That is why we accept most of the government amendments to the clause, but object to the two key amendments, Amendments Nos. 53J and 53K, which would impose liability to pay the secondary NICs—the employer's national insurance contributions—on the personal service company. If those amendments are deleted, the liability will return to where it should rest; namely, on the client.
  But that is only part of the problem. The Government need to rethink these matters at a more fundamental level, and at two issues in particular. First, they must look carefully at the whole NIC system, because of the enormous preference that it gives to self-employment over employment. Self-employed people now receive almost the same benefits as employees. But the NIC contributions paid in respect of the self-employed are very much lower—in particular, because there is no equivalent of the employer's contribution. I have seen figures suggesting that the NIC subsidy by employees to the self-employed may be as great at £2½ billion a year.
  Secondly, the Government need to examine carefully the classification of people as either employed or self-employed. That is where the
  1218
  Professional Contractors Group has its strongest point. People with very high skills who enter into a short-term contract to perform a specific job and then expect to move on to another job with another client, seem to be more clearly self-employed than employed. Such people do not receive, and do not expect, rights under employment law: holiday pay, membership of occupational pension schemes and the other benefits that go with employment. But under the existing tests they may be employees for tax purposes even if they are not employees for the purposes of employment law.
  We need to re-examine the whole question of classification so that the test for the classification as employed or self-employed can take into account not merely the specific job being done but the whole pattern of work that a particular worker goes in for. That is why we believe that Clauses 70 and 71 present serious and unsolved problems. We believe that the Government should take those matters away, reconsider them and return with solutions at a later date. I beg to move.
  Moved, That this House do not insist on their Amendment 53 to which the Commons have disagreed, do agree with the Commons in their Amendments Nos. 53A to 53H and 53L to 53V to the words so restored to the Bill, but do disagree with the Commons in their Amendments 53J and 53K to the words so restored to the Bill.—(Lord Goodhart.)
  The Earl of Kintore: My Lords, in my valedictory speech in this House—a place that I shall miss a great deal—I do not intend to re-rehearse the points that were well made in a rather late short debate in the other place last Wednesday (at cols. 404–429 of the Official Report) as to why Clause 70 should stay removed from the Bill. When the House divided at midnight the Government insisted that Clause 70 should be reinstated, despite the fact that at the very least it appears to discriminate against smaller contracting businesses.
  At a meeting of about 240 professional contractors in Aberdeen in July, and a similar number in the Jubilee Room last Wednesday, there seemed to be feelings of anger and bewilderment: anger that running one's affairs through a long-established personal service company is now regarded almost as an illegal activity; and bewilderment that a perfectly sensible, popular, preferred, flexible, and in some cases necessary method of working as contractors is under attack. If there is large-scale fraud as regards the National Insurance Fund, I am sure that there is all-party support in this House to help the Government to stop it. A figure of £200 million was given, but doubts have been expressed about its accuracy.
  The aspect that alarms me most about the situation is that in order to catch a few wrongdoers there is ready acceptance that many perfectly legitimate contracting businesses will have to close down if they cannot change their method of working or absorb the competitive pressures from larger, favoured organisations.

  1219
  I realise that this provision has had to be accommodated in a large, complex and important Bill. But Clause 70 is important to those whom it affects. I make a plea that in a similar future situation adequate parliamentary time will be allowed, away from the Bill, in both Houses, and that there should be genuine pre-legislative consultation with established pressure groups such as the Professional Contractors Group. The group continues to have real concerns about the practical application of Clause 70 and has suggestions for better ways of achieving the Government's objective. Here I should declare an interest in the Professional Contractors Group. The group intends to give me a hugely expensive dinner this coming Wednesday. I believe that fish is to be the main course.
  During my journey back to Scotland on Friday after our sadly curtailed Sitting, I read an article in the Evening Standard of which I should like to quote the first sentence:
  "Shortly after becoming Chancellor of the Exchequer, Gordon Brown decided to find out why there are so few entrepreneurs in Britain".
  I think I can now assist the right honourable gentleman. The threat of IR35 being enacted has already caused a trickle of entrepreneurs to go abroad. If the provision is enacted as Clause 70, there is a danger of the trickle becoming a flood. If the seven or eight contractors—young, smart, articulate and interested—who were listening to the debate with me in another place last Wednesday are a representative sample of the group, we should be fighting tooth and nail to keep them in this country, and not treat them like unwanted raffle prizes.
  The Minister will probably tell me, as usual, that I am talking rubbish. I shall not try to embarrass the noble Lord; however, I earnestly hope that on this occasion he is correct and I am wrong.
  Lord Jenkin of Roding: My Lords, shall not detain the House long as I have deployed the arguments at previous stages: we debated this point in Committee, on Report and at Third Reading. I am deeply disappointed that the Government have decided to bring these clauses back to the House at this stage.
  I have tried to read and understand the debate in the other place. I must say that it was an extremely scrappy debate. The knowledge that it would be guillotined encouraged people to intervene at every stage. Like the noble Earl, Lord Kintore, I find it difficult to see the justification for taking this measure through in such a blunderbuss fashion.
  No one on this side of the House has denied that there is a problem with the Friday to Monday transition, as the noble Lord, Lord McIntosh, has asserted. But there is absolutely no doubt that this and the succeeding clause will hit a large number of perfectly reputable self-employed people, who will find themselves having to pay not merely the self-employed tax but both the employer's tax and the employee's contribution. In a very competitive industry that kind of thing can make a difference.
  1220
  We have talked a good deal about people in the IT contracting industry. I do not know whether even now the Minister realises the scale of the attack that this clause represents. Recently, I received a letter from Mr P J Street who works as a consultant in the railway industry. he writes:
  "Until recently I was in full time, salaried employment, but I resigned and set up my own company. This, I hasten to add, was so that I would obtain more variety and job satisfaction (I'm no longer working for my original employer). As you rightly pointed out"—
  he refers to my speech at Third Reading—
  "the effect of Clauses 71 and 72",
  as the matter stood then,
  "will be simply to saddle me with an excessive tax liability because I will have to fund both employee's and employer's NIC. I work in the railway industry …
  Unlike a permanent employee I have no continuity of employment. The client doesn't fund a pension scheme, sick pay scheme, holidays, etc, and if I want a perk, such as a mobile phone, I have to fund it myself".
  Is it really the intention of the Government to hit people like that—because that is what they are doing? I fear that, as the noble Earl said, some people will simply pack up and go abroad because they feel that they are being unjustly penalised and will be unable to compete under the burden. That is a great shame.
  We are told in the press, given the usual leaks, that there will be all kinds of splendid bonuses for people to engage in share option schemes and so on. What the Government give with one hand they take away with another. I believe that it is a great shame.
  7 p.m.
  Lord Higgins: My Lords, I understand that we are to have just one debate on IR35. It is perhaps appropriate for me to comment at this stage, although the noble Lord, Lord Goodhart, concentrated on the specific amendments that are before us. First, I pay tribute to the noble Earl, Lord Kintore, who has been assiduous in pursuing the arguments on this point with considerable skill. It is sad that, as I understand it, in a short time he will no longer be with us. One cannot help but ask whether those who come after him will be of the same quality that we have seen from his speeches on this amendment. I believe that he has represented the interests to which he has spoken 'with considerable skill.
  We conduct this debate following a further spin session on the way in which the Government are to encourage entrepreneurs. As with the welfare reform side, I believe that we must look carefully at the way in which the Government say one thing in public relations terms and do something quite different. We have seen that illustrated clearly in the case of this clause. We on this side of the House have made it abundantly clear that we do not favour tax avoidance, but we genuinely believe that as a result of the measures that are now before us a considerable number of people, who are perfectly genuine entrepreneurs, will find themselves paying a substantial amount in tax and national insurance contributions. We have yet to see the particular tax

  1221
  proposals. However, this is another stealth tax. It is no good the noble Lord raising his eyebrows. Unless we can together find a reasonable solution it will have the effect of discouraging industry and lead to it going abroad, as well as other unfortunate consequences.
  I had not realised until I read Hansard in another place that this was yet another "Yes, Minister" case. We discovered in relation to the previous set of amendments that the Government's new proposals to deal with the disabled were put to the previous government and turned down. They have re-emerged with this Government. I understand that this is a somewhat similar situation. The Revenue proposed this measure to the previous government, who turned it down, and now it emerges again. Alas, with the bar on documents proceeding from one government to that of another party we shall never know.
  Lord Jenkin of Roding: My Lords, perhaps my noble friend will give way. He may recollect that when I first debated this matter at the early stages of the Bill I said that they tried it out on me when I was Secretary of State for Social Services in 1979. I turned it down.
  Lord Higgins: My Lords, it has taken a long while to surface. I recall it well. I also recall that, quite apart from the merits, when my noble friend and I were both at the Treasury, the Inland Revenue and HM Customs and Excise customarily came along with a list of 20 or 30 so-called anti-avoidance proposals. Generally, we agreed that each could have two and that would be it. Be that as it may, it is crucial that further consultations should take place.
  I should like to quote an observation by Mr Timms in the other place:
  "The proposals … have been widely welcomed, not least by the Chartered Institute of Taxation and the Professional Contractors Group".—[Official Report, Commons; 3/11/99, col. 428.]
  My understanding is that that is not so. The group does not welcome what is now proposed.
  Following the original insertion of this clause in the Bill and its translation to your Lordships' House, a considerable amount of consultation took place but largely with bodies such as the Law Society, to which the noble Lord, Lord Goodhart, referred, and other organisations of that kind. As a result, significant changes were made. The government amendments now before us are very different from those originally tabled. I am happy to say that the so-called control test has gone, certification has been dropped and so on.
  What is now before us is certainly better than what we had before, but the fact is that that is largely as a result of consultations with those major professional bodies, not those most affected. I hope that this evening we shall have an undertaking from the Minister that the Government will carry out a further round of consultation with those people who are affected. A large number of them came to the House the other day to make representations to various people, including their own Members of Parliament.
  1222
  That is of great importance if the proposal is to proceed in a reasonable form and is not to have the undesirable effects that we have already debated.
  The central point is the Government's proposals in regard to the question of costs. The essence of the problem is that as far as concerns this group of people, what is proposed to be taxed and to be subject to national insurance contributions and so on is the total revenue of the operation. If it is a normal plc that is not so: the revenue is divided up into its component parts and so on. But as the clauses now appear before us the new rules will allow personal pensions for the individuals concerned from expenses allowed to employees under Schedule E rules to 5 per cent of the gross fees to cover running costs. But they do not cover a considerable number of other costs, for example salaries paid to support staff, most training and in particular capital equipment. The whole amount of the revenue is classified as income. That has a serious effect on those companies. That is clearly wrong if we are to have a level playing field between the large and small companies operating in this area. I cannot believe that it is in the interests of the economy as a whole to discriminate in that way so that only large companies find themselves able to expand the business, to invest, and so on. The Government have not recognised a serious problem.
  Before the provision comes forward in the finance Bill, the Government should carry out a series of further consultations. I pay tribute to the noble Lord, Lord McIntosh, who arranged a suitable meeting for those concerned in this House. None the less, we have a long way to go before the clauses are in a satisfactory form. I understand that there are provisions in the Bill for the Treasury, and other orders, to alter the provisions. If that is so, we can put right what we are unable to do now. It is too difficult to try to form specific amendments which we could have sought to force on the Government today. I do not propose that my noble friends should vote against the proposals before us. However, I express the hope that the issues will be further considered and a sensible solution to the problem found.
  7.15 p.m.
  Lord McIntosh of Haringey: My Lords, two sets of congratulations are due. The first is to the noble Lord, Lord Goodhart. He has become more radical and antagonistic to the provisions as the Bill has proceeded through the House. The noble Lord will remember that when the matter first arose, he was concerned only with the definition of self-employment. He objected to the control test rather than the existing test. He argued that if the amendment were accepted or passed, his Benches would support the clause. We did what he wanted; and he has gone to the next issue.
  The next issue was to oppose the whole clause on the grounds that we have heard; I shall not repeat them. Now he agrees with almost all the clause but appears to oppose the basis on which national insurance contributions are calculated and charged. The noble Lord is a true radical and deserves praise for that, if not for consistency.

  1223
  The second congratulations are due to the Professional Contractors Group. I have never encountered such a literate, persuasive series of letters. Ministers have had something like 2,000 letters. I have received many dozens. The noble Lord, Lord Jenkin, has received a number. They are literate, well spelt, well argued, persuasive letters—and wrong. A great dealt of parliamentary time has been taken up because a number of people have gathered together, put aside a certain amount of money for lobbying, and persuaded a number of noble Lords opposite of a view of this legislation which is utterly misguided and misconceived. They deserve credit for it; that is the way lobbying works; that is the way politics work. That is what we have to respond to; and I have been responding to it.
  However, I shall not go over the wider argument on the clause. The amendments before us from the noble Lord, Lord Goodhart, are on one specific aspect: whether the client of the worker is responsible for deciding whether the new rules apply to a contract and is liable to pay employers' national insurance contributions if they do.
  The Motions numbered 53W and 54W would have the effect of reverting to the original proposal, and place liability on the client for any NIC liability incurred by a worker hired through a service company. One of the most unpopular features of our original proposals in the very widespread consultation we carried out—I shall not repeat the figures—was the proposal to do just what the noble Lord proposes. As a result of the consultation, we listened to what people said. We were persuaded that it would have the effect of putting an end to a mechanism which provided valuable flexibility in the market for skilled workers. Most people have welcomed the changes we have made which allow that flexibility to continue while at the same time ensuring that the right amount of tax is paid.
  Before I turn to the arguments put forward by the noble Lord, Lord Goodhart, it is necessary for me to quote from the response of the Professional Contractors Group to the press release of 23rd September. It said, first, that the removal of registration is to be welcomed; it would have been an administrative burden. That we did, and it is not in contest.
  Secondly, the group said that the move from a single test of supervision, direction and control is to be welcomed. That we have done; it has not been contested.
  Thirdly, on the transfer of a responsibility for accounting for tax and NIC from the client to the service company, it said that it is "very welcome indeed". That is not much support for the arguments put forward by noble Lords opposite.
  Four points have been argued in the debate. First, it is easier for the client than the worker to bear the risk of having to pay the employer's NICs in particular where the client is a substantial company with a number of short-term contract workers. That implies that larger companies are not as concerned about
  1224
  profit margins as smaller companies—which I contest. But it surely does not reflect the reality of the business world: that businesses of all sizes compete. On the contrary, the onus for calculating any secondary and primary Class 1 contributions is best placed with the service company. The worker will build up a knowledge through his previous contracts, and possibly his concurrent contracts, about what working circumstances lead to a NIC liability.
  Secondly, it has been argued that where there is liability as to whether the provision was applicable, it is plainly easier for the client than the worker to get legal advice and to form a judgment on the degree of risk. But that ignores the fact that the service companies will have access to advice from the Inland Revenue on whether a contract is caught by the provision. In addition, they will have a right of appeal if they are not happy with the decision. We should not forget that the original proposals would have introduced a new test—to decide whether the provision is applicable to a contract—which has now been withdrawn.
  There is a wealth of experience in the private sector and the Inland Revenue in applying these rules. A borderline test will be clear to contributors as being just that: one on which advice should be sought. I do not believe that such advice cannot be obtained by service companies.
  Thirdly, there is concern that if there is a dispute with the Inland Revenue, it is easier for a client than for a worker to fight it. That may be true for elaborate avoidance vehicles dreamed up by City lawyers. But the provision is simply to ensure that where a worker would be the employed earner of the client but for the service company, they should pay NICs on relevant contracts. It is a simple concept which has a right of appeal when there is disagreement.
  Finally, there is concern that our proposals will increase the pressure on workers to form service companies; in other words, as the noble Lord, Lord Goodhart, said, that clients will refuse to contract with workers who do not have service companies. I hope that I explained from my experience of nearly 30 years that that is not in practice the case. It is not the way the system works. The cost to the client should be the same whether he hires an employee or a service company. The worker will seek to pass on the NIC cost to the service company in the cost that he charges to the clients. The decision is tax and NICs neutral.
  I shall not go back on the existing definitions of employment. However, I wish to respond to the noble Lord, Lord Higgins, about consultation with the Professional Contractors Group. I assure the noble Lord that we are consulting the Professional Contractors Group on guidance for its members so that the proposals can be made as clear as possible.
  Lord Higgins: My Lords, if the noble Lord will allow me to intervene, that is the essence of the group's complaint. It will be told the position; it will be made as clear as possible. The group's complaint about the consultation is that it has not had a reasonable

  1225
  audience on the arguments for changing the Government's proposals. What the Minister has just said brings out that fact: that the Government will tell the group, but they will not listen to it.
  Lord McIntosh of Haringey: My Lords, when this charge was made at the last stage in this House, I said that the Professional Contractors Group had been present at the seminar which the noble Lord attended and that when I asked it about the consultation, it said they were satisfied with it and that it understood that the Government intended to pursue the basic thrust of the proposal. After all, if we are talking about something over £200 million in tax avoidance, it is the responsibility of the Government to pursue a proposal of that kind. I was astonished when the noble Lord, Lord Higgins, said that he accepted only one or two out of 18 or 20 tax avoidance measures put forward by the Revenue. Ministers in the Treasury are supposed to be on the side of taxpayers, not on the side of tax avoidance. I found that a very curious set of priorities.
  Lord Higgins: My Lords, I accept what the noble Lord, Lord McIntosh, said about the meeting which he was kind enough to arrange for the noble Lord, Lord Goodhart, myself, and others who attended. Nonetheless, there is a widespread feeling among people who do not feel that the Government are listening to all the arguments. Can I put one argument? Is it the case under the present arrangements proposed by the Government that if the personal service company invests more in equipment which, together with its other costs, exceeds the 5 per cent limit the Government have imposed, it will find that it is at a disadvantage compared with a large company because it will be taxed on the amount over 5 per cent and the large company will have no such inhibition?
  Lord McIntosh of Haringey: My Lords, I think that objection is based on the misconception which has been prevalent in this debate that somehow these one person service companies are entrepreneurs and that they are making some specific contribution other than the skill of the person. We are talking about one-person companies. We are talking about people who choose to form themselves into a company rather than being self-employed without incorporation, which is what most other people in the same position do. Why are they doing that? I do not say that every single one of them is doing it for the purpose of tax avoidance, but I think it has been generally accepted that that is a very substantial reason. We, as guardians of the public purse, have the responsibility of ensuring that that tax avoidance element of the formation of service companies is not allowed to continue.
  I hope that the noble Lord, Lord Goodhart, will not feel it necessary to press his rather modest amendment to this very important change.
  Lord Goodhart: My Lords, I am most grateful to the Minister for his reply. I would particularly single out the question of the risk with which I do not think he
  1226
  dealt adequately. The risk arises particularly in borderline cases. First of all, the noble Lord did not accept what seems to me patently and obviously true. That is that the risk of an adverse decision, so far as employers' NICs are concerned, should rest with the real employer and not with the nominal employer. It is the bigger organisation and not the one person company who is clearly in a better position to bear that risk. It can be spread over a much larger number of cases. For the individual concerned in the one person personal service company, it may be catastrophic, as pointed out in the letter that the noble Lord, Lord Jenkin, read to us. It must undoubtedly be an issue for many people in that position.
  Equally, the reason why employers or clients will insist on dealing only with service companies is again simply the risk. By dealing with the service company, they know they are at no risk at all if Clauses 70 and 71 are brought back in the form that the Government want them as the risk is bound to lie on the worker and not on the employer. Whatever the noble Lord, Lord McIntosh, may have done in the past, I am sure he was an exceptionally good employer and would not have allowed that sort of issue to disturb him.
  Lord McIntosh of Haringey: My Lords, not just my company is doing it now. All market research companies are doing it now.
  Lord Goodhart: My Lords, the question is how much longer they will continue to do so if the personal service company becomes something which is clearly seen as a protection for them against the risk in borderline cases.
  The Minister will no doubt be relieved to hear that I do not intend to divide on the Motion. There are three reasons. First, we have probably had enough Divisions today. Secondly, broadly speaking, we agree with the Governments' objectives but feel that the proposal has not been adequately thought out and that it needs more care. Thirdly, there will be opportunity for further consideration in the next six months or so because, as we know, there will be legislation in the next Finance Bill to deal with the tax aspects of a personal service company and Clauses 70 and 71 can then, as a result of subsection (9) in each clause, be revised in the light of the relevant decisions taken in that Bill. However, I hope very much that the Government will take the opportunity of reconsidering something that I believe is aimed in the right direction but which is a deeply flawed solution. I beg leave to withdraw my Motion.
  Motion, by leave, withdrawn.

  LORDS AMENDMENT
  53 Clause 70, leave out Clause 70.
  The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill—
  53A Page 74, line 36, leave out ("in any specified circumstances")
  53B Page 74, line 40, leave out ("and")

  1227
  53C Page 74, line 42, leave out ("a contract between the client and a third party,") and insert ("arrangements involving a third person (and not referable to any contract between the client and the worker),")
  53D Page 74. line 43, at end insert ("and

  (c) the circumstances are such that, were the services to be performed by the worker under a contract between him and the client, he would be regarded for the purposes of the applicable provisions of this Act as employed in employed earner's employment by the client,").

  53E Page 75. line 1, leave out ("the purposes of the applicable provisions of this Act") and insert ("those purposes")
  53F Page 75, line 3, leave out from ("his") to end of line 4.
  53G Page 75, leave out lines 5 to 9 and insert—

  ("(2) For the purposes of this section—

  (a) "the intermediary" means—

  (i) where the third person mentioned in subsection (1)(b) above has such a contractual or other relationship with the worker as may be specified, that third person, or

  (ii) where that third person does not have such a relations lip with the worker, any other person who has both such a relationship with the worker and such a direct or indirect contractual or other relationship with the third person as may be specified; and

  (b) a person may be the intermediary despite being—

  (i) a person with whom the worker holds any office or employment, or

  (ii) a body corporate, unincorporated body or partnership of which the worker is a member;

  and subsection (1) above applies whether or not the client is a person with whom the worker holds any office or employment.").
  53H Page 75, line 14, leave out ("relevant payments or benefits,") and insert ("the specified amount of relevant payments or benefits (the worker's "attributable earnings"),").
  53 Page 75, line 15, leave out ("client") and insert ("intermediary").
  53K Page 75, line 16, leave out ("client") and insert ("intermediary (whether or not he fulfils the conditions prescribed under section 1(6)(a) above for secondary contributors)").
  53L Page 75, line 17, leave out from ("of") to end of line 19 and insert ("the worker's attributable earnings;").
  53M Page 75, line 23, leave out from ("of") to ("period") in line 25 and insert (" the worker's attributable earnings for any specified").
  53N Page 75, line 26, at end insert—

  ("( ) for aggregating any such amount, for purposes relating to contributions, with other earnings of the worker during any such period;

  ( ) for determining the date by which contributions payable in respect of the worker's attributable earnings are to be paid and accounted for;").

  53P Page 75, line 37, leave out ("third party") and insert ("intermediary").
  53Q Page 75, line 44, at end insert ("persons, whether—

  (i)")

  53R Page 75, line 47, after ("1988)") insert (", or

  (ii) persons of any other specified description,").

  53S Page 76, line 7, at end insert—

  ("( ) Regulations made in pursuance of subsection (3)(c) above may, in particular, make provision—

  1228

  (a) for the making of a deduction of a specified amount in respect of general expenses of the intermediary as well as deductions in respect of particular expenses incurred by him;

  (b) for securing reductions in the amount of the worker's attributable earnings on account of—

  (i) any secondary Class 1 contributions already paid by the intermediary in respect of actual earnings of the worker, and

  (ii) any such contributions that will be payable by him in respect of the worker's attributable earnings.").

  53T Page 76, leave out lines 13 to 23.
  53U Page 76, line 35, leave out ("third party") and insert ("intermediary").
  53V Page 76, leave out lines 40 to 44.
  Lord McIntosh of Haringey: My Lords. I beg to move that the House do not insist on their Amendment No. 53 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 53A to 53V to the words so restored to the Bill.
  Moved, that the House do not insist on their Amendment No. 53 to which the Commons have disagreed and do agree with the Commons in their Amendment Nos. 53A to 53V to the words so restored to the Bill. —(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.
  [Motion No. 54W not moved.]

  LORDS AMENDMENT
  54 Clause 71, leave out Clause 71.
  The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill—
  54A Page 77, line 16, leave out ("in any specified circumstances")
  54B Page 77, line 20, leave out ("and").
  54C Page 77, line 22, leave out ("a contract between the client and a third party,") and insert ("arrangements involving a third person (and not referable to any contract between the client and the worker),").
  54D Page 77, line 23, at end insert ("and

  (c) the circumstances are such that, were the services to be performed by the worker under a contract between him and the client, he would be regarded for the purposes of the applicable provisions of this Act as employed in employed earner's employment by the client,").

  54E Page 77, line 25, leave out ("the purposes of the applicable provisions of this Act") and insert ("those purposes").
  54F Page 77, line 27, leave out from ("his") to end of line 28.
  54G Page 77, leave out lines 29 to 33 and insert—

  ("(2) For the purposes of this section—

  (a) "the intermediary" means—

  (i) where the third person mentioned in subsection (1)(b) above has such a contractual or other relationship with the worker as may be specified, that third person, or

  (ii) where that third person does not have such a relationship with the worker, any other person who has both such a relationship with the worker and such a direct or indirect contractual or other relationship with the third person as may be specified; and

  (b) a person may be the intermediary despite being—

  (i) a person with whom the worker holds any office or employment, or

  1229

  (ii) a body corporate, unincorporated body or partnership of which the worker is a member;

  and subsection (1) above applies whether or not the client is a person with whom the worker holds any office or employment.").
  54H Page 77, line 38, leave out ("relevant payments or benefits,") and insert ("the specified amount of relevant payments or benefits (the worker's "attributable earnings"),").
  54 Page 77, line 39, leave out ("client") and insert ("intermediary").
  54K Page 77, line 40, leave out ("client") and insert ("intermediary (whether or not he fulfils the conditions prescribed under section 1(6)(a) above for secondary contributors)").
  54L Page 77, line 41, leave out from ("of") to end of line 43 and insert ("the worker's attributable earnings;").
  54M Page 77, line 47, leave out from ("of") to ("period") in line 2 on page 78 and insert ("the worker's attributable earnings for any specified").
  54N Page 78, line 3, at end insert—

  ("( ) for aggregating any such amount, for purposes relating to contributions, with other earnings of the worker during any such period;

  for determining the date by which contributions payable in respect of the worker's attributable earnings are to be paid and accounted for;").

  54P Page 78, line 14, leave out ("third party") and insert ("intermediary").
  54Q Page 78, line 21, at end insert ("persons, whether—(i)")
  54R Page 78, line 24, after ("1988)") insert (", or

  (ii) persons of any other specified description,").

  54S Page 78, line 32, at end insert—

  ("( ) Regulations made in pursuance of subsection (3)(c) above may, in particular, make provision—

  (a) for the making of a deduction of a specified amount in respect of general expenses of the intermediary as well as deductions in respect of particular expenses incurred by him:

  (b) for securing reductions in the amount of the worker's attributable earnings on account of—

  (i) any secondary Class 1 contributions already paid by the intermediary in respect of actual earnings of the worker, and

  (ii) any such contributions that will be payable by him in respect of the worker's attributable earnings.").

  54T Page 78, leave out lines 38 to 48.
  54U Page 79, line 12, leave out ("third party") and insert ("intermediary").
  54V Page 79, leave out lines 17 to 21.
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do not insist on their Amendment No. 54 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 54A to 54V to the words so restored to the Bill.
  Moved, That the House do not insist on their Amendment No. 54 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 54A to 54V to the words so restored to the Bill.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  LORDS AMENDMENT
  85 Clause 84, page 87, line 23, leave out (", 70").
  The Commons disagreed to this amendment for the following reason—
  85A Because it is consequential on Lords Amendment No. 53 to which the Commons have disagreed.

  LORDS AMENDMENT
  93 Clause 84, page 88, line 4, leave out (", 71").
  The Commons disagreed to this amendment for the following reason—
  93A Because it is consequential on Lords Amendment No. 54 to which the Commons have disagreed.
  Lord McIntosh of Haringey: My Lords, I beg to move that this House do not insist on their Amendments Nos. 85 and 93 to which the Commons have disagreed for their reasons numbered 85A and 93A.
  Moved, That the House do not insist on their Amendments Nos. 85 to 93 to which the Commons have disagreed for their reasons numbered 85A to 93A.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  Royal Parks
  7.30 p.m.
  Lord St. John of Fawsley Lord St. John of Fawsley rose to ask Her Majesty's Government whether they consider that the present uses of the Royal Parks are appropriate.
  The noble Lord said: My Lords, I begin by declaring an interest. I am a joint trustee of the Royal Parks Appeal of His Royal Highness the Prince of Wales and have been for the past decade. There is much to be said in favour of the Monarchy, but not least that we owe a great debt of gratitude to that institution for the creation of the Royal Parks. They were given to the people—it was never intended that they should be used for commercial purposes—for their use; for their refreshment; to provide them with peace and recreation; and to give them an opportunity to enjoy a park or country experience.
  In a real sense, the Royal Parks are the lungs of London. They are visited by people who do not have dachas in the country, but wish to enjoy the grass, the trees, the flowers and the birds and have some relief from the stresses and strains of city life, which grow ever greater. They are a true rus in urbe.
  The first point I wish to make is that they should be inviolate from development. The expropriation of any land in the Royal Parks is much worse than nibbling away at the green belt.
  Secondly, traffic intrusion must be reduced. The Outer Circle of the Regent's Park, for instance, has become a major commuter rat run. In the mornings and evenings, streams of cars pass through driven by people who are not visiting the area and have nothing to do with it. I ask the Minister, who speaks on behalf of the Government not

  1231
  only for the Department for Culture, Media and Sport but also for the Department of the Environment, Transport and the Regions, to do three things—
  Lord McIntosh of Haringey: My Lords, the noble Lord is mistaken. I do not have that privilege.
  Lord St. John of Fawsley: My Lords, I am sorry to differ in the smallest particular, but it is my understanding that when a Minister speaks on a subject from that side of the House he speaks for the policy of the whole Government.
  Lord McIntosh of Haringey: My Lords, in that general sense, of course the noble Lord is correct.
  Lord St. John of Fawsley: My Lords, I am grateful for that clarification of the Minister's position. Will he use whatever influence he has in the Government to take steps to end that practice, both in the Regent's Park and in the other parks? If it is not possible to do so all at once, will the Government do their best to ensure that traffic is slowed down? Will they ensure an enforcement of the 30 mile per hour speed limit? That could easily be achieved with the use of speed cameras and sleeping policemen. The danger to pedestrians would then be reduced, as would noise and pollution.
  Thirdly, we would like to see the parks properly maintained. The existing infrastructure is collapsing. The roads and paths are forever being patched up. Many of the signs indicating, for example, that no skating or cycling is allowed in certain garden areas have decayed or vanished. The money should be found to restore them. Furthermore, the staffing structure of the parks is collapsing. The friendly, helpful park-keeper is a figure of the past; an almost extinct species. The Commons Select Committee on the Environment, Transport and Regional Affairs recently published a report deploring that. Park managers are also on the way out. In the Regent's Park, which I know well, there is an excellent manager, Mr David Caselton, but I believe that that park is almost unique in that. The other park managers have disappeared.
  Moreover, there is a need to preserve views. Mary had "Calais" written on her heart and I hope that the noble Lord the Minister will have "views" written on his. The most recent act of vandalism, perpetrated on St. James's Park, is the ferris wheel. It overshadows a world heritage site and the Royal Fine Art Commission did its best to stop the building. It will look even worse once the cars, in which the public are to travel, have been attached.
  We willingly gave up our carparking space on the Horse Guards Parade in order to create that great open space which is such an addition to the amenity of the capital. How sad that the wonderful view from the bridge in St. James's Park is now so marred and spoiled. Will the Minister say when the monstrosity is to be removed? Furthermore, will he undertake that the surface area will not be scarred by hideous temporary buildings, as happened recently?
  Behind all this looms a larger problem; that of finance. It is a question of money. This year's grant to the Royal Parks Agency was £26.39 million from the DCMS, which
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  is a rise of £4.4 million over the year 1998–99. But it is the first increase for five years and, much worse, between 1994 and 1999 there was a 30 per cent fall in real terms in the funding of that agency. Even the present increase will not make up the loss because £3 million of the additional money is not for the parks but for projects connected with the Princess of Wales. Therefore, by 2000–01 we shall be back to £22.2 million, which represents another cut in the budget of the Royal Parks Agency. What a way to start off the millennium!
  In desperation, the agency is advancing down the road of privatisation and commercialism. In 1998, Royal Parks Enterprises was set up to sponsor events and to sell merchandise in the parks. As they are commercial companies, their primary purpose is to make a profit. In the summer of 1999, Kensington Gardens in Hyde Park was leased out for rock and pop concerts. No fewer than nine of them took place in six weeks. Of course, they involved not only the loss of the use of the park during the time of the performance, but the appearance of lorries, portaloos, portakabins, fences, damage to the grass and the visit of thousands and thousands of fans. So for long periods the public are excluded from the use of great tracts of the park. They are not able to enjoy them; to take their children out; to play games there; or to have picnics.
  I draw on a recent example from the Regent's Park where a flower show took place this summer. It was totally unnecessary because we have plenty of flower shows in London and we have plenty of flowers in the park. At that fair, hardly a flower appeared; it was mainly devoted to the selling of garden gnomes and fountains. (It is as well that Mr. Major is not present!) It lasted only a few days, but the soccer players and other young people who use that part of the park were excluded from their pitch for five weeks.
  Another jewel in the crown of the Regent's Park is the secret garden for meditation. A theatrical performance was put on there by a group of ladies. It was an idiosyncratic performance and they were selling garden plants. For two weeks in the height of summer the public were excluded from that wonderful garden. It was devoted to a totally different purpose when there is already a perfectly adequate theatre in the Regent's Park.
  What did all those events raise in financial terms? We should be grateful for detailed accounts from the department. I estimate that probably only about £1 million was raised, which does nothing ultimately to solve the financial problems of the parks.
  A creeping commercialism is taking root. Let us take the example of Ronald Rae. I have nothing against Mr Rae, and indeed I do not know him. Until his work suddenly landed in the middle of the park, I had never seen it. Twenty huge works suddenly arrived in the Nesfield gardens. As the Minister will know, the Nesfield gardens are divided in two. The first part is comprised of formal Victorian gardens designed by Nesfield Senior. The second part, designed by Nesfield Junior, is an English park garden.
  In a space of less than nine acres, the 20 huge sculptures were dumped for sale, for the benefit of Mr. Rae. I rang up Camden Council, which had not even given planning permission. When I inquired, its

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  representatives said that a different department was responsible. They admitted that an error had been made but said that they would grant permission retrospectively. One can imagine the fate of someone who produced that excuse in relation to a house. Will the Minister tell the House when the sculptures are going to be removed?
  Some people have said that it is good to attract many thousands of people to the parks. Perhaps I may refer them to Fred Hirsch's classic and seminal work, The Social Limits of Growth, in which he demonstrates conclusively, in the case of what he calls "positional goods", that the influx of masses of people destroys the very thing that they have come to see and enjoy.
  I appeal to the Minister and the Government to make a new start. A new chief executive is about to be appointed to the Royal Parks Agency. We wish him well. The present Prime Minister has done a number of good things. I hope that I shall not be expelled from the Conservative Party for having said that. His policies towards Europe and Ireland have evolved. But what immediately concerns us is domestic policy. It would be splendid if he were to intervene, as he has done in the case of architecture, and seek to divert the wasteful flow of cash away from building white elephants for which there is no demand, no long-term use and no means of maintenance. If that cash could go towards preserving our Royal Parks and their character, and abolishing the need to resort to futile and dubious commercial projects to raise money, the Government would earn the gratitude of the whole country.
  7.43 p.m.
  Lord Kennet: My Lords, I very much agree with the general drift of the noble Lord's remarks. I have had the inestimable—I do not know what the word is; not "privilege" or "pleasure"—perhaps positive joy of living across the road from Kensington Gardens since I was four years old. I refer to the north side, which is the less smart and frequented side. Having been able to compare it in later life with the major parks of other civilised capital cities, I know that Kensington Gardens is the largest and finest. Of course, Regent's Park is equally fine, but it is smaller—I make that point to avoid competition with the noble Lord, Lord St John of Fawsley.
  There is currently a trend explicit in government thinking that we should do something to improve Hyde Park and Kensington Gardens, by which is meant something to attract more people or another sort of people from those who go there at present. I believe that that trend is based on a misconception or a false impression. There could not be a broader spectrum of people than those who use the Royal Parks at present. They are of every age, sort, colour, number of legs and so forth that one can imagine.
  When the Government's policy was first launched, I went for a walk one Sunday afternoon especially to see what and whom I should see. I was particularly struck by a nascent difference of opinion among a fairly large number of black youths under a tree and by the way in which the park police approached with a vehicle at one-and-a-half miles per hour, disembarked in slow motion,
  1234
  assumed smiles and lolled towards the young black men. The men instantly explained the difference of opinion to the police, who instantly settled it and lolled away again at one-and-a-half miles per hour. In one way, it is only in a large park that one can have really humane policing.
  On the same walk I overheard two French ladies who were out walking together. The younger looked around at everything and, beaming expansively, said, "It's very beautiful". The older woman rounded upon her with the stern disapproval that only an older French lady can use to a younger French lady and contradicted her: "It's magnificent". I thought so too; and if one compares Kensington Gardens and Hyde Park with the major central parks of other civilised capitals, one is forced to admit for once that this country probably has the best.
  The parks of Paris are formal, splendid and enjoyable, but they are very small and they are dry in the summer. Rome has nothing really. The main park in Berlin is good, but there is a great roaring motorway right down the middle, separating one half from the other, which takes one half a day to summon up the courage to cross. Washington is one of the best; it has great expanses of real beauty. However, by and large in Europe I believe that we have the best parks and that we should therefore be extremely careful in considering ways of changing them.
  Kensington Gardens is not collapsing at all. I am not sure that I detected in the Government's statements about Kensington Gardens, as did the noble Lord, Lord St John, the notion that it was collapsing. It is not collapsing, and I do not believe that the Government feel that it is.
  I turn now to the question of concerts. Clearly, six to nine concerts per year on the vast treeless area in Hyde Park is too many. That is too many nights of unignorable thumping for the neighbours of the parks and too many weeks—not nights—of closure of neighbouring thoroughfares for traffic, which causes considerable congestion. Therefore, I hope that it may be possible to keep down the number of concerts to one or two. It would be nice if only one of them were pop and the other opera or some well thought out change of content from year to year.
  It is difficult to know what one thinks about the Diana project because one does not know what to expect. There appear to be no firm proposals after a year of deliberation, except for a general notion that it may be in Kensington Gardens. Good, say I, provided that it does not occupy too much territory. The territory in particular in the north-west corner has been occupied creepingly by many good causes over the past 50 years, most already devoted to children. It would be a pity to take that whole corner away from natural greenery and natural woodland and make it into a formal phenomenon of any kind.
  In short, my opinion is that the present arrangements are about right. I am glad to be able to say that for once. I am continually telling governments that their arrangements for this and that are not right. My noble friend Lord McIntosh knows only too well what I mean—probably better than any other of your Lordships. Therefore, it is a pleasure for me to be able to

  1235
  say, "Do not change it, it is good". I am glad to be able to praise this Government for having gone as far as they have and I urge them to go no further.
  That is a particular pleasure because this will be my last speech in your Lordships' House. I shall retire therefrom and reflect with some pleasure and some boredom on the 39 years I have spent here. I shall wish good 39-year stints at the minimum to all those who come into the House in the future.
  7.52 p.m.
  The Earl of Carlisle: My Lords, it is a very great privilege and pleasure to follow the noble Lord, Lord Kennet. I have spent a mere tenth of the time that he has spent in this House. I have admired vastly his contributions, although we may disagree on the expansion of NATO.
  To my eternal shame, I never took part in the debate on Stonehenge two years ago. As he has done today, on that occasion, the noble Lord, Lord St John of Fawsley, led on the subject of Stonehenge; the noble Lord, Lord Kennet, made the most brilliant speech; and the noble Lord, Lord McIntosh of Haringey, closed the debate, saying that something would be done and progress would be made. Had I spoken on that occasion I should have said that Stonehenge is a clock; that we are at the millennium; and it is time to make that great national man-made monument in the most perfect surroundings a fitting tribute to our generation.
  The London parks are not a clock but they tell us about the seasons: spring, summer, autumn and winter. We who live in this great capital city enjoy that. We relax when we get out into those parks and we are recharged. In its excellent report dated 28th February 1996, the Royal Parks Review Group headed its sixth and final section not with the words "Conclusions" or "Recommendations" but with the words "Need for a Champion". It certainly found two champions today, in the noble Lords, Lord St John of Fawsley and Lord Kennet. Be one a Londoner, a visitor to London, a tourist from abroad, an employer or an employee of the Royal Parks Agency or the Royal Parks Constabulary, a pelican or a ruddy duck on St James Park lake, or a great oak in Richmond Park, they and all of us who care for the Royal Parks are greatly in the debt of the noble Lord for introducing this Un starred Question.
  I am grateful to him for the opportunity which it gives me to set out my stall—unlike some of those who operate stalls in our parks—in support of those unique parks, those swards of green which run through our capital city. Indeed, it is still my duty and right to do so until Thursday. Fortunately, the noble Lord is not unique as a champion. There are others. First, I pay tribute to Dame Jennifer Jenkins and her team, who conducted the review and made such timely and far-sighted recommendations. However, due to budgetary restraints some of those have still to be acted upon and implemented.
  Secondly, I pay tribute to the Evening Standard, which has unremittingly campaigned in the highest traditions of journalism for positive developments in the Royal Parks and for the avoidance of negative ones.
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  Among others, Simon Jenkins, Molly Watson, Richard Allen and Sophie Daniels have constantly raised matters such as the cheeseparing of government grants to the parks, the poor facilities, the vandalism, theft, hawkers, buskers and inebriates who damage the parks and the enjoyment of those who visit them to relax and who seek leisure, peace, quiet and tranquillity.
  At the moment I am not able to add to the list of champions the name of the noble Lord, Lord McIntosh of Haringey. I trust that I shall be able to do so after his reply to this debate. The Department of Culture, Media and Sport, which the noble Lord represents in this House, and which is responsible for Parliament in the Royal Parks, has left the Royal Parks Agency with insufficient funds to care for and maintain the parks and has set it over-ambitious targets to raise money which it cannot possibly meet. If it tries to do so, the ethos of those parks will be damaged.
  The result of that is that the agency has decided, reluctantly I understand, to introduce short-term measures which, I suggest, diminish the role of the parks in the short, medium and long term. The Government must not allow themselves to shift the blame on to the Royal Parks Agency, which, we all agree, consists of real professionals, doing their job to the very best of their ability. The Government must shoulder the responsibility themselves and recognise that salami-slicing of funding is detrimental to the good of the parks. They must address the problem of finance and revisit the matter of funding.
  When he comes to reply, I have no doubt that the Minister will argue that, first, the Royal Parks Agency received a grant of £26.39 million. That is a rise of £5.4 million. As the noble Lord, Lord St John of Fawsley, has pointed out, that is the first increase in funding for five years. No doubt the Minister's argument will be that Royal Parks are better off now than when the Opposition were in power. That argument does not cut much ice with noble Lords on these Benches. The Government have now been in power for 30 months.
  Perhaps I may make some practical recommendations. I start from the premise that the parks are to be open to all and to be open free of charge for ever to those who abide by sensibly enforced regulations. Secondly, they are Crown property, run by an agency. The people of London and those who visit London, either from the provinces or from abroad, benefit most from the green swards through the capital city. Therefore, the nation must pay for the care and maintenance of the parks through, first, arbitrary taxes. Secondly, many of the Crown estates properties border the parks and their capital and income is increased through them. Therefore. it should be possible to draw back money from those Crown estates. Thirdly, the Treasury receives billions of pounds as a result of overseas visitors coming here, spending their money and enjoying the parks. The parks should have a proportional share of that income from tourism. Finally, the Royal Parks Agency should never have to pay for the repair of major thoroughfares through the park. The Mall was repaired, at great inconvenience to certain Londoners. However, I

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  understand why it had to be done. Did all of that funding come out of the Royal Parks Agency? Did it foot the bill? If so, the money should be given back.
  If the Minister feels that the best way of funding the care and maintenance of the parks is by getting the agency a mere £1 million through, as has been pointed out, unsuitable pop concerts, I would ask him to think again. The tread of so many feet will damage the habitat, irritate those who live nearby and who use the amenities for rest and relaxation, and will often cause more damage to the park than the cost of repairing the damage. I urge the Minister to think again.
  I conclude by telling a short story. I do so because, enjoyably to all of us who listen, the Minister, with his enormous command of English literature, which I cannot meet, often chooses from such literature a short story.
  I draw the attention of your Lordships to H.H. Munro (Saki) and his short story entitled "The Lumber Room". Delete "lumber room" and insert "St James's Park". The story is about a little boy called Nicholas who enjoys the park. Let us call him "Carlisle". There was an aunt who controls and bosses everybody. I do not suggest that we call him the Minister.
  Nicholas wished to go into the lumber room. He had disobeyed his aunt by putting a frog in a cup of milk at breakfast. The aunt said that it was impossible for a frog to sit in a glass of milk. Nicholas was right because he had put it there; the aunt was wrong. The aunt arranged for a treat for the children. They were to go off to the beach to play, whereas Nicholas was left behind.
  What happened next? Thinking that Nicholas wished to go into the garden, the aunt told him that he was not allowed to because he was in disgrace. Nicholas had no intention of going into that garden. He wanted to go into the lumber room. While he was in the lumber room, he heard a screech. He went down to the garden. The aunt, who could not find him, suspected that he had gone into the garden.
  Nicholas said, "What happened?" She said, "I was searching for you in the garden. I couldn't find you. I have now fallen into a tank of water." "Aunt, will I be allowed jam for tea?" "Yes" said the aunt, meaning no. Nicholas said, "Oh, aunt, it is the devil who has warned me not to do what the devil says". "You will get jam if you help me out". There is jam in the cupboard; the aunt does not know it. "Therefore, you must be the devil".
  I refrain from saying to anybody that a Minister who does not look after the Royal Parks is a Prince of Darkness. Nicholas apparently got his jam. I do hope that the Department for Culture, Media and Sport can, over the millennium period and for the foreseeable future, give the Royal Parks what they need; a backdrop of £60 billion in order to restore them and carry out what needs to be done to bring them up to the proper standard.
  Nicholas said to his aunt, "Devil, you have sold yourself". I say to the Minister, please do not sell short the Royal Parks.
  8.4 p.m.
  Baroness Hamwee: My Lords, the noble Lord, Lord St John of Fawsley, has introduced a most important subject. He has given us the opportunity to hear two notable swan-songs, if that is the opposite of a maiden speech. I am not sure whether to the noble Lord, Lord Kennet, it just seemed like 39 years.
  I have two main points to make on the subject of the Royal Parks. The first is that not all the parks are the same. Because they are not homogenous, their uses need not necessarily be uniform. We should, therefore, approach them in different ways. My second point concerns the question that politicians always need to ask themselves: for whose benefit in this instance are the parks being provided? We need to recognise that changing times may mean changes in responses to that question.
  It is perhaps easy to take our parks for granted. I am sure that this does not apply to others of your Lordships, but we may not know their history as thoroughly as perhaps we should. As the noble Lord said, we assume they are there as green lungs for London. As with many amenities, it may be that they are recognised less by Londoners than by tourists. We have heard comments this evening about the reaction of people visiting London.
  In the publication concerning the Royal Parks, I noticed the references to visitors' surveys. I applaud the investigation of people's responses, needs and wishes for the parks. However, by definition these are people who visit the parks. I wonder who is being missed in that inevitably narrow set of surveys.
  It is easy to assume that the fabric of open spaces will look after itself. Perhaps it is only when things go wrong that a lack of maintenance becomes apparent. That is why it is important not to reach that point. In preparing for today's debate, I was struck by the realisation that it is not only investment in the fabric of the parks which is so important. We need to consider, for instance, the reduced funding for policing. The noble Lord, Lord Kennet, referred to policing in the parks. Before this evening I had not particularly thought about how important it is to keep up the level of supervision as an avoiding tactic. I refer also to the reduced funding in human resources; that is, staff. We saw the effect of that in the cancellation of Greenwich's Family Day.
  The conclusions of the Royal Parks Review, led by Dame Jennifer Jenkins, was published in 1996. The section headed "Need for a Champion", to which my noble friend referred, listed the buildings, park walls, gates and lamp posts that are to be maintained. It mentioned the 35 kilometres of road, 170 kilometres of paths, the private river, huge areas of parkland, 1,000 deer and so on. It states:
  "Yet the Agency is expected to look after its domain for less than. for example, some individual national museums. The parks provide incredibly good value for money and are enjoyed by literally tens of millions of people".
  Indeed, they provide excellent value for money. However, one can understand that it is necessary to ensure that the level of funding is maintained. Noble Lords referred to the decreasing level of funding over recent years, other than the recent uplift.

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  It is perhaps inevitable that the Royal Parks Agency is embarking on merchandising ventures. It may be easy to frown on that as a rather "tacky" venture. I hope that it will not be. It might even promote a sense of the history of the parks. However, it will not be easy to get right. Inevitably, larger-scale income generation is on the cards.
  It seems to me that some of the parks can cope with substantial influxes of people; some cannot. Indeed, some areas of particular parks can cope and some cannot. It is right that the parks now have criteria against which to consider the staging of events. It is also right that the Royal Parks Agency continues to consult those who have an interest in the parks and who so care for them. I am glad to have the opportunity to pay tribute to the various groups of friends of the different parks and, indeed, of the Friends of the Royal Parks Forum. In their different ways, in the different parks of London, they have been doing a terrific job.
  One of the topics with which the groups of friends have been involved is traffic, mentioned by the noble Lord, Lord St John of Fawsley. I agree in regard to the question of speed. If speed were to be effectively controlled, that might make the use of the parks by road traffic a little less offensive. It is a contentious subject. Since the roads have been taken into the London network, one cannot consider closing those routes without considering the impact on other areas. I feel—it is probably a highly politically incorrect observation—that it is necessary to ensure that those who enjoy the parks by travelling through them should not totally be deprived of that pleasure.
  I understand the protests about the flower show in Regent's Park. I have been reminded of what happened when the first flower shows were started at Hampton Court a few years ago. Temporary structures erected for long periods and heavy concentration of feet undoubtedly mean that the turf is badly damaged. But such experiences should not lead to the conclusion that all major events are inappropriate. Prince Albert brought the 1851 Exhibition into a Royal Park. The parade ground next to Park Lane was used for big events. And I believe that The Mall will be closed for three days to be used fir a millennium fair. That is entirely appropriate. The Royal Palaces used to be part of the parks, not walled off. However, there is a little movement towards bringing them back into the park areas.
  I do not object to the use of the large flat area of Hyde Park for major concerts. Such concerts are an important type of public assembly of the late 20th and early 21st century. Some object to that type of use. I take no pleasure in a heavy reverberating bass, but can understand that some people do. Some object because of the scale. One must be careful not to impose one's prejudices. I say that as somebody who attended one of the Prince's Trust concerts because clients of mine were playing. I was extremely glad to be one of those with a seat and not to have to stand throughout the whole concert.
  Many people enjoy such occasions. The parks provide an exciting venue. I do not believe that everybody who attends a concert in a park goes into the arena without becoming aware of where they are. That is perhaps a mechanism not to be used every week, but one that can be
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  used to introduce new groups of people to one of London's major pleasures. I recall that in about 1979 there was a proposal that the Pope, when visiting this country, should hold a mass in Richmond Park. The protests voiced through the local press were just as loud as the protests made in relation to Prince's Trust concerts in Hyde Park. So it is not only commercial uses which cause such furore. The Pope did not come.
  Having established the criteria, that criteria must be applied in the context of the circumstances of each park. We must be imaginative about the uses that can be made of them. In Richmond Park—my local park—there is an important and interesting environmental centre. It is used as the home for the Thames Landscape Strategy. In particular, it has been developed—the project of one of Richmond's recent mayors—as an environmental centre catering for children with special needs. That sort of venture—a partnership with other partners, in this case including the local authority—is important, exciting and the sort of thing we should be encouraging in our parks.
  The noble Lord, Lord St John of Fawsley, reminded us that too many people destroy the very thing they seek to support. I have used the same argument against the proposed Terminal 5 and in relation to various other London issues. Of course, I support the call for adequate funding, although perhaps not all my responses in relation to the uses of the parks are quite the same as the noble Lord's. I am delighted that we have had the opportunity to air what no doubt will be a variety of views.
  8.16 p.m.
  Baroness Anelay of St Johns: My Lords, I thank my noble friend Lord St John of Fawsley for giving us the opportunity to debate this important issue which is of such interest, not only to Londoners but also to visitors to the capital. Like the noble Baroness, Lady Hamwee, I pay tribute to the two notable swan-songs tonight. Although I have been a Member of your Lordships' House for only three years, in that time whatever brief I have been speaking to I have always noted with interest the tenacity with which the noble Lord, Lord Kennet, has followed the issues surrounding Royal Parks, and I shall miss his Written Questions and the information they have elicited from both the last government and this. I have always listened with interest to the noble Earl, Lord Carlisle. I believe in my three years I have learnt more about the Baltic States than I ever expected to.
  It is timely that we have the opportunity to debate this subject because we are awaiting the first report of the review of the Royal Parks Agency. It was postponed during the Comprehensive Spending Review and we were told in a Written Answer in another place on 1st July that the report should be completed by the end of November this year. As I understand it, from a Written Question tabled by the noble Lord, Lord Kennet, the review is intended to examine how the agency has performed since its creation six years ago; to reappraise the alternatives to agency status; and to make recommendations for the future development and management of the Royal Parks. Are the Government still on target to complete the review

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  by the end of this month? If so, when do they intend to publish the report? Will it form the basis of legislation to be announced next week in the Queen's Speech?
  In preparation for this debate, I read the annual report of the Royal Parks Agency and the annual report published by the Friends of the Royal Parks Forum. Like the noble Baroness, Lady Hamwee, I pay tribute to their work and that of other groups of friends. The report of the friends puts the issues into sharp relief.
  The agency's report highlighted its four main objectives—very laudable objectives which we can all support. They were, first, to conserve and improve the fabric of the parks; secondly, to improve the presentation, safety and enjoyment of the parks for visitors; thirdly, to organise and manage the agency's work efficiently and effectively; and, fourthly, to place the agency on a sound financial basis and to generate increased income. But as noble Lords pointed out, for the agency the challenge is to find ways to maintain the horticulture of the parks—the fabric of the parks—at a high level, to tackle the backlog of maintenance and to use income-raising events without spoiling for ever the character of the parks.
  The report by the friends puts those objectives under the microscope and asks how they meet the needs and wishes of this generation and generations to come. But it recognises the fact that the parks continue to be maintained to a high standard thanks to the efforts of the agency's staff. But the friends are concerned about a new and growing threat. The report states:
  "Because of the pressure to generate revenue, large-scale events are being planned"—
  referring to the events of summer 1999. The report continues,
  "We are in favour of the Parks attracting the widest possible range of visitors, provided that this does not damage the fabric or detract from the peace or enjoyment of regular users and regular residents … in our view frequent pop concerts and other huge events, as foreshadowed in the Royal Parks Enterprises plans for Hyde Park and Horse Guards parade, risk going far beyond what can or should be tolerated".
  My noble friend Lord St John of Fawsley made some very telling points tonight on this same issue. I look forward to hearing the Government's response to the arguments that he put forward.
  Another issue that has caused much public concern is that of illegal trading in the parks. It was a matter which the House discussed in part at both the Report and Third Reading stages of the Greater London Authority Bill. Several amendments were introduced during the proceedings on that Bill by which the Government transferred the management of Trafalgar Square and Parliament Square—at least, those parts which belong to the Crown—from the DCMS to the Greater London Authority. Powers were given to the authority to prosecute illegal traders.
  The House will be aware that a court decision earlier this year made it impossible to prosecute traders on Crown land unless they are actually the owner of the business. Certainly, I have already made it clear in this
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  House that we on this Front Bench support measures that the Government may seek to introduce to ensure that those who actually sell the goods may be prosecuted.
  During the proceedings on the Greater London Authority Bill, the Minister reminded the House that my noble friend—I am sorry, I mean my right honourable friend—Peter Brooke; he is not yet my noble friend but, who knows, perhaps in the future—tried to put the matter right as far as possible, when he introduced a Private Member's Bill in June this year. Indeed, some of the remarks of the noble Lord were not quite reported by Hansard on the first occasion, but he put that right by way of a correction.
  The key provisions of the Bill were: first, to increase the maximum penalty for offences of illegal trading in the Royal Parks and certain other open areas; secondly, to provide for the seizure by park constables of items used in the commission of such offences, for the purpose of interrupting and preventing further illegal trading; and, finally, where a person was convicted of an offence, the Bill provided that the court would be given the discretion to order the forfeiture of any items seized. Does the Minister believe that these provisions form a good basis for a future government Bill? Alternatively, do the Government believe that increased fines on their own will be sufficient to stop illegal traders operating?
  I have already mentioned the discussions on Third Reading of the GLA Bill. The Minister took the opportunity then, on 1st November, gently to chide this side of the House on the basis that the Conservative Party blocked my right honourable friend's Bill. However, as the Minister said, it was, as I quoted from Hansard (at col. 668), a "totally unjustified jibe". No doubt the noble Lord will have the opportunity in a moment to see whether he can argue that one back.
  Like my other noble friends on this Front Bench, I was disappointed when my right honourable friend's Bill was blocked at Second Reading in another place by one of my honourable friends on the Back Benches. He exercised the right that one has in another place to prevent a Private Member's Bill going forward. I have to respect the action of my honourable friend from the Back Benches. He believes that, as a matter of principle, Private Members' Bill should not add to the regulatory burden in this country. I respect his beliefs, but I would argue that, on some occasions, regulation is a necessary evil. Indeed, this is one of them. However, my honourable friend is entitled to stick to his principles as a Back-Bencher. The Minister himself witnessed the same situation in this House today when some of his Back-Benchers stuck to their principles and voted against the Government on the Welfare Reform and Pensions Bill.
  If and when the Government bring forward legislation of their own to clamp down on illegal trading in the Royal Parks, we on this Front Bench will support those measures, provided, as ever, that such legislation addresses the problem in an appropriate, effective and fair manner. We would not give up our right to look carefully at the legislation, but we certainly hope that it will be effective and prove to be legislation that we can welcome.

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  There are other illegal activities that cause problems in the parks. I shall stick to just one; namely, the misuse of drugs. I was intrigued to note in the agency's report (at page 12) that the number of drugs crimes recorded in the parks has almost doubled in the past two years: the figure was 68 in 1997, but rose to 129 in 1998. I should be grateful if the Minister could tell the House what information the Government have about the nature of these crimes and the reasons for what appears to be a dramatic increase. There appears to be no other major change with regard to other categories of crimes recorded in the parks.
  Several speakers tonight made it clear that all of us have a great interest in ensuring that the Royal Parks remain a treasure for all of us and for future generations. Indeed, as my noble friend said in his introductory remarks, they are the lungs of the city. They are a precious escape for all of us from the pressures of city life. Indeed, they are an essential part of everyday life for Londoners. It is absolutely vital that we keep safe their historic integrity and hand on to future generations Royal Parks that can give them as much pleasure as they currently give us.
  8.25 p.m.
  Lord McIntosh of Haringey: My Lords, the noble Lord, Lord St John of Fawsley, who deserves the congratulations of all noble Lords on his initiative in introducing this debate, is certainly much more expert than I am on the Royal Parks. Indeed, that is the case with my noble friend Lord Kennet. Therefore, any attempt that I make in the terms of the noble Earl, Lord Carlisle, to be a champion will be from the point of view of someone who is really a Hampstead Heath boy. I was brought up on the west side of the heath and have lived on the east side for 40 years. That is my home territory. I am an outsider, as a visitor rather than a devotee of the kind that has been in evidence during tonight's debate.
  However, that does not mean that I do not appreciate the enormous importance for London and for the whole country of the Royal Parks. They are a national asset. Of course, they are owned by the Sovereign in right of the Crown but they have been the responsibility of the Government and of taxpayers since the Crown Lands Act 1851. The noble Earl, Lord Carlisle, set the right priority when he said that we must ensure that the parks remain open to all, with free access and for ever. If we stick to those three principles, we will at least have made a start, although there is a great deal more than that to be considered.
  Inevitably, what I say about the Royal Parks will be scrappy because it will be said in response to an admirably wide range of observations by all speakers in the debate. Perhaps I may start by looking at the annual report and accounts for 1998–99 of the Royal Parks Agency, which has already been mentioned by the noble Baroness, Lady Anelay. The achievement against the seven key targets sets the scene in which I can comment on the observations that have been made.
  The agency set itself three quality targets. The first was the average score by the independent horticultural expert for soft landscape presentation in each park. Here, over the past four years, there has been a rise to a target of 83 per cent, with an 84 per cent achievement in 1998–99.
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  I turn now to the average mark in customer satisfaction surveys. It is true to say that customers are those who visit the parks, and one cannot estimate the views of those who do not go or easily discover why they do not. Nevertheless, as regards customer satisfaction with the quality of the parks, including issues such as cleanliness, upkeep, and so on, the target was 86 per cent with the results not being quite so good at 84 percent. I should not have referred to cleanliness because that is a specific item where the target was 85 per cent and the achievement was 84 per cent. However, generally speaking, I think it will be agreed that those who use the parks are pretty satisfied with what they see.
  I shall have to return to the more controversial issue of income, but that includes income from events and from all the activities in the park, where the Royal Parks Agency met its target of £3.3 million. It also met its target of efficiency savings on running costs. Moreover, because there had been some complaint about the inefficient use of the Royal Parks Constabulary, it almost met its target of reduction of the hourly costs of a police constable on duty.
  The final target was to re-tender the ground maintenance contracts in four parks. That was achieved. That is the context in which I want to talk about the observations made by noble Lords. But before I leave that point, the noble Lord, Lord St. John, said that park-keepers had virtually vanished and park managers were vanishing. I can assure him that the numbers of park-keepers have been maintained but also that all the parks have managers, just as Regent's Park and Primrose Hill have a manager. I am grateful for the noble Lord's comments on the quality of that management.
  I turn to the most difficult issue, which concerns the accusations of commercialisation of the Royal Parks. Of course there have always been special events in the Royal Parks. The 1851 Great Exhibition was situated on the southern side of Hyde Park. Although I cannot find any documentary evidence, I seem to remember that in the 1951 Festival of Britain there was a mock coal-mine near Speakers' Corner which I clearly remember visiting. However, no one can tell me where it was or when it was. It is true that the Government have encouraged the Royal Parks Agency to do two things: first, to raise the income from events of this kind and, secondly, to attract a wider range of visitors to the parks. Some 10 per cent. of the visitors come to the parks to attend specific events. We have to be careful not to be exclusive or elitist in our views on these events. If Proms in the Park are welcome, why not Simply Red or the other popular concert performers?
  The noble Earl, Lord Carlisle, talked about unsuitable pop concerts. I share the distaste of the noble Baroness, Lady Hamwee, for strong beat, but we have to be tolerant of other people's cultural tastes. As regards the sculptures of Ronald Rae in Regent's Park, they were originally put there for a period of 12 months, but I understand that they are rather popular—the noble Lord, Lord St. John, clearly disagrees—and there is a suggestion that they may be left in position for longer in response to popular demand. I note what the noble Lord said about the flower show and I note what the noble Baroness, Lady Hamwee, said about flower shows in Richmond Park.

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  It is certainly true, particularly during the summer just past, that there has been a considerable increase in commercial events in the parks, organised mostly by Royal Park Enterprises. The income from that is not quite as much as the noble Lord, Lord St. John, suggests. It is only just under £800,000, rather than £1 million, but it is a worthwhile addition to the revenue of the Royal Parks Agency. However, Ministers are aware of problems caused by these events. We have been considering what should be done about that. We are forming the view that we may have reached saturation point in that regard. It is likely that there will be no further increase in events of this kind in future years.
  Noble Lords quite properly commented on funding. Although the funding for 1999–2000 is much higher than in previous years, or than is expected for future years, the increase includes £3 million worth of projects to commemorate Diana Princess of Wales and £2.3 million towards tackling the backlog of maintenance. Clearly it is undesirable for maintenance to be allowed to fall behind so that specific funding is needed for that purpose. I do not deny that there is a problem with the funding of the Royal Parks. They have to compete for funding with many other activities of the Department for Culture, all of which have, quite properly, vociferous advocates. The Royal Parks Agency will have to continue to fight its corner and Ministers will have to continue to listen sympathetically.
  I am grateful to the noble Earl, Lord Carlisle, for his tribute to the review of Dame Jennifer Jenkins. I have reread the final conclusions of 1996 with great interest. I believe that she set a standard which we try to keep to. The previous government accepted the recommendations of the review subject to the availability of resources. That is still the position. The noble Earl is right to say that we need champions in this regard. The Evening Standard has been an outstanding champion, as has the Forum of Friends. Their work is much valued.
  I was asked specifically about the Diana Princess of Wales memorial garden. As noble Lords will know, there was a great furore about this in the summer of last year. The proposals that were tentatively made for consultation purposes were very much scaled down. I refer to the refurbishment of the children's playground and improvements to the area south of Kensington Palace which are due to be completed by the spring of 2000. The Chancellor's committee is considering suggested locations for a fountain in memory of the princess in one of the Royal Parks although it has not yet been decided which one.
  The noble Lord, Lord St. John, referred to the menace of traffic in the parks. I believe that he went further than Dame Jennifer Jenkins. She wanted a reduction in the amount of traffic and, in particular, the closure of North Carriage Drive in Hyde Park, which we have not been able to achieve except when commercial events are taking place. I take the noble Lord's point about traffic calming
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  measures. Some are in place and I am sure that the Royal Parks Agency will consider the need for more as necessary.
  As regards millennium events, I am glad to have the support of the noble Baroness, Lady Hamwee, for the funfair which is to be held on the Mall from 31st December to 3rd January. There will also be a royal tournament style military event in July on Horseguards. There is to be another flower show in Regent's Park following this year's successful show. If anything can be done to increase the proportion of flowers and decrease the proportion of garden gnomes I shall be as happy as the noble Lord, Lord St. John of Fawsley.
  The noble Baroness, Lady Anelay, asked me about the Royal Parks Agency's five year review. It is on time. We now have a first draft but the report has not been considered by Ministers. Over 40 people and organisations have responded to the consultation and we shall make an announcement to Parliament as soon as we possibly can.
  On illegal trading, the noble Baroness, Lady Anelay, has set out the position fairly and I do not need to take time to cover it. The idea of a Private Member's Bill failed because Mr Eric Forth took a position of principle against that. There will probably have to be a government Bill. Let us hope that we shall have something positive to say about that, subject of course to the usual precautions about what is likely to be in the Queen's Speech. Certainly, there is an advantage, in that the Bill is already drafted and covers, as I understand it. more effective penalties than simply fines and will make it possible to act against traders rather than the shadowy proprietors in the background.
  The noble Baroness asked me about drug offences in the Royal Parks. I do not believe that there has been any huge change in drug abuse generally in this country but police intelligence has identified drug dealing in some central Royal Parks. The police put in resources that resulted in an increase in the number of arrests. That was a proper reaction to police intelligence.
  I have reached the time limit allowed for this debate. Again I thank the noble Lord, Lord St. John of Fawsley, and all who have taken part. I am sure that the Royal Parks Agency will be grateful for the searchlight that has been trained on the royal parks and for the high level of support that has been evinced by all speeches.

  City of Newcastle upon Tyne Bill [H.L.]
    Kent County Council Bill [H.L.]

      Medway Council Bill [H.L.]
      A message was brought from the Commons that they concur with the resolution of this House of 4th November.
      House adjourned at nineteen minutes before nine o'clock.