Lords Sitting of 13 October 1999

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

Lord Filkin
David Geoffrey Nigel Filkin, Esquire, CBE, having been created Baron Filkin, of Pimlico in the City of Westminster, for life—Was, in his robes, introduced between the Baroness Hollis of Heigham and the Baroness Thornton.

Lord Lipsey
David Lawrence Lipsey, Esquire, having been created Baron Lipsey, of Tooting Bec in the London Borough of Wandsworth, for life—Was, in his robes, introduced between the Baroness Gould of Potternewton and the Lord Gladwin of Clee, and made the solemn Affirmation.
The Marquess of Lansdowne—Sat first in Parliament after the death of his father.
The Earl of Winchilsea and Nottingham—Sat first in Parliament after the death of his father.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Irvine of Lairg): My Lords, before Business begins, I take the opportunity to inform the House that I am to make a visit to the Community Legal Service Pioneer Project in Cornwall on Friday 15th October, when the House will sit.
I am also to chair a strategic planning conference being held on Monday 18th October, when the House will sit. Accordingly, I trust that the House will grant me leave of absence.

National Assembly for Wales: Progress
2.50 p.m.
Lord Roberts of Conwyasked Her Majesty's Government:
Whether they are satisfied with the progress made by the National Assembly for Wales in implementing the Government of Wales Act 1998.
Baroness Farrington of Ribbleton: My Lords, we are satisfied that the National Assembly for Wales is acting in accordance with the provisions of the Government of Wales Act 1998.
Lord Roberts of Conwy: My Lords, first, may I congratulate the noble Baroness on embracing Wales
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among her responsibilities? I know that she has strong family connections with Wales, so her credentials are impeccable.
Since I tabled this Question, the noble and learned Lord the Lord Chancellor has presented his significant Memorandum of Understanding and supplementary agreements between the United Kingdom Government, Scottish Ministers and the Cabinet of the National Assembly of Wales, as anticipated in our devolution debates.
Subject to more detailed scrutiny, I can say that we welcome that document as a statement of the Government's intent as to how the various bodies involved should behave. However, does the noble Baroness agree that while the memorandum and concordats represent a brave attempt to reduce the potential for conflict between the devolved administrations and central government, our experience of devolution to date—brief as it is—suggests that only the fullest possible co-operation and mutual support between the executive elements in the new system are required if the best interests of the peoples they govern are to be served?
Is the noble Baroness fully aware of the very serious difficulties the Welsh Cabinet has got into as it sought to pursue its own line on agricultural issues in Europe? Are there not some hard lessons to be learnt from that critical experience?
Baroness Farrington of Ribbleton: My Lords, I agree with the first three points made by the noble Lord and thank him for the welcome he so generously gave me. Obviously the concordats have been considered and agreed by the Scottish Ministers in the Cabinet. They are available for scrutiny by the UK Parliament, the Welsh Assembly and the Scottish Parliament Members at this point.
I share with the noble Lord the belief that we are all working together to overcome any minor difficulties at the beginning of the process.
Lord Cledwyn of Penrhos: My Lords, does my noble friend agree that in these early stages Mr Alun Michael and his colleagues are working extremely carefully? They are impressing the people of Wales, north and south. He deserves the help of all parties at present if the new Assembly is to be effective and respected by everyone in Wales and outside.
Baroness Farrington of Ribbleton: My Lords, my noble friend Lord Cledwyn is right. I share with him the view that I believe was expressed by the noble Lord, Lord Geraint, who said that the principle of devolution for Wales is right, a principle which has been endorsed by the Welsh people. We owe it to them to work hard to make it a total success.
Lord Thomas of Gresford: My Lords, is the noble Baroness aware that the Secretary for Agriculture of the Welsh Assembly has said that she will not resign in the face of a resolution of censure which is being debated at this moment? Does the Minister agree that

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it would be a bad day for democracy in Wales if a Minister of the Crown refused to resign in the face of such a resolution?
Baroness Farrington of Ribbleton: My Lords, the noble Lord, Lord Thomas, seeks to draw me into a totally improper area: to discuss the decisions, policies and actions of Members acting in their capacity as Members of the Assembly for Wales. It would be a brave Minister in your Lordships' House who commented on the behaviour of even Members of a Committee in another place.
Lord Islwyn: My Lords, does the Minister agree that the Welsh Assembly is still in its infancy, therefore, it will have its trials and tribulations? Nevertheless, progress is being made. Does the Minister further agree that one of the Assembly's principal objectives must be to get every possible aid for the South Wales valleys and other areas which have suffered so badly in the past? Does the Minister appreciate that the Assembly is buttressed by a first class Secretary of State in Mr Paul Murphy?
Baroness Farrington of Ribbleton: Yes, my Lords, I agree with my noble friend.
Lord Crickhowell: My Lords, does the noble Baroness agree that the real effect of the actions of the Secretary for Agriculture, Christine Gwyther, which may lead to her defeat in the vote of censure, is exactly the same as with Ministers in both Houses of this Parliament? They have falsely given the impression that it would be possible to negotiate for Scotland and Wales wholly different policies in Europe from the rest of the United Kingdom. Has not the European Commission now called their bluff and quite rightly shown that it is absurd for farmers in, for example, my valley, to be treated differently from those in England two or three miles away or in the Scottish Borders where exactly similar conditions exist?
Baroness Farrington of Ribbleton: My Lords, Her Majesty's Government have put no obstacles in the way of the Assembly exploring possibilities of various courses of action with the Commission. As the noble Lord said, it is true that any application would have had to be made by the UK Government, as a member state. Such applications only occur when preliminary discussions have indicated that they would be acceptable.
The Earl of Lauderdale: My Lords, does the noble Baroness agree that the Welsh Assembly, like the Scottish Parliament, suffers from a gross under-representation of rural areas, notwithstanding the fell designs of proportional representation?
Baroness Farrington of Ribbleton: My Lords, ultimately it is a matter for the people in both Assemblies to consider whether the degree of representation is accurate. My experience from
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looking at television and reading the newspapers in Wales is that fair coverage is given to the needs of both rural and urban communities in Wales.
This may be the final comment on the Question and I am sure all noble Lords wish Wales well tomorrow in their rugby match against Samoa. We also wish Neil Jenkins well. He is a joint record holder, with the largest number of points scored. Tomorrow he may break that record.

Azerbaijan: US Freedom Support Act
2.58 p.m.
The Earl of Clanwilliamasked Her Majesty's Government:
What action they are taking to persuade the United States Government to repeal Section 907 of the Freedom Support Act as it is applied to Azerbaijan.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, the repeal of Section 907 of the Freedom Support Act is a matter for the United States authorities. We are aware that the US Administration has sought to have it repealed; we welcome its efforts. So far, the US Congress has refused to repeal the legislation, but the US Administration continues to pursue this.
The Earl of Clanwilliam: My Lords, I thank the noble Baroness for her reply and fully understand the points that she makes. The US Congress voted recently by quite a small margin to retain this measure. Is the noble Baroness aware that some 200,000 Azeris were ethnically cleansed from Armenia at the beginning of the troubles and since then about 800,000 have been displaced from the areas occupied by the Armenians in Nagorno-Karabakh? In the light of those distressing facts, does the Minister agree that Her Majesty's Government should make every effort to impress upon the United States the importance of its position in this matter?
Baroness Scotland of Asthal: My Lords, both sides would press issues of the kind raised by the noble Earl. Her Majesty's Government have good relations with both sides in this dispute and a strong interest in the resolution of the conflict. One of the difficulties that has been prayed in aid of the Azeri position is that Section 907 has adversely affected their ability to restore their economic base. Surely, it is in our interests to enable security in Azerbaijan to be enhanced so that the peace process can be pursued with vigour. Although we have not exhorted the US Administration in their action we cannot but commend it.
Baroness Cox: My Lords, is the Minister aware of reports that Azerbaijan has been allowing the passage of troops and weapons through its territory to join Islamic terrorists who are now fighting in Dagestan,

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and that those terrorists have declared their next target to be Armenia and Nagorno-Karabakh? In the light of such developments, does the Minister agree that it may be inappropriate to repeal Section 907 until Azerbaijan has proved its unequivocal refusal to be involved directly or indirectly in any further military offensives against Armenia and Nagorno-Karabakh?
Baroness Scotland of Asthal: My Lords, I reiterate that the United Kingdom has no locus in relation to this matter which is internal to the United States. However, we do not believe that the Azerbaijan Government are endorsing any activity of the kind referred to by the noble Baroness. The Russian Government have formed the same view. Both Prime Ministers are working very hard in conciliatory terms to resolve this issue. We exhort all those in this debate to be cautious about the language and tones that they use which do not necessarily inure to the benefit of peace. We are at a very sensitive stage in the negotiations, but there is some reason for optimism in terms of the approach that is currently being taken. We are pursuing with vigour the peaceful methods that are being adopted by both sides.
Viscount Waverley: My Lords, what contribution does the Minister believe the TRACECA corridor initiative may make to the peace-making activity? Is there any possibility that Britain will become a Minsk member?
Baroness Scotland of Asthal: My Lords, we endorse the initiative to which the noble Viscount refers. The three co-chairs are doing a splendid job in terms of the Minsk initiative. At present, we do not seek to add our name to that. We have been very active in giving as much support as we can to these initiatives. We shall continue to pursue that to the best of our ability.
Lord Moynihan: My Lords, does the Minister agree that the Armenian population of Nagorno-Karabakh needs reassurance about its future security which has been so threatened in recent years by the conflict? Over two years ago in July 1997 the noble Lord, Lord Whitty. gave noble Lords an assurance that with their commitment to human rights the Government would ensure that the international community made this issue central to reaching an agreement. Can the Minister outline the specific ways, rather than general exhortations, in which the Government have sought to do so since then?
Baroness Scotland of Asthal: My Lords, the Government have encouraged the resolution of the Nagorno-Karabakh matter. The noble Lord is aware that that is based on three key principles set out in the Lisbon Summit: first, the preservation of the territorial integrity of both the Republic of Armenia and Azerbaijan; secondly, the security of legal status for Nagorno-Karabakh, which should be defined and based on self-determination to the highest possible degree; and, thirdly, that the security of Nagorno-Karabakh and its whole population should be
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guaranteed. That includes mutual obligations and the compliance of all parties. Her Majesty's Government have provided aid to both sides, engaged in visits and direct exhortations with those involved and given practical assistance in that process which is ongoing. This is a sensitive issue which, if I may say so, is being dealt with at the moment with commendable skill.
Lord Elton: My Lords, the Government's concern with this issue is a matter for congratulation, but the Minister has said that negotiations are at a delicate stage and that we must be careful of the attitudes that we strike. Would not the removal of the restriction requested in the Question be a very partisan gesture in favour of Azerbaijan which last week shelled Armenian territory and which earlier this year was shown by Physicians for Human Rights to be engaged in the torture of Armenian prisoners and to this day is maintaining a blockade of Armenia? Surely, there needs to be some balance and if gestures are to be made in one direction they should be made in the other as well.
Baroness Scotland of Asthal: My Lords, the balance with which Her Majesty's Government have acted has, if I may say so, been truly magnificent. We have exhorted both sides to be cautious and to use moderation. It is regrettable that when one focuses on one side of the argument the other side very quickly gives a robust riposte and lists all of the incursions made by its opponents. Her Majesty's Government have tried to introduce a balance. We have aided both sides in humanitarian terms and have tried to assist in the structure and maintenance of good governance and broker a rapprochement as best we can. To be the friend of both sides gives us an advantage. In my previous incarnation as a family lawyer I see all the benefits of Relate on the international stage.

Ministry of Agriculture, Fisheries and Food
3.7 p.m.
Lord Peyton of Yeovil asked Her Majesty's Government:
What are the useful achievements of the Ministry of Agriculture, Fisheries and Food.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, MAFF's successive annual reports detail its achievements in promoting a sustainable, efficient food chain and ensuring consumers have competitively priced food produced to high standards of safety, animal welfare and environmental care.
Lord Peyton of Yeovil: My Lords, such gratitude as I have for that reply is at least tinged with sympathy for the noble Baroness in her present role. Will the Minister be so kind as to assemble a group of her colleagues and advisers and take it on a tour of the

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countryside in Germany, France, Holland, and anywhere else she may choose in the Community, where it will find prosperity and confidence? If the same group returned to the UK it would find the very reverse: no prosperity and no confidence whatever. My neighbour, who is a third generation small farmer, has been forced to sell up because of rising capital costs and the disappearance of rewards. I put the following question to the noble Baroness, even in her rather embarrassing position: does that not point to a total failure of the department, which in fairness may be attributed to the split in its role representing the interests of both consumers and producers? Should that not be replaced with the farming role in preserving the environment and ensuring that the health of the countryside is fully safeguarded?
Baroness Hayman: My Lords, I am not in the slightest bit embarrassed in answering this Question, although any prudent Minister would probably adopt the precautionary principle when dealing with questions from the noble Lord, Lord Peyton, particularly those that appear to be deceptively simple.
I do not disagree with him as to the severe problems that are facing farmers and the agricultural industry in this country across a wide range of sectors. It is the difficulties in each of those sectors occurring at the same time that makes this crisis particularly deep and difficult for those involved.
Many issues are influencing the situation, not least the over-supply in commodity markets, the effects of world trade, the recession in the Far East, the collapse of the Russian economy and the fact that farmers in this country have had to deal with the beef export ban and the associated charges on the livestock industry.
We are trying to deal with all the issues involved, but there is a general understanding that there will have to be a restructuring within agriculture, not only in this country because there are areas of agriculture where equal strains are being felt internationally. We have to find ways of supporting those who are working in the industry while that restructuring occurs.
Lord Stoddart of Swindon: My Lords, can my noble friend give an assurance that she will give the utmost support to British beef farmers following the insufferable and illegal action by the French of banning British beef, although the European Union has said that it is safe? Will she and her department be tough when negotiations are held with the EU and, if the French will not return to legality, will my noble friend advise the British people to boycott French goods?
Baroness Hayman: My Lords, I prefer to adopt the strategy suggested by my noble friend in the first half of his question in relation to the completely unjustified non-implementation of an EU decision about the resumption of beef exports from this country. We must ensure that the decision is properly implemented throughout the Community. I can reassure my noble friend that my right honourable friend the Minister of
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Agriculture and the Prime Minister have made quite clear within Europe and to the governments concerned, particularly to the French Government, our belief that they have no new evidence in this field and that the measures that have been approved by the EU scientific advisers after exceptionally thorough scrutiny show that British beef is safe and that they are legally obliged to implement that decision.
Baroness Miller of Chilthorne Domer: My Lords, I welcome the Minister to her new position. May I say how pleased we are in the south-west that we will be part of her particular brief.
Will the Minister make particular efforts to ensure that MAFF looks beyond the farm gate, which it has failed to do historically? That is one of the reasons for the lack of prosperity in the countryside and has led to a situation in which the amount of money that we are to receive for rural development regulation is below that given to Finland and most other countries in Europe. Can the Minister ensure that that money receives matching funding for the development of such essentials as farmers' co-operatives, farmers' markets and measures to make it easier for farmers to sell their extremely high quality produce to local people?
Baroness Hayman: My Lords, I am grateful to the noble Baroness for her welcome. I agree that the Rural Development Fund gives opportunities for exactly that kind of restructuring, diversification and support for rural economies in the round, not necessarily only through a very narrow definition of conventional agriculture. There have been difficulties because of the EU decision to base the amount of funding that is available on historical spend rather than on necessity, and that is an issue that we are pursuing. I agree that the opportunities exist, as with the special aid package that was announced by my right honourable friend in providing support for marketing schemes in particular areas for particular produce.

East Timor
3.15 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What steps they will take to further the apprehension and indictment of war criminals in East Timor.
Baroness Scotland of Asthal: My Lords, those responsible for war crimes and crimes against humanity must be brought to justice. The Government are very concerned about the reports of atrocities committed in East Timor. There is a pressing need to establish the facts and who was responsible.
An international commission of inquiry has been set up by the UN and we are offering our practical support. The Commission will report to the UN Secretary-General before the end of the year.
Lord Avebury: My Lords, I thank the Minister warmly for the close interest that the Government

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have always displayed on the issue of East Timor, and the Foreign Secretary in particular for his active concern. Is the Minister aware that the Commission which is to be set up will have no jurisdiction over the offences but only a power to inquire into what offences were committed and by whom?
Will the Government therefore try to ensure that the transitional authority being established by the UN has criminal jurisdiction over the criminal acts which have been committed during the Indonesian occupation? Will she also ask the Security Council for a ruling on whether the fourth Geneva Convention applies to East Timor so that these criminal acts can be subject to universal jurisdiction and tried in the courts as signatory states?
Baroness Scotland of Asthal: My Lords, your Lordships will know that the details of the transitional authority are still being worked out. The UN Secretary-General's report makes clear that one of the objectives of the transitional authority is to create non-discriminatory and impartial institutions, particularly the judiciary and the police, to ensure the establishment and maintenance of the rule of law and to promote and protect human rights. As stated by the Secretary-General's special representative, it is to facilitate the creation of an independent East Timorese human rights institution whose functions will include investigation of alleged violation of human rights.
It is very important to establish what happened. If we act precipitously and on ill-founded evidence, we might identify the wrong culprits, if indeed there are culprits for these atrocities. Therefore there is a real need to act with a degree of circumspection and caution.
The noble Lord will know that the Security Council does not make rulings on the applicability of the Geneva Convention. I shall seek to respond to the noble Lord in written form, if that would be acceptable to him.
Lord Archer of Sandwell: My Lords, rather than addressing these situations ad hoc, the best method of bringing war criminals to justice would be to establish the international criminal court. Can my noble friend give an estimate of when this country is likely to ratify the treaty?
Baroness Scotland of Asthal: My Lords, I cannot say anything specific in relation to the ratification of the treaty; what I can say is that the appropriate nature of our response should be dependent upon the facts once they are established. We know that a number of solutions and responses have been adopted in the international fora; for example, in South Africa. There is a whole panoply of appropriate responses. We have to await the results of our inquiries and see what recommendations come from the UN. We have to engage the people of East Timor, because they have
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been the primary sufferers of these atrocities. Their views as to the best way forward must be of great significance to the international community.
Lord Moynihan: My Lords, in view of the huge numbers of East Timorese who are missing in West Timor, estimated at some 500,000, on which occasions and to what effect have the Government put pressure on President Habibie to make good his pledge to the international community that all displaced persons in West Timor will be protected, humanely cared for and allowed to return safely to East Timor?
Baroness Scotland of Asthal: My Lords, we have been clear in the exhortations that have been made to President Habibie on behalf of Her Majesty's Government on these issues. We have to bear in mind that Indonesia has taken a number of crucial steps towards the establishment of democracy within its borders and in East Timor. It has an ability and it would appear now perhaps a willingness to engage constructively.
We shall continue to exhort Indonesia in relation to all the matters to which the noble Lord refers.

Welfare Reform and Pensions Bill
3.21 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
Clause 50 [Bereavement payments]:
[Amendment No. 94 not moved.]
Clause 51 [New allowances for bereaved spouses]:
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 95:
Page 56, line 40, leave out ("for not more than 26 weeks") and insert ("based on the contribution record of the deceased spouse")
The noble Baroness said: My Lords, in moving this amendment, I speak also to Amendments Nos. 97 and 98 which are also in my name. I regret that I am unable to support Amendments Nos. 96A and 99A also grouped with my amendment.
The Minister will not be surprised that I wish to return again to the subject of benefits for widows. She has referred often to modernising widows' benefits. Indeed, this is the description given to the proposals in the Bill in the Queen's Speech. Modernising in this case means removing benefit altogether from widows over the age of 45 without children and substituting an improved one-off bereavement allowance of £2,000 rather than the present £1,000, plus a benefit lasting for six months. These arrangements are intended to apply both to widows and widowers on the basis that

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this will equalise benefits for both sexes. In both cases we are informed that benefits will depend on the contribution record of the deceased spouse.
In support of those proposals, it is asserted that widows' benefits are now out of date; most women work and are now no longer dependent on male earnings. It is said that continuing to provide the benefit means that it goes to women who do not need it, like women who benefit from a spouse's occupational pension; and that funds should be concentrated where there is the greatest need.
I do not accept those arguments. Leaving aside altogether the view that the Equal Opportunities Commission has always held, that one should equalise upwards rather than downwards, I think that there is a quite deliberate confusion here between insured benefits and welfare provision. Insured benefits arise from the system of social insurance to which everyone contributes and individuals draw benefits from it as and when they qualify for them. Welfare provision is something else. It is not based on contribution records but only on need. That being so, it is means tested and depends upon the claimant's perceived and established lack of means.
Widows' benefits belong to the first, insured, category. The Government confirm that. Even in discussing the new proposals the then Minister for Social Security, Mr Stephen Timms, stated on 9th March that the contribution conditions for the new bereavement benefits exactly mirror those that they replace. He spells out precisely what those conditions are. In other words, this is a benefit for which the recipients have paid and they therefore have entitlement not in any way dependent on their present circumstances.
In response to a Question that I asked on 13th April, the Minister said:
"It is certainly true that the widow's benefit has been a contributory benefit … The purpose of that contributory benefit was to help the needs of those who would have no income, but that is now met in other ways".—(Official Report, 13/4/99; col. 617.]
With respect to my noble friend, I think that that is wrong. If that had been so, the benefit would have been a means-tested one; and it was not. It was paid as of right on the death of the spouse provided that contributory conditions were met. Hence it is wrong in my view to argue against a continuation of the existing arrangement on the basis that it is no longer needed. But even if we look at the matter from the standpoint of the Government and the Minister, again I think that that is wrong. The Minister has said on a number of occasions that times have changed. I do not think that they have changed as much as she thinks they have in particular for large numbers of poorer women. The Equal Opportunities Commission figures demonstrate that women's earnings are still very much less than those of men. While it is true that many more women now work, much of the work is poorly paid. I say that, even though acknowledging with gratitude what the present Government have done and continue to do via the minimum wage to alleviate some of this poverty. Nevertheless, households where the woman partner is
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the main earner are still the exception rather than the rule. The death of the male partner usually means a substantial drop in the standard of living of that household.
Nor is it true that there are large numbers of women with generous benefits from occupational pension schemes to which their husbands belong. It is true that some schemes are generous, in particular those negotiated in the wake of the Castle plan by some unions. But plenty are not and are based on the assumption that there will be a state pension in addition or, in the case of an early death in service of the spouse, a widow's pension to the remaining partner.
So the state widow's pension is a very useful addition and not one that can be dispensed with easily and without hardship. And the state will benefit quite substantially from this transfer of benefits from women to men which is what is involved here. The figure of £600 million has been mentioned. I do not know whether this is accurate. But I am also advised that the proposals in the Government's plan in relation to equalising for widowers will cost £100 million so there will be a gain of £600 million and a payment of a £100 million in order to equalise on the basis suggested for widowers.
I have had some interesting figures supplied to me by the Widows' Advisory Trust of which I am a trustee. I hereby declare my interest which I think is known to your Lordships. This is a comparison between the sums paid out over the past eight years to a widow who is widowed at the age of 50 in 1991 and the amounts that would be paid out in the case of a women widowed in 2001 at the same age of 50 over a similar period of eight years under the Government's proposals.
The 1991 widow received a bereavement payment of £1,000 plus a small sum representing the SERPS addition, now to disappear, and benefit over the next years. The total cost to the social security budget over eight years was £20,560.32.
Now let us consider the woman widowed in 2001— and remember that we have been told that the contributory rules will be the same in each case. The 2001 widow will receive a bereavement allowance of £2.000; there will be no SERPS addition; and she will receive a benefit for only six months thereafter—nothing at all in the following years. In the case of the latter woman (to be widowed in 2001) the saving to the Government, compared with the cost of the 1991 widow, is £20,242.42. That is for one widow over an eight-year period. I do not believe that that is at all justified.
Widows, particularly poorer ones, do not constitute a very powerful lobby. Many women journalists have written on the subject and cannot themselves very easily empathise with some of the women who have not had their education or career opportunities and who spent earlier years bringing up children. Even if they have had jobs they always looked to the male earner in the couple to produce the required living standard. I ask my noble friend the Minister to picture

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the lives of some of these women. I say again to her that for such women things have changed far less than for women from more privileged backgrounds. Such women are entitled to have what they believe their spouses have contributed on their behalf.
The TUC, the Equal Opportunities Commission and the Child Poverty Action Group have supported what I am saying. In fact, the Child Poverty Action Group states:
"Except for a minority, women's lack of economic independence while bringing up children means that they are ill-placed to take on work after bereavement. The on-going income of a contribution-based benefit such as the widow's pension is thus an important safeguard".
Finally, I gather that the Government's intention is to remove from widows the two-year income tax concession that they have had hitherto. When one takes that into consideration it seems as though the increase in the bereavement payment from £1,000 to £2,000, although welcome, is not all that generous. I beg to move.
The Chairman of Committees (Lord Boston of Faversham): My Lords, if Amendment No. 95 is agreed to, I cannot call Amendment No. 96 or Amendment No. 96A which appears on the supplementary list.
3.30 p.m.
Lord Rix: My Lords, I explained in Committee why I am unhappy at the abolition of the widow's pension. I do not need to repeat myself. Nothing has changed since then and I am still unhappy. In particular I do not like the fact that another contributory benefit is being virtually removed for some people who have already contributed to it. The House knows of the campaign I have been waging with Age Concern to protect future widows' rights to SERPS after April 2000. This matter is somewhat similar.
The Psalms teach us that God defendeth the widow. Thank goodness someone does, for there appears to be very little help from this or previous governments. I recognise that they have the prerogative to make changes to the benefit system. Judging by the amendments moved by the noble Baroness, Lady Turner of Camden, and those to be moved, I believe, by the noble Baroness, Lady Crawley, and the noble Lord, Lord Higgins, it is abundantly clear that no one believes that a six-months' bereavement allowance is enough. The Minister hinted in Committee on 6th July that she would reconsider. I hope that we may hear some good news today.
Baroness Crawley: My Lords, I speak to Amendment No. 96A. It reflects a similar amendment that I tabled, with colleagues, in Committee. It is a modest but sensible alteration to the measures in the Bill as regards the bereavement allowance and its length of payment.
We know that for those who have lost a loved one through death, a year rather than six months represents some kind of landmark on the road to recovery. The first anniversary and a festival such as
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Christmas have been endured and survived. Their physical and mental health have started to improve after the trauma, as any doctor will tell us. Acceptance of death is beginning to be experienced and the practical and financial matters concerned with organising the deceased's estate have begun to be dealt with.
There is no ideal stage at which a person must decide to begin again and move on. But I genuinely believe that the resources and the strength required to take that step and accept new challenges are far more likely to be present for the bereaved a year after death rather than at six months. I ask my noble friend the Minister to look favourably on this temperate amendment which would be of enormous significance for those who have suffered bereavement.
Earl Russell: My Lords. the House owes thanks to the noble Baroness, Lady Turner of Camden, for the determination with which she has kept before us the big issues arising from this clause. I agree with a great deal of what she said. At the end of the day, however, our positions differ. The Minister has also said a great deal with which I agree, but at the end of the day our positions differ. Indeed, I believe that I just about bracket the difference between the two of them.
As the Government originally envisaged the clause, it is in effect the downside of equality. The requirement to work, on women as on men, after bereavement is an attempt at full equality. I understand the kind of pride that leads the Minister to defend that. My sense of it is not that it is wrong but that it is considerably premature. It is a major cultural change enforced on a world which is not yet ready for it.
Before we have such a change I would like to see progress made towards equal pay reach at least the point of women earning 90 per cent of equivalent male earnings. I would like to see effective legislation against age discrimination. The requirement to work is nugatory if people cannot be conside7ed for employment. I know the Minister will tell us that there is in place a code of guidance against age discrimination. A recent survey by, I believe, the CBI found that one-third of its members were unaware of the existence of that guidance. The overwhelming majority of the others thought that it made very little difference. Were that otherwise I would be more inclined to agree with the Minister's position than I do.
However, we cannot begin from anywhere other than where we are. I listened with a great deal of sympathy to the speech of the noble Baroness. Lady Crawley. I remember the amendment moved in Committee. It was introduced in a particularly moving speech from the noble Baroness, Lady Pitkeathley. At the end of that debate I said to myself that this is probably where we are going to end up. If so, it has taken a very long time.
The Treasury always reminds me of the 17th century Spanish proverb that if death came from Madrid we would all live to be very old. In a perfect world compromise is inadequate. But the whole point is that it is not quite adequate to any party. That is why

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compromise works. If this were our position of ultimate resolution, I do not believe that it would last for ever but give rise to disadvantages. However, it would give everybody something. Therefore, even though we have heard what the Chairman of Committees has said about pre-emption, if the noble Baroness, Lady Crawley, chooses to put her amendment to the vote, we on these Benches will support it.
Lord Astor of Hever: My Lords, the House will be grateful to the noble Baroness, Lady Turner, for moving her amendment so eloquently. She made a very convincing point. I look forward to the Minister's reply.
As regards the two amendments in the name of the noble Baroness, Lady Crawley, we on these Benches are very sorry that they were tabled so late. We believe that they should have been grouped with our Amendments Nos. 96 and 99. Accordingly, and with the leave of the House, I shall speak to those amendments at this point.
We agree with the noble Baroness that an allowance for 26 weeks is not long enough for a bereaved widow. However, we do not believe that one year is long enough. Our amendments are designed to ameliorate the effect of Clause 51 by extending the new allowance to two years. We realise that no length of time is likely to truly overcome the sense of loss of bereavement, which is often unexpected. My noble friend Lord Higgins gave warning at Committee stage that we would be returning to this issue. The principle of our amendments was widely supported in the other place by Members who sit on the Conservative, Labour and Liberal Democrat Benches. There was a truly outstanding contribution on this issue from the honourable Member for Newbury.
The principle is supported by Age Concern, the Child Poverty Action Group, Disability Alliance, citizens' advice bureaux, the National Association of Widows, Cruse- Bereavement Care, Survivors of Bereavement by Suicide and the All-Party Group on Ageing and Older People. All of those groups are unhappy about the abolition of the contributory widows' pension.
The Government will eventually save over £600 million per year which many future widows—there are over 250,000 of them—thought that they would receive because their husbands had paid national insurance contributions. Sometimes they paid voluntarily over a lifetime of work. Those contributions will no longer count. The Government clearly do not seek to honour that contract. There was no mention of that intention in the Labour Party Manifesto. Every penny of that saving for the Treasury will come directly from the pockets of recently bereaved women. The additional expenditure on widows and children in a family where there has been a bereavement pales into insignificance when compared with the savings being taken from widows.
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Losing a partner is often devastating. Some people will have nursed their spouse through a terminal illness. I have seen at first hand the suffering that a husband endures watching a partner die since my wife's sister died of cancer only a couple of years ago. Many widows in that age group still need to continue to support their older teenage or young adult child through further education or training. The Government's proposals mean that a woman will suddenly be forced to work to support herself a mere six months after the death of her husband, when she may still barely cope with getting through the day. The reality is that the job search would have to start long before the six months were up.
Is it not incredible for the Government to expect a widow to enter the competitive world of work so quickly? She may have had no previous work experience, nor time to study for a qualification to earn the kind of money that the widows' pension would have provided. The six month bereavement allowance is not an adequate substitute for the widows' pension, especially for those who may be struggling hard to keep their heads above water and to keep a family together. An allowance should give the bereaved person time for grieving, for reorganising the home, taking care of financial and legal matters connected with the bereavement, and preparing, where necessary, to take up work. Widows will be punished for having stayed at home to bring up their children.
These amendments will ensure a more realistic degree of comfort than 26 weeks or one year to vulnerable people who believed that they had security and provision.
3.45 p.m.
Baroness Berners: My Lords, I strongly support the amendment, and especially what my noble friend Lord Astor of Hever has just said. The proposal as it stands is far too short a time for any real support for a widow or widower in a state of bewilderment and desolation. There must be many who are not able to cope at all for months. All kinds of ongoing circumstances may abound, such as debt or disablement and family problems of one sort or another. Such widows would find 18 months to two years' pension a real benefit towards helping them to sort out and come to terms with their much-altered circumstances. Therefore I ask the Minister to concede this point as a way of extending the compassionate nature of this welfare reform.
Baroness Hollis of Heigham: My Lords, the clauses which we are discussing, which the Government propose and to which Amendments Nos. 95 and following relate, would reform the current, and in my view, outdated, system of widows' benefits, which apply only to women and not to men. The proposals would replace it with a fair system of bereavement benefits for men and women alike. Far from reducing the contributory principle, they will actually be extending it to men for the first time. The benefits are designed to provide help where one member of a working-age couple is left, often unexpectedly, to cope alone.

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Our reforms will concentrate help from the State where it is most needed. Many noble Lords have experience of this issue. I can tell the House where that help is most needed. It is needed at the point of bereavement itself, for the immediate problems of adjusting to funeral arrangements, of sorting standing orders, pensions, car insurance, house insurance, the estate and so on. That will normally take a couple of months. One may also need a lump sum to help with the immediate arrangements. One will need a breathing space while one continues with the arrangements and "gets one's life sorted". If one has children who are not yet in further or higher education, one will also need help to support them and in order to have a genuinely free choice as to whether one should work—man or woman alike—or stay at home and bring those children up, knowing that having lost one parent, they may not wish to see the second parent out of work.
I know, as do many noble Lords, where the points of pressure lie. They lie first, in the immediate few months after widowhood, or widowerhood., and secondly, there is pressure if one has responsibility for children, which remains an ongoing responsibility. I am sure that I am speaking to something which all noble Lords would accept and understand. That is precisely where our reforms are aimed to help. At present, they help worn en, who will often for the rest of their lives be back in the labour market, and they are giving them a benefit which they do not necessarily need, like myself. The present system does nothing at all to help men who may have come out of the labour market to look after their children, and in doing so go onto income support.
We must change the system because it is not fair to men who may he struggling to look after their children, and because it no longer in my view reflects the situation which families may face. They need help in the immediate few months after bereavement, and, as I say. if they have ongoing responsibilities for children.
We are talking about the future. No existing widow will be affected by these changes, so no one need worry that their benefits will he changed tomorrow. In our reforms we are proposing three things. First, at present, a woman would receive a bereavement payment of. £1,000 at the point of her husband's death for the immediate expenses. The Government propose to double that sum from £1,000 to £2,000, and to apply it to men and women alike, because these needs do not apply solely to women but to men or women in that situation.
Secondly, we are giving both men and women alike a breathing space; a benefit as of right—not a means-tested benefit—for six months to men and women, whether they have children or not and whether or not they work. They will have a breathing space in which to come to terms with their loss and to adjust their lives accordingly. Thirdly, the Government propose to develop a widowed parents allowance, to apply to men and women alike, while their children are dependent on them.
That is our approach—three proposals; for the bereavement allowance to be doubled, for the breathing space payment to be paid to men and women
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alike, and for a widowed parents allowance to be paid to men and women alike while children are dependent on them. In addition, we shall be giving extra help to those aged over 55 at the start of the new arrangements who are widowed in the first five years, so that they can receive extra income-related help without signing on for work, as well as extra access to the New Deal and so on, should they so wish.
My problem with the amendments tabled by my noble friend Lady Turner is that they effectively maintain the status quo. There is effectively no change: they propose money for life for a widow, whatever her circumstances, and as far as I can see, unless the noble Baroness is going to say otherwise, virtually no change for men. It may be that my noble friend wishes to extend the same principle of benefit as of life for men, at whatever age they may be widowed, whether or not they have responsibilities or whatever their income. That would mean that my noble friend would be offering the state benefit to men who possibly have perfectly generous salaries, and so on, simply on the grounds that they have become a widower at some point in their lives.
I believe my noble friend's amendments would undermine one of the fundamental principles of what we are trying to achieve—to focus support where it is most needed; that is, in the immediate period after bereavement and on families with children. Quite frankly, why should a woman with no dependent children and therefore no one dependent on her staying at home, possibly in a well-paid job with no financial need and possibly with a generous occupational pension, receive a state benefit as of right? I am talking about someone who has no children, is in a job and with a decent pension. And yet a man who may be struggling to bring up his children by coming out of the labour market on income support gets nothing at all. That cannot be right and that is what we propose to change. It is not right to put money into the pockets of a widow who does not need it while denying it to men who may do. At the moment men get nothing.
Our reforms will change that. We propose to extend bereavement benefits to men and remove the assumption that widows—simply because they are women—should have to rely on benefits through the rest of their lives. I do not find that situation acceptable because the world in which the original widow's benefit was devised—the world of Beveridge and of subsequent times—has changed beyond recognition. When I listen to speeches, even those of my noble friend, who knows a great deal about the field of social security, I wonder sometimes whether people realise just how much the world has changed. In Beveridge's day, one woman in eight worked. Now seven out of 10 married women work; eight out of 10 married men work. That is seven times as many as in Beveridge's day. I give another example: 98 per cent of married women—that is, all but 2 per cent of them—either are in work or have been in work while married.
That was inconceivable in Beveridge's day. The assumption was that a woman was at home and, therefore, when her husband died she had to obtain her

375
widow's benefit through him because she had no other income. Now 98 per cent of married women will have worked or will have built up work records or are able to go back to work. The assumption behind the very thoughtful speech of the noble Earl, Lord Russell, and the moving speech of the noble Lord, Lord Astor of Hever, is that with these amendments a widow will for the first time "have to go into work". But a widow is going back to work from the job she had.
Earl Russell: My Lords, the Minister is putting words into my mouth when she says "for the first time". I did not develop my side of the argument about how much the world has changed because I thought that the House knew it.
Baroness Hollis of Heigham: My Lords, I am sure the House is grateful for the noble Earl's brevity. In that case, let me attribute the phrase to the noble Lord, Lord Astor, who certainly used those words.
The assumption behind a lot of the argument for no change is that a widow has not worked and that, suddenly, as a result of bereavement she is forced out into the rough and difficult world of work and that that is not fair. There are as many women working in the labour market as there are men. There are almost as many married women in work as there are married men. I repeat that 98 per cent of married women have worked. Therefore, the assumption that married women should have a benefit as of right for life simply because they are a widow, irrespective of their income, their job or their children, belongs to a generation that has passed.
Indeed, I wonder what noble Lords would expect when looking at the figures relating to the number of women and men, of widows and widowers, in work. If one looks at the number of widowers in work between the ages of 45 and retirement—admittedly, five years longer than women—53 per cent of widowers work while 54 per cent of widows work; that is, more women (widows) work than men (widowers), and yet we give the benefit to women and not to men. That is the scale of the change in our society. Our proposals seek, in decent, fair and just ways, to reflect that so that men and women are supported at the two points of need— the immediate period after bereavement and also if they have a responsibility for children.
We recognise that people need a breathing space to come to terms with the emotional and practical upheaval caused by the loss of their husband or wife. That is why we propose that the bereavement allowance should offer financial support for six months for men and women alike.
We weighed up all the arguments. We thought that six months was about right. We wanted to concentrate help where it was needed. However, following the debate in Committee and the eloquent speeches made there and again today by my noble friend, there has been much pressure on the Government to change the period from six to 12 months; that is, to double the
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period in which we give a supporting benefit to men and women alike while they come to terms with bereavement.
I believe those arguments were put forcibly. Men and women alike, particularly if they have been caring for a spouse, may be tired and depressed and may need a longer breathing space than we perhaps first thought. My noble friend Lady Crawley has made that point. We have reflected and I am delighted to be able to say that we are willing in principle to accept the amendment of my noble friend Lady Crawley to extend the bereavement allowance not to six months for men and women alike but to one year. That is a significant move and means that widows and widowers aged over 45 without dependent children—if they have dependent children, they are both eligible for the widowed parent's allowance—will receive financial support from bereavement benefits for a year. That is for twice as long as under our original proposals. That will cost a further £50 million. As a result, 20,000 or so new widows and many thousand widowers each year would receive that allowance for six months longer.
As I said, we are willing in principle to accept the spirit of the amendment of my noble friend Lady Crawley. However, if the House were instead to accept the amendment of my noble friend Lady Turner, or, more particularly, the amendment moved by the noble Lord, Lord Astor, I must tell the House that I would expect the Secretary of State to seek to overturn that amendment. I phrase my words carefully. But because the six-month period is on the face of the Bill, we would find ourselves returning to that point—not the 12-month period. In that situation I could not guarantee what the other House would do. It would obviously reflect upon it.
The offer that I make to your Lordships today is that were the whole House to support my noble friend's amendment which proposes a 12-month period, that would be accepted by the Government and would survive. If instead that is displaced by an amendment which has to be overturned in the other place, I cannot predict what the outcome of that may be. I do not know what would happen. I am being frank with the House. There would be all sorts of pressures in the other place.
I urge your Lordships to accept that the Government have moved very considerably on this matter. We have listened to the points made by your Lordships. As a result we are proposing, if the House so wishes, to accept the amendment of my noble friend Lady Crawley which would double the bereavement period from six months to 12 months. That means that men and women alike would get a bereavement payment of £2,000, not £1,000, at the point at which they lost their spouse.
Secondly, men and women alike, whether or not they had children, and whether or not they were in work, would get a bereavement payment of support for 12 months. Those with dependent children would receive benefit—men and women alike—until their children were adult. That is the package I put to your Lordships. We have listened, but we cannot accept the

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amendment of the noble Lord, Lord Astor, because it goes too far. I urge the House to accept the compromise amendment of my noble friend Lady Crawley. If we secure that today, the House will have done very well.
4 p.m.
Baroness Turner of Camden: My Lords, I thank my noble friend for her detailed response. She will not be surprised to learn that I do not agree with it. If I may say so, I believe that she has overlooked one of the main points in my submission, which is that we are talking about a contributory benefit. This is a benefit to which the spouse who has died contributed during his working life. Probably because he believed that his widow was covered to some degree, he had not perhaps made other provision.
As regards widowers, I certainly did not intend to imply that I do not believe that widowers should have the improvement that has been recommended. On the contrary, but under the same conditions. The widower would be entitled to a benefit based on the contributions of his spouse while the spouse was in work in the same way that the widow would be entitled to a benefit based upon the contributions that her husband had made. Answering this again on the basis of need—that a great number of women who do not need it receive it—is no answer to the argument. A contributory benefit ought to be a contributory benefit, and you should get the benefits accruing therefrom when you qualify.
For example, if I took out a policy with the Prudential and when under the terms of the policy I qualified for a payment I was told by the company, "Well, we're very sorry but you can't have it because you don't need it", I would feel very angry indeed and the Prudential would probably end up in court. We are talking about the same kind of principle here. We are discussing a contributory benefit in a system of social insurance: we all contribute, and then when we need the amount due under that contributory system, we receive the benefit.
Further, I do not agree even when we examine the question of need and the number of women who are said to be in work. According to information I have been provided with by, for example, the Child Poverty Action Group, the majority of widows, if they work, are working part time, and are usually in low-paid employment at that. I do not believe that that argument holds water.
Baroness Hollis of Heigham: My Lords, the majority of married women in employment work full time and not part time. The average pay for a married woman in full-time work is £15,000 a year. I am afraid that my noble friend's statistics are not up to date.
Baroness Turner of Camden: My Lords, we could argue about that, but certainly those figures do not tie up with some of the information I have received from a number of lobbying organisations which support what I have been saying. The fact remains that we have
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here a situation in which there will be women who would have expected to receive the benefit bur will not receive one.
We have been told that there is to be an increase. Of course I welcome the rise from £1,000 to £2,000 at the point of bereavement. That is very welcome. However, I must point out that it is the first increase since the benefit was introduced some 10 or 15 years age—I cannot remember exactly when. However, as I said in my opening statement, the Government will recover the money to pay for that by not paying widows' benefits beyond six months, or the year that has been suggested today. Further, I believe that the Government have decided that in future the two-year tax concession available for the first two years after the husband has died will not be paid. It seems to me that the Government will recover some of the extra costs involved there. Further, as a result of these proposals in total, the Treasury will gain substantially over and above what would have been the situation had the existing arrangements continued.
For those reasons, I do not accept what my noble friend has said. However, I do not intend to call a vote on the issue today. I shall think about what has been said. As regards the amelioration of one year, I do not think that that is enough. Should the noble Lord, Lord Astor, choose to press his proposition calling for two years, I would vote for two years rather than one year, because two years are rather more generous. However, I still do not think that that is enough.
I should like to think about what has been said today and perhaps return to the whole issue of benefits based upon the contribution record at Third Reading. I regard the matter as very important. I am a supporter of social insurance and not a supporter of an entirely means-tested system which we would otherwise need to have if we do not have a system of social insurance leading to the eventual provision of universal benefits when people become qualified for their entitlement.
As I said, I am not happy about the proposal for one year. It is quite insufficient.I do not agree that you can get over everything in one year. From personal experience, I do not think that that is true at all. Two years is not really sufficient, but I would much prefer that to one year. That will be my position. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Astor of Hever: My Lords, I beg to move Amendment No. 96 formally. I wish to test the opinion of the House.
Page 56, line 41, leave out ("26 weeks") and insert ("two years")
A noble Lord: Pre-emption.
The Chairman of Committees: My Lords, Amendment No. 95 has been withdrawn and therefore pre-emption does not arise in those circumstances. Only if Amendment No. 95 had been agreed to would that have arisen. At present I am dealing only with Amendment No. 96. That is the amendment which I have called and which I must put to the House.
4.7 p.m.
On Question.Whether the said amendment(No. 96) shall be agreed to?
Their Lordships divided: Contents, 193; Not-Contents, 114.

Division No. 1

CONTENTS

Aberdare, L.

Elles, B.

Ackner, L.

Elliott of Morpeth, L.

Addison, V.

Elton, L.

Ailsa, M.

Exmouth, V.

Aldington, L.

Ferrers, E.

Alexander of Tunis, E.

Fitt, L.

Anelay of St. Johns, B.

Fookes, B.

Archer of Weston-Super-

Gage, V.

Mare, L.

Gainford, L.

Ashbourne, L.

Geddes, L.

Ashley of Stoke, L.

Gilmour of Craigmillar, L.

Astor of Hever, L.

Gisborough, L.

Attlee, E.

Glenarthur, L.

Bathurst, E.

Glentoran, L.

Belhaven and Stenton, L.

Gray, L.

Bell, L.

Gray of Contin, L.

Berners, B.

Greenway, L.

Blaker, L.

Gretton, L.

Blatch, B.

Haddington, E.

Blyth, L.

Hanham, B

Boardman, L.

Harding of Petherton, L.

Bowness, L.

Hayhoe, L.

Brabazon of Tara, L.

Henley, L.[Teller]

Brentford, V.

Higgins, L.

Bridgeman, V.

Hogg, B.

Brookeborough, V.

Holderness, L.

Brougham and Vaux, L.

HolmPatrick, L.

Bruntisfield, L.

Howe, E.

Buccleuch and Queensberry, D.

Hunt of Wirral, L.

Burnham, L. [Teller]

Ironside, L.

Buscombe, B.

James of Holland Park, B.

Butterworth, L.

Jenkin of Roding, L.

Byford, B.

Jopling, L.

Cadman, L.

Kelvedon, L.

Caithness, E.

Keyes, L.

Campbell of Alloway, L.

Kimball, L.

Campbell of Croy, L.

Kintore, E.

Carnegy of Lour, B.

Knutsford, V.

Carnock, L.

Lane of Horsell, L.

Carr of Hadley, L.

Lang of Monkton, L.

Castle of Blackburn, B.

Lauderdale, E.

Chadlington, L.

Lawson of Blaby, L.

Chesham, L.

Lindsey and Abingdon, E.

Clanwilliam, E.

Liverpool, E.

Clark of Kempston, L.

Long, V.

Coleraine, L.

Lucas, L.

Courtown, E.

Lucas of Chilworth, L.

Cox, B.

Luke, L.

Craig of Radley, L.

Mackay of Ardbrecknish, L.

Cranbrook, E.

Mackay of Drumadoon, L.

Cross, V.

MacLaurin of Knebworth, L.

Davidson, V.

Macpherson of Drumochter, L.

De L'Isle, V.

Masham of Ilton, B.

Dean of Harptree, L.

Merrivale, L.

Denham, L.

Middleton, L.

Derwent, L.

Miller of Hendon, B.

Dixon-Smith, L.

Monk Bretton, L.

Donegall, M.

Monro of Langholm, L.

Downshire, M.

Monteagle of Brandon, L.

Dunleath, L.

Montgomery of Alamein, V.

Eccles, V.

Montrose, D.

Eccles of Moulton, B.

Morris, L.

Eden of Winton, L.

Mountevans, L.

Ellenborough, L.

Mowbray and Stourton, L.

380

Moyne, L.

Rowallan, L.

Moynihan, L.

Ryder of Wensum, L.

Munster, E.

St. John of Fawsley, L.

Murton of Lindisfarne, L.

Sanderson of Bowden, L.

Napier of Magdãla, L.

Seccombe, B.

Naseby, L.

Selborne, E.

Nelson, E.

Sharples, B.

Newall, L.

Shaw of Northstead, L.

Norrie, L.

Simon of Glaisdale, L.

Northbrook, L.

Slim, V.

Northesk, E.

Soulsby of Swaffham Prior, L.

Norton of Louth, L.

Stallard, L.

Nunburnholme, L.

Stodart of Leaston, L.

O'Cathain, B.

Stoddart of Swindon, L.

Onslow, E.

Strathclyde, L.

Onslow of Woking, L.

Strathcona and Mount

Oppenheim-Barnes, B.

Royal, L.

Oxfuird, V.

Sudeley, L.

Park of Monmouth, B.

Swansea, L.

Pender, L.

Tebbit, L.

Peyton of Yeovil L.

Teviot, L.

Platt of Writtle, B.

Thomas of Gwydir, L.

Platt of Writtle, B.

Townshend, M.

Plummer of St. Marylebone, L.

Trefgarne, L.

Porter of Luddenham, L.

Trumpington, B.

Prentice, L.

Turner of Camden, B.

Pym, L.

Vivian, L.

Radnor, E.

Wade of Chorlton, L.

Rathcavan, L.

Wakeham, L.

Rawlings, B.

Warnock, B.

Renton, L.

Waterford, M.

Renwick, L.

Westbury, L.

Roberts of Conwy, L.

Wise, L.

Rotherwick, L.

Young, B.

NOT-CONTENTS

Acton, L.

Filkin, L.

Ahmed, L.

Gainsborough, E.

Allenby of Megiddo, V.

Gilbert, L.

Amos, B.

Gladwin of Clee, L.

Annan, L.

Glanusk, L.

Archer of Sandwell, L.

Gordon of Strathblane, L.

Bach, L.

Goudie, B.

Barnett, L.

Gould of Potternewton, B.

Bassam of Brighton, L.

Graham of Edmonton, L.

Berkeley, L.

Grantchester, L.

Blackstone, B.

Grenfell, L.

Blease, L.

Hanworth, V.

Bragg, L.

Hardy of Wath, L.

Brett, L.

Brightman, L.

Harris of Haringey, L.

Brooke of Alverthorpe, L.

Haskel, L.

Bruce of Donington, L.

Hayman, B.

Burlison, L.

Hilton of Eggardon, B.

Carter, L.[Teller]

Hogg of Cumbernauld, L.

Christopher, L.

Hollis of Heigham, B.

Clarke of Hampstead, L.

Hoyle, L.

Cledwyn of Penrhos, L.

Hughes of Woodside, L.

Clinton-Davis, L.

Hunt of Kings Heath, L.

Cocks of Hartcliffe, L.

Hylton-Foster, B.

Crawley, B.

Irvine of Lairg, L.(Lord

Currie of Marylebone, L.

Chancellor)

David, B.

Janner of Braunstone, L.

Davies of Coity, L.

Jay of Paddington, B.(Lord

Desai, L.

Privy Seal)

Diamond, L.

Kennet, L.

Donoughue, L.

Kilbracken, L.

Dormand of Easington, L.

King of West Bromwich, L.

Dubs, L.

Kinloss, Ly.

Elder, L.

Lea of Crondall, L.

Evans of Parkside, L.

Lipsey, L.

Evants of Watford, L.

Lockwood, B.

Falconer of Thoroton, L.

Lofthouse of Pontefract, L.

Farrington of Ribbleton, B.

Lovell-Davis, L.

Faulkner of Worcester, L.

Macdonald of Tradeston, L.

381

McIntosh of Haringey, L.

Scotland of Asthal, B.

[Teller]

Shepherd, L.

Mackenzie of Framwellgate, L.

Shore of Stepney, L.

Mason of Barnsley, L.

Simon, V.

Merlyn-Rees, L.

Strabolgi, L.

Milner of Leeds, L.

Symons of Vernham Dean, B.

Molloy, L.

Taylor of Blackburn, L.

Monkswell, L.

Taylor of Gryfe, L.

Montague of Oxford, L.

Tenby, V.

Morris of Manchester, L.

Thornton, B.

Nicol, B.

Varley, L.

Orme, L.

Walpole, L.

Patel, L.

Warner, L.

Peston, L.

Warwick of Undercliffe, B.

Ponsonby of Shulbrede, L.

Weatherill, L.

Prys-Davies, L.

Wedderbum of Charlton, L.

Ramsay of Cartvale, B.

Whitty, L.

Rea, L.

Williams of Elvel, L.

Rix, L.

Williams of Mostyn, L.

Sawyer, L.

Williamson of Horton, L.

Resolved in the affirmative, and amendment agreed to accordingly.
4.18 p.m.
Baroness Crawley Baroness Crawley moved Amendment No. 96A:
Page 56, line 41, leave out ("26 weeks") and insert ("one year")
The noble Baroness said: My Lords, I understand that the amendment will be moved to leave out the words last inserted.
Lord Higgins: My Lords, we have just decided that the appropriate length of time for the widow's benefit to continue is two years. That seems to me to be a very clear decision of the House. The amendment seems to be quite inappropriate and I should have thought that it should fall. The House has clearly indicated that it believes that that is right, and I do not understand why it should not be so.
Earl Russell: My Lords, perhaps I might assist the House. Noble Lords may remember the debate on the Police Bill in the last Session of the last Parliament when the House carried an amendment from the Labour Front Bench and one from our Front Bench. The amendments were inconsistent with each other. The advice we received from the Table was that the House was perfectly entitled to carry both if it wished to do so.
Baroness Hollis of Heigham: My Lords, we sought the advice of the Table on this matter. We were advised that the House has taken a view on the two-year rule but has not yet had the opportunity to make a judgment on the one-year rule. That comes afterwards and is subsequent.
Lord Higgins: My Lords, this seems to me to be quite remarkable tactics by the Government. I understand that it is in line with advice received from the Table. None the less, the House has clearly indicated what it wishes to do. Other than on the grounds that this will result in procrastination, I find it difficult to understand why the House should be asked to vote again. However, if that is the wish of the House, that
382
is so. I would strongly advise my noble friends to vote against what is now proposed and re-affirm what they have said only a few moments ago.
Lord McIntosh of Haringey: My Lords, I do not think that we can allow the noble Lord to get away with saying that this is a device by the Government. This is nothing to do with the Government; it is the advice of the Clerks at the Table and is reflected in the Chairman's brief. The words are:
"to leave out the words last inserted".
As the noble Earl, Lord Russell confirmed, that is entirely in accordance with the procedure of the House.
Lord Higgins: My Lords, I am astonished. We all know that there are important amendments later on which the House is anxious to reach and vote upon. We have just had a vote which says that widow's benefit should be extended to two years. As the noble Lord just said, it is perfectly true, as I understand it from the Table, strictly within the rules of this House, that it is possible then to put the amendment which states "one year". However, that would be extraordinary when the House clearly indicated, a moment or two ago, that its preference is for two years. However, if the Government are determined to waste time to avoid votes on later amendments, we must put up with that. We will have to make it clear and vote again. If the amendment has been moved and is put to the House, I urge my noble friends to vote, as they did a few moments ago, against this amendment in order to establish what we have already clearly indicated is the will of the House.
Earl Russell: My Lords, with the leave of the House, first the House is entitled, if it wishes, to express the view that both one year and two years are preferable to six months, which is at present in the Bill. Secondly, however dissatisfied we may be with procedure. we cannot change it ad hoc to suit the convenience of one amendment. If the noble Lord, Lord Higgins, thanks that the present situation is unsatisfactory—there may be merit in that view—his proper recourse is to recommend this issue for consideration by the Procedure Committee rather than to make an issue of it immediately without notice. I accept that it is no fault of his that there is no notice; the situation has arisen suddenly.
Baroness Turner of Camden: My Lords, perhaps I may seek guidance as I find this puzzling. As I understand it, Amendment No. 96A, tabled in the name of the noble Baroness, Lady Crawley, states:
"leave out ("26 weeks") and insert ("one year")"
and Amendment No. 99A states:
"leave out ("26 weeks") and insert ("one year")".
As a result of the Motion just carried by the House, "26 weeks" has disappeared from the text and does not exist any more. Instead of "26 weeks" we have "two years". I cannot see what the amendment is amending.
Baroness Lockwood: My Lords, surely if an amendment is carried which alters slightly the wording

383
of a subsequent amendment, the normal procedure of the House is to leave out the words previously agreed "and insert". That is exactly what is happening on this occasion. The Chairman must take the amendments in order. We have just voted on Amendment No. 96. The next amendment to vote on is Amendment No. 96A. That is perfectly in accord with the usual procedure and certainly in accord with the briefings that I have received from time to time as a Deputy Chair.
Lord Higgins: My Lords, I would not question, for one moment, what the noble Baroness says. Clearly, she has vastly more experience in these matters than me. I entirely agree with the point made by the noble Earl, Lord Russell; the procedure is as it is. In that case we must clearly follow it. I presume that if the noble Baroness wishes to press her amendment to a Division, it will take place but we should be clear that it is against a background where we need to make rapid progress in order to reach other important amendments. However, if the House wishes to vote again, it is right that it should do so. I strongly advise my noble friends to vote against the amendment which the noble Baroness is moving and in favour of the one we have just carried.
Lord Swinfen: My Lords, I abstained on the last amendment because I did not think that Her Majesty's loyal Opposition were right. On this occasion I shall vote with the noble Baroness, Lady Crawley, because I think that she is right. There has been a great deal of fuss over nothing. It is not often that we have a number of alternatives of this sort before the House. However, we are following the correct procedure.
Baroness Crawley: My Lords, I beg to move.
4.26 p.m.
On Question, Whether the said amendment (No. 96A) shall be agreed to?
*Their Lordships divided: Contents, 164; Not-Contents, 185.

Division No. 2

CONTENTS

Acton, L.

Bradshaw, L.

Addington, L.

Bragg, L.

Ahmed, L.

Brett, L.

Allenby of Megiddo, V.

Brooke of Alverthorpe, L.

Alton of Liverpool, L.

Brookeborough, V,

Amos, B.

Burlison, L.

Annan, L.

Calverley, L.

Archer of Sandwell, L.

Carlisle, E.

Avebury, L.

Carter, L.[Teller]

Bach, L.

Christopher, L.

Barker, B.

Clarke of Hampstead, L.

Barnett, L.

Cledwyn of Penrhos, L.

Bassam of Brighton, L.

Clement-Jones, L.

Bath and Wells, Bp.

Clinton-Davis, L.

Berkeley, L.

Crawley, B.

Blackstone, B.

Currie of Marylebone, L.

Blease, L.

Dahrendorf, L.

Bledisloe, V.

Darcy de Knayth, B.

384

David, B.

McIntosh of Haringey, L.

Davies of Coity, L.

Mackenzie of Framwellgate, L.

Desai, L.

Maddock, B.

Dholakia, L.

Mar and Kellie, E.

Diamond, L.

Mason of Barnsley, L.

Donoughue, L.

Merlyn-Rees, L.

Dormand of Easington, L.

Methuen, L.

Dubs, L.

Miller of Chilthorne Domer, B.

Elder, L.

Milner of Leeds, L.

Evans of Parkside, L.

Molloy, L.

Evans of Watford, L.

Monkswell, L.

Ezra, L.

Montague of Oxford, L.

Falconer of Thoroton, L.

Morris of Manchester, L.

Farrington of Ribbleton, B.

Newby, L.

Faulkner of Worcester, L.

Nicol, B.

Filkin, L.

Orme, L.

Fitt, L.

Oxford, Bp.

Gainsborough, E.

Patel, L.

Geraint, L.

Peston, L.

Gilbert, L.

Phillips of Sudbury, L.

Gladwin of Clee, L.

Ponsonby of Shulbrede, L.

Glanusk, L.

Porter of Luddenham, L.

Goodhart, L.

Prys-Davies, L.

Gordon of Strathblane, L.

Ramsay of Cartvale, B.

Goudie, B.

Rathcavan, L.

Gould of Potternewton, B.

Rea, L.

Graham of Edmonton, L.

Redesdale, L.

Grantchester, L.

Rix, L.

Grenfell, L.

Russell, E. [Teller]

Grey, E.

Sandberg, L.

Hacking, L.

Sawyer, L.

Hanworth, V.

Scotland of Asthal, B.

Hardy of Wath, L.

Shannon, E

Harris of Greenwich, L.

Sharp of Guildford, B.

Harris of Haringey, L.

Shepherd, L.

Haskel, L.

Shore of Stepney, L.

Hayman, B.

Simon, V.

Hilton of Eggardon, B.

Skelmersdale, L.

Hogg of Cumbernauld, L.

Smith of Clifton, L.

Hollis of Heigham, B.

Stallard, L.

Strabolgi

Holme of Cheltenham, L.

Swinfen, L.

Hooson, L.

Symons of Vernham Dean, B.

Hoyle, L.

Taylor of Blackburn, L.

Hughes of Woodside, L.

Taylor of Gryfe, L.

Hunt of Kings Heath, L.

Tenby, V.

Hutchinson of Lullington, L.

Thomas of Gresford, L.

Irvine of Lairg, L. (Lord

Thomas of Walliswood, B.

Chancellor)

Thomson of Monifieth, L.

Janner of Braunstone, L.

Thornton, B.

Jay of Paddington, B.(Lord

Thurso, V.

Privy Seal)

Tordoff. L.

Jenkins of Hillhead, L.

Varley, L.

Kilbracken, L.

Walker of Doncaster, L.

King of West Bromwich, L.

Warner, L.

Kinloss, Ly.

Warnock, B.

Kirkwood, L.

Warwick of Undercliffe, B.

Lea of Crondall, L.

Watson of Richmond, L.

Lester of Herne Hill, L.

Weatherill, L.

Linklater of Butterstone, B.

Wedderburn of Charlton, L.

Lipsey, L.

Whitty.L.

Lockwood, B.

Wigoder, L.

Lofthouse of Pontefract, L.

Williams of Elvel, L.

Lovell-Davis, L.

Williams of Mostyn, L.

Macdonald of Tradeston, L.

Williamson of Horton, L.

NOT-CONTENTS

Aberdare, L.

Archer of Weston-Super-Mare, L.

Ackner, L.

Astor of Hever, L.

Addison, V.

Attlee, E.

Ailsa, M.

Balfour of Inchrye, L.

Aldington, L.

Bathurst, E.

Alexander of Tunis, E.

Belhaven and Stenton, L.

Anelay of St. Johns, B.

Bell, L.

385

Berners, B.

Hunt of Wirral, L.

Blaker, L.

Ironside, L.

Blatch, B.

James of Holland Park, B.

Blyth, L

Jenkin of Roding, L.

Boardman, L.

Jopling, L.

Bowness, L.

Kelvedon, L.

Brabazon of Tara, L.

Keyes, L.

Brentford, V.

Kimball, L.

Bridgeman, V.

Kinnoull, E.

Bridges. L.

Kintore, E.

Brougham and Vaux, L.

Knutsford, V.

Bruce of Donington, L.

Lane of Horsell, L.

Bruntisfield, L.

Lang of Monkton, L.

Buccleuch and Queensberry. D.

Lauderdale, E.

Burnham, L.[Teller]

Lawson of Blaby, L.

Buscombe, B.

Lindsey and Abingdon, E.

Butterworth, L.

Liverpool, E.

Byford, B.

Long, V.

Cadman, L.

Lucas, L.

Caithness, E.

Lucas of Chilworth, L.

Campbell of Alloway, L.

Luke, L.

Campbell of Croy, L.

Mackay of Ardbrecknish, L.

Carnegy of Lour, B.

Mackay of Drumadoon, L.

Carnock, L.

MacLaurin of Knebworth, L.

Carr of Hadley, L.

Mancroft, L.

Castle of Blackburn, B.

Merrivale, L.

Chadlington, L.

Miller of Hendon, B.

Charteris of Amisfield, L.

Monk Bretton, L.

Clark of Kempston, L.

Monro of Langholm, L.

Coleraine, L.

Monteagle of Brandon, L.

Courtown, E.

Montgomery of Alamein, V.

Cranbrook, E.

Montrose, D.

Crickhowell, L.

Morris, L.

Cross, V.

Mountevans, L.

Davidson, V.

Mowbray and Stourton, L.

De L'Isle, V.

Moyne, L.

Dean of Harptree, L.

Moynihan, L.

Denbigh, E.

Munster, E.

Denham, L.

Murton of Lindisfarne, L.

Derwent, L.

Napier and Ettrick, L.

Dixon-Smith, L.

Naseby, L.

Donegall, M.

Nelson, E.

Downshire, M.

Newall, L.

Dunleath, L.

Norrie, L.

Eccles, V.

Northbrook, L.

Eccles of Moulton, B.

Northesk, E.

Eden of Winton, L.

Norton of Louth, L.

Ellenborough, L.

Nunbumholme, L.

Elles, B.

O'Cathain, B.

Elliott of Morpeth, L.

Onslow, E.

Elton, L.

Onslow of Woking, L.

Exmouth, V.

Oppenheim-Barnes, B.

Ferrers, E.

Oxfuird, V.

Fookes, B.

Park of Monmouth, B.

Gage, V.

Pender, L.

Geddes, L.

Peyton of Yeovil, L.

Gilmour of Craigmillar, L.

Piatt of Writtle, B.

Gisborough, L.

Prentice, L.

Glenarthur, L.

Pym, L.

Glentoran, L.

Radnor, E.

Gray.L.

Rawlings, B.

Gray of Contin, L.

Renton, L.

Greenway, L.

Renwick, L.

Gretton, L.

Roberts of Conwy, L.

Haddington, E.

Rotherwick, L.

Hanham, B.

Rowallan, L.

Harding of Petherton, L.

Ryder of Wensum, L.

Harris of Peckham, L.

St. John of Fawsley, L.

Hayhoe, L.

Sanderson of Bowden, L.

Henley, L.[Teller]

Seccombe, B.

Higgins, L.

Seaford, L.

Hogg, B

Sharples, B.

Holderness, L.

Shaw of Northstead, L.

HolmPatrick, L.

Simon of Glaisdale, L.

Howe, E.

Soulsby of Swaffham Prior, L.

Howell of Guildford, L.

Stodart of Leaston, L.

386

Strathclyde, L.

Trumpington, B.

Sudeley, L.

Turner of Camden, B.

Swansea, L.

Vivian, L.

Tebbit, L.

Wade of Chorlton, L.

Teviot, L.

Waterford, M.

Teynham, L.

Westbury, L.

Thomas of Gwydir, L.

Wharton, B.

Townshend, M.

Wise, L.

Trefgame, L.

Young, B.

[* see col. 439]
Resolved in the negative, and amendment disagreed to accordingly.
4.38 p.m.
[Amendments Nos. 97 and 98 not moved.]
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 99:
Page 57, line 1, leave out ("26 weeks") and insert ("two years")
The noble Lord said: My Lords, the amendment is consequential. I beg to move.
On Question, amendment agreed to.
[Amendment No. 99A not moved.]
Baroness Crawley Baroness Crawley moved Amendment No. 100:
After Clause 51, insert the following new clause—

EXTENSION OF INVALID CARE ALLOWANCE FOR BEREAVED) CARERS
(" . In section 70 of the Contributions and Benefits Act. at the end there shall be added—
"(11) The Secretary of State shall issue regulations in respect of persons who cease to be in receipt of Invalid Care Allowance as a result of the death of the person in respect of whose care the allowance has been claimed which shall set the condition for the award to be satisfied for a period of eight weeks from the date on which that person ceased to be in receipt of Invalid Care Allowance."").
The noble Baroness said: My Lords, I speak on this amendment in place of my noble friend Lady Pitkeathley, who has unfortunately been detained. She is in discussions with the Secretary of State in her role as chair of the New Opportunities Fund.
The purpose of the amendment is to extend the payment of invalid care allowance for eight weeks after the death of the person being cared for. At present ICA stops immediately on the death of the cared-for person. This amendment is, I believe, a relatively modest measure. The amendment provides the opportunity to recognise a small but vulnerable group of carers who are bereaved, carers who receive ICA and who look after children or parents who then die. The amendment could help to make the single work-focused gateway operate more sensitively.
If individuals are caring for a spouse who then dies, the new provisions contained within this Bill will mean that they may receive support to help them through their bereavement. However, in the case of carers looking after a child or parent who then dies, there is no such support through bereavement. The trauma is not necessarily any less, as we know. The loss of ICA underlines and emphasises their own personal loss.
There is already a precedent for this suggested addition to the Bill. Carer premium is paid to certain carers who receive income support and is paid for eight

387
weeks following the death or the movement into permanent residential care of the person being cared for. This provides a valuable breathing space for those carers. Carer premium is not a benefit in itself but an extra amount of money, worth £13.95, which is paid to a carer receiving income support. In order to receive carer premium, a carer also has to be entitled to ICA or have underlying entitlement to ICA.
If ICA were extended under the similar but more generous rules of carer premium, it would cost around £5 million per year. Invalid care allowance is currently worth £39.95 per week. Although many carers feel that the benefit should far better reflect the amount of support given to relatives, it is, nevertheless, a very valuable benefit. It is the only benefit to recognise that caring has some value. It was introduced because it was recognised that caring had limited the opportunities of the individuals who do that caring; in other words, it is intended for people of working age who give up the opportunity of full-time employment because of their caring responsibilities.
This small but significant change to the rules governing ICA, together with the other measure that the Government have developed in the national carers' strategy, would, I believe, send a strong message to carers that they are both recognised and valued. I beg to move.
Earl Russell: My Lords, this is a good and useful amendment and we on these Benches are happy to support it. There is another precedent; namely, the linking rules on housing benefit introduced in 1993. That draws my attention to one snag which I hope will be avoided in the administration of this amendment. Under the linking rules, housing benefit has to be claimed within eight days, but people are often not told that they need to make a separate claim until the eight days have already elapsed. Therefore, if the amendment is accepted, I hope that the administration will take account of that point. Moreover, while we are about it, I hope that the Minister will look at this defect in the administration of housing benefit.
Baroness Hollis of Heigham: My Lords, Amendment No. 100 would extend the period of entitlement for all recipients of invalid care allowance to eight weeks after the death of the person being cared for and in respect of whose care ICA was being paid.
I have a great deal of sympathy with the intention behind this amendment, which is to provide an opportunity to recognise a small but vulnerable group of carers who receive ICA for looking after disabled children, parents or others who then die. I am grateful to my noble friend for drawing the attention of the House in this debate to this small but deserving group and equally grateful to my noble friend Lady Pitkeathley for doing so during the Committee stage.
388
They have enabled me to make clear the Government's agenda in this area following publication of the national strategy for carers earlier this year.
In his preface to that report, my right honourable friend the Prime Minister said:
"Carers are among the unsung heroes of British life",
and they,
"should be properly recognised and properly supported"—
a view I wholeheartedly endorse. The national strategy put down a marker of the Government's intention to do this by stating that we would,
"keep under review how financial support for carers—Including Invalid Care Allowance—can best meet [Carers'] needs".
The issue was then immediately underlined by the publication, a few days later, of the report of the Royal Commission on Long Term Care. The Royal Commission suggested that,
"the system could do more to offer support for carers".
Clearly, therefore, the Government are committed to taking forward a review of the financial support available to carers. In turn, this work must link across to the proposals that we make in our response to the Royal Commission.
I know that the concern of my noble friend is to secure what is in the best interest of carers. So she will be looking to the Government to indicate that we have in hand specific plans to take forward this assessment of financial support for carers which the carers' strategy explicitly proposed, and the Royal Commission implicitly suggested. I am pleased to be able to give that assurance.
Our thinking is, as yet, at a very preliminary stage. I am not able to make any promises to my noble friend, or to your Lordships' House, about specific objectives and outcomes. I hope that she will be able to take on trust that we will indeed seek to reflect the best interests of carers. We will of course be consulting the Carers National Association, and other representative groups, about particular proposals. That would be the only appropriate way to ensure that we are promoting the best interests of carers.
I turn briefly to the amendment. I emphasise that the group of carers which it seeks to help is small, though none the less deserving of consideration for that. However, I should like to assure your Lordships that there is at least already protection for those whose need is greatest. Carers who receive income support and the carer premium, which is the increase paid specifically for people entitled to ICA, receive an increase to income support and continue to receive the benefit, including the carer premium, for eight weeks after their caring responsibility ends. In addition, during this eight-week period, they are also exempt from the need to be available for and actively seeking employment in order to qualify for income support.
Where the death is that of a spouse, bereavement benefits are normally paid within a few days of the claim being made. As such payments take precedence over ICA, a run-on would not be of material assistance to those carers. For those who are most vulnerable and in greatest need, therefore, their income is already

389
protected despite the loss of ICA on the death of the disabled person for whom they have been caring. This is, however, by way of offering some reassurance to noble Lords on the specific point. It does not alter what I have already said; namely, that the Government are very strongly aware of the need for adequate financial support for carers and are now seeking to take forward their existing commitment in respect of that support, with a view to addressing the concerns of carers in the round. In the light of that, I suggest that it could be difficult to anticipate specific changes at this stage. Therefore, in view of what I have just said, I hope that my noble friend will feel able to withdraw her amendment.
Baroness Crawley: My Lords, I thank my noble friend the Minister for that response. Carers who have put a great deal of store by this amendment will obviously be disappointed, though I am sure my noble friend realises that. I know that we have had reassurances from my noble friend that there is a commitment to a future programme to meet the challenge of carers in the round in future government legislation. Therefore, on that basis, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 52 [Entitlement to Category B retirement pension by reference to new allowances]:
[Amendments Nos. 101 to 104 not moved.]
Clause 53 [Claim or full entitlement to certain benefits conditional on work focused interview]:
[Amendment No. 105 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 106:
Page 59, line 24, leave out ("making") and insert ("who—(i) makes")
The noble Baroness said: My Lords, this group of government amendments makes two main sets of changes. First, the amendments implement the recommendations of the Select Committee on delegated powers, as they relate to Clause 53. Secondly, they clarify that all claimants have the right to launch an appeal against, or ask for a review of, a personal adviser's decision that they have failed to take part in an interview. The amendments also make a minor technical change to support joined-up government within the ONE programme.
Firstly, I should like to speak to Amendments Nos. 106 to 111, 258 and 259, which implement the recommendations of the Select Committee. I should like here to offer my thanks to the committee for its positive response to the department's memorandum and for its broad endorsement of our use of delegated powers. I am happy to say here that we have taken on board all the recommendations.
Amendments Nos. 106 to 111 are intended to exclude men and women aged 60 and over from having to take part in compulsory work-focused interviews, either as part of a training process or during the lifetime of an award. I assure your Lordships that it
390
has never been the Government's intention to require this group of people to have work-focused interviews. Originally we had planned to exempt them through regulations, but we are happy to accept the committee's recommendations and to place this exemption on the face of the Bill.
As state retirement age gradually equalises over the next two decades, there is likely to be a need to amend the Bill to include all claimants below the age of 65. In the mean time, men and women aged 60 to 65 who do want help to stay in touch with the labour market will still be able to access support through the ONE service. However, this will be available on a purely voluntary basis.
We are also happy to accept the committee's recommendations for full parliamentary scrutiny of the first set of regulations under this clause, setting out the detail of how the mandatory phase of the ONE service will operate. Amendments Nos. 258 and 259 insert a new paragraph into Schedule 12 of the Bill, amending Section 190 of the Social Security Administration Act. This will ensure that the first set of regulations made under Clause 53 are subject to the affirmative resolution procedure.
Amendment No. 118 seeks to give clearer effect to our policy intention that all claimants should have a right to lodge an appeal against, or to ask for a review of, a personal adviser's decision that they have failed to take part in a work-focused interview. It has been made clear in this House and in another place that where personal advisers make the decision on non-participation the claimant should be able to challenge that decision in line with our new dispute resolution procedures. In other words, claimants should be able to contact the ONE service within one month to examine the reasons behind the personal adviser's decision.
If an error has been made, the personal adviser, in looking afresh at the case, should be able to correct it. In addition, we have always made clear that the claimant should also have a right of appeal against a personal adviser's decision. Subsection 2B of Clause 53 was intended to give all claimants a right of appeal to a tribunal under Section 12 of the Social Security Act.
However, the current drafting fails to achieve our stated policy intention. For example, a claimant who received a negative decision from a local authority personal adviser would not be able to access the dispute resolution procedures, and in some circumstances would also be denied a right of appeal. In addition, local authority personal advisers would not be able to revise their own or another decision, even where it was clearly incorrect. The amendment makes absolutely clear our stated intention that dispute resolution procedures and rights of appeal should apply in all cases.
Amendment No. 262 clarifies that a claimant has a right of appeal against a decision that they have failed to take part in an interview rather than a right of appeal against the consequences of that decision either terminating or reducing a benefit. This makes things simpler for claimants by giving them a single route of appeal which is focused on the key decision that caused

391
the penalty to be imposed, even where it impacts across a number of benefits and follows a model adopted elsewhere in the benefit system.
Amendments Nos. 151 and 152 make necessary changes to support closer working. They give local authority staff working in the one service the same powers as those possessed by the Employment Service and the Benefits Agency to require JSA claimants to attend for interview. Amendments Nos. 156 and 208 are consequential. Amendments Nos. 274 and 280 provide consequential changes to the commencement and extent provisions of the Bill. I hope that, with this explanation of a large number of amendments we have grouped together for the convenience of your Lordships, your Lordships will accept them. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 107:
Page 59, line 25, after ("applies,") insert ("and
(ii) is under the age of 60 at the time of making the claim,")
On Question, amendment agreed to.
[Amendments Nos. 108 and 109 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 110 and 111:
Page 59, line 27, leave out ("in a case where") and insert ("at a time when")
Page 59, line 28, after ("is") insert ("under that age and")
On Question, amendments agreed to.
[Amendment No. 112 not moved.]
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 113:
Page 59, leave out lines 38 to 40
The noble Baroness said: My Lords, although this amendment relates to widow's benefit, it also refers to a rather different aspect. I have given my noble friend the Minister an indication of what I intend to raise. My real purpose is to seek clarification.
Clause 53 sets out the arrangements for work-focused interviews. The recipients of certain listed benefits are to be asked to attend these interviews. Clearly, the intention of the interviews is to get claimants off benefit and into work, but they could result in a loss of benefit. Among the benefits included are widows' benefits, which I take to mean widows' benefits already in payment and not those which are to be put into operation under this Bill.
The inclusion of widows' benefits under this heading raises some quite serious issues. When proposals relating to widows were first made public a guarantee was given to the Widows Advisory Trust that women already receiving widows' benefits would not be affected. They would continue to receive their benefits for which contributions had been paid, as before, and they would not be affected by the new legislation. Indeed we have had that assurance repeated today.
However, as already indicated, widows' benefits under present legislation are paid as of right and on the basis of the contribution record. They are not dependent on means-testing or income received from elsewhere, either from a pension or a job. If existing recipients are being asked to attend for a work-focused interview on pain of losing benefits if they do not attend, this is an alteration in the conditions for receipt of their benefit and it undermines the assurances given by the Government that the benefits will not be affected.
What happens if a widow, believing that she had assurances that her benefit would not be affected, simply does not attend? She might then find that her benefit will disappear. I hope that such a thing could not be a result of what is said in the Bill. That would be unacceptable, and I would very much welcome the comments of my noble friend. I beg to move.
Baroness Hollis of Heigham: My Lords, as my noble friend has explained, this amendment seeks to exclude widows and widowers from the requirement to participate in a work-focused interview. As with other amendments—I do not think they have been moved and so I will not speak to them now—to exclude certain groups from the provisions of this clause, I have every sympathy with the proposal that has been made.
We must have regard to individual circumstances in which those who have recently been bereaved find themselves and we must treat them with appropriate respect and compassion.
However, the Government believe that the amendment is not the way to achieve this. A blanket exclusion of all those claiming bereavement benefits does nothing to address the needs of individual claimants. Again, it would deny many people the help and support they may need at a difficult time.
As I tried to make clear in Committee the ONE service is not just about jobs, although work for those who can is a central aim. It is about providing an holistic approach to the welfare needs of each claimant based upon their individual circumstances. If those needs are best met by helping individuals move towards the labour market, then that is what will be provided irrespective of the reason for their benefit claim. If they have different needs—such as help in stabilising their financial position or bereavement counseling—then we will provide that help, each person treated according to their personal needs, which is the philosophy behind ONE.
The amendment moved by my noble friend would perpetuate the failing of the current benefits system, which makes broad assumptions about people according to which benefit they claim. This approach does nothing to address the wider welfare needs of individuals or help them to realise their potential. The ONE approach treats people individually, including widows.
We must remember that many widows and widowers choose to work. Many widows and widowers were in work at the time of their

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bereavement and they will go back to work very quickly after their bereavement. Others may have given up work to provide care for their spouses and may wish to move back to work quite quickly. Others, particularly those with children, may wish to stay in touch with the labour market to improve their future employment prospects while not seeking to return to work straightaway. Those are three different possibilities. The ONE service will enable people—widows and widowers alike—to receive the help and advice they need by providing tailored assistance through their adviser.
Advisers will, of course, receive full training and guidance to ensure that they are sensitive to the needs of those recently bereaved and to help them deal with clients in an appropriate way. Of course, if an immediate interview is not appropriate in the individual circumstances of any particular claim, the requirement will be deferred and benefits put into payment in the normal way. It may frequently be the outcome where a bereaved client makes a claim to benefit that the interviews are deferred until a later and more appropriate time. I hope that my explanation reassures my noble friend and that, as a result, she will feel able to withdraw her amendment.
Baroness Turner of Camden: My Lords, I thank my noble friend for that comprehensive explanation. It allays some of the fears I had. I shall look very carefully at the explanation in Hansard tomorrow. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5 p.m.
Baroness Buscombe Baroness Buscombe moved Amendment No. 114:
Page 60, line 7, at end insert—
("( ) for determining the training to be provided to persons by whom interviews are to be conducted, which shall include training in the principles of personnel management and job placement, in types and incidence of mental and physical disability and in recent developments in coping with time;")
The noble Baroness said: My Lords, as we stated very clearly in Committee, we on these Benches welcome the principle of ONE, the single-focus gateway to work. However, we have been talking about the principle. The problem lies in the detail. The amendment therefore again specifically refers to the training of the personal advisers who will conduct the interviews.
As we understand it, the recipients of benefits must turn up to ONE interviews. The interview is extremely important and therefore it is important that those attending the interview fully understand what they are in for and that the interviewer is able to cope with a broad spectrum of recipients. The interviewers' job will be extremely tough. They have a tough timeframe within which to carry out the interview, sometimes as little as an hour. It is important that the personal advisers involved in the interviews really understand some of the sensitivities with which they will be faced in the broadest sense, particularly with regard to the
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disabled and others who will feel very upset and disturbed by the fact that the interviews are compulsory.
I am grateful to the Minister for forwarding to me a copy of the learning assessment framework; I have read it in detail. It presumes a considerable amount of expertise and knowledge. I appreciate that. In the framework, the accent appears to be—quite rightly in many senses—upon benefits. I understand—the Minister made it absolutely clear in Committee—that the interview is not only about work but also about opportunities for benefits. I am grateful to her for sending me that information. However, we feel strongly that the level of expertise which the advisers will need to retain and develop in a very short space of time is crucial in terms of the ways in which the advisers will be trained. We accept that many of them will not be starting from a nil base; that many of them are already trained to some extent. However, the amendment makes particular reference to those people with mental and physical disabilities; they will need very special treatment and attention during the interviews.
It is important that I give an example. Multiple sclerosis is often completely invisible in a person. If a person with multiple sclerosis is in remission but is put under stress by fear of the compulsory interview, the consequence could be that the stress will trigger off another serious illness. We feel that the more pressure we can apply from this side of the House with regard to the level of expertise and training which is to be carried out, the better.
In Committee, the Minister made clear that during interviews the advisers will be able to call upon other areas of expertise. However, if personal advisers will have ready access to a wide range of support services—the Minister stated that the advisers would not themselves need to be experts but would need to know when to bring them in—and the interview is really one interview, how will the adviser know what kind of expertise to call upon until the interview is taking place? Surely it will be too late then to call in the experts. Perhaps the Minister will be able to advise me in regard to that matter.
Although I have some sympathy with the principle behind Amendment No. 115, which is very similar to Amendment No. 114, it is important that we question the wording of it. It states that the training of personal advisers is,
"to be conducted by people with direct personal experience of mental illness".
I have a legal background. I have read the amendment time and again. Surely, it is saying that the training is to be conducted by people who have themselves a history of mental illness. I therefore cannot support

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Amendment No. 115; I do not think it is accurately worded. I am sure that it does not reflect the intention of those who tabled it.
Lord Addington: My Lords, I have been told by the noble Baroness, who is legally qualified, that my amendment is defective. I will, of course, defer to her if that is the case.
Baroness Hollis of Heigham: I cannot believe it!
Lord Addington: My noble friends will undoubtedly form an opinion about whether it is appropriate. There is a direct thrust to this amendment rather than the broad-brush approach taken by the noble Baroness.
As the noble Baroness said, the best one can realistically hope for from a general person conducting a ONE interview, especially where no warning is given beforehand, is that that person is expert enough to know the limitations of his knowledge. I believe that that is what the noble Baroness was driving at. One of the most difficult tasks in assessing disability is realising what you do not know and backing off. I hope that those who will conduct the interviews will have more success in that field than people have in virtually every other field—medicine, teaching, and so on. I have heard of an enormous number of cases where people have been struggling and have not known whether they should become involved or pass the case on.
In sport, knowing when to keep the ball and when to get rid of it generally marks out the great player from the average. That is equally true of those who give advice. It is important to know when not to give advice and to defer rather than give bad advice. That is the crucial thrust behind the noble Baroness's amendment and underlies everyone's concerns about the interview. In Committee, the noble Baroness gave a considerable amount of assurance about the amount of training that would be available. I doubt whether she will ever be able to provide enough training to be able to handle these matters.
A point was raised as to whether the ONE interviews could be extended. I assumed that they could be. I assumed that the one-stop interview was merely a starting-point—and, it is to be hoped, the finish in the majority of cases. The option of an interview is in the structure and I hope that it can be used.
Those who have mental health problems, almost by definition, have the greatest degree of difficulty as regards their perception of their own case. All the problems that we have previously referred to are magnified. Someone who suffers, for example, from severe depression is incapable of taking a clear look at his or her situation, even when confronted with the necessary information. Surely, it must be necessary to involve someone with expertise. That is why I have added my name to Amendment No. 115. If the wording is not correct, I am happy to accept that. The point is that some real expertise should be found.
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I know that the noble Baroness wants this provision to work well, as do we all. But the road to hell is paved with good intentions. In certain pieces of government legislation such wishes have led us at least as far as purgatory.
Lord Williamson of Horton: My Lords, we are dealing with matters for which the regulations "may" make provision, that is to say, the draftsmen have an element of discretion. However, it is reasonable to indicate on the face of the Bill the issues which, as legislators, we regard as important. That is why I support Amendment No. 114. The role of the person who conducts the interview is extremely important. If the interview goes wrong, there could be serious difficulties. It would be wise to refer to that element of training in the Bill.
It should be particularly borne in mind that the percentage of those with mental illness who are in work is substantially less than it is for those with other forms of disablement. I believe it is about 12 per cent of those with severe mental problems. The present reforms may make possible an improvement in that figure. So the present reforms are a move in the right direction. However, we need properly qualified interviewers in order to maximise the chances of a good result. Therefore, I support the amendment proposed by the noble Lord, Lord Higgins.
5.15 p.m.
Baroness Hollis of Heigham: My Lords, we discussed the first of these amendments at an earlier stage. I was then able to offer some assurances to the noble Baroness, Lady Buscombe. I have subsequently provided her with additional information.
The aim of the training, as I made clear in Committee, is to create a group of people able to support and advise clients with a very wide range of needs. An extensive training programme is therefore essential. However, this programme needs to recognise both the skills that many staff will bring to their new posts and the range of additional, specialist support to which personal advisers can have access where that is appropriate.
Although we recognise that the quality of the training is crucial to making the ONE pilots work, we cannot accept this amendment. Identifying only three or four, albeit important, subjects in legislation, and requiring all personal advisers to be trained in those areas, would reduce the flexibility we need to give every member of staff appropriate training. In addition, we consider it essential that all ONE staff, not merely the personal advisers, are allowed access to the same high-quality training packages.
I appreciate that this is, in part, a probing amendment on what is clearly a very important subject. I should therefore like to reassure the noble Baroness as to the importance that we place on providing suitable training for ONE staff. As I made clear in Committee, the average member of staff working for ONE will carry out well over 200 hours of learning before taking up his or her post. That equates

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to nearly seven weeks. In addition, all advisers will be required to work towards a professional qualification in advice and guidance, at least to NVQ standards.
Some of the training will focus on enabling staff to provide good-quality benefit advice; other aspects will cover the administrative processes that staff need to undertake. However, we have recognised the clear need to ensure that staff are given adequate training and support in handling a wider range of clients than they currently see and for a wider range of work and welfare related issues. That means appropriate learning opportunities for staff to ensure that they can give client groups with special needs a high-quality, sensitive service.
The help that key voluntary organisations have given to our officials has been invaluable in that respect. As I mentioned in Committee, we have developed training in the needs of special client groups in association with organisations such as MIND, the National Schizophrenic Fellowship, Scope, Mencap, Gingerbread and the Carers' National Association. I had intended to give further details of what we are doing to help to take account of the needs of people with mental illnesses. As that amendment, which I thought was important, was not moved, I have not been able to set out our proposals. All of the organisations involved have spoken to ONE staff at training events and have provided extremely useful background information on the needs of the groups they represent and what the ONE service needs to give them if it is to prove effective. That knowledge has been incorporated into an on-line information system, which all personal advisers will be able to use in the course of their work.
All ONE staff without thorough knowledge of disability issues are being required to undertake a disability awareness course as an essential part of their training. The course is now being thoroughly updated, both to take on board the additional information that has been made available to us and to build on the best of the existing training material used by the Employment Service to train disability employment advisers. Again, we will ask organisations that represent people with disabilities and mental health problems for their views, to ensure that we are providing staff with appropriate and helpful material.
I hope that that has reassured your Lordships that we are treating the issue of training extremely seriously. We are investing considerable money and effort to offer training that will enable ONE staff to provide a high-quality service, focusing on both the employment and the welfare needs of clients.
I do not believe that these amendments will allow us the flexibility to respond to individual training needs. In the light of that, I hope that the noble Baroness, Lady Buscombe, will not pursue her amendment.
The noble Lord, Lord Addington, was right when he said that, however much we invest in training, disability, particularly mental health disability, can be such a complex area that we cannot hope to achieve the necessary skills, even with the extensive training that is proposed. In particular, staff may not know the range
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of problems until the ONE interview takes place, and by then those with appropriate skills—including those who can offer advocacy help—may not be at hand.
There will, in fact, be two interviews. There will be the start-up interview, in which basic information is taken. It is hoped that the major ONE interview will then be arranged within a couple of days of that. If the disability emerges, as it should normally do— I accept that it will not do so in all circumstances—at the startup interview, staff will ensure that those with the most appropriate skills will be available at the second interview. If such people are not available, the interview can be deferred either at the convenience of the person being interviewed or in order to make sure that appropriate help is available. I fully accept that only a consultant in certain areas of medicine could have the full range of knowledge. But we are doing our best to ensure the opportunity, first, to train and provide skills to staff and, secondly, to ensure that those trained and skilled staff are available to help those with particular disabilities and special needs.
I shall be happy to write to noble Lords on the issue because I have not had the opportunity to give much of the information I was going to give the House and I am sure that noble Lords would wish to have it.
Lord Addington: My Lords, before the noble Baroness sits down, the point I was trying to make is that I appreciate that the Minister is trying to deal with this through regulation. However, the problem is that we may not know what we are dealing with at any point in the process. Do the staff have the power or the authority to be able to stop the process dead if they feel they do not have the expertise? That is important.
I did not move the amendment standing in my name because I thought that this amendment would cover the matter. I did not want to go over the same ground twice. However, if the noble Baroness will write to me with the information, I shall pass it on to those whom I shall consult on the issue.
Baroness Hollis of Heigham: My Lords, if the interview is inappropriate because of mental health or learning or language difficulties, the full interview can be postponed. That is on the assumption that the problems emerge quickly. In the normal course of events I would expect most of the issues to emerge at the start-up interview. If someone has severe learning difficulties and cannot write or read, if they have language problems or are from an ethnic minority, that also would emerge. If they have other disabilities, it will become clear. At the major follow-up interview, those resources would be available.
If that was not the case and it was clear that the interview needed to be postponed, deferred or taken in two stages, that is possible. It would include having an interview in the person's home and whatever else is most appropriate. We wish to ensure that all people coming through the ONE service have the opportunity to engage with a skilled and appropriate personal adviser who can take them through the range of

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options, not only in terms of work but also benefits, financial counselling and the like, to ensure that they have the best opportunities in their lives.
Baroness Buscombe: My Lords, I thank the Minister, I appreciate her explanation and will be grateful to receive her letter before Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115 and 116 not moved.]
Baroness Buscombe Baroness Buscombe moved Amendment No. 117:
Page 62, line 8, at end insert (", conducted at a location appropriate to the person")
The noble Baroness said: My Lords, following this discussion, can the Minister clarify one point? We talked at great length about the location of the interview at Committee stage and I do not wish to be repetitive this afternoon. However, I wish to confirm a point with the noble Baroness.
In relation to location, we said at Committee stage that in cases of severe disability or mental illness, home is not necessarily the place for the interview, although we appreciate that the Minister and others seek to be as flexible as possible over the location. We stress that we believe that for many the home can be invasive and make people feel awkward when the so-called experts are at hand.
In relation to the start-up interview and the major interview, can the Minister reassure us that if the adviser decides at the start-up interview stage that the personal adviser would value additional skills and expertise at the major interview, the personal adviser would explain carefully to the recipient that they could have a choice of either having the second interview in the home or at an alternative location. While the home might be the better alternative for the disabled at the first stage, with one person visiting them in the home, if it is decided thereafter that several people should visit them and therefore there would be a crowd going into the home, it might be better if it is held elsewhere. The adviser could suggest alternative locations. I would appreciate the Minister's comments on that. I beg to move.
Lord Addington: My Lords, this is a sensible point and I hope the Minister will consider it.
Baroness Hollis of Heigham: My Lords, the noble Baroness has identified a problem. If one is trying to make a home visit to suit the convenience of the client because that client may have a range of disabilities, and if as a result a whole range of skills is needed, there may be many people going to one house, as opposed to one person going there. There are considerations of convenience such as administrative arrangements, costs and the like.
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I have tried to emphasise that we seek to ensure that the ONE delivery sites would be relaxed and friendly environments where all clients would feel at ease. They will also meet the needs of disabled people on access and facilities. In addition, sites currently in use in the pilot areas were selected to minimise the likelihood of ONE clients having to travel further than 45 minutes to their local office. On the whole I would expect the ONE delivery site or office to be seen as the most appropriate place for an interview.
If that is not the case—and we recognise that in certain circumstances it will not be—there will be other options such as phoning, mobile facilities or providing a home visit. So, for example, where a person's mobility problems prevent them getting to a ONE office, the personal adviser may visit the claimant and conduct the interview in their home. There has never been any suggestion otherwise.
I understand that noble Lords have concerns that personal advisers carrying out home visits might not have the benefit of the combined expertise of the rest of the ONE team. It is a dilemma for us. I agree that it is important to see the ONE service as a team effort, particularly to ensure that advisers consult colleagues when it is clear that a situation calls for knowledge outside their sphere of experience.
Having said that, I think it is equally important to emphasise the ability of trained personal advisers to provide for most, if not all, the immediate needs of clients during a home visit. The information given during the start-up interview should provide the basis for determining which personal adviser is best qualified to deal with the needs of a specific client who requires a home visit. Equally, we should not see the initial personal adviser interview in isolation. It should be viewed as part of an ongoing relationship between adviser and client. I believe it is acceptable for a personal adviser, during the course of a home visit or an on-site interview, to take away unresolved issues with a view to dealing with them more thoroughly, after consultation with colleagues and then come back.
We are trying to ascertain how best to negotiate the issue that the noble Baroness identified. On the one hand, we do not want the house full of a range of possible people, but on the other we wish to ensure that we can offer the facility, where appropriate, in the client's home. I hope that with that description noble Lords are reassured by what I have said and will feel able to withdraw the amendment.
Baroness Buscombe: My Lords, I appreciate the Minister's response to my question. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 118:
Page 62, leave out lines 24 to 41 and insert—
("(1) Chapter II of Part 1 of the Social Security Act 1998 (social security decisions and appeals) shall have effect in relation to relevant decisions subject to and in accordance with subsections (1 B) to (2B) below (and in those subsections "the 1998 Act" means that Act).

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(1A) For the purposes of this section a "relevant decision" is a decision made under regulations under section 2A above that a person—

(a) has failed to comply with a requirement to take part in an interview which applied to him by virtue of the regulations, or

(b) has not shown, within the prescribed period mentioned in section 2A(3)(e)(ii) above, that he had good cause for such a failure.

(1B) Section 8(1)(c) of the 1998 Act (decisions falling to be made under or by virtue of certain enactments are to be made by the Secretary of State) shall have effect subject to any provisions of regulations under section 2A above by virtue of which relevant decisions fall to be made otherwise than by the Secretary of State.
(1C) For the purposes of each of sections 9 and 10 of the 1998 Act (revision and supersession of decisions of Secretary of State) any relevant decision made otherwise than by the Secretary of State shall be treated as if it were such a decision made by the Secretary of State (and accordingly may be revised by him under section 9 or superseded by a decision made by him under section 10).
(1D) Subject to any provisions of regulations under either section 9 or 10 of the 1998 Act, any relevant decision made, or (by virtue of subsection (IC) above) treated as made, by the Secretary of State may be—

(a) revised under section 9 by a person or authority exercising functions under regulations under section 2A above other than the Secretary of State, or

(b) superseded under section 10 by a decision made by such a person or authority,

as if that person or authority were the Secretary of State.
(2) Regulations shall make provision for conferring (except in any prescribed circumstances) a right of appeal under section 12 of the 1998 Act (appeal to appeal tribunal) against—

(a) any relevant decision, and

(b) any decision under section 10 of that Act superseding any such decision,

whether made by the Secretary of State or otherwise.
(2A) Subsections (1C) to (2) above apply whether—

(a) the relevant decision, or

(b) (in the case of subsection (2)(b)) the decision under section 10 of the 1998 Act,

is as originally made or has been revised (by the Secretary of State or otherwise) under section 9 of that Act; and regulations under subsection (2) above may make provision for treating, for the purposes of section 12 of that Act, any decision made or revised otherwise than by the Secretary of State as if it were a decision made or revised by him.
(2B) Section 12 of the 1998 Act shall not apply to any decision falling within subsection (2) above except in accordance with regulations under that subsection.")
On Question, amendment agreed to.
[Amendment No.119 not moved.]
Schedule 7 [Joint Claims for Jobseeker's allowance]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 120:
Page 111, line 12, after second ("couple") insert ("(other than a person to whom regulations under section 1(2C) apply)")
The noble Baroness said: My Lords, Clause 55 and Schedule 7 introduce joint claims for jobseeker's allowance. Couples without children who wish to claim income-based jobseeker's allowance will be required to make a joint claim. Joint claims will apply to couples where at least one partner is in the 18-to-24 age range when the provisions come into effect. These changes give those who are currently treated as
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dependent partners of JSA claimants—90 per cent of whom are women—equal rights and responsibilities on their claim.
Both members of the couple will have equal opportunities to receive help and support from the employment service to return to work. Both will be able to go on to employment programmes, including a new deal for young people, those aged 18 to 24.
Amendments Nos. 120 to 128 are a series of minor technical and drafting amendments in Schedule 7 which is made to the Jobseekers Act 1995. Amendment No. 120 on Section 1(2C) provides that regulations may prescribe circumstances where a person who is a member of a joint claim couple does not have to make a joint claim to jobseeker's allowance. It is a technical amendment to ensure that conditions for calculating entitlement to a joint claim JSA will not apply to members of a joint claim couple to whom Section 1(2C) applies.
Amendments Nos. 121 and 122 change references to "adjudication officer" to "Secretary of State" because the Social Security Act 1998 provisions relating to decision-making and appeals have come into force and the functions of adjudication officers have now passed to the Secretary of State.
Amendment No. 128 is consequential on Amendments Nos. 121 and 122 and deletes paragraph 17(3) of Schedule 7. This sub-paragraph was originally inserted because it was thought that the Bill might receive Royal Assent before the commencement of the decision-making and appeals provisions in the Social Security Act 1998. However, as this part of the Social Security Act 1998 has now commenced, sub-paragraph (3) will not be necessary.
Amendment No. 123 is a drafting amendment. Its purpose and effect is to refine the wording of page 116, line 13, to make sure that the meaning is clear. Amendment No. 124 is a technical amendment. Its purpose and effect is to take account of changes to Section 17 of the Jobseekers Act 1995 made by the coming into force of the Social Security Act 1998.
Amendments Nos. 125 and 126 correct an error by deleting the word "for". The effect is that a person "claims" JSA rather than claims "for" JSA. Amendment No. 127, which changes paragraph 17 of Schedule 7, is consequential on the other amendments relating to the Social Security Act 1998. We have grouped together a large number of amendments for the convenience of the House. They are technical, but I urge the House to support them. I beg to move.
On Question, amendment agreed to.
5.30 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 121 to 128:
Page 115, line 34, leave out ("adjudication officer") and insert ("Secretary of State")
Page 116, line 6, leave out ("an adjudication officer") and insert ("the Secretary of State")
Page 116, line 13, leave out ("referred to in subsection (2)(a) above") and insert ("to whom subsection (2)(a) above applies")

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Page 116, line 29, leave out ("he has failed to complete a course of training") and insert ("the condition in section 17(3)(b) or (c) is established")
Page 118, line 48, leave out ("for")
Page 119. line 9, leave out ("for")
Page 119, line 17, leave out from beginning to ("(interpretation") in line 18 and insert ("In section 39(1) of the Social Security Act 1998")
Page 119, line 23, leave out sub-paragraph (3)
On Question, amendments agreed to.
Clause 56 [Special schemes for claimants for jobseeker's allowance]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 129:
Page 64, line 36, at end insert—
("(5A) For the purposes of, or in connection with, a scheme established for (or for an area which includes) Wales or a part of Wales, the National Assembly for Wales may, if it considers that facilities whose provision any person (including the Secretary of State) is undertaking under arrangements within subsection (5)(a) or (b) are capable of being supportive of the training of persons for employment, make such payments to that person as the Assembly considers appropriate; and any such payments—

(a) may be by way of fees, grants, loans or otherwise, and

(b) may, unless the Assembly otherwise specifies, be used by the person to whom they are made for the provision of any of the facilities provided under the arrangements.")

The noble Baroness said: My Lords, a key principle behind the creation of employment zones is to allow pooling of the various funding streams currently available to help long-term unemployed people. Obviously, that is the point of Amendments Nos. 129 and 130. These include funds for training, jobsearch and the equivalent of JSA. One effect of pooling these funding streams is that they cease to be separately identifiable and no longer need to be earmarked for a specific purpose. For example, money which was originally destined to support training can be used for any purpose within employment zones. It is straightforward to pool the funding in England. Training money is being set aside from the work-based learning for adults budget, which is already held by DfEE, and there will also be a transfer made from employment service programmes into the employment zone pot.
This is more difficult for employment zones in Wales. The clause in the Bill which establishes employment zones is a social security measure and social security is not a matter transferred to the National Assembly for Wales. Nor is it intended that the provision should change this principle. The power to fund training for work, however, is devolved to the National Assembly for Wales (concurrently with Ministers of the Crown) and it holds the funding for this in its block grant. We intend that this should continue to be the case. In the absence of a legislative provision the Assembly does not have the power to fund employment zones. Without this amendment, the money which it holds for training could not be used for employment zones in Wales.
Amendment No. 129 would ensure that the National Assembly for Wales could make payments to those running employment zones in Wales without changing the devolution arrangements for training for work, jobsearch and social security, and without restricting the use of such payments to the provision of training. It is not intended that this provision should broaden the Assembly's role in relation to jobsearch or other non-transferred matters. There is also a small consequential amendment involving some renumbering within Clause 56 as a result of Amendment No. 129. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 130:
Page 64, line 37, leave out ("subsection (5)") and insert ("subsections (5) and (5A)")
On Question, amendment agreed to.
Clause 58 [Incapacity benefit: restriction to recent contributors]:
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 131:
Page 66, line 10, leave out ("two") and insert ("seven")
The noble Lord said: My Lords, in moving Amendment No. 131 I should like to speak also to Amendments Nos. 132 and 133. This Government have an outstanding record of help for disabled people, but this clause is one of the few blots on that record. I hope that this debate will help to remove that blot. I am strongly opposed to Clause 58 because it will create hardship and suffering to 170,000 future disabled people by depriving them of their incapacity benefit if they have been unable to work in the two years before claiming.
I speak not only of disabled people but of severely disabled people—not those with a sick note from a friendly GP but people who are certified by the strict Benefits Agency doctors as being too incapacitated to work. These people of working age are so severely disabled that they have no realistic prospects of enhancing their lifestyle. Most of them are poor which, in most cases, is a concomitant of severe disability.
The clause does not affect present claimants, but that is no comfort to the 170,000 who will be hit. Their crime is to commit the cardinal sin of being unable to get a job in the two years preceding their claim. The Government are barging ahead with this ham-fisted penalty as if we live in Shangri-La where everyone can get a job if they want one. Everyone else knows that that is hopelessly unrealistic. There are prosperous areas but there are also depressed areas where few, if any, jobs are available. Why should severely disabled people in those areas be treated unfavourably compared with their counterparts in better areas? Why should they lose the valuable £66 a week incapacity benefit through no fault of their own? Where is the justice in that? Disabled people who are poor will find this a stunning blow.
Just as serious, unreasonable and unfair is that the Government's proposal will deny incapacity benefit to people, no matter how severely disabled, who may have paid national insurance contributions for 20 or

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30 years. This is a clear and unambiguous moral contract between the Government and people who are paying. They have paid trustingly and in good faith on the legitimate assumption that if they become disabled they will get what they have paid for. That is a very simple, honest and reasonable proposition. But now the Government tell them, without so much as a murmured apology, that they have moved the goalposts. They say it is too bad that these people could not get a job, too bad that they have paid contributions for all those years and that they now need the money. They are refusing even a penny of incapacity benefit if they have not worked in the preceding two years—end of discussion.
There are various theories about wanting to relate benefits to recent work and wanting to help very poor disabled people and modernise the system. They are all fine, high-sounding principles, and I agree with many of them. But none of them can justify the blatant unfairness, breach of moral contract and cheating of future disabled people of their right to incapacity benefit. The House should reject completely the implicit policy that poor disabled people should be forced to pay for very poor disabled people. That is the job of wealthy people or the general taxpayer.
I repeat. I am strongly opposed in principle to Clause 58. However, I recognise that the Government have a massive majority in another place and would seek to overturn any decision made by this House. They may or may not succeed, but it is likely that at some point, being politically realistic, a compromise would have to be reached if the Bill is to be saved.
In the hope of reaching an honourable and reasonable compromise sooner rather than later, I have put forward Amendments Nos. 131 and 132. I hope that the Government will accept them because the last thing we want is ping-pong between the two Houses, which would hardly be dignified or edifying—but it may come to that.
I have no doubt that the clause should be dropped, but in an effort to bridge the massive gap between the needs of disabled people and the Government, it is proposed in Amendment No. 131 that the period should be seven rather than two years. That figure is as arbitrary as the Government's figure, but it is much more reasonable and fairer. Although the Government believe that this benefit should be related to recent work, I believe that it should go to those who have shown a commitment to work. Therefore, I am proposing the additional provision in. Amendment No. 132 that people should qualify if they have worked and pa id contributions for ten years at any time in their working life. A commitment to the world of work and the national insurance principle for such people cannot be disputed. That commitment should be recognised by giving them entitlement to incapacity benefit should they become severely disabled.
I hope that the Government will accept the amendments because it is a reasonable, reasoned and honourable compromise; it is also a benchmark.
I should like to say, quite frankly, that if the Government do not accept those two reasonable compromise amendments, then I intend to divide the House on Amendment No. 133, which proposes that the clause should be deleted completely. I beg to move.
Lord Rix: My Lords, being in two minds is not a comfortable position to be in, and I am in two minds in relation to this clause. I have signed my name in full support of the amendment of the noble Lord, Lord Ashley which propose an extension of the contribution conditions for incapacity benefit to ensure that more people who have contributed during their working lives will be entitled to the benefit. I believe this to be a laudable approach that is consistent with the Government's overall strategy of reform, but which nonetheless offsets some of the harsher consequences of the change in policy.
However, I suspect, as we have just heard, that in the context of this debate there will be no third way. I believe we will be asked to vote for polar opposites: either support the clause as originally proposed, or support a wholesale rejection of it. If my suspicions turn out to be correct, then, with great reluctance, I would be unable to vote in favour of the clause.
Testing the opinion of the House in this manner seems to be something of a missed opportunity. It is unfortunate that the Government have failed to table a compromise amendment which could lend credence at this stage. I urge them to do so at the earliest opportunity, and in so doing to consider seriously t he suggestions of the noble Lord, Lord Ashley.
I fear that as the Bill progresses the political strategy may begin to overshadow the substantive concerns of the debate. I therefore urge all noble Lords and those in the other place to focus their minds on the impact of these changes on disabled people rather than on what transpires as political victory in the latter stages of this parliamentary timetable.
Earl Russell: My Lords, not for the first time the noble Lord, Lord Ashley of Stoke, has hit the nail on the head. Clause 58 is objectionable because it penalises people for things which are not their fault.
Between two people, both of whom have actively sought work with equal determination, one will be eligible for incapacity benefit having been successful and one will be ineligible as a result of being unsuccessful. The race is not always to the swift if they are not running over an equal course.
We on these Benches think that that is wrong, and that is why we agree so entirely with the noble Lord, Lord Ashley of Stoke, about the clause. We do not regard his amendments as being a satisfactory compromise. I agree with him that there always has to be compromise. Normally, it is true that half a loaf is better than no bread, but there are possible exceptions to that principle, as, for example, when the bread has ergot and is poisonous to eat. We think that that is the case here.
We are familiar in this House with the concept of salami-slicing. Were I the Treasury, I would be making contingency plans at this moment to accept the

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amendment of the noble Lord, Lord Ashley of Stoke, this year and then to take another salami slice off it next year and another salami slice the year after that and so on—I will not add the words "ad infinitum" because there is not an infinite amount of money to take, but for quite a long time.
For that reason I hope that the noble Lord, Lord Ashley of Stoke, will not press the amendments but will press the clause that should not stand part.
One of the ways in which the Bill penalises people for things which are not their fault is that it is geographically discriminatory. There are some areas where we are happily approaching full employment. In Newbury we have an unemployment rate of 1.1 per cent. My honourable friend Mr Rendel happens to be Member for Newbury, but he does know that Newbury is not the whole country. There are many other areas where the unemployment rate is 10 per cent, and sometimes more. In those areas the impact will be very much harsher. I do not see any good reason why it should be easier to get incapacity benefit in Newbury than in Newcastle, easier in Hampstead than in Hartlepool, and easier in Crawley than in Chorley. That seems to me to be an injustice.
It is not only geographical area which makes it harder for some people to get work than others. It is a very clear fact that it is much harder to get work if you are black. The rate of youth unemployment under 25 nationwide is 18 per cent. That is a Labour Force Survey measurement which I think is reasonably reliable. For black men under 25 nationwide the rate is 51 per cent; for black men under 25 in the Greater London area the rate is 62 per cent. So clearly the impact of this clause between black and white will be severely discriminatory. It will be discriminatory between those who have lost work, both under 45 and over 45.
I have already mentioned the lack of any satisfactory legislation against age discrimination and employment. In many areas and in many fields of work, if you lose a job over the age of 45 you have very little chance of getting another. If you thereafter fall ill, as has been known to happen, your chances of getting incapacity benefit drop by the year. I do not see any reason for saying that is fair. It works harshly against those whose disabling condition was weakening their capacity to work before they were diagnosed as eligible for incapacity benefit. Back pain and depression are two very common conditions to which that applies. It is not only that it is discriminatory; it is also that those against whom it is discriminatory are most likely to suffer limiting longterm illness and need to apply for incapacity benefit.
I take my evidence from a source that I am sure is familiar to the Minister, DSS Research Report No. 94. It shows that the incidence of severe disability varies very much indeed across the country. Indeed, the rate in Wales is as much as twice the rate in the south-east. There is a clear correlation between the poverty and disadvantage of an area and the amount of illness and disability which is found in it. For example, in
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Glasgow Easterhouse 18.3 per cent of the population have a limiting long term illness which hinders their capacity to work.
The interesting argument is this. Which is the hen and which is the egg? Government—I say
"government" because it is equally true of the last government in 1993–94 and of this—assume that people claiming incapacity benefit after unemployment use it as a form of early retirement. I have never seen one shred of evidence for that assumption. But there is a large amount of evidence. some of it very powerful and not simply resting on correlation, that unemployment has a negative medical effect and leads to illness.
The most persuasive presentation of this view that I have seen was in a book by Jane Mattinson published by the Tavistock Institute for Marital Studies. It demonstrated bit by bit in individual case studies the deterioration of the state of mind, followed by limited resistance, followed by mild illness, followed by serious illness.
I refer to another specific case: the closure of the Harris bacon factory in Calne. That led to a massive increase in illness in Calne. It came immediately after the closure and was documented in each individual case and often consisted of physical symptoms about which there could be no argument. We still have to answer this question: why are so many more people found to be disabled than used to be? The DSS Research Report No. 94 found that a great many more people were found disabled than in its previous survey. But it concluded that almost all of them would have been found disabled by the criteria of previous surveys. So it is not that the criteria are being used more loosely. It is more a matter of disability coming out of the closet: being prepared to avow itself; not hiding away and refusing to admit. It is also probably the result of the highest levels of unemployment we have seen in this country since the 1930s. When we ask, "Which is cart and which is horse?", I believe that it is the unemployment that leads to the disability.
The people concerned are being doubly punished by this clause. Its philosophy is this: "To him that hath shall be given and from him that hath not shall be taken away even that that he has". It is not the policy of this party. I did not think that it was the policy of the Labour Party either.
Lord Morris of Manchester: My Lords, I pay tribute to my noble friend Lord Ashley for again having let your Lordships hear the authentic voice of disabled people on this clause which, as he said, is strongly opposed by every major disability organisation in Britain.
My noble friend describes himself as a lifelong Labour loyalist. I ask anyone who questions the truth of that to point to the last occasion in my noble friend's 33 years in Parliament on which he voted against a legislative proposal by a Labour Government. Friendship is one of the great tests of loyalty and, by that test, I know of no one more loyal than him. He is my very close and longstanding friend and like him—

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in my case after 35 years in Parliament—I am deeply saddened to find myself unable to accept what the Government are proposing in Clause 58.
I hope that we and other Labour Peers who cannot accept the clause without radical change will today be spared any homilies on the iniquity of disloyalty. In truth we feel more sinned against than sinning. For where in our general election manifesto was there even the vaguest suggestion that 170,000 people who now qualify for invalidity benefit would be denied it altogether? Who among us even hinted to the electorate that vulnerable people with a progressive illness like multiple sclerosis would lose their invalidity benefit even though they had contributed for it from their earnings week by week for 30 years? And how do I reply to the woman who wrote to me last Thursday from Huntingdon to say:
"Should this proposal pass into law it will bring further distress to those whose lives are already seriously restricted by disability and illness".
What shall I tell her?
No wonder my good and right honourable friend Torn Clarke, who led for Labour in explaining our policy for disabled people at the general election, felt bound to speak and vote against this clause in the Commons. His speech kept faith impeccably with what he told the electorate on our behalf.
No convincing case has been made for the proposal since it was unveiled last October. Labour Ministers rightly condemned the Major government for their encouragement of unjustified invalidity benefit claims from unemployed people to cut their ever-lengthening dole queue. But the proposals now before Parliament do not dispossess those who allegedly ought not to have the benefit.
Instead they pile handicap upon handicap for many thousands of severely disabled people who, having paid national insurance for a contributory benefit in good faith over many years while in work, will lose the help for which they insured themselves.
Their resentment is compounded by media suggestions that the proposals are justified by massive fraud in the disability benefits system. Those suggestions persist and are repeated in public debate notwithstanding the conclusive proof of their dishonesty given to your Lordships' House—with all her customary candour and decency—by my noble friend Lady Hollis. As long ago as 15th January 1998, she made it crystal clear that suggestions of massive fraud were,
"based on old information from the previous government",
and that after over 40,000 cases had been reviewed by DSS investigators in home visits to disabled people they had not found,
"a single case of confirmed fraud".—[Official Report, 15/1/98; col. 1142.]
What my noble friend's statement to this House demonstrates is that to accuse disabled people of abusing the benefits system is to bark not just up the wrong tree but in the wrong forest. The real story is not that disabled people are abusing the system, but that the system is abusing them. For while the cruise
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missile can now be successfully targeted at a telephone booth in another country, we still seem unable to deliver their statutory entitlements to disabled people in this country. And without them they are left doubly disabled and often in double despair. Yet between £5 billion and £6 billion a year in benefits go unclaimed by the disabled people entitled to them.
A reason often given by disabled people for not claiming their entitlements is fear of being branded as what some commentators call one of the "somethingfor-nothing merchants". The same reason is given by frail elderly people, more especially single women living alone, for underclaiming £2 billion a year in income support.
Like those who speak for them in this House, disabled people want the Government to be tough on fraud and tough on the causes of fraud, not least when it is caused by administrative incompetence and corrupt private landlords. They point out that failure to tackle low take-up of benefits frustrates the will of Parliament. They are not resistant to change. For there are many reforms disabled people want to see. They are deeply appreciative, as I am, of the helpful new steps the Government have taken and will be taking and want the Government to succeed. But for that to happen Whitehall and Westminster must get the facts straight. And benefits for disabled people should be commended to the taxpayer not as acts of compassion but of enlightened self-interest and moral right. Our preoccupation should be with value as well as cost. And disabled people should be seen as givers, not only as receivers. For there are marked cost savings in humanely assisting them to achieve their potential as full and fully participating members of British society.
6 p.m.
Lord Higgins: My Lords, anyone who participates in a debate on the disabled opened by the noble Lord, Lord Ashley, supported by the noble Lord, Lord Rix, the noble Earl, Lord Russell and the noble Lord, Lord Morris, must do so with very considerable diffidence. But the measure which the Government have included in this clause is fundamentally wrong in principle. In particular it is a further step in the undermining of the contributory principle. If this clause is not amended it seeks to restrict incapacity benefit for those who have only recently been in work and paying contributions. But all the evidence that one receives from outside bodies shows that vulnerable people such as the unemployed, people with progressive illness such as multiple sclerosis and so forth, would lose benefit even though they may have contributed for 30 years. Therefore, I believe that this clause is completely wrong and that it is right to oppose it. It is entirely understandable that it should have been opposed in all parts of the House.
There are those who will say that there are reasons for taking action on incapacity benefit. There was the argument that under the previous government people received incapacity benefit more than was justified in order to take early retirement. That argument is invalid on two grounds. The first is that they were

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subject to severe inspection as to entitlement. In any event, the clause will only affect future claimants who have contributed and therefore it cannot have anything to do with what has happened in the past.
The reality is that the clause should be opposed in toto. The noble Lord, Lord Ashley, has tabled other amendments by way of compromise. I do not take the view that this is a matter on which there can be reasonable compromise. The noble Earl, Lord Russell, referred to half a loaf being better than no bread. But the people who have contributed to the benefit will not receive half a loaf. Unless they have contributed in the previous two years, under these restrictions they will get nothing whatever. That is quite wrong.
Many of the points that I wished to make have already been made. There is one other point. This matter is set against a background of events a couple of weeks ago when there was a large publicity campaign as to what the Government are doing on welfare issues. However, the reality of what they are doing now is contained in this clause, the one which follows and in Clause 61. All three severely endanger disabled people. It is wrong.
Therefore, I cannot go along with the compromise amendments which have been put forward. I very much hope that the House will ask the Commons to think again on this issue and accept the amendment which asks that the clause be deleted. In principle I believe that that is the right thing to do on this occasion.
Lord Campbell of Croy: My Lords, the three amendments are grouped together including Amendment No. 133, which is to leave out the whole clause. I shall address my remarks to Amendment No. 133. The debate was begun with clarity by the noble Lord, Lord Ashley, as one would expect. When this matter arose in Committee the Government claimed that the Beveridge proposals were linked to recent work and that that was the reason why they were now making it difficult for people who have been unable to make contributions to national insurance for two years.
The noble Baroness, Lady Hollis, did not give a full answer to the noble Lord, Lord Ashley, at that stage or answer the question as to where in the election manifesto the proposals appeared.
There is a geographical consideration to which the noble Earl, Lord Russell, made reference; namely, that there are parts of the country where it is exceedingly difficult to find work, particularly for a disabled person. Of course, it is much easier to find work in other parts of the country. That situation makes the clause objectionable.
There are two other considerations. As they grow older, some disabled people become more infirm but they try to stay in work. They should be congratulated on that. But it has to be part-time or low paid work. That means that when they retire altogether they will not have made recent contributions to national insurance and not enough to meet the requirements contained in this clause.
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The other point is fraud. The noble Lord, Lord Morris, touched on that. It is clear that there is very little fraud in the disabled sector. Most of the fraud connected with benefits is concerned with able-bodied people, employment and housing benefit. It is not concerned with the disabled. That has been confirmed by the noble Baroness, Lady Hollis, in this House on previous occasions.
One of the troubles was a misunderstanding caused by an article in The Times of 15th January last year by the Prime Minister. It has been quoted by the noble Lord, Lord Morris, and I shall point it out again. There were two consecutive sentences in the article. The first was,
"We spend more on disability and incapacity benefit than we do on the entire schools system".
The next sentence was,
"Benefit fraud, estimated at £4 billion a year, is enough to build 100 new hospitals".
That is a non sequitur. The first sentence refers to disability benefits whereas the second refers to all welfare benefits put together. The noble Baroness knows that we on this side of the House are in favour of trying to reform the system. However, there is not much to reform as regards fraud and the disabled.
When the noble Baroness replied at Committee stage she referred to "recent work" being envisaged in the Beveridge proposals. That did not completely answer the noble Lord, Lord Ashley, concerning the intentions of the 1948 legislation. I remember that time very well. I was working in Whitehall from 1946 to 1949. I remember the legislation being prepared on the Beveridge Report which mainly introduced the new national insurance system. I was not in the department in Whitehall which was primarily involved, but friends and contemporaries of mine were. Whitehall was very small at that time and most of us had been in the Armed Forces during the war. We were in touch with each other and we were interested in what was being done.
From that experience I disagree with the noble Baroness who said in Committee on 13th July of this year, at col. 313 of Hansard, that Beveridge did not anticipate long-term unemployment. Of course he hoped that his national insurance system would prevent it. However, the whole basis and purpose of his proposals were to avoid the severe unemployment of the 1920s and 1930s. That was what inspired him to come forward with his proposals. The benefits then proposed anticipated loss of work and being able to help people when that happened. But the proposals were not hidebound as has been suggested. I trust that the Government will reconsider Clause 58 very seriously. If not, I shall oppose it.
Lord Davies of Coity: My Lords, I do not doubt for one minute the sincerity expressed by both my noble friends Lord Ashley and Lord Morris on this matter. I do not doubt the sincerity expressed by the noble Lord, Lord Rix, and the noble Earl, Lord Russell, but I do want to test the depth of sincerity of the noble Lord, Lord Higgins, and that of Members on his Benches.

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Only last week in Blackpool David Willetts, the Opposition spokesman for social security, said,
"Labour's failure on welfare is first and foremost a catastrophic failure of financial control. That is why the first Conservative pledge I give this conference is that we will cut social security spending as a proportion of our national income. We did it before; we can do it again; we will do it again".
But the facts are these. The Tory Government increased welfare spending by 90 per cent in real terms when they were in office, despite making cuts in benefit entitlement. The reason for the increase is that mass unemployment resulted during their period in office. The noble Lord, Lord Higgins, might say, as he did, that it is a question of entitlement because of contribution; but that did not seem to be the philosophy in 1986 when the Conservatives were cutting SERPS for widows—which would have occurred next year if we had not altered the situation on Monday this week.
If David Willetts is right—and he is the Conservative Party's official spokesperson—I ask the party opposite how it justifies the enormous cost which will result, contrary to his view, from the amendments which it is tabling to the Bill.
The Earl of Longford: My Lords, I do not propose to become involved in a discussion about the hypothetical views of Sir William Beveridge, although I worked with him for three years as his personal assistant when he was drawing up the main report some years before our much esteemed Prime Minister was born.
For over half a century, I voted loyally for the Labour Party whether they were in government or opposition, with a few exceptions. I often have to come along nowadays and ask, "which is the Labour Lobby"? I usually follow along obsequiously. But this time I am afraid that is not quite the case. In my eyes, my noble friend Lord Morris is unlikely to be wrong. Nor for that matter is the noble Lord. Lord Ashley, whom I of course much admire. I had the honour of carrying Alf Morris's famous Bill through this House nearly 30 years ago, and I have never yet found him to be wrong. If anyone should ask me whether I believe he knows more than the present Government, or any government, about the disabled, the answer is yes, I believe that he does. So I am afraid that I shall vote for the amendment of my noble friend Lord Morris.
The Duke of Buccleuch: My Lords, I should first declare an interest inasmuch as I am a recipient of disablement allowances of various kinds. I am also president of RADAR. and previously its chairman, and so I have been much involved in what has been going on behind the scenes in negotiations. I am saddened that the Minister in the other place in charge of the Bill is the Member of Parliament for my former constituency—what was Edinburgh North. Had I produced a measure such as this in my day I would have been literally savaged by my constituents.
We have gone so far down this road, and now, looking at these three amendments, I have great sympathy for the first two of them: to try to find a
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compromise, if it is possible to do so, on the very practical grounds that when the Bill goes back to the other place, if we simply delete this clause it will be reinstated; whereas if it goes back amended, there is some possibility that those sensible people in the other House will agree that those changes are better than nothing. Therefore I greatly hope that it will be possible to test the opinion of the House on the first two amendments before deleting the clause altogether.
6.15 p.m.
Baroness Hollis of Heigham: My Lords, the proposals contained in this clause have been debated thoroughly and I understand the issues expressed so eloquently by my noble friends—and they are my noble friends; it is not just a formality, but sincerely meant—Lord Ashley and Lord Morris. NI y right honourable friend the Secretary of State and I respond to the spirit of co-operation in which my noble friend has put forward various amendments.
However, the Government believe that their proposals are right. We remain convinced that a proposal for a contribution test based broadly on the two most recent tax years is largely right, although obviously—this has been made clear—my right honourable friend the Secretary of State in the other House is reflecting, both in the light of your Lordships' discussion and that elsewhere, on whether the two most recent tax years is the most appropriate figure. My noble friend's suggestion of a test which requires either contributions in one of the last seven years or 10 years' contributions in total would largely perpetuate the current position whereby incapacity benefit goes disproportionately to people who were previously unemployed.
As has been said tonight, and it is perhaps worth repeating, no one currently on incapacity benefit is affected. We are talking about future claimants only. It would be wrong to take away benefit from existing claimants, where they satisfy the other entitlement conditions, but we do not believe it right that incapacity benefit should become a means of alleviating the effects of long-term unemployment. The right way to tackle unemployment is through our welfare-to-work programme, not through incapacity benefit.
As my noble friend Lord Davies of Coity pointed out, the previous government were content to let thousands of people, men in particular, drift from unemployment to incapacity benefit and stay there until they retired. Not surprisingly—and I do not blame those people at all—many older people turned to IB as a more generous benefit, and perhaps somehow as a more "respectable" benefit than unemployment benefit. The then government colluded in order to massage their unemployment figures by switching people onto "the sick". We all know it. Never again. In many parts of the country a whole generation was written off by the previous government.
The Chancellor has made a statement to which I believe Beveridge would certainly have responded. He said that he is expecting and hoping for the prospect of

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a return to full employment and that that it is within our grasp. But if we are going to help people realise their full potential, as well as giving them support through the New Deal and the ONE service, it is essential that we are clear about the role of benefits such as incapacity benefit.
My noble friend Lord Morris raised the point about fraud. I say that this is not about fraud at all. I entirely accept his statements. I have never said that this provision was about fraud and I have never said that BIP was about fraud. He has been generous on many occasions to acknowledge that. The exercise of BIP (the benefit integrity project) showed that there was no confirmed evidence of fraud. I was delighted to be able to tell the House so on several occasions. However, it showed that quite a significant percentage of people—between 15 and 20 per cent or thereabouts —were actually on the wrong level of benefit. That was usually, I am glad to say, because they had got better, but they continued to claim an incapacity benefit.
Those are precisely the people whom the Government seek to help; those on, say, incapacity benefit who have got better, or those on DLA who want to, are entitled to and able to work. We want to encourage those people into the labour market, not to ask them to hold onto a benefit when the need for that benefit and the basis for their entitlement to it has passed.
What is the function of incapacity benefit? Incapacity benefit is supposed to provide a measure of earnings replacement for people who have had to stop work because of sickness or disability. It replaces to a degree the wages lost from work. That was the original intention. I know that many noble Lords may not accept that point, but it is long standing. I defer on this to the experience of the noble Lord, Lord Campbell of Croy, and to that of my noble friend Lord Longford. But we have had this checked and it is clear when one looks at what Beveridge was doing, from the start of the National Insurance Fund in 1948, the conditions of entitlement to sickness benefit included a requirement that contributions had been paid or credited in the most recent year. That was Beveridge's stipulation in 1948.
But the purpose of the original sickness benefit, which in time became invalidity benefit, which in time became incapacity benefit, was to require that contributions had been paid or credited in the most recent year. In other words, it was a benefit for those in work who had lost their work through sickness and disability in that year or the year before and, as a result, needed a benefit of support to replace their earnings. That was introduced by Beveridge. That requirement evolved over the years until in 1988 the previous Conservative government introduced the current second contribution condition for both sickness and unemployment benefit, which requires contributions or credits in both the last two years. That condition was carried forward unchanged by the previous government when sickness benefit was replaced by incapacity benefit in 1995.
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I might add that when the second contribution condition was debated in 1987 the then junior Minister, Mr Portillo, said unequivocally about sickness and unemployment benefit:
"Both benefits are designed for people who have been in work and they have been so designed since 1948".
Therefore, there has always been an understanding, an acceptance and an intention that IB was an earnings-replacement benefit for people recently in work who fell out of work through sickness or disability.
There is, therefore, a continuous history of a link between entitlement to incapacity benefit—or its predecessor, sickness benefit—and recent work. It has never been enough, as some noble Lords might suggest, for someone to have paid a minimal amount of contribution in just one year—a sort of "on account"—in order to receive incapacity benefit at any point thereafter; that is, 20 or 30 years after and so on. Equally, it has always been possible for people to have paid contributions over a number of years and fail to qualify. The entitlement conditions have always involved looking at what the person has been doing recently. In practice, people whose circumstances do not attract credits will currently need to have been working and paying contributions in both the last two years in order to qualify. It is an insurance scheme. If one has not paid that insurance, there must be questions about one's entitlement.
At the same time, however, the second contribution condition can be satisfied by credits alone. The current rules mean that someone who has been unemployed and who has signed on for many years qualifies. The result is that half of the people receiving incapacity benefit today came not from work, because they had become sick or disabled, but from unemployment—often many years of unemployment. Incapacity benefit was never intended to be an alternative unemployment benefit or, indeed, a top-up to early retirement benefit. It was intended to replace the earnings of someone who became ill or disabled while in work and fell out of work.
Therefore, the current situation with regard to IB is not consistent with the role of the benefit as a replacement for wages. Indeed, it would not have been even conceived of in the late 1940s by Beveridge when the national insurance system was created.
The Government's proposals for reforming the contribution test are intended to remedy the situation and establish a firm link between benefit entitlement and recent work. That link would not be achieved through the suggestion of my noble friend Lord Ashley of a test of contributions in one of the last seven tax years or 10 years in total. That is what he calls his compromise amendment. The one-in-seven test would allow people to qualify for as long as 8 years after they last worked and paid contributions. The 10-year alternative would extend that period even further. In practice, there would be so little difference from the current situation under the so-called "compromise benefits" as would make virtually no difference. At the moment approximately 300,000 people claim incapacity benefit after the six-month period. Under

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my noble friend's amendment, only 5,000 people would find themselves in a different situation from the one in which they are now. It is not a compromise. Effectively it continues the status quo.
However, the Government's proposals do recognise the need for some exceptions to the requirement to pay recent contributions. We are providing exceptions and exemptions for a number of vulnerable groups. Who are those vulnerable groups? In my view, the most vulnerable group is those young people who are long-term sick and who have become long-term disabled before they have the opportunity to work and contribute. They may have been born with cerebral palsy. They may have severe learning difficulties. However, they will never have been able to enter the labour market nor to build contributions. They are among the poorest and most severely disabled in our society. As a result of the measures which we propose in Clause 60, those people will be in a far better position than ever before. Those measures will enable them to claim incapacity benefit, rather than the much lower severe disablement allowance, without having to satisfy the contribution conditions. Therefore, the poorest and most disabled, those born with a disability virtually from birth or acquired in their youth, will be protected. They will receive IB without contribution conditions.
Another vulnerable group is carers. We have made it clear all along that there will be regulations to maintain the status quo for former recipients of ICA—invalid care allowance. They will continue to be able to qualify in the same way as now on the basis of contributions paid in any tax year and credits in the last two.
We have also said all along that there will be safeguards for people who leave IB and have to return to it before they have had sufficient time to rebuild their contribution record. Those are people on IB who have taken the risk of entering the labour market. We seek to lay that risk not on them but on the Government so that such people can return to IB if their health or their job, so to speak, collapses. We have achieved that through the protection of the one-year linking rule, which we introduced last year. We want to be able to provide a complete assurance that people will not lose out under the new contributions test if they try to return to work in that situation.
I am pleased to announce today a further initiative. We are providing protection for another particularly vulnerable group who might otherwise lose out through trying to work; that is, people receiving disabled person's tax credit and earning below the lower earnings limit. I believe that may refer to a point made by the noble Lord, Lord Campbell of Croy. I believe it was a legitimate concern and we are addressing it.
People on DPTC already benefit from a special two-year linking rule in IB. However, after careful consideration of the representations made by disability organisations, we agree that further safeguards are needed for low-paid workers who remain on DPTC for more than two years. Therefore, I
418
am pleased to announce that we intend to provide that people who no longer receive DPTC—perhaps because a deteriorating condition such as multiple sclerosis, which has been mentioned this evening, means that they can no longer work—will be able to qualify for IB as they do now on the basis of contributions paid in any tax year rather than one of the last two. An amendment will be needed to ensure that our regulation-making powers are wide enough to do that. I hope to bring forward such an amendment at Third Reading.
I believe that those safeguards, and in particular the further protection that I have announced today, show very clearly that the Government are not inflexible. We recognise that there are particular circumstances in which it would be wrong to require contributions to have been paid in one of the last two tax years, and we are dealing with those. By using regulation-making powers, it also means that we have the scope to modify the protection for the groups which we have identified, should that be found to be necessary, and to provide for other people in comparable situations that may arise in the future. Flexibility is built into our approach.
For those who do not qualify for IB in future, income support will be available. Income support already goes to many people who satisfy the medical conditions for IB but not the contribution conditions. As your Lordships will know—
Earl Russell: My Lords, I am very glad to hear what the Minister says about disabled person's tax credit, but can she tell us the number of people affected by that concession?
6.30 p.m.
Baroness Hollis of Heigham: My Lords, we expect some 20,000 people to come onto DPTC. That is the broadbrush figure. Within that, I would not be able to tell the noble Earl who would qualify automatically—because even on DPTC there will not be a lower earnings limit—and those who might. However, we are expecting a figure of that order, although we hope to bring it up to 30,000. That is the best advice I can give to noble Lords at the moment.
To return to the point. If people are not receiving IB, where do they go? If someone is unemployed and becomes disabled, there is an alternative benefit which is in fact more generous than IB; that is, income support with a disability premium. Income support with the disability premium is worth £73 per week compared to £66 or £67 for IB. There is no question of hardship arising as a result of the change to the contribution conditions. That is the alternative benefit for someone who becomes unemployed and then after some years becomes entitled to help because they have become disabled. The benefit, according to household circumstances, is actually more generous than IB. Certainly, anyone who is unemployed—which comprises more than half of those coming on to IB—would normally have been receiving as their basic benefit the means-tested JSA. If someone qualifies for

419
JSA and then becomes disabled, that person will qualify for IS with the disability premium and therefore will be better off.
Our approach recognises that where someone has been unemployed for an extended period and has not paid contributions, income support with the disability premium is the right benefit rather than incapacity benefit. We are not stripping away benefits and thus leaving people in hardship. We are trying to ensure that IB returns to the function for which it was always intended; namely, to be a replacement for those who become sick and disabled at work rather than those who have been long-term unemployed, who are currently on JSA and who would qualify for IS.
The Government believe that their approach is the right one. Of course, on top of all those benefits, people will qualify for DLA. Some noble Lords have tried to argue today that it is wrong to change the rules at all. However, in reality the rules for contributory benefits have changed numerous times over the years, and that is probably understandable.
Finally, I would remind your Lordships that the new contribution conditions are not difficult to satisfy. As now, contributions on earnings equivalent to 25 times the lower earnings limit, currently £66 a week, will suffice. To qualify, this is equivalent to just four weeks' earnings for someone on average male full-time earnings, or 12 weeks for someone on the national minimum wage. That period of 12 weeks' work on the national minimum wage to build up the qualification for a national insurance IB need not be continuous. The conditions can be satisfied by people with broken work records and intermittent health problems.
It has been suggested again tonight that the rules will create particular difficulties for people with deteriorating conditions like MS, for whom incapacity is preceded by a period of unemployment. But there is no question of people losing eligibility for IB after short periods of unemployment. Contributions need only to have been paid in one of the last two years. As I say, my right honourable friend in the other place is reflecting on that two-year rule. If the rules applied now, someone claiming benefit in 1999 following a period of unemployment would have been able to qualify on the basis of contributions paid as long ago as April 1996. I believe that that would normally be expected to cover a wide variety of the kind of circumstances your Lordships have properly raised tonight.
I said at the beginning that the Government fully understood the concerns that have been raised about the proposed changes to the contribution conditions for IB. Safeguards need to be provided—noble Lords raised some of those concerns at Committee stage—and I am glad to be able to announce that low earners on DPTC will be protected, as well as carers and former IB recipients, and indeed those who currently are on SDA and who are the poorest and most disabled who have never had the chance to enter the labour market.
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But the Government also believe that there is a principle at stake here, and that it would be wrong to allow the current situation to continue where IB goes to many thousands of people who have no recent record of working and paying contributions. I hope that I have responded to the very real worries that noble Lords have addressed. We are reflecting on the two-year rule, and we have made important announcements tonight. However, at the end of the day, my noble friend's compromise is not a compromise. The Government cannot accept it and therefore I must say to my noble friend that the Government cannot support him.
Lord Ashley of Stoke: My Lords, my noble friend has treated the House to a first-class contribution which is typical of her eloquence. She is a marvellous government spokesman. Nevertheless, it may not have escaped her attention that in this House she was in a minority of one in advocating those policies. The noble Lord made a very ambiguous speech. I did not hear any strong advocacy of the Government's policy other than in the contribution of my noble friend.
The point I wish to make is this. The noble Baroness has spoken of what has gone wrong in the past, and no doubt she was, as usual, accurate. However, Clause 58 does not deal with the past. It deals only with the future. My noble friend was unable to contradict my allegation that 170,000 severely disabled people will lose their £66 incapacity benefit. She was unable to contradict my assertion that those people may have paid their contributions in good faith for 20 or 30 years, and then in the future they will be denied this crucial benefit. She failed to deny the fact that this will cause immense suffering to those people. When you are poor, £66 is a fortune. Valiantly though she tried, my noble friend has failed to deal with these problems.
When the Minister mentioned income support, she must know of—she is an experienced Minister—its shortcomings. There is no excuse for saying, "Income support is available", because you lose your savings beyond a certain amount. My noble friend knows that people's pride is involved here and the take-up is poor.
I do not wish to speak at length. However, I repeat: this Government have an outstanding record of helping disabled people. This clause is one of the few blots on their record. I hope that it will now be removed. At the beginning I said that if the Government do not accept my compromise amendments, I would withdraw Amendments Nos. 131 and 132. I said that I would press to a vote Amendment No. 133 to delete the clause.
I beg leave to withdraw Amendment No. 131 and to test the opinion of the House on Amendment No. 133.
Amendment, by leave, withdrawn.
[Amendment No. 132 not moved.]
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 133:
Leave out Clause 58
The noble Lord said: I beg to move.
6.53 p.m.
On question, Whether the said amendment (No. 133) shall be agreed to?
Their Lordships division: Contents, 251; Not-Contents, 95.

Division No. 3

CONTENTS

Ackner, L.

Dixon-Smith, L.

Addington, L.

Donegall, M.

Addison, V.

Downshire, M.

Alexander of Tunis, E.

Dunleath, L.

Allenby of Megiddo, V.

Dunrossil, V.

Anelay of St. Johns, B.

Eccles, V.

Ashley of Stoke, L.

Eden of Winton, L.

Astor of Hever, L.

Effingham, E.

Attlee, E.

Ellenborough, L.

Avebury, L.

Elton, L.

Baker of Dorking, L.

Ezra, L.

Barker, B.

Falkland, V.

Barnett, L.

Feldman, L

Bath and Wells, Bp.

Fitt, L.

Bathurst, E.

Flather, B.

Belhaven and Stenton, L.

Fookes, B.

Bell, L

Fraser of Carmyllie, L.

Berners, B.

Freyberg, L.

Biddulph, L.

Gage, V.

Birdwood, L.

Gainsborough, E.

Blatch, B.

Garel-Jones, L.

Blease, L.

Geddes, L.

Blyth, L.

Geraint, L.

Bowness, L.

Gilmour of Craigmillar, L.

Brabazon of Tara, L.

Gisborough, L.

Bradford, Bp.

Glanusk, L.

Bradshaw, L.

Glenarthur, L.

Brentford, V.

Glentoran, L.

Bridgeman, V.

Goodhart, L.

Brookeborough, V.

Gray, L.

Brougham and Vaux, L.

Hambro, L.

Buccleuch and Queensberry, D.

Hamwee, B.

Burnham, L.

Hanningfield, L.

Buscombe, B.

Harding of Petherton, L.

Byford, B.

Harmsworth, L.

Cadman, L.

Harris of Greenwich, L.

Caithness, E.

Harris of Peckham, L.

Campbell of Croy, L.

Hayhoe, L.

Carlile of Berriew, L.

Henley,[Teller ]

Carnegy of Lour, B.

Higgins, L.

Carnock, L.

Hogg, B.

Carr of Hadley, L.

Holderness, L.

Castle of Blackburn, B.

Holme of Cheltenham, L.

Cathcart, E.

HolmPatrick, L.

Charteris of Amisfield, L.

Hooper, B.

Clanwilliam, E.

Hunt of Wirral, L.

Clark of Kempston, L.

Hutchinson o f Lullington, L.

Clement-Jones, L.

Hylton-Foster, B.

Clwyd, L.

Inchyra, L.

Cocks of Hartcliffe, L.

James of Holland Park, B.

Courtown, E.

Jenkin of Roding, L.

Cox, B.

Jenkins of Hillhead, L.

Cranbrook, E.

Jenkins of Putney, L.

Crathorne, L.

Jopling, L.

Crickhowell, L.

Kimball, L.

Cross, V.

Kintore, E.

Darcy de Knayth, B.[Teller ]

Kirkhill, L.

Davidson, V.

Knutsford, V.

De L'Isle, V.

Laing of Dunphail, L.

Dean of Harptree, L.

Lane of Horsell, L.

Denbigh. E.

Leigh, L.

Denham. L.

Lester of Herne Hill, L

Dholakia, L.

Lindsey and Abingdon, E.

Dixon, L.

Linklater of Butterstone, B.

422

Liverpool, E.

Renton, L.

Lofthouse of Pontefract, L.

Rix, L.

Long, V.

Roberts of Conwy, L.

Longford, E.

Rogan, L.

Lucas of Chilworth, L.

Rodgers of Quarry Bank, L.

Luke, L.

Rotherwick, L.

Lyell, L

Rowallan, L.

Mackay of Ardbrecknish, L.

Russell, E.

Mackay of Drumadoon, L.

St. John of Fawsley, L.

McNair, L.

Saltoun of Abernethy, Ly.

McNally, L.

Seaford, L.

Maddock, B.

Seccombe, B.

Mancroft, L.

Selsdon, L.

Mar and Kellie, E.

Sempill, L.

Marlesford, L.

Sharp of Guildford, B.

Marsh, L.

Sharples, B.

Masham of Ilton, B.

Shaughnessy, L.

Mayhew of Twysden, L.

Shaw of Northstead, L.

Merrivale, L.

Shore of Stepney, L.

Methuen, L.

Skelmersdale, L.

Miller of Chilthorne Domer, B.

Slim, V.

Miller of Hendon, B.

Smith of Clifton, L.

Molyneaux of Killead, L.

Soulsby of Swaffham Prior, L

Monk Bretton, L.

Stewartby, L.

Monro of Langholm, L.

Stodart of Leaston, L.

Montagu of Beaulieu, L.

Stoddart of Swindon, L.

Monteagle of Brandon, L.

Strange, B.

Montrose, D.

Strathcarron, L

Morris, L.

Strathclyde, L.

Morris of Manchester, L.

Swansea, L

Mountevans, L.

Swinfen, L

Mowbray and Stourton, L.

Taverne, L.

Moynihan, L.

Taylor of Gryfe, L.

Munster, E.

Tebbit, L.

Murton of Lindisfarne, L.

Tenby, V.

Napier and Ettrick, L.

Teviot, L.

Nathan, L.

Teynham, L.

Nelson, E.

Thomas of Gresford, L.

Newby L.

Thomas of Gwydir, L.

Thomas of Walliswood, B.

Newton of Braintree, L.

Thomson of Monifieth, L

Northbrook, L.

Thurso, V.

Northesk, E.

Tope, L.

Norton of Louth, L.

Tordoff, L.

Nunburnholme, L.

Torrington, V.

O'Cathain, B.

Townshend, M.

Ogmore, L.

Trefgarne, L.

Onslow, E.

Turner of Camden, B.

Oppenheim-Barnes, B.

Ullswater, V.

Orme, L.

Vivian, L.

Oxfuird, V.

Wallace of Saltaire, L.

Palmer, L.

Walpole, L.

Park of Monmouth, B.

Waterford, M.

Patten, L.

Watson of Richmond, L.

Pender, L.

Weatherill, L.

Phillips of Sudbury, L.

Wharton, B.

Prentice, L.

Wigoder, L.

Radnor, E.

Wilcox, B.

Rawlings, B.

Williams of Crosby, B.

Razzall, L.

Williams of Elvel, L.

Redesdale, L.

Wise, L.

Rennard, L

Young, B.

NOT-CONTENTS

Acton, L.

Brooke of Alverthorpe, L.

Ahmed, L.

Brooks of Tremorfa, L.

Alli, L.

Burlison, L.

Amos, B.

Carter, L.[Teller]

Bach, L.

Christopher, L.

Bassam of Brighton, L.

Clarke of Hampstead, L.

Berkeley, L.

Cledwyn of Penrhos, L.

Blackstone, B.

Clinton-Davis, L.

Bledisloe, V.

Crawley, B.

Borrie, L.

David, B.

Brett, L.

Davies of Coity, L.

423

Davies of Oldham, L.

Jay of Paddington, B.(Lord

Dean of Thornton-le-Fylde, B.

Privy Seat)

Diamond, L.

Kennedy of The Shaws, B.

Donoughue, L.

King of West Bromwich, L.

Dormand of Easington, L.

Lea of Crondall, L.

Dubs, L.

Lipsey, L.

Eatwell, L.

Lockwood, B.

Elder, L.

Macdonald of Tradeston, L.

Evans of Watford, L.

McIntosh of Haringey, L.

Falconer of Thoroton, L.

[Teller]

Farrington of Ribbleton, B.

Mackenzie of Framwellgate, L.

Faulkner of Worcester, L.

Mason of Barnsley, L.

Filkin, L.

Merlyn-Rees, L.

Gilbert, L.

Milner of Leeds, L.

Gladwin of Clee, L.

Molloy, L.

Gladwyn, L.

Monkswell, L.

Gordon of Strathblane, L.

Montague of Oxford, L.

Goudie, B.

Pitkeathley.B.

Gould of Potternewton, B.

Ponsonby of Shulbrede, L.

Graham of Edmonton, L.

Prys-Davies, L.

Grantchester, L.

Ramsay of Cartvale, B.

Grenfell, L.

Rea, L.

Hacking, L.

Rendell of Babergh, B.

Hanworth, V.

Richard, L.

Hardy of Wath, L.

Rogers of Riverside, L.

Harris of Haringey, L.

Sawyer, L.

Haskel, L.

Scodand of Asthal, B.

Hayman, B.

Smith of Gilmorehill, B.

Hilton of Eggardon, B.

Strabolgi, L.

Hogg of Cumbernauld, L.

Symons of Vernham Dean, B.

Hollis of Heigham, B.

Taylor of Blackburn, L.

Howie of Troon, L.

Thornton, B.

Hoyle, L.

Thurlow, L.

Hughes of Woodside, L.

Varley.L.

Hunt of Kings Heath, L.

Warner, L.

Irvine of Lairg, L.(Lord

Warwick of Undercliffe, B.

chancellor )

Whitty, L.

Janner of Braunstone, L.

Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Clause 59 [Incapacity benefit: reduction for pension payments]:
6.53 p.m
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 134:
Page 66, line 37, after ("payment") insert ("exceeding the level of the Disability Income Guarantee")
The noble Lord said: My Lords, the position regarding my amendments to Clause 59 is the same as for Clause 58. I am strongly opposed in principle to the clause because its provisions would devastate many severely disabled people who have saved via an occupational pension.
The Government are making an extraordinary proposal which provides, for the first time, means testing for a major long-term contributory benefit. The importance of that should never be underestimated. It raises questions about the future of contributory benefits. Are the Government moving away from them? The same arguments for hitting disabled people claiming incapacity benefit and having an occupational pension can also be used against the retirement pension. What will happen in future if this principle is accepted?
Means testing breaches the moral contract between the Government and the people. None of those people who have paid national insurance contributions,
424
perhaps for 20 or 30 years, will have had any idea that if they became disabled, they would be hit as hard as they will be under this clause.
The clause provides that anyone claiming incapacity benefit who has an occupational pension of over £50 shall lose a stunning 50 pence in every pound for every additional pound over £50. That is a stunning figure by any standards. To start penalising severely disabled people so drastically because they have such a small pension would be remarkable for any government. For a Labour Government, historically committed to helping the poor, that is amazing. I know that the figure of £50 is not in the Bill. The specific figure will be in regulations. However, the Government's thinking was clearly betrayed when they put the figure in the Explanatory Notes to the Bill.
Ministers have indicated that they will reconsider that figure. However, I must tell them that any paltry increase would not be acceptable to me nor, I believe, to the House as a whole. It certainly would not be acceptable to the 500 disability organisations which have unanimously condemned the proposal.
It is bad enough to start cutting incapacity benefit at this low level of pension. It is equally unfair that the cut should be at the penal rate of 50 pence in every pound. As incapacity benefit is already taxed at 23 per cent, this new imposition would mean that the incapacity benefit of many future disabled people would be at the marginal rate of 73 per cent. The top rate for millionaires is 40 per cent. Where is the sense in that? Where is the justice and the reason?
Ministers are implying that incapacity benefit recipients are well off. I do not like using figures because I am not good at them, but I must impose a few on the House. The Government intend to start cutting IB for someone with an occupational pension as low as £51 per week. Severely disabled people, with an incapacity benefit and a £51 pension would have a total income of just £117.75 per week, or £6,123 per annum. That is only 37 per cent of average income and just 28 per cent of average male earnings. These people are not, by any stretch of the imagination, well off. They are also too severely disabled to work to improve their income. They are nailed to poverty. By definition, they are incapacitated, and too incapacitated to work.
The Government's proposal is that all incapacity benefits should be withdrawn when a person has a pension of £181.77 per week; that is £9,452 per annum. That is 58 per cent of average income and 43 per cent of average earnings. All I can say is that an income of £9,500 is not a wealthy one.
The Government seek to justify their proposals by claiming that there is double provision of pension and incapacity benefit; that very few people used to have occupational pensions, whereas now many people have them. That is the Government's case, or part of it. However, that has already been taken account of by the previous Tory government who removed the earnings-related element of the former invalidity benefit when it became incapacity benefit. The Tory Government did that precisely because of double provision, so it is already dealt with. The deduction is

425
already made. This Government are going on with a further deduction as if the previous government had done nothing about it. It is a duplication of effort. In fact it is double jeopardy for disabled people and I cannot see for the life of me how that can be justified.
If the Government wish to remove incapacity benefit from those who make their own provision with savings and pension, then they should also remove the requirement to pay the portion of contributions that pays for incapacity benefit. That is logical common sense. Not only is the principle wrong; so is the practice proposed by the Government.
In the spirit of compromise which I mentioned a moment ago, I want to propose some fairer figures. Instead of the Government's proposal of penalising people with a £51 pension, I suggest in my amendment that the reduction in incapacity benefit should not begin until a person has a pension of £128 a week. That is the level of the disability income guarantee and that is an amount fixed by the Government. It is a realistic figure. By relating the level to the guarantee and placing this in the Bill it indexes the level and ensures that it will not decline in real terms over time, and that is very important. I hope the Government will be able to accept that.
The 50p in the pound rate of deduction is far too high. I know that there are all sorts of social security tapers, but the significant factor about incapacity benefit is that people have contributed in order to receive it should the need arise. It is not a means-tested benefit which, by definition, has to be related to overall income. I believe, and I invite the House to believe, that two types of payments—national insurance and occupational pension—should mean two benefits. Again, those are straightforward, reasonable, honest propositions. But, again, if Clause 59 is accepted, the moral concept is totally removed.
If we must have the taper then this figure of 23p in the pound, which is the standard rate of income tax, is a reasonable one. I recognise that if all the provisions of my amendment were accepted the incapacity benefit would riot be totally withdrawn until the disabled person had an income of £21,747 per annum. The Government would no doubt object to that and claim that these people would be wealthy. I disagree. They would not be paying the higher rate of tax, which is the usual measure of wealth.
There are two vital points to take into consideration. First of all, most people affected by the Government's proposals will have nothing like this income and most of them will be poor. They are the people that we are concerned about tonight with these amendments.
Secondly, regardless of how high the income of the few may be, all of them have paid their national insurance contributions, in some cases for decades, and they are entitled to the benefit when the need arises. I am labouring that point. I make no apology for it, because it must be fair. If people pay you must keep faith with them and give them what they have earned. In an effort to build some kind of bridge, I commend this amendment to the Government. If it is not accepted by my noble friends and the Government,
426
as I have said, in my second amendment I shall invite the House to reject the clause completely. I beg to move.
7.00 p.m.
Lord Rix: My Lords, I regret the extension of means testing to a non means-tested benefit, and I should like to see the Government accept the substantial easement of the new means test proposed by the noble Lord, Lord Ashley—seconded, as it were, by me—but that, I fear, is wishful thinking.
The Government deserve credit for the improvements they have made through this Bill for severely disabled people, and I for one accord that credit. However, beneficial changes inevitably have a price tag attached, and the savings contained in this clause certainly provide the necessary financial leverage.
Noble Lords may wonder why I am taking such an interest in this clause, particularly as the majority of people with severe learning disabilities do not have pensions and therefore will not be adversely affected. The reason for my profound discomfort with the principle that an advance for one group of disabled people must be paid for by a reduction in benefits for another group of disabled people must be quite clear.
The Government seem to have couched this distinction in terms of the deserving and the undeserving disabled, characterising the undeserving—the losers in this clause—as those who are using incapacity benefit to finance early retirement. This I believe is misleading. All those who have passed the all work test for incapacity benefit should be judged to be incapable of work, albeit with a measure of assessment of their future capabilities.
I have heard enough said by Ministers to convince me that some further change is in mind to the means test formula. But once again detail has not been forthcoming. I, like a number of other noble Lords present today, would be satisfied with a change which includes substantially raising the level of the existing disregard and protecting its value over time.
I am therefore led to express my disappointment at the Government's continual procrastination over this clause. If there is a Division on Clause 59, as I believe there will be, I feel unable to lend this clause my wholehearted support. I cannot in all conscience represent the concerns of disabled people generally unless I vote against the clause as it currently stands. Nevertheless, I look forward to hearing more detail on any progress in government thinking from the noble Baroness, Lady Hollis, and I urge her and the Government not to defer such detail to another place.
Earl Russell: My Lords, majorities of over 150 do not happen very often in this place. Whatever they may say about the composition of this House or anything else, Ministers should think very carefully about what they may have done to contribute to that result. I say, not to the Minister, who is too good a scholar to need it, but through her to the Secretary of Slate arid the Prime Minister: I pray you, in the bowels of the Lord, to think it possible you may be mistaken.

427
I am afraid, however, that I have to make the same point to the noble Lord, Lord Ashley of Stoke, about his amendments that I had to make in the previous debate. I respect and honour the intention behind the amendments, but the principle of what is being attempted is not acceptable and therefore a compromise would not really be a compromise since it would involve accepting the Government's principle.
My objections to what the Government are doing are twofold. The first is the obvious commonsense one that it discourages saving. The second is the erosion of the contributory principle and therefore the taking away of what one might perhaps regard as a legitimate expectation. I am not, of course, going to adopt the tablets of stone principle that conditions for contributory benefits may never be changed under any circumstances whatever. We are not Medes and Persians and if we were we would not need a Parliament. But we do have to take account of the fact that in pension provision, with the changing age balance, the shortage of young people as well as the numbers of old ones, we really must be thinking about encouraging a climate of private provision. Occasionally I think people are going too fast in that direction, but I do think that discouraging private provision, in the present actuarial situation, is going rather against a change in culture which we need to see. I think it is a long way from joined-up government.
The argument about these people being wealthy, as the noble Lord, Lord Rix, hinted at very briefly, grossly fails to take account of the extra costs of disability and it gets more and more clear that we have underestimated those at every stage.
The other really interesting thing about this proposal is how it got here. Some of your Lordships will have read the article in the Guardian of 25th September which pointed out what some of us had previously suspected; namely, that the proposal is identical to one put forward, largely by the same civil servants, through Michael Portillo and offered to Peter Lilley in 1993. I am interested in the response that Mr. Lilley gave, and the quote is from the original documents. He said that the move would justifiably create "a source of resentment" among disabled people and raise difficult questions about the contributory principle.
Mr. Lilley went on to say—these are his exact words—
"I do not favour this approach. Apart from the disincentives to make private provision it would introduce, I think it would raise some very difficult questions about the future of the contributory benefit system before we have fully thought through the direction we want to take".
Mr. Lilley said it all.
We heard earlier from the noble Lord, Lord Davies of Coity, who is no longer in his place, a variant of the "Mr. Jones will come back" argument directed against the Conservatives. But there are two points about that argument: first, it was never employed, except when those in charge were doing something rather wrong;
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and, secondly, if we take Mr. Lilley as the Mr. Jones on this occasion, he seems to me to have shown a good deal more sense that this Government.
The final point that I wish to make is that this direct carbon-copying of a proposal from the Treasury under Michael Portillo seems to me to cast some doubt on the general concept of welfare reform as employed by the Prime Minister. It tends to suggest that it is not some great, new, glorious brainchild of the Prime Minister's thinking: it is simply the Treasury doing business as usual. We are used to that.
Lord Morris of Manchester: My Lords, writing to me about this clause yesterday my friend for many years, Sir Peter Large, than whom no severely disabled person is more widely respected in all parts of both Houses, said:
"The policy of redistributing resources from disabled people in need to others in greater need is abhorrent to me. Unfortunately, the policy is nowhere more clearly evident than in Clause 59, which introduces the dangerous precedent of means testing a contributory benefit".
Sir Peter went on to say that by no stretch of anyone's imagination can people with a personal pension of £51 a week be thought of as sufficiently well off to be an appropriate target for means testing. He added:
"It is in stark contrast to the future upper earnings limit for the new Children's Tax Credit which will be approximately £38.500 a year".
Many disabled people fear that the worse is to come. Clause 59(3)(c) allows invalidity benefit to be reduced through,
"a payment of any other specified description; and 'specified' means prescribed by or determined in accordance with regulations under this section".
There is widespread worry, notwithstanding all that has been said by Ministers so far, that the means testing of invalidity benefit that this clause proposes will lead logically to taking other benefits into account and means testing them also.
Where in our general election manifesto was there any hint that disabled people would be forced to take a cut in benefit of 50 per cent of any personal pension worth over £50 a week so that, for example, someone who has saved for years to provide a weekly pension of £75 will have her or his benefit cut by a punishing £12.50 a week? What possible justification can there be for doing this when between 1980 and 1998 disability benefits were frozen, while average earnings in Britain rose by £115 a week in the same period?
Clause 59 confuses reform with retreat. "What justice is there", I am asked by disabled people, "in penalising those who forgo pleasure today in order to pay for safeguarding their future?" Many say that the Government's top priority ought to be improving the take-up of disability benefits.
I most strongly urge my colleagues in government to think again about this clause which they know, as well as I do, is deeply resented by everyone aware of its implications for many of the most vulnerable people in Britain today. Speaking from ministerial experience of, I think, twice the length of any present Minister in your Lordships' House, I know the consequences for

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individual Ministers of the deceit that government is seamless. The reality is that every Minister in all governments must fight his or her corner for available resources. I have no doubt whatever that my noble friend Lady Hollis has fought her corner and that her commitment to making life better for disabled people is every bit as strong now as it was before she became a Minister.
I profoundly hope that we shall hear when she speaks that this clause will now be withdrawn.
7.15 p.m.
Lord Campbell of Croy: My Lords, I shall speak to Amendment No. 136, which would leave out the whole of Clause 59 and which is grouped with the other two amendments that we are discussing. The clause would extend means testing within the system of contributory benefits, as noble Lords have already pointed out, but it would penalise people who have saved for the future with the encouragement of successive governments.
I spoke on this point in Committee, so I shall be brief in what I have to say tonight. However, I draw your Lordships' attention to this anomaly. It appears that pension income only is involved in the means testing. This seems unfair as between pensioners with pension income and pensioners with other private income. I should be grateful for confirmation from the noble Baroness that this is so and perhaps she could explain why it is so. I shall join the noble Lord, Lord Ashley, in opposing this clause for the reasons which I gave in Committee.
Lord Higgins: My Lords, as has rightly been pointed out, this is means testing of a major, long-term contributory benefit and, as such, must give grave cause for concern. The case against the clause and in favour of the amendment has already been made strongly, but what is extraordinary about it is not merely that it is means testing a major benefit but the way in which it proposes to do so.
The noble Earl, Lord Russell, suggested that this was something put forward by the previous government, turned down by them but accepted now by this Government—a kind of "Yes, Prime Minister" television show scenario. If any Sir Humphrey had put this before Jim Hacker in the programme, he would have had no difficulty at all in turning it down. He would have pointed out clearly that the people who would be means tested are those who happen to have pensions. He might have added that the entire purport of most of this Bill, which we have been debating day after day, is to encourage people to take out pensions. If they happen to be disabled, and no doubt had greater difficulty in procuring a pension in the first place, they are now to be told, "Well, you are not going to get the full amount of your disability benefit because you have been prudent enough to take out a pension".
The noble Lord, Lord Rix, suggested that the Government are distinguishing between the deserving and the undeserving disabled. He is right: in my view, we must make no such distinction. But the people who
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are regarded by the Government as the undeserving disabled are those who have been prudent enough to provide themselves with a pension.
This clause verges on the bizarre and I really do not think one needs a very long speech to point that out. The reality is that there are estimated to be some 45,000 people—prudent, disabled people—who will lose in the first year, rising to 335,000 after 10 years. I have had a very large number of letters from people. One example concerned a. lady who had previously worked as a nurse and had had a stroke. She managed to get a pension and long disability benefit, but she now writes to me saying, "If this goes through I will probably have to sell my house".
There are many such cases. It is very easy, in this atmosphere, to look at it all in a rather academic way, but the reality is that there are people concerned who are disabled, who have been prudent, and they are being penalised by the Government. I think I am right in saying, if I may just pick up the point made by my noble friend Lord Campbell of Croy just now, that if someone has a disability benefit—the Minister will correct me if I am wrong—and has an income from, let us say, shares, of £2 million a year, they will still continue to get their disability benefit.
This clause, as it stands, is quite absurd. The noble Lord, Lord Ashley, has rightly considered the matter and he has put down amendments which would effectively contain a degree of compromise. I think the principle behind this clause is doubly wrong, and we really must totally oppose it.
Baroness Masham of Ilton: My Lords, I would just like to say: was not the cause of the downfall of the Conservative government that they did not listen to their friends? It would be very advisable tonight to listen to their friends, the noble Lords, Lord Ashley and Lord Morris, who know so much. As a disabled person myself for about 42 years, I can assure your Lordships that whatever a person's income, disability is exceedingly expensive. I do hope that the Government will listen.
Baroness Hollis of Heigham: My Lords, in proposing to take some account of pension income and incapacity benefit, perhaps I could pick up some of the points that have recently been made tonight. We are not of course means testing in any conventional sense. We are not taking into account in these proposals other income, such as a spouse's income; nor, despite the suggestion of the noble Earl, Lord Russell, are we taking into account savings and the thrift associated with them. We are talking about pensions. As the noble Lord, Lord Higgins, knows, incapacity benefit is designed for people who lose their work through sickness or disability. If they become sick or disabled after normal retirement age they do not qualify for IB. They qualify for a retirement pension and possibly for attendance allowance, but the state retirement pension is paid basically at the same level as IB. Therefore if someone retires early and has a pension, as an alternative to their earnings as opposed

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to a normal retirement, at that point they simultaneously receive IB as well as their earning pension. That means a double coverage for the same contingency.
In the same way, perhaps I may take the example of travel insurance and also insurance of household goods. If I lose a suitcase on holiday I do not get reimbursed from both sources. You do not get double coverage for the same contingency. That is why we are taking pension income into account: not savings, not income, not a spouse's income and so on.
Lord Swinfen: My Lords, I wonder if the noble Baroness will allow me to intervene? Is she not aware that if you have to give up work and take a pension early, particularly early by a number of years, you are taking a pension at a very much reduced rate and you are not getting the amount every week or every month that you would have been getting if you had reached the normal retirement age. The pension is cut down. Therefore, the Government are giving a double-whammy to disabled people who are forced to retire early.
Baroness Hollis of Heigham: My Lords, I am afraid that I would not accept that. In the first place, from my own experience, when people do retire there is often a package in the round of added years and so on, if retirement is on medical grounds. Secondly, if the disability is of sufficient severity they will almost certainly be entitled to some level of disability living allowance which tops up their income in addition to IB. I accept that in some circumstances what the noble Lord has said may be right, but I would certainly not accept that it applies to the majority of people about whom we are talking here. There are other sources of income, like DLA, which I think he has overlooked tonight.
As I explained before, benefit for incapacity and similar allowances were introduced when very few people had occupational pensions. If someone needed to retire early through sickness or disability, there was nowhere else for them to go but on to sickness benefit. They could very seldom draw down an occupational pension, whether reduced, as the noble Lord said, or in full. In either case, three-quarters of the population would not have had that sort of access.
Now, the vast majority of people do: about 85 or 86 per cent of men, for example, have an occupational pension. Incapacity benefit, IB and its predecessor, sickness benefit, were designed to replace wages. They were never designed as a top-up to generous white-collar pensions, offered for early retirement. In the public sector, for example, there can be ill-health retirement on £25,000 a year, and such pensions cost us £1 billion a year. The Audit Commission found that in some local authorities 50 per cent of retirements are on ill-health grounds.
Overall, 22 per cent of civil servants, 25 per cent of teachers and 39 per cent of local government staff—I say nothing about the police—who retired over a five-year period did so on medical grounds. Normally they
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would also be eligible for IB; yet they have generous occupational pensions and in most professions their pensions are made up in full. That is what we are talking about. We are talking about IB which for many people who have generous white-collar pensions has become a top-up for early retirement.
My noble friend, in his usual courteous and impeccably careful way, has put forward amendments which at least accept the principle that there should be a partnership between the state provision and what people themselves provide, by way of pension. I very much appreciate the careful and considered way in which he has sought to move the debate on, but I hope I may yet persuade my noble friend that he should not insist on seeking the support of the House for his amendments.
The Government are currently spending over £24 billion a year on benefits for disabled people: that is about a quarter of the Government's total social security expenditure. We believe it is right that the money should go to those who most need it, to those disabled people on low or modest incomes and to those whose disability needs are most severe. In other words, we are talking about those who are most likely to be in financial need and those with the most acute disabilities. Those are our priorities.
Perhaps I may just remind your Lordships that no one on IB at the present time will be affected. For the future, assuming the same proportion of IB recipients with pensions, the number of new cases who are unaffected will still be around 80 per cent. Therefore, under the Government's proposals everyone now on IB will be unaffected and in future 80 per cent will be unaffected. The 20 per cent who would be affected are for the most part retiring early with generous white-collar, often public sector financed pensions, paid for by us all, which were designed to cover the same contingency as IB is being asked to pay for: that is early retirement on grounds of sickness. That is, where the Government stand. They do not believe that that is the right or the best use of public money.
Lord Barnett: My Lords, would my noble friend allow me to intervene? She has raised the question of cost: £24 billion. If cost is the issue, could she tell us what would be the cost of allowing this amendment?
Baroness Hollis of Heigham: My Lords, I wonder whether my noble friend would allow me to go on, because I will come back to that in detail later regarding my noble friend's proposal about the number of people who will be affected. We are talking about those in financial need and those who have the most acute disability, the most financial need, those who are currently on SDA and the client group so movingly spoken to by the noble Lord, Lord Rix, on many previous occasions in your Lordships' House who are now bumping along on income support; they have SDA but they have to be means-tested for income support and they still live, in my view, a very limited life in terms of the income available to them.
What we are doing with our proposals is ensuring that those people go on to IB. In other words, those who have been born with a disability or acquire a

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disability before going into the labour market—the poorest of the poor—will see an increase in their benefits of nearly £30 a week. That is what we are doing; we are seeking to bring money to those who most need it. Not to the early retirement teachers, civil servants, university lecturers or who you will, but to those who most need it. People such as those who have learning difficulties or cerebral palsy will receive an extra £30 a week. We are seeking to help those who are the poorest among the groups of disability.
Secondly, we want also to concentrate help on those who are the most severely disabled as well as on the poorest. I hope to offer some good news to the House. Many of the concerns about the Government's proposal to take pension income into account in IB have focused on the impact on severely disabled people with progressive, degenerate diseases, or perhaps on people who have had a traumatic injury which has left them in need of care by day and night and unable to work until retirement or early retirement. I am delighted to tell your Lordships that in recognition of the special circumstances and particular needs of this group, the Government have decided that there should be no reduction of incapacity benefit at all in the case of people who are the most severely disabled; that is, those 'who are entitled to the highest rate of the care component of disability living allowance.
This recognises that the most severely disabled people who work and have to plan in the expectation of early retirement—because of MS or whatever—and a reduced pension are in a very different position from the school teacher, the university teacher, and so on, who retires early—perhaps on grounds of stress, depression, a lower back injury or arthritis. They are very different from the people we are talking about, such as the person who has a broken back or who has been born with cerebral palsy; they are the people who really need our help. We are therefore focusing on the poorest and most severely disabled.
In the Bill we are helping the most severely disabled with the exemption for those on the highest rate of DLA; and we are helping the poorest by ensuring that those who would otherwise be on income support and SDA—MENCAP clients and those with CP, for example—will get a £30 lift in their benefit. That is consistent with our strategy of concentrating resources on the most severely disabled people and the poorest people, those with greatest need. We will bring back an amendment to put this into effect.
We estimate that approximately 20,000 people on IB will benefit in the long run in the future. None of these pension proposals, the tapering or whatever, will affect those people with the most acute need and whose disability generates the highest rate of care—they may have MS, spinal injury or be bed ridden—and qualify for the highest of the DLA; they will be exempt. This will recognise the high cost of disability, as the noble Baroness, Lady Darcy de Knayth, said. I am sure that this will be welcome news to your Lordships. It is a direct consequence of the views expressed in your Lordships' House and urged on the Government.
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It also has a direct bearing on my noble friend's amendment linking the disregard to the disability income guarantee. The Government's guarantee that he quoted applies only to people on the highest rate of DLA. My noble friend would apply it to all people. irrespective of the degree of disability. My noble friend is offering a disregard of the same value for all disabled people, whether they are suffering from stress or mild arthritis or have been paralysed by a major injury. My noble friend's amendment treats the ex-bank manager with a good pension, who has taken early retirement and who 10 years on develops depression and qualifies for IB in the same way as the King's Cross fireman with a broken back. The Government do not. I am not for a moment denying that depression is not real; I am saying that the ex-bank manager is in no financial need. His depression need generate no additional financial costs—if it does, he may go to DLA—unlike the fireman, who needs constant care and attendance. The fireman is the person we are seeking to help.
I would also remind the House that the Government have not yet confirmed the level at which pension income is to be taken into account in other cases. My right honourable friend the Secretary of State has said all along that he will review the proposal in last year's consultation document to reduce IB at the rate of 50p in the pound for every pound of pension income over £50. In seeking to specify the value of the disregard and the taper on the face of the Bill, my noble friend's amendment would pre-empt the Secretary of State's consideration of these issues and prevent him from bringing forward his own proposals. I rather suspect that is my noble friend's intention. The Secretary of State has made it clear that his figures are not set in tablets of stone. He has listened and consulted and he is reflecting on the issue. He will come back in due course with his proposed figures.
My noble friend said that he is offering a compromise. In linking the taper to the basic rate of income tax and starting the disregard at the disability income guarantee of £128, my noble friend has more than halved the taper and more than doubled the disregard. Some compromise! My noble friend's idea of a compromise is to accept the principle in theory and then to move an amendment to exclude almost everyone affected from its impact. While the Secretary of State is thinking carefully about these figures, your Lordships will appreciate that my noble friend is expecting the Secretary of State to move a very long way if there is to be any meeting of minds.
What does my noble friend's amendment mean? Take together a taper linked at the basic rate of income tax and his disregard, and what would it mean? My noble friend quoted a figure of £23,000 for a single man; only at that point would he lose his entitlement to IB. If someone was getting IB for a partner and two children, they would continue to be eligible for IB until the pension income was £39,000. My noble friend would protect the situation of someone with previous earnings of £70,000 to £80,000 and the possibility of decent savings which would generate a pension of nearly £40,000. Only at that point would my noble friend's amendment extinguish the right to IB.

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I ask your Lordships, is it really our priority that people at that generous level of income, with pensions nearing £40,000 a year, should still retain, if they have children and a spouse, an entitlement to incapacity benefit? Should they receive a level of support when we have people with very modest incomes living on income support—people with learning difficulties and the like—not getting the help and support that they should? It is about priorities—and I am asking your Lordships to judge those priorities tonight. Under no circumstances can the people protected by my noble friend's amendment be regarded as modest or in need.
In setting the level of the disregard we have to be fair to all, including people on IB who do not have the advantage of pensions and people in work who are often earning less than the level of pension that would be protected by my noble friend's formula. I should remind the House that nearly half of those on IB are in the top 40 per cent of income in this country, whether or not DLA is calculated. Many disabled people are not poor if they retire early with generous pensions.
My noble friend and I disagree. I hope that your Lordships will accept that the Government's approach is based on principle and a careful assessment of the issues. The important exemption that I have announced for people on the highest rate of DLA care will go a long way to meet many of the concerns raised by your Lordships and disability organisations. It will do far more for the most severely disabled than my noble friend's amendment. On his proposal the taper will still kick in; on ours they will be exempt altogether.
The Government's proposals are more generous to the most severely disabled people than my noble friend's compromise amendment. My noble friend, however, is more generous than the Government think right to those who have earned £70,000 to £80,000 in the past and who now have white-collar pensions of £30,000 to £40,000.
Lord Goodhart: My Lords, does the Minister accept that, under her proposals, if the disabled person does not have a pension but an investment income of £39,000, £50,000 or £100,000, they will lose none of their incapacity benefit?
Baroness Hollis of Heigham: Yes, my Lords. But if one looks at the profile of savings and wealth compared to the profile of pensions, one will find that people protected by that are a tiny handful compared to the number of people who will be protected under the amendment of my noble friend Lord Ashley. His amendment protects pension income; an occupational pension is the big source of income for white-collar people. We think it not unreasonable, if they are not in financial need, to consider the interlocking of that pension with disability benefits.
I was asked by my noble friend Lord Barnett what would be the cost of accepting my noble friend's amendment removing the clause. It would remove savings of £45 million in year one, £190 million in year three, and £550 million in year 10 as provided for in the
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Government's original proposals. That money would not then be available to help the poorest, those on income support and those born with a disability or who acquired it in their youth. There are choices to be made.
The gap between us is large. The Government are giving most help to the poorest—those on severe disablement allowance topped up by income support. We are also protecting the most severely disabled, those on the highest rate of DLA. My noble friend's proposals would mean that much less could be done for both those groups and instead protect people with generous white-collar pensions and less severe disability. The Secretary of State will consider all the factors. However, I hope that noble Lords will accept that the Government's case is not only principled but also fair and decent and one that deserves support.
Lord Ashley of Stoke: My Lords, I congratulate my noble friend again on a splendid presentation of the Government's case. My noble friend and I have crossed swords on the detail of this issue for many months. It would be remiss of me to bore the House with a repetition of the details set out in our debates at Second Reading and in Committee.
My noble friend has not justified the Government's proposal for hitting people who have a pension income of over £50 a week at the extraordinary rate of 50p in the pound. Nor has she persuaded me that this is not a case of disabled people who are poor being forced to pay for those who are very poor. That is not a philosophy I can accept.
My noble friend seemed proud of the number of people who will not be affected by the provision. But we are concerned with those who will be affected. That is the whole point of the debate. My noble friend spoke of people on "generous white-collar pensions". I visualised millionaires driving up by the million in Rolls-Royces to draw their incapacity benefit. But we are not concerned with millionaires. We are concerned with people on a pension of £50 or just above being robbed of 50p in every pound over that amount. This is an extraordinary proposal. One speaker in this splendid debate described it as bizarre. How true that is.
At the beginning of the debate I said that if the Government were unable to accept my reasoned, honourable amendments—despite the scorn poured on them by my noble friend, they are a genuine attempt to reach a compromise sooner rather than later and there must be a compromise at some time—I would not press Amendments Nos. 134 and 135 but would seek a Division on Amendment No. 136. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 135 not moved.]
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 136:
Leave out Clause 59
The noble Lord said: My Lords, I should like to test the opinion of the House on Amendment No. 136, which seeks to delete the clause.
7.43 p.m.
On Question, Whether the said amendment (No. 136) shall be agreed to?
Their Lordships divided: Contents, 198; Not-Contents, 90.

Division No. 4

CONTENTS

Ackner, L.

Fookes, B.

Addington, L.

Geddes, L.

Allenby of Megiddo, V.

Geraint, L.

Anelay of St. Johns, B.

Glanusk, L.

Ashley of Stoke, L.

Glenarthur, L.

Astor of Hever, L.

Glentoran, L

Attlee, E.

Goodhart, L.

Avebury, L.

Goschen, V.

Barker, B.

Gray, L.

Barnett, L.

Greenway, L.

Bathurst, E.

Hambro, L.

Bell, L.

Hamwee, B.

Berners, B.

Harding of Petherton, L.

Biddulph, L.

Harmsworth, L.

Blatch, B.

Harris of Greenwich, L.

Blease, L

Harris of Peckham, L.

Bowness, L.

Hayhoe, L.

Brabazon of Tara, L.

Henley, L.[Teller]

Bradford, Bp.

Higgins, L.

Bradshaw, L.

Hogg, B.

Brentford, V.

Holme of Cheltenham, L.

Bridgeman, V.

HolmPatrick, L.

Brookeborough, V.

Hooper, B.

Brougham and Vaux, L.

Inchyra, L.

Buccleuch and Queensberry, D.

James of Holland Park, B.

Buchan, E.

Jenkin of Roding, L.

Burnham, L.

Jenkins of Hillhead, L.

Buscombe, B.

Kintore, E.

Byford, B.

Knutsford, V.

Cadman, L.

Lane of Horsell, L.

Caithness, E.

Lawrence, L.

Campbell of Croy, L.

Leigh, L.

Carlile of Berriew, L.

Lester of Herne Hill, L.

Carnarvon, E.

Lindsey and Abingdon, E.

Carnegy of Lour, B.

Linklater of Butterstone, B.

Carnock, L.

Liverpool, E.

Carr of Hadley, L.

Lofthouse of Pontefract, L.

Cathcart, E.

Longford, E.

Clanwilliam, E.

Lucas of Chilworth, L.

Clark of Kempston, L.

Luke, L.

Clement - Jones, L.

Lyell, L.

Colwyn, L.

Mackay of Ardbrecknish, L.

Cox, B.

Mackay of Drumadoon, L.

Cranbrook, E.

McNair, L.

Crickhowell, L.

McNally, L.

Cross, V.

Maddock, B.

Darcy de Knayth, B.

Mancroft, L.

De L'Isle, V.

Mar and Kellie, E.

De Ramsey, L.

Marlesford, L.

Dean of Harptree, L.

Masham of Ilton, B.

Denbigh, E.

Mason of Barnsley, L.

Denham, L.

Mayhew of Twysden, L.

Devonport, V.

Methuen, L.

Dholakia, L.

Miller of Chilthorne Domer, B.

Dixon, L.

Miller of Hendon, B.

Dixon-Smith, L.

Monk Bretton, L.

Donegall, M.

Monro of Langholm, L.

Downshire, M.

Montgomery of Alamein, V.

Dunleath, L.

Montrose, D.

Eccles, V.

Morris, L.

Eden of Winton, L.

Morris of Manchester, L.

Ezra, L.

Mountevans, L.

Falkland, V.

Mowbray and Stourton, L.

Flather, B.

Moyne, L.

438

Moynihan, L.

Slim, V.

Munster, E.

Smith of Clifton, L.

Napier and Ettrick, L.

Soulsby of Swaffham Prior, L.

Nathan, L.

Stodart of Leaston, L.

Newby, L.

Stoddart of Swindon, L.

Newton of Braintree, L.

Strange, B.

Norrie, L.

Strathclyde, L.

Northbrook, L.

Swinfen, L.

Northesk, E.

Taverne, L.

Norton of Louth, L.

Taylor of Gryfe, L.

Ogmore, L.

Tebbit, L.

Onslow, E.

Tenby, V.

Orme, L.

Teviot, L.

Park of Monmouth, B.

Teynham, L.

Patten, L.

Thomas of Gresford, L.

Phillips of Sudbury, L.

Thomas of Gwydir, L.

Rathcavan, L.

Thomas of Walliswood, B.

Rawlings, B.

Thomson of Monifieth L.

Razzall, L.

Thurso, V.

Redesdale, L.

Tope, L.

Rennard, L

Tordoff, L.

Renton, L.

Torrington, V.

Rix, L.

Townshend, M.

Roberts of Conwy, L.

Trefgarne, L.

Rodgers of Quarry Bank, L.

Tryon, L.

Rotherwick, L.

Turner of Camden, B.

Rowallan, L.

Vivian, L.

Russell, E.[Teller]

Wallace of Saltaire, L.

St. John of Fawsley, L.

Watson of Richmond, L.

Seaford, L.

Waverley, V.

Seecombe, B.

Weatherill, L.

Selsdon, L.

Wilcox, B.

Sharp of Guildford, B.

Williams of Crosby, B.

Shaw of Northstead, L.

Wise, L.

Shore of Stepney, L.

Young, B.

NOT-CONTENTS

Acton, L.

Grantchester, L.

Ahmed, L.

Grenfell, L.

Alli, L.

Hacking, L.

Amos, B.

Hanworth, V.

Bach, L.

Hardy of Wath, L.

Bassam of Brighton, L.

Harris of Haringey, L.

Berkeley, L.

Haskel, L.

Blackstone, B.

Hayman, B.

Borrie, L.

Hilton of Eggardon, B.

Brett, L.

Hollis of Heigham, B.

Brooke of Alverthorpe, L.

Howie of Troon, L.

Brooks of Tremorfa, L.

Hoyle, L.

Burlison, L.

Hughes of Woodside, L.

Carter, L.[Teller]

Hunt of Kings Heath, L

Chandos, V.

Irvine of Lairg, L. (Lord

Christopher, L.

Chancellor)

Clarke of Hampstead, L.

Janner of Braunstone, L.

Clinton-Davis, L.

Jay of Paddington, B.(Lord

Cocks of Hartcliffe, L

Privy Seal)

Crawley, B.

Kennedy of The Shaws, B

David, B.

Kennet, L.

Davies of Coity, L.

King of West Bromwich, L.

Davies of Oldham, L.

Kirkhill, L.

Donoughue, L.

Lea of Crondall, L.

Dormand of Easington, L.

Lipsey, L.

Dubs, L.

Macdonald of Tradeston, L.

Eatwell, L.

McIntosh of Haringey, L.

Elder, L.

[Teller]

Evans of Watford, L.

Mackenzie of Framwellgate, L.

Falconer of Thoroton, L.

Merlyn-Rees, L.

Farrington of Ribbleton, B.

Milner of Leeds, L.

Faulkner of Worcester, L.

Molloy, L.

Filkin, L.

Monkswell, L.

Gilbert, L.

Montague of Oxford, L.

Gordon of Strathblane, L.

Nicol, B.

Goudie, B.

O'Neill of Bengarve, B.

Gould of Potternewton, B.

Pitkeathley, B.

Graham of Edmonton, L.

Ponsonby of Shulbrede, L.

439

Ramsay of Cartvale, B.

Smith of Gilmorehill, B.

Rea, L.

Strabolgi, L.

Rendell of Babergh, B.

Symons of Vernham Dean, B.

Richard, L.

Taylor of Blackburn, L.

Thornton, B.

Rogers of Riverside, L.

Warner, L.

Sawyer, L.

Warwick of Undercliffe, B.

Scotland of Asthal, B.

Whitty, L.

Simon, V.

Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.
7.54 p.m.
The Lord Chancellor: My Lords, in Division No. 2 this afternoon the number of votes was announced as follows: Contents, 164; Not-Contents, 185. It has been agreed by the Tellers that the figures should have been: Contents, 163; Not-Contents, 184.
Baroness Amos: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begin again not before 8.55 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Sudan
7.55 p.m.
Lord McNair Lord McNair rose to ask Her Majesty's Government whether they will reconsider their support for the American cruise missile attack on the AL Shifa pharmaceutical factory in the light of subsequent scientific and technical reports on the matter.
The noble Lord said: My Lords, it is now absolutely clear that the American cruise missile attack on the AL Shifa pharmaceutical factory in Khartoum, Sudan, was a disastrous misjudgment. As the House will be aware, Professor Thomas Tullius, Chairman of Boston University's Department of Chemistry, conducted detailed tests on the remains of the AL Shifa factory. The analysis, carried out in three accredited European laboratories, did not uncover a shred of evidence to support American claims that the AL Shifa factory was involved in the manufacture of chemical weapons.
Everyone, except for a few who cannot afford to face the truth, now accepts that AL Shifa was a factory producing a range of medicines. Even the American Defence Intelligence Agency, the Pentagon's own intelligence service, has admitted that the attack was a serious error of judgment. The attack was a foreign policy disaster which set the Islamic world against the United States and, by association, the United Kingdom. It was also a catastrophe for the Sudanese people because a factory that produced two-thirds of Sudan's medicines at an affordable price was destroyed and has not been replaced.
There is a curious inconsistency between the overall treatment of Sudan and the treatment accorded to Saddam Hussein and Iraq over the past 16 years. The
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House will remember that in 1998 the American and British Governments went to war against the Iraqi state in order to force Iraq to open its factories for chemical weapons investigations. Yet both governments had, a few months earlier, pointedly refused repeated Sudanese requests that they examine a factory on the outskirts of Khartoum which the Americans alleged to have been involved in the production of chemical weapons. In fact, Iraq was listed, de-listed and re-listed according to the prevailing political climate.
President Clinton attacked and destroyed the AL Shifa medicines factory on the false assumption that it was owned by Osama bin-Laden. Osama bin-Laden is the conduit through whom the Americans poured millions of dollars in military assistance, equipment and training to the mujaheddin in order to remove the Soviet-backed government in Afghanistan. Not for the first time, such a person bit the hand that fed him. He turned against the Americans and is now the sworn enemy of the United States. The Taliban now rule Afghanistan as a direct result of American policies.
The Prime Minister's hasty and unwise support for President Clinton's attempt to divert media attention from his domestic affairs damaged Britain's standing abroad no less than the bombing damaged America's. The most important lesson from AL Shifa is the danger of labelling countries as state sponsors of terrorism on the basis of political rather than factual logic.
So how did this occur? I suggest that the American Administration's foreign policy establishment began to believe its own propaganda and also the erroneous information that it had been given by people who are in opposition to the present government in the Sudan. Naturally, it is one of the ways that people in opposition can press their point.
One problem with this is that it tends to underline the political nature of the listing and un-listing of countries. It also tends to undermine international efforts to combat the real terrorists.
When the Clinton Administration listed Sudan in 1993, no less a figure than former President Jimmy Carter asked to see the evidence behind the listing. These are former President Carter's own words:
"In fact, when I later asked an assistant Secretary of State, he said that they did not have any proof but there were strong allegations".
So Sudan was listed as a state sponsor of international terrorism without any proof. In particular, the US Government have been unable to point to a single act of international terrorism sponsored by Sudan. Instead, they fall back on allegations of "passive support".
These allegations of "passive support" for international terrorism by Sudan apparently consisted of turning a blind eye and allowing members of several Islamic groupings to reside in Khartoum. On that basis the UK should have been so listed long ago. Not only do the British authorities allow thousands of foreign "extremists" to live in and agitate from London—many are in receipt of state benefits—but the Governments of Algeria, France, Egypt, Israel and

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Saudi Arabia, among others, have all complained about terrorist acts being planned by foreign radicals in Britain. The recent Yemen affair could be cited as an example.
We should remember that it was Sudan that extradited Carlos the Jackal to France and, at the request of the American Government, expelled Osama bin-Laden in 1995, while at the same time prophetically warning that in doing so it would be difficult for the Sudanese and Americans to keep tabs on him. One year later bin-Laden began his attacks on American personnel.
There have been many allegations that within the borders of Sudan there are terrorist training camps. The question to be asked is: if these terrorist training camps exist why were the Tomahawk missiles not aimed at these as they were in Afghanistan? Why else would the Americans attack the Al Shifa factory in the suburbs of Khartoum, where, if the allegations were correct, tens of thousands of people might have died or been crippled permanently, rather than the terrorist training camps?
The American Government quickly realised that the factory had no connection with bin-Laden. They were candid enough to admit that for one whole week after the attack on Al Shifa they did not know who was the owner of the factory. The world's press quickly ascertained that the factory was owned by Mr Salah Idris, a Saudi Arabian businessman of Sudanese origin. The Clinton Administration were unwilling to admit that they had made a mistake in associating the ownership of the factory with Osama bin-Laden. President Clinton then hurriedly invoked American anti-terrorist legislation, listed Mr Idris as a terrorist and froze 24 million dollars of his assets in accounts with the Bank of America. Washington also banned him from entering the United States. Fortunately for Mr Idris, he had the resources to challenge this listing in a federal court in the United States. In May of this year eight months after the freezing of his assets, the United States Government chose not to defend the action and released his funds. Most American newspapers saw this as an admission of error on the part of the Government.
The Minister may recall that some months before this court case I asked whether Her Majesty's Government had at any stage decided to regard Mr Idris as a terrorist or supporter of terrorism and, therefore, whether he would be excluded from the United Kingdom, mirroring the American measures. The answer was no. If the Government of the United Kingdom were so convinced by the American case in respect of the use and purpose of the factory why did they not follow the American line in respect of Mr Idris?
One of the unexpected by-products of the American attack on the AL Shifa medicines factory was a surge of in-depth investigative journalism into the issue of Sudan and terrorism by American newspapers and periodicals such as the New York Times and New Yorker. On 21st September 1998 the New York Times called into question the US State Department's claims
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of Sudanese involvement in international terrorism. The article revealed that two years before the AL Shifa debacle the American Central Intelligence Agency had found itself obliged to withdraw over 100 intelligence reports alleging Sudanese involvement in terrorism because it realised that they had been either fabricated or were simply wildly inaccurate.
The bombing of the American embassies in east Africa occurred several days before the attack on the Al Shifa medicines factory. It is a matter of record that the Government of the Sudan were among the first to condemn the terrorist bombings in Nairobi and Dar-es-Salaam, and Khartoum granted unlimited and unconditional overflight permission for American aeroplanes to evacuate those injured by the explosions. The day after the embassy bombings two men entered the Sudan travelling on forged Pakistani passports. They attempted to rent a flat overlooking the American Embassy in Khartoum. At this point the Sudanese authorities arrested them, notified the US State Department that they were in custody and offered to hand them over to the US justice system.
According to recent American media reports, the US Government, for reasons best known to themselves, preferred to ignore the possibility that the Sudanese had apprehended two of the embassy bombers, and a few days later Tomahawk missiles destroyed the Al Shifa factory. Sudanese government officials, despairing of American co-operation, deported the two suspects to Pakistan where they promptly disappeared. In August of this year the American media reported that the Clinton Administration's decision not to take into custody two possible bombers of the American embassies was being investigated by committees of both the House of Representatives and the Senate.
Since, yesterday, the noble Baroness, Lady Cox, referred to allegations by Norwegian Peoples Aid, which I regard as a thoroughly discredited organisation, that the Government of Sudan used chemical weapons in a bombing raid on 23rd July and since the Minister seems to be unaware that, according to the Guardian of Friday 6th August,
"UN inspectors were heading for two towns in Western Equatorial province",
I should like to ask—I have given the noble Baroness rather late notice of this question—what has been the result of that investigation.
In addition, Africa Confidential, which is no friend of the Government of Sudan, reported on 27th August that,
"The UN and NPA sent teams to investigate. Then silence fell".
Can the Minister enlighten the House about the reasons for that silence?
8.6 p.m.
The Lord Bishop of Bradford: My Lords. your Lordships' House has considered the subject of Sudan a number of times over the past few years, and I believe that is right. It is a vast country with vast problems and suffering and is easily forgotten. Therefore, I welcome

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the debate initiated by the noble Lord today. I hope that the noble Lord will forgive me if I say I do not think that we should concentrate on Al Shifa and the missile attack. That is now history. I do not believe that we shall get very far by raking over the ashes of that particular incident.
The life of Sudan is daily one of claims of atrocity and counter-claims, with blame going to and fro. I believe that for two significant reasons the time has now come to move forward and not rake over the past. First, as the Minister told us yesterday, in September the Foreign Secretary and Dr Mustapha Osman Ismail, Sudan's Minister for External Affairs, met. As a result, full diplomatic relations are to be restored. I believe that that gives Her Majesty's Government a real opening to stress again the need for peace in Sudan and to work for peace with justice.
Every time I go to Sudan and meet Sudanese who live in Uganda and Kenya they do not pray for victory in a military sense but for peace so that their lives may be restored. With the exchange of ambassadors I hope that the Minister will assure us that every effort will be made to support the IGAD process and to take any other measures which are open to Her Majesty's Government to promote peace in Sudan.
The second reason is the development of the oil industry in Sudan which could be a blessing or curse. Fighting goes on. There have been explosions at Atbara and Kasala and stories that the government are to buy 50 tanks with part of the oil revenue. The increase in oil revenue provides an incredible opportunity for the Government of Sudan, encouraged and supported by Her Majesty's Government, to address homelessness, hunger, poverty, disease and the needs of education in their own country and to receive international approval for doing just that. It is essential that there are people in a position to encourage the Government of Sudan not to spend the money on weapons but in that other way. People who know the country well tell us that it is most unlikely that a military victory would ever be possible. If the revenue is spent and if those in the rebel parties continue the war ad infinitum, it will not lead to victory but to increased suffering for ordinary, innocent people who have suffered far too much already.
I hope that Her Majesty's Government, with these new links, and based upon the development of the oil revenue, will exercise a diplomatic and sensitive and supportive role in inviting the Government of Sudan and the dissidents to talk seriously, as a matter of integrity, so that the country may find peace.
In this process I believe that Christians and Muslims have a significant role to play. I resist the idea that this is in every respect a conflict between the two great faiths. There are many devout Christians in Sudan and many devout Muslims. Dr Mustapha Osman Ismail, who I know personally, is one such. Here is an opportunity for people of these two great historic religions to prove that religion can heal and reconcile and not just divide and persecute. It will not be easy because there is deep bitterness and suffering, but already modest but significant steps are taking place.
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Groups of Muslim and Christian women, who have been brought up to regard each other with suspicion, if not distaste and hatred, are meeting together as mothers to ask what it means to have their sons in the war. They are beginning to meet as human beings and to listen to each other, which is crucial.
In the Christian context the recent agreement at Wunlit between the Nuer and the Dinka, who have a history of violence, hatred and killing, is one more building block in this new building of peace in Sudan.
If the Minister was in any way responsible for this, I thank her warmly, but yesterday at Question Time I drew her attention to the intention of the Government of Sudan to evict the Episcopal Church at Omburman from its headquarters, and today I received a message relayed by the Sudanese Embassy from Dr Mustapha Osman Ismail saying that this will not happen.
These are small things, straws in the wind, but I would argue that the time has now come to take those straws and to build for peace. Active and sustained involvement by Her Majesty's Government is greatly to be desired. I can assure the Minister that the churches, and I believe devout Muslims, will play their part.
8.12 p.m.
Baroness Cox: My Lords, I regret that I must follow the right reverend Prelate's contribution, which was so optimistic, with a more disturbing analysis. Given the Question before us, I will focus on three issues: first, the bombing of the Al Shifa factory; secondly, reports of the import and manufacture of chemical weapons by the National Islamic Front (NIF) regime—I cannot call it the government because it forcibly replaced the elected government and has no legitimacy—and, thirdly, continuing violations of the ceasefire by the NIF, including allegations of the use of chemical weapons.
The Al Shifa pharmaceutical factory is inherently capable of manufacturing chemicals which can be used for chemical weapons. Usage of facilities can be changed overnight. As far as I know, there has been no investigation by the Organisation for the Prevention of Chemical Warfare. However, there are convincing reports that there are other facilities in Khartoum and elsewhere in Sudan which are used for the manufacture of weapons of mass destruction. At least one of those is in a residential area and, if that had been bombed, there would have been many civilian casualties.
For further evidence, I refer to the film shown on Channel 5 in October 1998 called Exporting Evil—Saddam's Hidden Weapons which gives chilling accounts of the export of weapons of mass destruction and the personnel and means for manufacturing them from Iraq to Sudan. Among those giving evidence is a senior UNSCOM inspector, whose testimony cannot be lightly dismissed. Obviously, the NIF regime's supporters did not like that film and complained to the ITC. The film's producer, Damien Lewis, answered all the criticisms. The complaint was dismissed; the report stands, and the claims that Sudan is making chemical weapons must be taken seriously.

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Even more serious are the reports that the NIF has used chemical weapons against its own people. During recent visits to different parts of Sudan, I have been given repeated accounts of the use of unconventional munitions by NIF forces in southern Blue Nile and the Nuba Mountains. Descriptions of the shells and of the aftermath are always consistent: the shells emit smoky gas which cause symptoms of eye and skin irritation, followed by intense vomiting and bleeding. Some victims die, others survive. Experts claim that the symptoms are entirely compatible with poisoning by arsenical compounds such as Lewisite. Water in some craters is a deep crimson viscous fluid, unlike any liquid seen in conventional high explosive craters. I am placing a photograph in the Library. Vegetation subsequently changes colour and atrophies.
Then, on 21st, 22nd and 23rd July, the NIF dropped 16 bombs in Lianya in southern Sudan. Descriptions of the after-effects are identical to those of the other incidents. But on this occasion UN relief workers were hospitalised and local people suffered. The United Nations sent in an investigative team, including a Canadian chemical weapons expert. Surprisingly, it was recalled just before arriving on location. There are also reports of an as yet unidentified team who arrived at the site very shortly after the bombings, and who effected what appears to have been such a thorough clean-up job that by the time subsequent investigators arrived there was not a single metal fragment to be found.
This abandonment of any full and publicly accountable investigation has left local people terrified and aid organisations deeply concerned. Equally worrying is the message to the NIF; that it can use these unconventional weapons with impunity.
However, we have facilitated an independent investigation. Samples have been collected and we are presently seeking full co-operation of the government in analysing one set of these samples. Others are being analysed elsewhere.
There is enough evidence to demonstrate that the NIF's record of brutality is as savage as any in the world today. As recently as 1st June I was in the oil-rich areas of western Upper Nile and witnessed the attempted ethnic cleansing of the local civilians to clear the land for oil exploitation. NIF Antonov bombers and helicopter gunships had bombed and terrorised them; then massive forces had swept through the region, killing scores of people, destroying 6,000 homes, seven churches, three clinics, and burning all the crops. We have the evidence in photographic and video form.
Therefore, in response to the noble Lord's Question, I hope that the Government will not in any way disassociate themselves from the United States' robust response to the murder of hundreds of people in the bombings of its embassies in Nairobi and Dar-EsSalaam. It is generally acknowledged that Sudan was implicated in those bombings, and the noble Lord, Lord McNair, seems strangely unconcerned about the victims of those bombings. Furthermore, his concern
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pales into relative insignificance, given the cumulative evidence of the likely use of chemical weapons by the NIF.
Therefore, will the Minister give an assurance that the Government will not in any way lessen their pressure on the NIF to desist from massacres or ethnic cleansing of tens of thousands of civilians from their lands in Bahr-el-Ghazal, the Nuba Mountains, the Moslem Beja territories of eastern Sudan and the oilfields in western Upper Nile.
The bombing of the Al Shifa factory was a response to the bombings of the United States' embassies with all the attendant death and suffering caused by those bombings. But it is not only the bombing of those embassies which needs to be taken into account. It is well known that Sudan harbours and trains international terrorists who are responsible for such acts of violence. Many are now involved in fighting in Chechnya and Dagestan and terrorist activities elsewhere in Russia.
Lord McNair: My Lords, I wonder if—
Baroness Cox: My Lords, I am sorry, it is a timed debate and I cannot give way.
And the evidence suggests that not since Iraq gassed its own people has a regime so systematically used chemical weapons against its own people. Now, as then, the West looks the other way. So I hope that this Government, committed to an ethical, human rights based foreign policy, which I respect, will stop looking the other way and support the United States in more sanctions until this brutal regime stops murdering its own people and spreading terror and destruction far beyond its own borders.
8.20 p.m.
Lord Kennet: My Lords, the House should be grateful to the noble Lord, Lord McNair, for having raised the question of Sudan at this moment when it was perhaps fading a bit out of sight. I, for one, learned a great deal from what said and also from what the right reverend Prelate said about the Christians and Muslims and everybody else in Sudan.
The Minister may find it difficult to sum up in a way that will encompass the contributions made by the noble Lord, Lord McNair, and the noble Baroness, Lady Cox. The noble Baroness, Lady Cox. has the advantage of having been in the Sudan, which I never have, and so I must defer to her up to a point. But I firmly reject her global picture of relations between Sudan and the United States, and Sudan and this country.
I want to tell a particular story. An interview on the Al Shifa bombing was given by a Sudanese opposition politician to a Jordanian journalist only a few days after the bombing. The Sudanese said that he had given what later turned out to be false information—that the Al Shifa plant was producing chemical weapons—only because to do so was "disobliging to the [Sudanese] Government" (which was his aim)

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Soon after the CIA and the DIA withdrew a sheaf of reports that they had previously issued about Sudan on the grounds that they were not reliable. I think that we may assume that much of the information must have come from the Sudanese businessman, whose name is missing from my records, for which I apologise. Our friends in Washington, the American Government, are by now pretty shamefaced and apologetic that this country should have been linked with the episode, and that we should have received threats on account of our support. Next time I hope that Her Majesty's Government will check, double check and triple check DIA and CIA-based information, whether it comes directly at intelligence level or through the President himself.
It is still the case that the CIA Kids' Page on the Internet tells the world that in this country we have no elections, and that it is the Queen who appoints the Prime Minister. While I know that in a certain sense it is the Queen who appoints the Prime Minister, I have always piously believed that the role of Parliament was considerable in such choices. The purpose of the CIA Kids' Page is long-term recruiting. It used to say that this country had obtained its independence in 1801. I have often wondered from whom, but the CIA text had nothing to say on that point. That story has at least now been changed.
My final point is about the Summary of World Broadcasts (SWB). It is linked administratively—but only administratively—with the BBC Overseas Service. They share the building. SWB works in the opposite direction. It feeds information into this country from every other country in the world by monitoring public broadcasting and television and putting out each day a sheaf of papers up to about 90 pages thick. This service is free to Members of both Houses of Parliament. It costs many tens of pounds each day to everyone else. It is an extraordinary privilege that we receive it free. It is without exception the finest sustained day to day report of what is being said on the airwaves of the world.
A few years ago—I should like to ask the Minister what is happening now—every morning the SWB was pushed over to the Research Department of the Foreign Office. This had a bad effect. The people who needed it were the frontline departments. They were in action diplomatically every day; but they did not receive it. I hope that the situation has now changed. I do not press the noble Baroness for an answer today. But it would be good to know that that priceless resource is available to the people in this country who most need it; namely, the working diplomats in the Foreign Office and elsewhere.
8.25 p.m.
Viscount Brentford: My Lords, I am grateful to the noble Lord, Lord McNair, for raising this Question. I shall be interested to know whether the Minister has any firm information on whether the factory made chemicals for warfare as well as pharmaceuticals or whether it is a US mistake, as was the bombing of the
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Chinese Embassy in the Balkans. I shall be grateful if the noble Baroness can also say whether a claim for damages by the factory owner against the US Government has been filed; and, if so, whether it has been accepted or rejected or whether this claim is still under negotiation or in the court. I shall ask the Minister a number of questions. I, too, shall be happy for the noble Baroness to write in response to any which she does not answer today.
At col. 210 of the Official Report yesterday, the noble Baroness referred to the July bombing by the Sudanese Government; and to allegations of use by the Government of Sudan forces of chemical weapons. It is obviously impossible to know whether or not these had been made in the Al Shifa factory. We probably do not know for certain whether the allegation is true. If the Sudan Government signed the Chemical Weapons Convention on 25th May, as the Minister informed us yesterday, why has not the Organisation for the Prohibition of Chemical Weapons investigated the results of the July bombing, which was two months after Sudan signed the convention? Surely such investigations have to be carried out immediately. My noble friend Lady Cox talked about subsequent investigations after evidence had been removed.
I refer also to the three UN World Food Programme aid workers who were allegedly caught up in the aftermath of the attack and hospitalised in Nairobi. Can the Minister tell us whether that is correct? Were their injuries consistent with having suffered from chemical weapons?
My noble friend talked about a team—I believe also from the UN World Food Programme—going to investigate but being recalled, perhaps for their protection. I have also heard that they collected blood samples from the area before they left. Can the noble Baroness tell us what reports were made both on the three WFP workers and on the blood samples? Have there been any subsequent allegations of use of chemical weapons in Sudan? None has come to me. I wonder whether the Government are aware of any.
Has the OPCW started working in Sudan? Is it ready to do so if any allegation of chemical warfare arises? Is it ready to move swiftly? Where is the local team based? How long would it take to get to any spot in the Sudan if allegations are made again?
What we need is authoritative and factual information on whether the Sudanese Government are using chemical weapons. I believe that that is important. We hear about allegations. It would be helpful to have from the Minister the up-to-date position on whether we have absolute proof.
Finally, I have seen allegations that chemical weapons are being manufactured in El Obeid in Sudan and that another factory for constructing chemical weapons is being built in Katdugli. Can the Minister assure the House that if there is any backing to these allegations the OPCW will investigate that and any other such allegations? It is encouraging that Sudan has signed the convention. It is right that the UN should take action as a result when allegations are made. As I have already said, we need to know the facts.
8.30 p.m.
Lord Ahmed: My Lords, I am grateful to the noble Lord. Lord McNair, for raising this Question in your Lordships' House and enabling us to debate the important issues related to international law and unilateral action taken by the United States.
The United Nations Charter prohibits the use of force by one state against another except for action taken collectively with the authority of the Security Council under Article 42 or, in the exercise of self-defence, under Article 51 when an armed attack occurs on a member state. There are conditions attached to this latter part. The circumstances must be such that if the Security Council had had the time it would have taken measures broadly in line with those taken by the state claiming to act in self-defence.
The American Government's cruise missile attack on one of the poorest countries in the world had no mandate from the United Nations Security Council. Nor was it attacked by Sudan. The principle of a super power taking unilateral action against a poor African nation without any warning, based solely on unreliable intelligence sources, about which we have heard tonight, could only result in such a violation of international law and foreign policy blunder.
The noble Lord, Lord McNair, pointed out that even former President Jimmy Carter said that US State Department officials admit that there was no evidence, only strong allegations of Sudan being involved in state sponsored international terrorism. That point was explained by the noble Lord.
In January samples from Al Shifa were tested by laboratories including TND Prins Maurits in The Hague, one of the top dozen laboratories in the world for chemical weapons testing, using the two most advanced techniques in the world. They found no evidence that the Al Shifa pharmaceutical plant was producing any chemicals other than medicines desperately needed by the poor people of Sudan.
Immediately after the missile attack, the US national security adviser, Samuel Berger, claimed that the Al Shifa (Arabic for "the cure") was part of the Sudanese military industrial complex, that it was heavily guarded, that it produced no medicines, and that its ownership trail led to Osama bin Laden.
Within 24 hours of the attack the German ambassador in Khartoum, Werner Daum, confirmed that it was not a heavily guarded installation, although a power plant a quarter of a mile away was. Al Shifa did indeed produce large amounts of medicines, some under contract to the United Nations. Independent investigators from Kroll Associates in London concluded that the plant was certainly not part of the Sudanese military industrial complex.
Finally, the owner of the factory was a private citizen, as has been mentioned previously. He is a Saudi businessman, Mr. Salah Idris, who has never had any connection with Osama bin Laden.
Since last year over 1,100 missiles have been launched against 298 targets in Iraq because Saddam Hussein refuses to allow the UN inspectors to inspect
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the alleged chemical factories. Repeatedly, Sudan has asked the United Nations and the international community to visit the country and investigate. The Americans declined the invitation because they would have had to admit that they have made a mistake and pay compensation to Mr Idris for the destruction of his factory. They would have had to apologise to the family of a worker who was killed and 12 others who were injured in the attack.
President Clinton has apologised repeatedly to China for wrongly bombing the Chinese embassy in Belgrade. Why not apologise to Sudan? Clearly, it is a case of "might is right". President Clinton has also apologised to Guatemala, another victim of American foreign policy. He has apologised to the Africans for the transatlantic slave trade. He apologised on almost a daily basis for the unfortunate Monica Lewinsky affair. It is time now for the American President to apologise to the people of Sudan and embark on a new chapter in America's relations with the Islamic world.
I am aware that a few Members of the House have already spoken. They speak regularly in debates about Sudan. Yesterday the noble Baroness, Lady Cox, displayed photographs of alleged bombing by the government in the south and the alleged use of chemical weapons which are difficult to detect on photographs even in the Library.
Early this year Sudan signed the UN chemical weapons convention and yesterday the Minister pointed out that it is up to the international community to determine the truth of the allegations. Perhaps I may recognise some positive steps taken by the Sudanese Government. There is the protection of human rights through a new constitution; freedom of association leading to multi-party elections; freedom of the press; the offer of a UN-monitored referendum on self-determination for the south and a new national security Act which demands accountability from the police and the security forces to Parliament.
On 5th August a comprehensive and unilateral cease-fire was announced by the Sudanese Government. Yesterday it was extended for a further three months. I call upon the supporters of the SPLA to do the same and bring peace and prosperity to this nation.
8.36 p.m.
Lord Moynihan: My Lords, I would also like to thank the noble Lord, Lord McNair, for securing this debate. The facts of what took place on 20th August last year, when the United States launched a cruise missile attack on the Al Shifa plant in Khartoum, are well known. But like my noble friend Lady Cox, I believe that it is important for your Lordships to recall the context of the attack on the Al Shifa plant. More than 100 innocent victims were killed in Africa as a result of a savage and senseless act of terrorism, the sole purpose of which was to kill and injure ordinary people going about their daily business. From these Benches we remember those who died, and we offer our sympathy to their families who will suffer the loss of their loved ones for the rest of their lives.

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I would like to take this opportunity to condemn absolutely all acts of terrorism. From these Benches we will always give our support to the Government to ensure that terrorism is fought in all its forms wherever it may occur, whenever it may occur and whatever its motivation.
Indeed, because of this, we echoed the support that the Government gave to the United States Government for their attack in August of last year. The US Administration maintained that they were taking action against international terrorism and further asserted that they had compelling evidence that the plant was being used for the production of chemical weapons materials and was associated with Osama bin Laden's terrorist network, the man responsible for the embassy bombings.
Furnished with this information from one of our key allies, we believe that the Prime Minister acted rightly to support the United States in this strike against international terrorism. Yet although the context in which this act of retaliation took place is clearly of critical importance in this House, we are all agreed that vengeance for the lives of the innocent wreaked upon the innocent would be pyrrhic indeed.
Since the attack over a year ago questions have been repeatedly asked about the true purpose of the factory. Did it manufacture chemical weapons or did it manufacture pharmaceuticals? The owner of the factory, Salah Idris, has since drafted a law suit, as we have heard this evening, seeking compensation for the loss of his factory. For the past year the Government have reiterated their willingness to rely on the statement of the United States Administration that it had compelling evidence for its action.
However, the American case appears to rely on the analysis of a single soil sample, although contradictory evidence has since come to light concerning both the chemical analysis and the origin of the sample. This evidence has been repeatedly reported in the American press. Indeed, less than two months ago the Washington Post reported that CIA analysts had produced a three-page document in July 1998 which raised questions about the conclusions which could safely be drawn from the soil sample. The Minister will also be aware of the opinions of eminent figures such as Professor Williams from Oxford University who have expressed doubts.
Much of that evidence, which appears to contradict the US position, may possibly be hearsay and gossip concocted by the press and based only on partial facts. But given the speculation and the questions raised over the use of the facility in the aftermath of the attack, questions which have simply not gone away, I hope that the Minister will agree that it is important that the Government are able to substantiate the US Government's position from independent sources.
From these Benches, we naturally would not expect the Minister to go into details of intergovernmental communications and intelligence reports. However, I should like an assurance from the Minister this evening that the Government are satisfied that the soil
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sample is genuine, that the work done on it was properly conducted and that the evidence upon which the action was taken was conclusive.
As the noble Lord, Lord Ahmed, has just mentioned, simply taking the word of the American Administration is now not enough. It cannot be forgotten that the tragic error which led NATO to target the Chinese Embassy in Belgrade in May during the air campaign against Serbia demonstrated that the intelligence assets and technology of the United States are not infallible. I should therefore be grateful if the Minister would tell us whether she is in a position to confirm independently the belief of the US Government that the Al Shifa factory site in Khartoum was indeed a chemical factory, capable of producing the deadly V series of chemical weapons, and not a pharmaceutical plant, as claimed by the Sudanese Government.
Can the Minister also say whether any official or Minister at the Foreign Office has met the engineer who set up the factory, as they were invited to do during the debate in another place in March, and what conclusions they have reached as to the factory's capabilities as a result of such a meeting?
Furthermore, will the Minister tell the House what reply the Government have given to the invitation from the Sudanese Government for a United Kingdom verification mission to examine the Al Shifa factory site or for a UN weapons inspections of the site, and what steps they have taken to make it clear to the Government of Sudan that the way to achieve an examination of the Al Shifa site is for Sudan to become a party to the Chemical Weapons Convention?
I look forward to the Minister's response to the important questions which have been raised this evening. I hope that the right reverend Prelate will forgive me for I cannot agree with him that this chapter is completely closed for the reasons and questions which I have just raised. However, I totally agree with him that we need to focus on Sudan in the border context. I was grateful for his comments in that regard. Last year the Select Committee on International Development recognised and recommended that the Government should urge the United Nations to broker a peace agreement in Sudan and the surrounding region to end conflict, not only in Sudan but also in neighbouring countries such as north Uganda, and that such an initiative should,
"crucially, involve the United States of America".
From these Benches, we believe that the role of the United States will be key to making significant progress in Sudan. There is some hope on that front. Earlier this year, the US Administration appointed a special envoy to Sudan in order to draw attention to the humanitarian crisis there, to shine the spotlight on Sudan's egregious human rights record, to marshal greater international awareness and concern for those issues and to reinforce US support for the IGAD peace process. I hope, now that our embassy in Khartoum is once more fully operational after a period of 11 months, that we shall be able to continue to urge progress in that direction.

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For our part, we shall support the Government while they continue to make the search for a peaceful solution in war-ravaged Sudan one of their highest foreign policy priorities.
8.45 p.m.
Baroness Scotland of Asthal: My Lords, the debate this evening has covered a wide range of difficult issues and the participation of noble Lords from all sides of the House is a demonstration of the depth of the interest this country has in the Sudan. The links between the people of the United Kingdom and the Sudanese are historic and remain strong. The continuing terrible suffering of the Sudanese people as a result of war is rightly felt strongly. I therefore welcome the opportunity to speak about this Government's policy towards the Sudan. I also commend the noble Lord, Lord McNair, for initiating the debate. He asked a very specific question and I should like to address that first before putting it into a wider context.
As the Prime Minister has said on many occasions, he gave his support to the US action against the Al Shifa factory last August as action against international terrorists. The US told us at the time of the strike on the Al Shifa factory that it had compelling evidence that the plant was being used for the production of chemical weapons materials. As noble Lords are well aware, and as the noble Lord, Lord Moynihan, has kindly indicated, I cannot go into the details of the intelligence reports and confidential intergovernmental communications. Those are covered by the code of practice on Access to Government Information.
In response to the noble Lord's question, I can say that I have been assured that in accordance with usual practice, there was evidence upon which Her Majesty's Government could act. Noble Lords are also well aware of this Government's determination to fight terrorism wherever it occurs, and whatever its motivation. The UK more than many countries in the world has experienced the horrors of terrorism at first hand. Terrorists must realise that they cannot act with impunity and that we shall do all we can to prevent further atrocities.
As we have said to the Sudanese Government on many occasions, the way to clear their name on the whole issue of chemical weapons manufacture was to become a party to the Chemical Weapons Conventions. As noble Lords are aware, the convention prohibits the acquisition, development, production, stockpiling and use of chemical weapons. It is supported by a verification regime consisting of data declaration and on-site inspections.
The OPCW can investigate only when asked to do so through the EU. We have urged the Government of Sudan to invite such an investigation. Her Majesty's Government promptly welcomed the news in May this year that the Sudanese Government had indeed signed the convention. That opens the way for Sudan to submit its declarations on its chemical sites to the Organisation for the Prohibition of Chemical
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Weapons and for the consideration of inspections by that organisation. That will also allow chemical weapons allegations to be looked at by the appropriate expert body.
I suggest that further issues in relation to the Al Shifa factory are really a matter for the Sudanese and US Governments. There have been claims made, as I understand it, by the owner of Al Shifa in relation to the US, and those matters are being dealt with between those two parties. Noble Lords will of course be aware of the recent developments in UK-Sudan relations, and we have had mention of them tonight. Following the events of last August about which we have been talking, the Sudanese Government withdrew their top two diplomats from London and demanded that we withdraw our ambassador and his deputy from Khartoum. Sadly, this made it impossible for us to maintain an embassy in the Sudan and we were forced to withdraw temporarily all our British staff.
In the following months we maintained regular contact with the Sudanese authorities both in London and in Khartoum. Discussions covered a whole range of issues, including the US attack on Al Shifa and comments made by Her Majesty's Government. Those talks led, as your Lordships are now aware, to a visit by Dr Hassan Abdin, Under-Secretary at the Sudanese Ministry of External Relations, to London in June when we agreed that the constructive way forward was to look to the future and to turn a new page. As your Lordships are also now aware, my right honourable friend the Foreign Secretary then met his Sudanese opposite number, Dr Mustafa Osman Ismail, in New York last month. Again the discussions focused clearly on the future; on normalising relations by re turning ambassadors to capitals in the near future; and on areas of concern to both our Governments in the coming months.
That is the position today of both our Governments and so I should like to take this opportunity to speak about what the future now holds, a subject many noble Lords have also looked to. I entirely agree with the sentiments so elegantly expressed by the right reverend Prelate, that what matters now most to the people of Sudan is an end to the terrible suffering caused by civil war. Only when peace is established will the Sudanese be able to rebuild their lives which have been torn apart by a war that has gone on for some 40 years with only one significant break. That is why Her Majesty's Government have given peace in the Sudan a new priority and that is why one of the key areas of work for our re-established embassy in Khartoum will be peace work—a task we can only perform usefully if on the ground.
We have been active supporters of the Inter-Governmental Authority on Development—IGAD—peace process. That process is the one to which the two main parties to the conflict—the Government of Sudan and the SPLA—have agreed, and through which an initial agreement on the form of a settlement—the Declaration of Principles—was agreed. It is a regional organisation dealing with a regional conflict. We are well aware of some of the limitations of this process and the slow progress it has

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made recently. We have, therefore, with other donors, helped to establish a permanent secretariat in Nairobi which will allow for an accelerated and sustained negotiation. We shall be working closely with the IGAD special envoy, Daniel Mboya, and all the parties to try to push the process forward.
In July 1988 the late Derek Fatchett, then Minister responsible for Sudan, visited Nairobi and Khartoum to discuss the possibility of securing a break in the fighting in the areas most affected by the humanitarian crisis. As a result of his visit, both the Government of Sudan and the Sudan People's Liberation Army announced an initial three-month ceasefire in Bahr al Ghazal. That has been extended ever since.
When my right honourable friend the Secretary of State recently met his counterpart, Mustafa Osman, in New York, he stressed again the importance the UK attaches to an extension of the ceasefire and the role it plays in alleviating the humanitarian situation in southern Sudan, and in the search for peace.
My right honourable friend further encouraged this extension by writing to the Government of Sudan and the SPLA. Yesterday the Government of Sudan, in part response to the UK request, announced an extension to the current ceasefire. I understand that the SPLA is also going to announce an extension and I look forward to confirmation of that. I hope that the ceasefire will give confidence to the two parties to pursue broader peace negotiations within the IGAD framework.
Her Majesty's Government see the focus of peace efforts as being within IGAD, but we shall also be promoting the cause in other fora, not least in the European Union and in the United Nations. As many of your Lordships are aware, the work of civil society is also key to promoting peace and we also hope to maintain close working links with those, such as the churches, who are active in that field.
Peace in the Sudan will be the main theme of our future policy. But, as we have heard tonight, there are other issues of importance in our relationships with the Sudan about which we shall also be in dialogue with the Sudanese, not least human rights, cultural ties and commercial ties. In our efforts to alleviate the humanitarian situation, the UK is one of the largest bilateral donors. We have committed over £180 million to Sudan and the Sudanese refugees through Operation Lifeline Sudan since 1991, £28 million in 1998 as a result of the famine, and £9 million in 1999 so far. We shall continue to assess the needs.
The Government look to the future, as the right reverend Prelate exhorted us to do. Our aim and our major concern is how to improve people's lives—in this case, the lives of the people of Sudan. There is a forum to address chemical weapons concerns—the OPCW—and there are fora in which to promote peace and reconciliation. I take this opportunity to commend the work that several noble Lords have done to improve the lives of the Sudanese. I can assure your Lordships that they remain a priority for this Government also.
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I turn briefly to a few of the matters that have been raised. I turn first to the points raised by the noble Viscount, Lord Brentford. We understand that three foreign aid workers were hospitalised in Nairobi. One was British and came to the UK for treatment. None of the three has released details of their illnesses to us. The British worker is back at work in the Sudan and we have no information about the whereabouts of the others. To date we have no definitive evidence which would justify the assertion that chemical weapons have been used.
In relation to the chemical attack on 23rd July referred to by the noble Lord, Lord McNair, we understand that the UN sent two medical teams to the area where attacks were alleged. There has been no conclusive report in relation to that matter either. None has been released by an authoritative and neutral body. As I have already said, the Sudan has signed and ratified the CWC, which provides for the authoritative mechanism through the OPCW to investigate allegations of chemical attack. Through the EU we have urged and continue to urge the Sudanese Government to use that mechanism for the purpose for which it was intended.
I am grateful too for the comments made by the Loyal Opposition. To close, I would commend to your Lordships the words of the right reverend Prelate—that we are looking for peace. It would appear at the moment that we are moving in the right direction. There are several specific questions to which I have not been able to respond. I hope that noble Lords will permit me to write to them in due course in relation to those matters.

Welfare Reform and Pensions Bill
8.56 p.m.
Further consideration of amendments on Report resumed.
Clause 60 [Incapacity benefit: persons incapacitated in youth]:
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 137:
Page 67, line 38, leave out ("each or).
The noble Lord said: My Lords, in moving this amendment I wish to speak also to Amendments Nos. 141 and 144.
The severe disablement allowance has a noble ancestry. It started life as a provision for a greatly neglected group—housewives. It has become of vital benefit for disabled people who, through no fault of their own, were not able to pay national insurance contributions. It has been a unique benefit, not means tested and paid solely on the grounds of severe disability, and 80 per cent disability is required.
SDA was paid at a lower rate than incapacity benefit. Therefore, many people also needed to claim income support, but 30 per cent did not. Having SDA as a right gave all severely disabled people a valuable income. It gave them dignity and a measure of independence. Ministers may feel that it is justifiable to

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abolish the benefit because 70 per cent can claim income support, which is a higher amount. However, it is utterly wrong to discard the severe disablement allowance until there is provision for all those groups of people who now benefit. I am afraid that is not the Government's current policy.
The Government have made a welcome provision in Clause 60 to allow young people with no chance of work but who have not had the opportunity to make national insurance contributions to gain access to incapacity benefit paid at a higher rate than the SDA. That is very welcome and I congratulate the Government. But apart from the provision for some carers, there is nothing for the other 80 per cent of disabled people who would receive severe disablement allowance. It is remarkable that in today's climate, a Labour Government are planning the removal of such an important disability benefit with no replacement for many people.
My Amendment No. 141 is a compromise amendment. It extends the compassion and logic of the Government's proposals for young disabled people to other small, clearly defined groups who may be disadvantaged by the abolition of the severe disablement allowance.
One group whose case I plan to argue is those people receiving the new disabled person's tax credit but who are in low-paid employment. However, my noble friend Lady Hollis has accepted this without hearing my argument. I am grateful to her for her mind reading. She is obviously psychic. I hope that she will be able to extend that psychic capacity to the other amendments. In the meantime, I am delighted that she has accepted it and I thank her very much indeed.
The other important group who will lose out as a result of the Government's proposals includes those who do not work because they stay at home to look after disabled relatives or children. Of course they are mainly women. Women, women, women: it is always the women who suffer. The Government will provide for carers, but only those carers who have previously worked but have then left work to care for disabled people. They are receiving ICA. However, there are many other carers whom I hope the Government will be able to consider.
The Government claim that the world has changed. They say that now women work and pay national insurance contributions. We know that. Further, they say that benefit should not go to women who have chosen not to build up a contribution record, and that is that. It is true that most women do now work and are therefore eligible for incapacity benefit, having paid national insurance contributions. However, there are 2.4 million women who work but who earn below the national insurance threshold and cannot build up a contribution record. That is real poverty. It is extremely unlikely that this group would have specifically chosen not to earn enough to pay contributions and thus deprive themselves of access to the benefit. They may have childcare or other caring responsibilities, and that is why they have a part-time
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job. My compromise amendment would provide compensation should they become 80 per cent disabled, which is an enormous disability.
If the Government are correct and women now have little need of the severe disablement allowance, the numbers claiming it would have fallen, but they have not. The latest government statistics from the DSS Analytical Services Division for May 1999 show that the number of people claiming SDA has remained consistent over the past two years, 1997 to 1999, having risen gradually from 1995 to 1997.
Once again, this Government are penalising one group of severely disabled people to pay for the improved benefits of another group. On 20th July this year when the House debated the case of disabled women with no contribution record and no access to means-tested benefits, my noble friend Lady Hollis said that she did not believe that disabled women had a prior claim on disability benefits over young people. My noble friend feels that this group of women should make sacrifices to pay for improved benefits for young disabled people. However, such improvements should be paid for by wealthy people or by the general taxpayer.
I wish to conclude by saying that I hope that the Government will feel able to accept my compromise amendment. It would give the higher rate of incapacity benefit to several groups of severely disabled people who deserve it. If the Government accept Amendment No. 141, I shall not seek to press for the deletion of Clause 61, which ends the severe disability allowance. However, if the Government cannot accept my compromise, I shall seek a Division on Amendment No. 144. I beg to move.
Lord Morris of Manchester: My Lords, again I am grateful to my noble friend Lord Ashley for the force and clarity with which he moved his amendments. As he knows, any debate about the severe disablement allowance—SDA—is of special importance to me because it was one of the four major new benefits for disabled people and their carers introduced in my five years as Minister for Disabled People from 1974 to 1979. They also included the invalid care allowance which was discussed on an earlier amendment.
When official rhetoric about it was in full flood, the boldest claim for this Bill was that, more than 50 years on, it revised and modernised Beveridge. But if Clause 60, as drafted, stays in this Bill we shall see a reversion to one of the ugliest features of Beveridge; namely, the denial of an income support benefit in their own right to disbled married women and others.
Beveridge was revised and modernised by an historic decision of the last Labour government to provide a non-contributory income support benefit as of right to people who, due to severe disability, had never been able to work and pay national insurance contributions. Before that decision they were non-people in terms of statutory income support and it was this that led the late Megan du Boisson and Berit Thornbury to found the Disablement Income Group in the 1960s.

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In a recent letter Berit Thornbury said she was "appalled" by this clause in the Bill. She and many others see it as a weird and cruel "reform" that turns the clock back to 1977 and consigns disabled married women once again to being nonentities in the social security system.
Let me strongly re-emphasise that Clause 60 is in truth not a reform of Beveridge but a return to one of the worst features of the system his report created.
In previous debates I have spoken of those who will benefit from the changes this Bill proposes. I welcomed in particular the help envisaged for 20 to 24 year-olds in full-time education. But today we must also consider the losers. Around one-third of SDA claimants who are not eligible for income support will be the main losers. They include every severely disabled person whose partner works on average more than 24 hours a week.
One of them is a married woman suffering from Guillan-Barre syndrome, multiple sclerosis and epilepsy. She is a wheelchair user, now receiving £52.70 a week in severe disablement allowance. Her husband works 40 hours a week. So under Clause 60 she will not be entitled to income support when she loses her SDA. Nor it appears will she be able to claim earnings replacement benefit in her own right.
The Government have stated that they want disabled people to lead a fulfilling life with dignity, but the Citizens' Advice Bureau, commenting on this and other cases, says that,
"abolishing SDA moves away from rather than towards this goal".
In his "moral crusade" speech at Newham on 18th July the Secretary of State said,
""Failing to embrace radical reform would let down people who look to Labour to represent their needs".
I very much hope he will now recognise that many such people will be very badly let down by headlong retreat from the radical reform that created a noncontributory income benefit as of right for severely disabled housewives in the 1970s.
I ask again tonight: what kind of radical reform is it that inflicts gratuitous and unmerited further hardship on severely disabled people? And what kind of moral crusade is it that hurts them at a time when the Chancellor of the Exchequer insists that our economy has never been stronger or more prosperous?
Lord Rix: My Lords, first I must apologise to the House and to the noble Lord, Lord Ashley of Stoke, for not being in my place when he moved Amendment No. 141. I can only claim that the enunciator was a few seconds behind. It is the first time that I have been off since 1942, when I was appearing with Sir Donald Wolfit at the Theatre Royal, Nottingham, and unfortunately I was ogling the chorus girls in "ChuChin-Chow" at the theatre opposite, the Empire Theatre, Nottingham, at the time and failed to be on my cue in "King Lear". I was severely reprimanded, as I am sure I shall be for tonight's indiscretion.
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I would like to support the noble Lord, however, in seeking to protect disabled carers and disabled low earners. I hope that the Minister in replying will be able to reassure your Lordships that at least some of those the amendment seeks to protect are already or will indeed be protected.
The logic of the Government's position, as I understand it, is that they wish to rule out those who could have worked but chose, for whatever reason, not to work. By that same logic, it would be unfair to exclude those whose caring responsibilities and personal disability prevent work, or who have in fact been working but have had low earnings because of disability. Some are easier to identify than others, but the focus of this amendment is on those who have already been identified and singled out for social security purposes.
I hope that the Minister will be able to respond positively to this amendment.
Earl Russell: My Lords, we on these Benches would like to delete the clause altogether, for the perfectly good reason that it is the only non-contributory benefit for those suffering from disability.
Baroness Hollis of Heigham: My Lords, I do not wish to sound pedantic and I do not want to exasperate the House, but I think that the noble Earl might refer to DLA, which is a non-contributory benefit of major significance for disabled people.
Earl Russell: My Lords, I accept the Minister's correction and I apologise. It is the first amendment after dinner and the papers are not yet sorted. The point that it is non-contributory, however, is one which I think the Minister will not dispute.
The noble Lord, Lord Morris of Manchester, has hit the nail on the head here. If you do not have a contribution record, you become a non-person. I shall not deal again with the argument that it is much harder to establish a contribution record for some people than it is for others. I made that point on Clause 58 and 1 hope that I do not need to repeat it. But the prospect of remaining a non-person is for some people quite considerable. The noble Lord, Lord Morris of Manchester, referred to the speech by the Secretary of State at Newham. I think it was in that speech, though it may have been at the one in Wester Hailes, Edinburgh, in February, when he referred to families who have been without work for three generations in a row. That is not simply a matter of poverty of expectation.
Very often the people concerned come from mining or shipbuilding areas. That is why Frank Field, the honourable Member for Birkenhead, is so aware of the problem. For many of those people there simply is not the work to be got. I am reminded by a briefing from the ME Association that the problem is further exacerbated by the fact that those who become disabled at age 16 or 17 years do not have income support on which to fall back. Those who suffer from

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being estranged from their parents while aged 16 or 17 often find that it takes them years to struggle back, if, indeed, they ever do.
One of my son's closest friends, with whom he was drinking last night, was in this situation. It took him five or six years, and a very creditable achievement it is. Not all of them manage to make it. These may be people who, for over 10 or 20 years, do not get into a position where they are sufficiently engaged in the normal world to be able to build up a contribution. They were made non-persons early on and they remain so.
For those reasons, the amount of hardship at risk and the number of people who do not have a contribution record because they are on low pay—which I am glad was mentioned by the noble Lord, Lord Morris—we want this clause deleted. I hope, when it comes to the point, that that may be what happens.
9.15 p.m.
Lord Rowallan: My Lords, I, too, would like to apologise for not being in my place when the noble Lord, Lord Ashley, introduced the amendment. I was involved with the Food Standards Agency debate next door.
The issue raised by the noble Lord is important. Severe disability allowance only goes to those who have 80 per cent or more disability. That is a serious disability which leaves a person in the hands of someone else. That person will need help. We are talking about the blind, the terminally ill and those who simply cannot look after themselves. We must remember that two-thirds of such people are women, many of whom bring up children. If we do away with SDA, what will they be left with? They must rely on their spouse. If they do not have a spouse, they will be in a great deal of trouble. We must think about this very seriously indeed. I take the opportunity earnestly to ask the Minister to think about this carefully. I thank the noble Lord, Lord Ashley, for raising the issue.
Lord Higgins: My Lords, I agree with my noble friend who has just spoken. It is helpful to have this debate. The clause which we are discussing abolishes SDA for new claimants. As has been rightly pointed out, it is a non-means tested benefit for severely disabled people who are unable to work and have not paid sufficient national insurance contributions to claim incapacity benefit.
A feature of our debates on the Bill, as on other welfare matters, has always been the noble Baroness's enormous expertise and depth of knowledge. That is reflected in the answers she has given in many of our debates. I should like on this occasion to take as a text what she said on 20th July, referring to this benefit:
"I believe that that is the right focusing of the benefit—not continuing to give it to people who have chosen not to build up a contributory record, as in the case of some married women, or who would not need access to means-tested benefit because they have sufficient finances coming into the household. I do not believe that they have the prior claim on disability benefits over young people".—(Official Report, 20/7/99; co1.834]
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I thought it right to give some thought to what she said and to analyse what was being proposed.
The first proposition made by the noble Baroness is that SDA provides additional money to people who do not need it, and that income support is there for those in financial need. However, the Government and the noble Baroness have not provided any evidence of the household incomes of those on SDA. She has not demonstrated that those are well off households. The Government appear to be saying that provided a family is above income support level, they are effectively well-off. I do not believe that that argument is acceptable.
Secondly, the noble Baroness seems to be saying that SDA makes no difference to 70 per cent of the recipients as they have to claim income support as a top up anyway. However, saying that income support is available if there is a financial need ignores the problem that comes with the means-tested benefits. For example, as we debated earlier this week, if someone has savings of over £3,000, it is reduced. If they have capital of over £8,000, they cannot claim at all. If the husband is working the family will not be eligible for income support. Thirdly, she seems to he arguing that the world has changed, that most women now go out to work and therefore build up eligibility for incapacity benefit, and that benefit should not go to women who have chosen not to build up a contributory record. In practice the sort of situation in which a married woman will claim SDA is where the husband has been working and the wife is looking after children. If she becomes disabled then, clearly, if the benefit is abolished, she will lose out.
Her fourth proposition is that money is better spent on increasing benefit for young disabled people who have never had the chance to work. The cuts to SDA are therefore needed to pay for the increased benefits of 16 to 19 year-olds. This has been a feature of the Bill. It is the same as the proposals on bereavement benefits where, having lost in the Court of Human Rights, the Government decided on a cut-back for widows in order to pay for the widowers. It is much the same in this case. The Minister seems to be saying that there is a fixed amount of money involved and if we spend it on this we cannot spend it on that and the priorities are wrong. That seems to be the essence of her argument.
It is very difficult to think of priorities which would justify eliminating the benefit we are discussing for the reasons set out clearly by the noble Lord, Lord Ashley, and others. If the Government are not prepared to abandon this proposal I hope that the House will take the view that they ought to.
Baroness Hollis of Heigham: My Lords, this extensive group of amendments includes one proposed by the Government, to which I should like to speak if your Lordships agree. The amendments, under the new rules in Clause 60, extend entitlement to incapacity benefit to additional groups of disabled people and retain SDA for all other groups. The extensive nature of the amendments indicates to me that perhaps we ought to go back to say, "Why reform the SDA?" I am sorry that so many of our comments

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were perhaps misunderstood or even misrepresented by the noble Lord, Lord Higgins, in an authentic effort to engage with the Government's argument. If I am repeating what was said in Committee, forgive me. But given that those proceedings were quoted back at me, it is perhaps right that I should do so.
We have strong reasons for reforming SDA and we do not want anyone to doubt why we think that reform is necessary. Our core belief is that SDA is now failing. The one group who are prevented from building up entitlement to help from the national insurance system, those who become disabled before they can enter work, are likely to face a lifetime on benefit. Yet currently we only award them as of right a benefit, SDA. I am talking about people who may have had Down's syndrome, with severe learning difficulties as a consequence, cerebral palsy or the like and receiving a benefit which is so low that in almost all cases it has to be topped up by income support.
There has been a broad welcome, I believe, for the Government's proposed reform of SDA. As a result, there will be a future hike in income for young disabled claimants. SDA recipients aged under 20 will receive £26.40 a week more than they do now. That is almost £1,400 a year extra. We estimate that around 175,000 people will gain in the long term, over half of whom will be women. The notion that we are not including women, with the hands in the air that we had from the noble Lord, Lord Higgins, is not true. This beneficial change, however, cannot be achieved without substantial additional cost. In the long run we estimate that cost will be about £180 million net. And, of course, people who are receiving SDA at the point of change will continue to receive the benefit on the same basis as now, which means that 350,000 disabled people receiving SDA will be unaffected.
As noble Lords are now aware, following further consideration we have introduced an amendment which will ensure that young disabled people who become entitled to IB under these rules, but then leave benefit, for example to try work, will be able to re-qualify. The amendment will apply to those who return to benefit beyond the age limit and who are not covered by the normal linking provisions should they have to reclaim benefit after a period abroad or after earning below the lower earnings limit. As I announced when we debated the last amendment, we are extending the protection for people under the age of 25 in education. Young people in any form of education or work-based training will now have access to invalidity benefit under the new rules.
I firmly believe that our reform of severe disability allowance (SDA) is right in itself. As I said in Committee, I do not believe it right to continue to direct benefit at people—and here the noble Lord certainly quoted me correctly—who have chosen not to build up a contributory record, as is the case with some married women. Perhaps I may make a confession: I would be one of those. I joined the labour market in 1967 and chose, quite deliberately, to pay the reduced married woman's stamp. I am grateful that my noble friend Lady Castle actually abolished that
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choice in 1978. I think that it was a misguided choice for most people. However, I chose it. I calculated just the other day that I have probably saved, out of my pocket, an extra £30,000, or more, by paying the married woman's stamp.
Why, then, because I chose not to build up a contribution record and make myself eligible for invalidity benefit were disability to hit me, should I go on, after pocketing £30,000, to be eligible, as of right, to SDA? I have no necessary financial need and I made a choice to save money all the way through. In my case, as I said, it was a matter of £30,000. Is the noble Lord, Lord Higgins, really saying that I should be able to save such a sum, courtesy of taxpayers, and have a benefit on top, irrespective of my financial need and irrespective of the cost of my disability because, of course, those are covered by DLA? Is that the noble Lord's proposal? I believe that that day has gone. Indeed, we are reforming SDA because of the changing position of women more broadly.
Disability living allowance, which was much less widely available when SDA was introduced, is now paid to the vast majority, indeed, 80 per cent of people. I give way to the noble Lord.
Lord Higgins: My Lords, I am most grateful. Is it not also the case that there could be someone with a number of small part-time jobs in supermarkets, McDonald's, and so on, who cannot build up a contribution record because such jobs are separate? In those circumstances, should that person become disabled, he or she would be penalised as a result of this change.
9.30 p.m.
Baroness Hollis: Yes, my Lords. However, that is one of the arguments I was about to deal with. If the noble Lord will allow me, I shall extend it.
First, when severe disability allowance was introduced, DLA was rarely available, but now 80 per cent are receiving DLA. Secondly, the disability premium in income support was introduced in 1988. So, in answer to the point made by the noble Lord—namely, that it is fine if the woman has a spouse but what does she do if she is single—I should tell him that she would go on to income support with a disability premium and get a higher benefit than she would on SDA. Therefore, it would not be a case of that woman being exposed to hardship.
In response to the noble Lord, Lord Higgins, I can tell him that in the past 20 years the number of women acquiring eligibility and claiming invalidity benefit has gone up from 84,000 to over half a million; in other words, 500,000. That is a sixfold increase. As a result of the minimum wage and changes to the lower earnings limit (LEL), introduced by this Government, 90 per cent of women who work more than 16 hours a week, and between 60 per cent and 70 per cent of women who work less than 16 hours a week, in whatever shape or form, will now build up contributory benefit entitlement. Not only will people currently on SDA be protected but also women will

465
increasingly be building up their own contributions record. In addition, given the changes on LEL and the introduction of the national minimum wage, and so on, most women will be covered in their own right as, in my view, they should be.
Put is the first change as regards what has happened to the world of work and the women in it. We should remember that seven out of eight married women do not stay at home looking after the children and doing nothing else; they look after their children, as that is a priority in their lives, but they also go out to work. Almost as many married women are working as married men. The assumption that somehow women are always at home looking after the children takes no account at all of the world of work and women's place in it. That place has been transformed in the past 20 or so years.
The second point I want to make is that there is extra help for disabled people which the Government are providing. We shall be spending up to £2 billion more on benefits for disabled people by the end of this Parliament. We are building on a commitment to comprehensive civil rights, helping disabled people to get into work through disabled person's tax credit. We have made a £200 million investment in a new deal for disabled people. There will be a further £18 million in the ONE programme. In addition, the most severely disabled people under 60 will receive the new disability income guarantee. In retirement, long-term disabled people with broken work records will be helped by our state second pension.
Within that context—what we are doing for disabled people in general and also for women in terms of encouraging them to build up their own contribution record to claim IB and not need SDA—we are going a long way. Of these amendments, Amendments Nos. 137 to 141 seek to extend the entitlement to IB under the new rules in Clause 60 to additional groups of disabled people.
Clause 60 ensures that disabled people aged under 20, or m certain circumstances under 25, will in future be entitled to IB. People with learning difficulties and with other forms of disability, either acquired at birth or at a very young age, will also benefit: they will be awarded IB. Amendment No. 144 would retain a severe disablement allowance for all claimants aged between 16 and 65: not just those who have been unable to build up a work record but those who have chosen not to build up such a record, including women like myself who have chosen to pay the married woman's reduced stamp.
The amendments before us would extend this generous treatment to other people of any age who, though they may not satisfy the current contribution conditions for IB will have the opportunity to work and to build up a contribution record earlier in their lives. In particular it is proposed that this should be extended to carers receiving ICA for a year, to parents and to people receiving DPTC or DWA..
Of course we recognise the valuable role of carers, and we are already protecting them. They will be passed forward to IB where they meet the appropriate
466
contribution record. Carers who are receiving ICA will be able to use credits to qualify for IB provided they have worked and paid contributions at some stage in the past and would, on the basis of those contributions, have qualified for IB under the current rules. Carers are therefore protected and I do not believe that this amendment is necessary. I could continue with the concessions that we are proposing to give to carers.
A concession built on a record of recent caring would result in lifetime carers becoming entitled to IB only if they become incapacitated within a year or so of ceasing caring, while a lifetime unemployed could secure IB on the basis of having received ICA fairly recently.
Given that we are protecting the position of carers in terms of access to IB, the second part of my noble friend's amendment would apply the same principles to newly disabled people who have been, until the amendment, precluded from employment by responsibilities at home. I presume this largely means parents who have children who have chosen not to work but to stay at home and not even to go into part-time work, and thus fail to take the opportunity to build up a contribution record.
I do not believe that this is right. We are saying that women, parents, have the same rights, capacities and abilities, as the statistics show, to enter the world of work and protect themselves against disability, in terms of contributing to a benefit which will give them full coverage.
The third element of my noble friend's amendment is the proposal that someone who has been receiving DPTC or DWA for 25 weeks of the last two complete years in relation to the relevant tax year should also be entitled to IB. Again, this amendment has been overtaken by events. We are extending protection under Clause 58 to certain people who might otherwise lose out through trying to work: namely. people who reclaim IB after receiving DPTC and earnings lower than LEL. For those people on DPTC who have previously been entitled to IB, on the basis of contributions paid, a special two-year linking rule also exists within IB. We therefore intend to provide that people coming off DPTC—perhaps because of a deteriorating condition—will be able to qualify for IB as now. Amendment No. 142 guarantees or ensures that that will be protected. We were worried that certain people who might be disadvantaged would need to reclaim after having left benefit; government Amendment No. 142 puts that right.
As your Lordships know, to be entitled to claim IB under the new rules, disabled people must be aged under 20 or, if in education or work-based training, aged under 25 when they make their claim. Having qualified for IB, these limits will stop people requalifying once they have left benefit, if they are over the appropriate age, unless they are covered by a linking rule. As now, for claims to link, the break between benefit claims must not exceed eight weeks. However, there are special rules which allow this period to be extended to 52 weeks for those who leave

467
benefit to start work. Those who qualify for the disabled persons' tax credit will have that link extended to two years.
However, we have identified two groups of people for whom it would be impossible ever to requalify if they do not satisfy the current linking rules: those who take up employment and are below the LEL for a lengthy period before becoming incapable of work; and those who return to the UK after a long period abroad. Our amendments protect them and rectify that situation. Of the remaining amendments, Amendments Nos. 143 and 269 are purely technical in nature.
These concessions go a long way to protecting the benefit position of disabled people who have been receiving DPTC or DWA. My noble friend has argued that there should be an extension to carers. I have tried to argue that they will be protected through the new access to IB in exactly the same way as now; they are unaffected by these changes.
Secondly, my noble friend argued that parents should have access to IB as opposed to SDA in the future, irrespective of the fact that they may have chosen not to build up a contributory record. I think that is unreasonable.
Thirdly, he asked for additional protection for disabled people who receive DPTC. I hope that I have reassured him that we are protecting such people.
I hope that the House will feel, believe and accept that the Government, in reforming SDA, are trying to take account of those who most need help—those who can never enter the labour market and build up the contributions which qualify them for IB. One group only is affected—young people who are either born disabled or acquire a disability at such a young age that they can never enter work. Everyone else can—and increasingly does—build up a contribution record in the world of work which qualifies them for IB and which makes SDA redundant. Given that, we believe that the time for SDA in its old form has passed. It used to be called a housewife's benefit pension. "Housewife's" is not now an appropriate term; because as many married women are in work as are married men. I hope that your Lordships will accept that SDA's time has passed and that we need to go forward with benefits which more appropriately fit the world in which we live.
Lord Ashley of Stoke: My Lords, I think that my noble friend Lady Hollis is rather remiss in saying that the Government have received no thanks for the good things that they do. A number of noble Lords—including the noble Lord, Lord Morris, and myself—have been at great pains to praise the Government for the good things that they have done. She is not justified in saying that there were no thanks to the Government for the good things that they have done.
I find it astonishing that anyone so expert and persuasive as my noble friend is unable to persuade the House to her way of thinking. I can only conclude that
468
it is not the presentation that is wrong but the policy. She is saddled with it; it is her bad luck. I offer her my sympathies.
I listened very carefully to my noble friend. I am afraid she has not made out a case for abolishing the severe disability allowance for new claimants. I do not propose to go over the old ground; we have done so time and time again. Basically, the Government are trying to juggle benefits. They have made a worthwhile, admirable attempt—but some of the balls are falling to the floor. That is one of the reasons why we cannot accept the proposition of my noble friend.
There is a basic flaw in all these proposals, which I have dealt with in previous amendments; namely, the poor are being asked to pay for the very poor. That is not justifiable. The very poor should be paid for by the wealthy or by the general taxpayer. There is no getting away from that basic principle.
My noble friend says that the time for the SDA has passed. In that case, the Government should put forward proposals to deal with those whose lives have been influenced and helped by the SDA. They have not done so for all of them. I said in moving the amendment that if the Government are unable to accept my compromise amendments, I would withdraw them and press Amendment No. 144 to delete the clause at the appropriate time. Accordingly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 138 and 139 not moved.]
Lord Rix Lord Rix moved Amendment No. 140:
Page 68, line 5, after ("cases") insert ("which shall include those in which he is a student undertaking a course of further or higher education,")
The noble Lord said: My Lords, the Government were quick to respond to the concerns expressed by the disability lobby about their original proposals that only those aged under 20 would benefit from the transfer from severe disablement allowance to incapacity benefit. Mencap was prominent among those seeking a higher age limit, because those with learning disabilities are properly seen as slow learners rather than non-learners, and are therefore likely to be studying and training into their early twenties. We welcomed the inclusion of those undertaking training or education which began before the age of 20, provided that claim to benefit was made before the age of 25.
That modification of the original proposal brought within the scope of the benefit improvement those whose capacity for work was not self-evident to everyone until early adulthood. It catered in particular for those whose special educational needs were catered for within the mainstream education system. It put them on a par with those severely disabled young people who become eligible for incapacity benefit while still at school. However, we were completely taken aback by, and promptly questioned, the limitation of the age 25 concession to those in higher education or training, apparently excluding those in further education. People with learning disabilities

469
have an Open University course designed for them, and there are the beginnings of access to university campus resources, but in general, people with learning disabilities are by definition not engaged in higher education. They are quite extensively engaged, however, in further education: in specialist further education colleges, ordinary sector colleges and social education centres where there is outreach teaching from FE colleges, including new electronic links with FE colleges.
We have for some months been pressing Ministers and their officials to put further education on a par with higher education. That is what we understood to be the original intention. The logic is incontrovertible. Our focus has been on those applying for benefit for the first time. It seems to me that the same incontrovertible logic applies to those receiving SDA at the changeover point, under age 25, and receiving further or higher education or training which began before the age of 20. I beg to move.
Lord Addington: My Lords, I support the amendment. The distinction between further and higher education is rather silly; the two merge into one another. Whether someone is eligible for higher education, the education is ongoing and it is education in the true sense of the word. It should be pushed forward. My party was fairly active in supporting the case in another place.
Baroness Darcy de Knayth: My Lords, I support the amendment for the reasons the other two speakers have given.
Baroness Hollis of Heigham: My Lords, first I thank the noble Lord, Lord Rix, for tabling the amendment. It gives me the opportunity to make clear the Government's position on the issue. I am pleased to say that we agree wholeheartedly with the purpose behind it. Following representations by the noble Lord, Lord Rix, our intention to extend the age cut-off to 25 for people in higher education will not help certain young people with severe learning disability who are in mainstream education beyond the age of 20. Following those representations, we have decided to widen the concession to include people in any form of education or work-based training. I hope that this further concession will be good news to Mencap, of which the noble Lord, Lord Rix, is president, as well as to your Lordships.
As noble Lords know, we intend to prescribe in regulations the circumstances in which the extended age 25 cut off will apply. We believe that it is particularly suitable for secondary legislation due to the level of detail necessary to ensure the inclusion of the new group, as well as the changing nature of educational prescription. We want to get the detail right and the use of regulations will give us this flexibility.
470
I hope that my reassurance on the matter and our commitment that we will take on board the spirit of the amendment will persuade the noble Lord that his amendment is no longer necessary.
Lord Rix: My Lords, I am happy to be so persuaded. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 141 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 142 and 143:
Page 68, line 18, at beginning insert ("Regulations may provide that persons who have previously been entitled to short-term incapacity benefit under paragraph (b) of subsection (1) above shall, in prescribed circumstances, be entitled to such benefit under that paragraph notwithstanding that they do not satisfy the condition set out in paragraph (b) of subsection (2A) above.
(7)")
Page 68, line 20, leave out ("subsection (2A) above") and insert ("paragraph (e) of that subsection")
On Question, amendments agreed to.
Clause 61 [Abolition of severe disablement allowance]:
Lord Ashley of Stoke Lord Ashley of Stoke moved Amendment No. 144:
Leave out Clause 61
The noble Lord said: My Lords, I beg to move Amendment No. 144. As I have already spoken to it, I wish to test the opinion of the House.
9.45 p.m.
On Question, Whether the said amendment (No. 144) shall be agreed to?
Their Lordships divided: Contents. 119; Not-Contents, 81.

Division No. 6

CONTENTS

Addington, L.

Kintore, E.[Teller]

Allenby of Megiddo, V.

Leigh, L.

Astor of Hever, L.

Linklaterof Butterstone, B.

Attlee, E.

Lucas of Chilworth, L.

Barker, B.

Luke, L.

Bathurst, E.

Lyell, L.

Berners, B.

Mackay of Ardbrecknish, L.

Blatch, B.

Mackay of Drumadoon, L.

Bradshaw, L.

McNair, L.

Bridgeman, V.

Mancroft, L.

Brougham and Vaux, L.

Mar and Kellie, E.

Burnham, L.

Methuen, L.

Buscombe, B.

Monk Bretton, L.

Byford, B.

Montrose, D.

Cadman, L.

Moynihan, L.

Campbell of Croy, L.

Newby, L.

Clement- Jones, L.

Norrie, L.

Crickhowell, L.

Norton of Louth, L.

De L'Isle, V.

Palmer, L.

Dholakia, L.

Park of Monmouth, B.

Dixon-Smith, L.

Razzall, L.

Dundee, E.

Rennard, L

Dunleath, L.

Rodgers of Quarry Bank, L.

Effingham, E.

Rowallan, L.

Exmouth, V.

Russell, E.

Falkland, V.

Saatchi, L.

Fookes, B.

St.John of Bletso, L.

Geddes, L.

Selsdon, L.

Glenarthur, L.

Sharp of Guildford, B.

Goodhart, L.

Strange, B.

Gray, L.

Taverne, L.

Greenway, L.

Teviot, L.

Hamwee, B.

Thomas of Walliswood, B.

Hanham, B

Thurso, V.

Harmsworth, L.

Tope, L.

Harris of Greenwich, L.

Torrington, V.

Harris of Peckham, L.

Wallace of Saltaire. L.

Henley, L.[Teller]

Watson of Richmond, L.

Higgins, L.

Weatherill, L.

Howe, E.

Wilcox, B.

Inchyra, L.

Williams of Crosby, B.

Jenkin of Roding, L.

Wise, L.

NOT-CONTENTS

Acton, L.

Clinton-Davis, L.

Ahmed, L.

Crawley, B.

Alli, L.

Davies of Coity, L.

Amos, B.

Desai, L.

Archer of Sandwell, L.

Dormand of Easington, L.

Bach, L.

Dubs, L.

Bassam of Brighton, L.

Elder, L.

Berkeley, L.

Evans of Parkside, L.

Brett, L.

Evans of Watford, L.

Brooke of Alverthorpe, L.

Falconer of Thoroton, L.

Burlison, L.

Faulkner of Worcester, L.

Carter, L.[Teller]

Farrington of Ribbleton, B.

Chandos, V.

Filkin, L.

Christopher, L.

Gilbert, L.

Clarke of Hampstead, L.

Gordon of Strathblane, L.

497

Goudie, B.

King of West Bromwich, L.

Gould of Potternewton, B.

Lea of Crondall, L.

Graham of Edmonton, L.

Lipsey, L.

Grantchester, L.

Macdonald of Tradeston, L.

Grenfell, L.

McIntosh of Haringey, L.

Hacking, L.

[Teller]

Hardy of Wath, L.

Mackenzie of Framwellgate, L.

Harris of Haringey, L.

Monkswell, L.

Hayman, B.

Pitkeathley, B.

Hilton of Eggardon, B.

Ponsonby of Shulbrede, L.

Hollis of Heigham, B.

Ramsay of Cartvale, B.

Rea, L.

Hoyle, L.

Rendell of Babergh, B.

Hughes of Woodside, L.

Sawyer, L.

Hunt of Kings Heath, L.

Simon, V.

Irvine of Lairg, L.(Lord

Symons of Vernham Dean, B.

Chancellor)

Thornton, B.

Jay of Paddington, B.(Lord

Warner, L.

Privy Seal)

Warwick of Undercliffe. B.

Kennet, L.

Whitty, L.

On Question, amendment agreed to.

Resolved in the affirmative, and amendment agreed to accordingly.
[Amendment No. 145 not moved.]
Clause 64 [Certain overpayments of benefit not to be recoverable]:
9.58 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 146:
Page 69, line 28, leave out ("finding") and insert ("decision")
The noble Baroness said: My Lords, Amendments Nos. 146, 147 and 148 are technical amendments that do not alter the meaning of the clause but make it significantly easier to understand. They give greater clarity to the parts of the clause that define which overpayments of disability or incapacity benefits will not be recoverable. They remove unnecessary duplication and ensure that the language used is consistent throughout and is in line with the terms used in the legislation relating to adjudication.
As noble Lords will appreciate, this clause is all about ensuring that there is no requirement to recover overpayments of benefits where it would be unreasonable to do so. It addresses a problem that we have identified with the current rules. In some situations it is not reasonable to expect claimants who are ill or disabled to know that they should report a change in their condition to the Benefits Agency. In such cases we want to ensure that the claimant is not required to repay any overpayment of benefit which may result. I am sure that the noble Lord, Lord Morris, will be delighted with the amendment.
Clause 64 sets out the circumstances in which these overpayments would be recovered. It is important that this definition is as clear as possible. The amendments do not alter the meaning of this clause but do make the definition of the relevant overpayments easier to understand.
As I am sure your Lordships appreciate, it is important that this provision is clear in its meaning and is no more complicated than it needs to be to achieve its intended effect. I therefore ask noble Lords to accept the amendments to incorporate it in the Bill. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 147 and 148:
Page 69, line 30, leave out ("finding") and insert ("decision so given")
Page 70, line 5, leave out from second ("allowance") to end of line 13 and insert—

("(d) incapacity benefit;

(e) any benefit (other than incapacity benefit) awarded wholly or partly by reason of a person being (or being treated as being) incapable of work: or

(f) any benefit awarded wholly or partly by reason of a person being (or being treated as being) in receipt of any benefit falling within paragraph (c). (d) or (e).")

On Question, amendments agreed to.
[Amendments Nos. 149 and 150 not moved.]
Schedule 8 [Welfare benefits: minor and consequential amendments]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 151 and 152:
Page 124, line 30, at end insert—

("( ) In section 8 (attendance, information and evidence)—

(a) in subsection (1)(a) (power of Secretary of State to specify place and time for claimant to attend), for "the Secretary of State" substitute "an employment officer"; and

(b) at the end add—

"(3) In subsection (1) "employment officer'' means an officer of the Secretary of State or such other person as may be designated for the purposes of that subsection by an order made by the Secretary of State."").
Page 124, line 35, at end insert—
("( ) In section 36(1) (orders to be made by statutory instrument unless made under specified provision), after "section" insert "8(3),".")
On Question, amendments agreed to.
Baroness of Hollis of Heigham Baroness of Hollis of Heigham moved Amendment No. 1.53:
Page 125, line 21, at end insert—
("ADMIN ISTRATION OF BENEFITS
.—(1) In each of the provisions of the Administration Act to which this paragraph applies—

(a) any reference to a person authorised to exercise any function of a relevant authority relating to housing benefit or council tax benefit shall include a reference to a person providing services to a relevant authority which relate to such a benefit; and

(b) any reference to the exercise of any function relating to such a benefit shall include a reference to the provision of any services so relating.

(2) This paragraph applies to the following provisions of the Administration Act—

(a) section 110A (appointment of inspectors by authorities administering housing benefit or council tax benefit);

(b) sections 122C, 122D and 122E (supply of information in connection with administration of housing benefit or council tax benefit);

(c) section 126A (power to require information from landlords etc. in connection with claims for housing benefit);

(d) section 182B (information about redirection of post); and

(e) Schedule 4 (persons covered by offence relating to unauthorised disclosures).

(3) In this paragraph "relevant authority" means an authority administering housing benefit or council tax benefit.")
The noble Baroness said: My Lords, Amendment No. 153 makes changes to provisions in the Social Security Administration Act 1992 relating to supply and use of information, particularly for the purposes of investigating cases of benefit fraud. It brings the wording of these provisions into line with the wording used in this Bill relating to the supply and use of information, and ensures that social security
474
information may, in certain cases, be passed to persons assisting local authorities in the exercise of their functions. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 154:
Page 125, leave out lines 22 to 28
The noble Baroness said: My Lords, these government amendments are all technical amendments dealing with Northern Ireland.
The majority of the subject matter of the Bill is devolved under the Northern Ireland Act. We had hoped that devolution in Northern Ireland would have occurred before the Bill received Royal Assent and any corresponding legislation for Northern Ireland would have been a matter for the Assembly. As it is likely that the Bill will be granted Royal Assent before devolution in Northern Ireland, it is prudent to take steps to ensure that corresponding Northern Ireland legislation can be enacted within a similar timescale to the rest of the United Kingdom. The negative resolution Order in Council clause is a well-established procedure for allowing Northern Ireland to legislate where it is desirable to have parity and early implementation. This new clause is provided for by Amendment No. 266.
The amendments ensure that corresponding provision can be made for Northern Ireland as soon as possible after the Bill receives Royal Assent.
Amendments Nos. 154 and 260 provide that the Social Security Advisory Committee is able to advise on Northern Ireland provisions corresponding to the measures in the Bill. I ask your Lordships to support the amendments. I beg to move.
On Question, amendment agreed to.
Clause 67 [Sharing of functions as regards- claims and information]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved. Amendment No. 155:
Page 72, line 37, at end insert—

("(3A) Regulations under this section may make different provision for different areas.

(3B) Regulations under any other enactment may make such different provision for different areas as appears to the Secretary of State expedient in connection with any exercise by regulations under this section of the power conferred by subsection (3A) above.")

The noble Baroness said: My Lords, this is another group of technical government amendments which ensure that some regulations can apply in some parts of the country but not in others. This is necessary to enable provisions in the Bill such as the ONE service to be introduced initially in pilot areas rather than nationally. In other words, it is entirely benign.
The amendments simply ensure that the regulation-making powers are fully in place, as intended. I commend them to the House. I beg to move.
On Question, amendment agreed to.
Clause 68 [Supply of information for certain purposes]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 156:
Page 73, line 35, after ("to") insert (", or designated for the purposes of this section by an order of,")
On Question, amendment agreed to.
Schedule 9 [New threshold for primary Class 1 contributions]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 157:
Page 128, line 16, at end insert—

("( ) Regulations under this section shall be made by the Treasury."")

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 158 to 164 and 271. I speak first to Amendment No. 271. I am grateful to the noble Lord, Lord Goodhart, who in Committee identified the technical issue relating to the drafting of Clause 84. I said at the time that I would take the matter away for further consideration and table an amendment at a later stage.
At present Clause 84 has no specific provision for bringing the mixed measures into effect. Therefore, by default it is the responsibility of the Secretary of State for Social Security to make the necessary commencement order. However, as the House is aware, responsibility for national insurance policy was transferred in April this year to the Treasury and the Inland Revenue by the Social Security Contributions (Transfer of Functions, etc.) Act 1999. Amendment No. 271 will therefore make Treasury Ministers responsible for appointing the date from which the national insurance contribution measures come into effect.
The other amendments in the group deal with the power to make regulations in relation to parts of Schedule 9 and Schedule 10. Amendments Nos. 157 and 158 make it clear that regulations in respect of the new Section 6A of the Contributions and Benefits Act will be made by the Treasury. That is currently not explicit in the drafting. Amendments Nos. 159 to 164 deal with contracted-out rebates in relation to the Pensions Schemes (Northern Ireland) Act. They relate to the power to make regulations to allow employers to recover contracted-out rebates from the Inland Revenue in cases where the rebate owed is greater than their national insurance contribution liability. That may arise, for example, where a large proportion of employees earn between the lower earnings limit and the new primary threshold because earnings in this band will be eligible for contracted-out rebates but not liable for contributions. This will bring the Pensions Schemes (Northern Ireland) Act into line with GB legislation. I urge the House to support the amendments. I beg to move.
On Question, amendment agreed to.
Schedule 10 [New threshold for primary Class 1 contributions: Northern Ireland]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 158 to 164:
Page 133, line 41, at end insert—

("( ) Regulations under this section shall be made by the Treasury."")

Page 135, line 9, after ("prescribed") insert ("by regulations made by the Secretary of State")
Page 135, line 11. after ("But") insert ("such")
Page 135, line 17, at end insert ("by such regulations"")
Page 135, line 49, after ("prescribed") insert ("by regulations made by the Secretary of State")
Page 136, line 1, after ("But") insert ("such")
Page 136, line 7, at end insert ("by such regulations"")
On Question, amendments agreed to.
Clause 71 [Earnings of workers supplied by service companies etc.]:
Lord Higgins Lord Higgins gave notice of his intention to move Amendment No. 165:
Page 74, line 42, leave out from ("worker")") to ("and") in line 3 on page 75 and insert ("would have been an employed earner of a business carried on by another person to which he provides services ("the client") had he contracted direct with the client,")
The noble Lord said: My Lords, we have here a series of amendments relating to Clause 71. I do not know what noble Lords opposite or on the Liberal Democrat Benches think, but it might be convenient to take all of them which relate to this clause and the clause stand part matter together. If we have a single debate that might meet the convenience of the House.
Lord McIntosh of Haringey: My Lords, we are all happy to do that. I believe that the noble Lord, Lord Goodhart, disagrees with me.
Lord Higgins: My Lords, in that case, somewhat paradoxically, I do not move Amendment No. 165.
[Amendment No.165 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 166:
Page 75, line 5, 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),")
The noble Lord said: My Lords, perhaps I may set out my stall. I am proposing to move this amendment and then speak to Amendments Nos. 168 to 180, 182, 183, 186, 188 to 200, 202 and 203. All these are government amendments. Then I shall speak to the Opposition and Liberal Democrat amendments because they all relate to the same issue.
My speaking notes begin to the effect that we have already debated Amendment No. 165. I shall have to start with what would have been that amendment. We last debated this matter at Committee stage on 20th July. A number of clear messages emerged during the debate. I believe that everyone agreed that there was a problem of tax and national insurance contributions avoidance where workers are hired through an intermediary. By using a one-man company and

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paying himself in the form of dividends rather than salary, a worker who would clearly be an employee but for that arrangement can avoid paying national insurance at all on his earnings. He cart do so without giving away any secrets of tax avoidance by paying himself out of his one-person company in dividends rather than through a salary on earnings.
I was relieved and reassured to hear from the Front Bench opposite that they acknowledge that the Government have a legitimate right to take steps to remove that avoidance. The noble Lord, Lord Higgins, said:
"We are entirely in favour of everyone paying their fair share. It would be wrong to suppose for one moment that we are in
favour of unjustified tax avoidance".—[Official Report, 20/7,99; col. 912.]
The noble Lord, Lord Goodhart, said on the same day:
"I do not think that the use of one-person companies for avoidance purposes is acceptable. It is an abuse of the NIC system and should be stopped".—[Official Report, 20/7/99; col. 918.]
Although noble Lords expressed their support for the need to act, a number of them had severe concerns about how the proposals would work in practice. I confirmed that the Government were considering the issues raised in consultation with business representatives, although I made it clear that there could not be any retreat from our intention of introducing legislation to remove that avoidance.
Consultations continued throughout the summer. The Government announced revised proposals in response to the consultations on 23rd September. The Paymaster General said in her announcement that while she was determined that no one should be able to avoid paying their fair share of taxes and national insurance contributions simply because of the way they structure their relationships with their clients, she recognised that any action must not do unnecessary damage to flexible labour markets where intermediaries are currently used. Our revised proposals will tackle the avoidance in a way which is more tightly targeted and does not prevent the use of intermediaries where they provide advantages other than the avoidance of tax and NICs.
There are three main changes to the revised approach. One thing we learned from the consultation was that both clients and workers saw benefits in the use of intermediaries—that is, these one-person companies—to hire skilled staff for short contracts, regardless of the tax and NIC advantages. The original proposals would effectively have given the client a choice between taking the worker onto his payroll for a short period, or running the risk of a PAYE and NIC liability on the contract payment which he had made to the consultant service company.
We were told that that threatened to take away the flexibility. We therefore decided to change the proposals so as to give the clients the option of continuing to hire workers through intermediaries on the basis of gross payment and without the risk or a new tax or NIC liability. The obligation to pay a fair share of tax and NICs will still be there, but it will be an obligation on the intermediary, not on the client.
One welcome result of that approach is that there will be no need for the Inland Revenue to run a certification scheme. That was originally proposed to allow clients to identify those service companies which could continue to receive gross payments. Many were concerned about the administrative and bureaucratic demands which would result for both workers and clients.
The second major change concerns the method of identifying engagements or contracts which have the characteristics of employment and therefore fall within the scope of the new rules. As the House is aware, our original proposal would have relied on the degree of control that the client had over the worker as to the task and manner in which it was completed to decide whether he should be treated as an employee under the new rules. We thought that this "control test" would provide simplicity and certainty for both clients and workers. That was much criticised during the consultation. Now that we have decided to remove from the client any need to identify the contracts caught by the new rules, we have had the opportunity to look again at the way in which we identify those contracts.
We have decided to accept the arguments made in the consultation process and to retain the existing method of determining the boundary between employment and self-employment for tax and national insurance contributions purposes, as it is used for individuals without service companies. That method is based on the courts' interpretation of the concept of employment, without a detailed statutory definition.
I hope that this change will be welcome. As the noble Lord, Lord Goodhart, said in previous earlier debate, the change has the backing of the Institute of Chartered Accountants and the Tax Law Review Committee. When referring to the replacement of the "control tests" with the normal markers for determining a worker's employment status, he said,
"If this amendment is accepted or passed, we shall support the Clause".
It has, however, been suggested that the definition of employment which is already used throughout the economy—including, for example, in the market research industry, which I know well—is in some way not appropriate for the information technology and engineering industries. I find that idea extraordinary. In fact, there are many people already working in the IT industry to whom those rules already apply.
Let us consider the case of two people sitting side by side in the computer department of a big company. One is an employee of the company, the other works for his own service company. They might have been there for the same length of time; they are both part of the same team and work under the same team leader, doing the same kind of work. It has been argued that because one worker has chosen to set up a service company, he is somehow an entrepreneur and deserves to pay less tax and NIC, and that because applying the normal rules to distinguish employees from the self-employed would result in taxing both in the same way, there must be something wrong with those rules. I do not think his colleague at the next desk would agree.
There are freelance workers in all kinds of industries, not just IT: trainers, draftsmen, writers, cameramen—in fact, 90 per cent of the film production business is made up of self-employed people. Unless they have opted out by setting up service companies, the same definition of employment applies to all of them. I see no justification for arguing that it cannot be applied to the IT industry as it has already been for all the others.
The announcement on 23rd September also included clarification of the amounts which could be deducted from an intermediary's receipts from clients to arrive at the amount on which class 1 NICs and, in due course, PAYE tax would be due. These deductions are: first, any expense which would be allowed to an employee in the same circumstances; secondly, any employer's contributions paid by the intermediary to an approved pension scheme on behalf of the worker; thirdly, any class 1 NICs paid by the intermediary in respect of the worker, plus a flat-rate allowance of 5 per cent of the intermediary's receipts from relevant contracts. That deduction is to recognise the general and miscellaneous expenses associated with running a service company.
We believe that the deductions for expenses which we have listed are fair to workers who chose to set up a company to market their skills and those who are employed directly. The effect is to make a choice whether to operate through an intermediary or as a direct employee—a neutral one—in terms of tax and NICs. Therefore, I hope that it will be agreed that the changes which we have announced address the concerns of the House and reflect the genuine nature of the consultation.
I need not say much more about the IT industry. Our support for the UK IT industry is on record. Our IT specialists are world leaders. However, we do not believe that the payment of a fair level of tax and NICs will wipe out the IT industry or that IT workers will leave the UK en masse as a result of those changes. To preserve a tax avoidance device which is used by many who are not in the IT industry, and not used by many who are, would not be a good way to show support for IT.
Our proposal must not stop any worker continuing to supply his skills as he thinks best. It is the decision of an individual whether one is employed directly by a company or sells one's services to a service company. It is a decision for the worker to take. The Government have a duty only to ensure that, whatever decision is made, one should expect to pay a fair level of tax and NICs. If it is argued, as it has been argued by the IT industry, that that puts them at a disadvantage compared to the large and, in particular, the foreign companies which provide consultancy, I can only say that that is based on a misconception. Any company which is other than a one-person service company cannot use the loophole of paying its principal in dividends. That company must pay a payroll and therefore must pay NICs and tax on its earnings from its clients. Therefore, there is a level playing field in that respect.
I shall now explain—and I shall do so as quickly as I can, but we are dealing with a large group of amendments—how our amendments work. Last week we had the advantage of a seminar in which some noble Lords were able to participate. At the seminar officials from the Inland Revenue were present to explain the amendments. We were able to provide the regulatory impact assessment, which sets out the cost—or a range of costs, because that is the best we can do—to industry of these proposals. We were also able to provide the text of Clauses 71 and 72 as they will be if these amendments are agreed.
Clearly, the revised clause must reflect the change to transfer to the intermediary the liability to pay any NICs due under the new rules. That is achieved by changing references from "client" to "intermediary". There are consequential changes which recognise whether it is payments made or deemed to be made to the worker by the intermediary rather than payments by the client on which NICs must be paid. That introduces the concept of attributable earnings; that is, the total earnings from the client less the four items I have already described.
Subsection (2) allows regulations to define an intermediary for the purposes of this provision. It is the service company which employs the worker or a partnership of which he is a partner. Subsection (3)(b) confirms that the intermediary is the secondary contributor. The new subsections on page 76 line 12 provide more detail of some of the deductions which regulations may allow in calculating attributable earnings. They provide the power to set in regulations a deduction for the general expenses in running a service company. The other main change is the amendment to remove subsection (5) which was the provision that provided for a certification scheme, which is no longer necessary.
I am speaking before any introduction of Opposition or Liberal Democrat amendments. Perhaps it would be for the convenience of the House if I allow noble Lords to do that. I shall then respond to them as appropriate at the end of the debate. I beg to move.
Lord Goodhart: My Lords, Clause 71 and its Northern Ireland twin, Clause 72, raise issues which are undoubtedly of great complexity. The use of personal service companies has grown very considerably in recent years. That is undoubtedly mainly due to the tax and NIC benefits where individuals use PSCs to solve their services requirements rather than contracting direct with the client to provide those services. I should say that those benefits accrue at least as much to the client as they do to the worker. At this time of night I shall not go into an explanation of how those benefits are obtained. To some extent the noble Lord, Lord McIntosh, has already done that.
There is no doubt that single person personal service companies are artificial creations which, in most cases although I accept not all, would not exist but for the tax and NIC advantages which they present. To that extent it is plain that they involve tax avoidance. The

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regulatory impact statement calculates that the proposed changes in law will bring an extra £220 million a year into the National Insurance Fund. That is a very significant amount. Furthermore, the sums avoided will get bigger if the avoidance route presented by PSCs becomes more widespread as, if no action is taken, it almost certainly will.
We therefore accept that something must be done. There has been a high-pressure lobbying campaign by some organisations, notably the Professional Contractors Group, to retain the status quo. However, as I have said, many personal service companies exist only for tax and NIC avoidance purposes and action does need to be taken against them. At the same time, we accept some of the complaints from the Professional Contractors Group and others.
First, we believe that the existing tests for self-employment, whether or not a personal service company is involved, need to be reassessed. In particular, the existing tests tend to look at the situation as a snapshot rather than as a film; that is, they look at a single moment of time. 'We believe that there is a great difference between a worker who is hired for short periods by a series of different clients to do a specific, specialist job and a worker who is hired on a more or less permanent basis by a single client to do a similar job. I hope that the Government will look carefully at the report that the Tax. Law Review Committee will produce shortly on the subject of classification.
Secondly, the Government's initial proposals in the Bill met with many objections which they have now accepted are justified. They have moved some way to meeting those objections. However, we believe that, in doing so, they have opened up new reasons to object. One objection was that the Government originally proposed to apply a special test to decide whether the worker is employed or self-employed: a different test from the normal test which had been built up through case law. That met with serious criticism from the Institute of Chartered Accountants in England and Wales and other professional bodies concerned with taxation. The Government have responded to that, and the ordinary tests will now apply.
Another criticism was that the Government were proposing to introduce a certification scheme which would enable clients to purchase services from certificated service companies, without a risk of being held to be an employer. That was criticised as being bureaucratic, expensive and giving an unfair advantage to certified companies. The Government have therefore dropped the certification scheme.
We now come to the problem. Under the original scheme if the client hired a worker through a personal service company and the worker was treated as an employee, the client would have had to pay the employer's NICs. That is what happens if there is a direct contract between the client and the worker. If the employment tests are satisfied, the client pays the NICs and not the worker in the case of a direct contract.
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Under the Government's new proposals employer's NICs will be paid, but they will be paid by the personal service company on the receipts from the client and not by the client itself. This, we believe, is wrong. It gives a significant advantage to a client which deals with a personal service company rather than directly with the worker. In borderline cases it plainly shifts the risk of an adverse ruling from the client to the personal service company and, through that company, to the worker himself or herself.
There are four main objections to that. First in most cases it is frankly easier for the client than for the worker to bear the risk of having to pay employer's NICs. That is especially so where the client is a substantial company and may have a number of short-term contract workers across whom it can spread the risk.
Secondly, if there is a risk of an uncertainty as to what the status of the worker is, it is plainly easier for the client than for the worker to get legal advice and to form a judgment of the degree of risk. The parties therefore are not, when they enter into contracts with each other, contracting on the basis of equal information and therefore on an equal footing.
Thirdly, it follows that if a dispute arises and has to be fought with the Inland Revenue, it is plainly easier for the client to fight it than for the worker to fight it.
Finally, pressure on workers from clients to form personal service companies, even if the worker does not want to do so, which al ready exists, will continue and may very well increase.
We therefore find ourselves in a difficult dilemma as regards our attitude towards the Government's amendments, and indeed towards the clause as a whole. There is undoubtedly a serious NEC avoidance loophole which needs to be blocked. The Government have to some extent improved their original scheme and it now appears to be acceptable to a number of professional bodies which criticised the original scheme. But we think that the drawbacks for workers—and we are looking at the problems facing these individual workers, many of them experts on whom the economy relies heavily—of placing on them the liability for employer's NICs and the risk in cases of uncertainty have been underestimated.
We will therefore have to ask the Government, even at this very late stage, to reconsider their proposals. We find ourselves unable to support the clause as it is proposed to be amended by the Government.
Finally, I have put down some minor amendments. In view of the lateness of the hour and the fact that they are not of primary importance, I shall not be moving them and I need not therefore explain them.
I would add a coda, however. The Professional Contractors Group plainly represents a large number of those people who have created personal service companies in the IT industry. It has a very strong view. As I have made clear, I do not, by any means, agree with everything it says but it is directly affected by this legislation and its voice needs to be heard by the Government.

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After the Committee stage in your Lordships' House, the Government held consultation meetings with a number of the major professional bodies such as the Institute of Chartered Accountants, the Chartered Institute of Taxation, and so on. However, as we understand it, the Professional Contractors Group was not invited to a meeting until 22nd September. It was then simply told of the Government's proposals, which were to be published on 23rd September and, indeed, were published on that date. We believe that it should have been properly consulted. It has a justifiable grievance in having been given, effectively, the brush off.
10.30 p.m.
Lord Higgins: My Lords, the noble Lord, Lord McIntosh, in his opening remarks, quoted what I said in Committee with regard to the question of avoidance. In no way do I go back on what I said then and the statement he quoted. We are clearly concerned that there should not be unjustifiable tax avoidance. Having said that, quite clearly the proposals which the Government have put forward have given rise to considerable concern and are now radically changed.
The original proposals are now radically different from the amendments before us and can, at best, be described as half-baked. However, our fear is that even after the changes now proposed, those in industry with service companies, quite legitimately, will still be adversely affected. As has been pointed out, this is of particular concern to those who take an entrepreneurial attitude in, for example, the IT industry or North Sea oil.
The original proposals included a new control test to determine whether or not someone was self-employed. We criticised that heavily in Committee. The Government have taken it on board and, as I understand it, have now dropped it completely. We are now considering, for the first time something quite different. Similarly, in Committee the question of certification, rather on the lines of the construction industry scheme, was suggested. Again, that has been dropped.
The Government now propose to use the existing test to determine the boundary between employment and self-employment. They introduced some new terminology. I understand that these companies are now to be described as "intermediaries" whereas previously they were personal service companies.
The noble Lord, Lord Goodhart, pointed out that there are some problems in applying even the existing definitions in this field. We believe that there are now significant objections, despite the changes that have been made to what is proposed. First, the burden has now been shifted from the client to the so-called intermediary. As the noble Lord mentioned a moment ago, the intermediary will carry the burden of administering the scheme and the risks involved in it.
Secondly, we believe that the new proposals will have a significant adverse impact on small entrepreneurial companies as against large, or even
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large international, companies. The representations we received subsequently suggest that the system that is now proposed is not fair to small companies. In effect, the small companies will pay PAYE and NICs on their entire revenues, which will include an element of profit.
The representations also point out that there is usually a significant difference between the fees charged by one of these companies and the amounts normally paid by employees. However, the Government are proposing to allow only a limited amount of deduction as far as concerns expenses. The representations received suggest that that deduction, which is 5 per cent, is not adequate in the circumstances. That, in turn, will have an adverse effect on investment by such small companies, which we believe may lead to some people moving offshore. That will not be in the interests of the UK economy.
In essence the complaints which we have received suggest that the new proposals make a distinction by applying the self-employment test to companies, but in fact the consultant is not a self-employed tradesman but an employee of one company providing a service to another. The amendments which are now before us do not provide a satisfactory approach as far as this matter is concerned.
I turn now to the way in which the matter has been handled so far and the way in which we believe it ought to be handled from now on. I should just add one point, which is that I was somewhat concerned, against the background of the Inland Revenue taking an aggressive attitude in these matters, though one which as far as the objective is concerned is legitimate, at a cutting from one of the papers last Sunday—which I have checked did in fact exist—to the effect that the chairman of the Inland Revenue, in issuing a newsletter, has made a statement saying he finds it exciting and important being at the forefront of implementing the new Labour Government's policy agenda. I find that a quite extraordinary statement for someone in the position of a senior civil servant in the Inland Revenue.
Some years ago we had a chairman of the Inland Revenue who seemed to think there was absolutely no distinction between avoidance and evasion and was determined to treat both the same. It is important that the chairman of the Inland Revenue should consider carefully the remark which he has made and what ought to be done about it.
I turn now to the way in which this whole matter has been introduced. Another place had no opportunity to debate the matter at Committee stage, where it would have had an opportunity of going into it in depth. In seeking to justify this, the noble Lord, Lord McIntosh, at Committee stage, said that that Committee stage was already half-way through by the time the Chancellor of the Exchequer made his announcement. Unless the whole thing was totally cooked up on the spur of the moment, there was no reason why a new clause at the end of the Committee stage—because that is where they turn up in another place—could not have been tabled and they could have looked into the matter

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in depth and in the rather more favourable circumstances of a Standing Committee than we have had perhaps in your Lordships' House.
What then happened was that the new clause was introduced at Report stage. I shall not go over the history of it again. but it appeared to be a device by the Whips to delay proceedings in the hope that the rebellion which was then going to take place on the matters we have been discussing earlier this evening would not take place at prime time but in the middle of the night. In the event it totally failed. It came up in the middle of the Today programme. None the less, this new clause was put down, the Report stage was guillotined and there was no opportunity adequately to discuss these matters. We find ourselves in a situation where the matter arrived in your Lordships' House at Committee stage. We have of course debated it and as a result of that we have found that the new proposals are in front of us.
In the course of debates at Committee stage the noble Lord, Lord McIntosh, said two things: first, that he would offer a seminar which we could attend before the House resumed so that we could understand where the Government had got to; he added:
"I undertake that the consultation will be fully published well in advance of the Report stage. We will report to noble Lords and the public about the issues raised in the consultation process".— [Official Report, 20/7/99; col. 923.]
That has not happened despite what the noble Lord said. We are also receiving considerable complaints about the way in which the consultation process proceeded from those who were involved. It would seem that there was some degree of segregation between some of those who made representations, perhaps the larger organisations which were seen privately by the Minister concerned in the Treasury, the Paymaster-General, and another consultation process which took place with various of the other smaller bodies, and the Minister has kindly provided me with a list of those who attended this meeting.
It is alleged—no doubt the Minister can tell us whether or not this is so—that halfway through this meeting a telephone call was received which indicated that the revised proposals would be published the following day. This did not suggest that the consultation was such that the Government were open at that stage to changing their mind. It would appear that the consultation consisted of the people at that meeting being told what the Government were going to do and that was it. There does seem to be very considerable disquiet. One could perhaps describe it as a charade, although that might be a slight overstatement. At all events, it was not a satisfactory way of going about such matters.
I turn, finally, to how we should go forward from now. As I said, the Government have put forward new amendments but we have not had adequate time to get all the representations that we would like, despite the marvels of e-mail. Given this particular case, which is perhaps a little unusual inasmuch as the IT industry has been involved in it, I wonder how things will proceed in the future. My e-mail has been flooded with representations on the subject.
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If we allow the matter to go forward at this stage, there are still a number of important issues to which the noble Lord, Lord Goodhart, has drawn attention and about which I have expressed concern. If the government amendments are accepted, the Bill will go to another place. But we know only too well that it will be very difficult for those in another place, on seeing these proposals for the first time, to discuss them in detail. There will be considerable trouble in terms of having time to receive representations and adequately move appropriate amendments.
Consequently, I have reached the conclusion that it is not appropriate that this clause should remain in the Bill. I think that another place should be given a full opportunity to look into the matter and discuss it. The noble Lord, Lord McIntosh, raised a fundamental objection to that conclusion. I suggested that such matters could be dealt with in a separate social security Bill if there is one in the new Session relating to the state second pension. That would be one way of dealing with the matter. Alternatively, it could go into a Finance Bill. I do not think that it would be overstating the noble Lord's position to say that he has argued that that is really quite impossible because Finance Bills can only be concerned with revenues that go into the Consolidated Fund and not those which go into the National Insurance Fund.
I have already pointed out that it seems to me that that is probably an obsolete approach for the simple reason that at the beginning of the year we agreed a transfer of functions Bill, the exact title of which I forget, which transferred responsibility for the Contributions Agency—this matter relates to that agency—from the Department of Social Security to the Inland Revenue. Therefore, as this is an Inland Revenue matter lock, stock and barrel, it is absolutely clear that it should be dealt with in a Finance Bill.
However, the noble Lord has said that that is not so and the matter cannot be dealt with in a Finance Bill. Such a procedure would, of course, give the House of Commons a full opportunity to debate these issues, together with the associated tax provisions which will have to be in a Finance Bill in any event. I have news for the noble Lord. It is normally the practice that the Finance Bill contains only measures of the kind that he has described. But it is also the case—I can give the noble Lord an example from 1987—that a resolution can be passed whereby such practice can be overridden and appropriately adjusted. If the noble Lord would care to look into the situation in another place on 23rd March 1987, he will find a record of a resolution, which was put before the House and approved; and, indeed, acted on. It related to the procedure under "Personal Pension Schemes", and stated:
"Ordered, That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill in the present Session may make provision for payment of sums out of or into the National Insurance Fund"—

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I repeat, the National Insurance Fund—
"in connection with provisions relating to the payment of minimum contributions under Part I of the Social Security Act 1986".
So the noble Lord, I believe, has been misinformed as to the true situation. There is absolutely no reason why a similar resolution should not be passed. Indeed, given the structural changes which have been made, it seems to me that it would be appropriate to reconsider the normal procedure, especially since the Inland Revenue now has responsibility for the Contributions Agency.
My view is that we should not accept these clauses this evening, or the amendments put forward by the Government. It would be more appropriate to delete them from the Bill and for them to be dealt with in another place in the way they should have been dealt with from the start. Up to now the other place has had no chance whatsoever of considering this matter.
10.45 p.m.
Lord Jenkin of Roding: My Lords, I have listened to my noble friend in total fascination. I think he has succeeded, if I may say so with the greatest respect to the Government Front Bench, in blowing their case out of the water. The way the matter was handled in another place—and I need not elaborate on what my noble friend said—and the prevarications which have been put up really makes it wholly inappropriate that this House should now pass this clause in whatever shape it may be. Of course I entirely understand the Minister's desire to try to deal with tax avoidance. It is now perfectly clear that this matter can be dealt with in a Finance Bill.
It has also been clear from the beginning, and indeed it has been part of the Government's case, that this is the first of two stages. The first will deal with social security and the second with PAYE and tax matters. I think my noble friend has made a totally unanswerable case as to why this should all be dealt with together in next year's Finance Bill.
I reinforce what was said by the noble Lord, Lord Goodhart, and by my noble friend. I believe that the Minister is still gravely under-estimating the concern felt particularly by the IT industry but also by others who deliver their services through contractors rather than by direct employment.
One of the more influential bodies who have been making representations call themselves Forum 35. They represent 49 accountancy firms that specialise in advising IT contractors on issues associated with personal service companies. They have sent a note to me in which they say:
"We accept that it is not the Government's intention that legislation should adversely affect legitimate service companies that were not set up in order to avoid paying their share of taxation. However, we are deeply concerned that the new proposals may have an unintentional detrimental effect on legitimate service companies if they are not fairly and equitably applied to the IT industry where modern business practices make the application of the self-employment tests difficult."
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The noble Lord, Lord McIntosh, made the point about the two workers sitting side by side. If I may say so, he has totally identified the problem that these contractors are going to face if this clause goes through with the amendments now proposed by the Government. Martin Tallett writes:
"From my personal point of view I will fail the SE tests and were I to attempt to operate under the new IR35 I would not only be liable for the employee's NICs on essentially the whole of my contract but also the employer's NICs."
He goes on to say:
"From a computer industry point of view we expect that 95 per cent of computer industry contractors will fail the SE tests because we generally go to work, sit in an open plan office and use a terminal all day."
This is the point that has been made about the "snapshot". The Government have taken a "snapshot" of these two characters sitting side by side in front of their screens. One of them may be a full-time employee of the company: the other may be there on a short-term contract for a particular piece of work. That is the difference between the two, We simply have to look at this against the pattern of employment that has developed.
For some years I was the chairman of an insurance company, one of those which prided itself on being at the forefront of introducing information technology into the life insurance business. Again and again we found that the most effective way of dealing with the new matters, new procedures and new processes that had to be introduced was to use the contractors. This had all the advantages of having people there for the short-term burst of activity; and then they were free to move on elsewhere.
It is worse than that. Mr Lewis, another person who has made representations to me, wrote as follows:
"The irony of this whole situation is that the original press release, on 9th March 1999, stated the Revenue's intentions to prevent the so called Triday-to-Monday' abuse".
We all agree with that; that intention is perfectly legitimate. He goes on:
"This is when an employee could leave a company on a Friday as a normal employee, only to return again on Monday doing exactly the same job, but as an independent consultant employed through his own limited company".
He goes on:
"The latest proposals"—
these are the revised Inland Revenue proposals—
"actually allow this to happen, as the onus of paying any tax and NI is down to the independent contractor and not his client/agency. Unscrupulous employers could exploit this loophole, sacking employees on a Friday and allow them to return only if they trade as an independent through a limited company. The employer would not be liable for any PAYE, NI, pensions, redundancy payments or other benefits which go with normal employment".
If there is any substance in that—and there may well be—it seems another reason why the Government must take more time, think this through thoroughly and come up with a scheme at a later stage in a later Bill in order to make sure of things. Avoidance can be attacked without interfering with and destroying

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legitimate businesses. There is a fear in the industry that large numbers will have to go abroad in order to preserve their position.
This is one more example of the Government saying one thing—"We want to encourage e-commerce; we want to encourage private enterprise and entrepreneurs"—and then doing something that seeks to destroy both. We should not allow this clause to pass into the Bill.
The Earl of Kintore: My Lords, Amendment No. 184 seems to have joined this grouping. It may be for the convenience of the House if I speak now.
I first became interested in this clause just before the Committee stage on 20th July and I had prepared quite a good speech to make then. I refrained from speaking as the Minister suggested a meeting during the Recess to try and thrash out some of the problems (col. 938 of Hansard). In my innocence I really expected the meeting to take place and for organisations, such as the Professional Contractors Group, to be invited to give us the benefit of their considerable experience of the practical application of the proposed law and regulations for contractors, and to suggest improvements. The meeting did not take place. I concur with the remarks of the noble Lord, Lord Higgins, on what did take place.
Even as amended, this clause shows a lack of understanding of how the North Sea oil search works. The major oil companies, such as Shell, are oil producers and not engineering companies. When they want to exploit an oilfield they put out contracts to the major contractors such as AMEC, Brown and Root, and the Wood Group. The contracts will cover everything that is necessary to get the oil to flow.
The major contractors will have permanent staff to enable them to bid for contracts—they win about one in five—and once they have a contract they will need extra staff for all or part of the contract, which could last between six months and three years. These extra staff will be supplied either by a specialist agency or they will be individuals who have advised the major contractor of their special skills. Neither the main contractor nor the agencies will take the extra staff onto their employed payrolls as they will have the problem of firing them once the contract is completed. So a perfectly sensible system has evolved whereby individuals are prepared to live by their wits and bid to work on any contract which needs their expertise.
Many of those individuals probably offer their expertise through personal service companies and, when working, command high salaries. But those salaries have to keep them going while they are not in work. There have not been too many contracts in the North Sea recently, so there are some rather hungry individuals about who may indeed have arranged their affairs, quite legally, to pay as little tax and national insurance as possible. But it is the proud boast of those kinds of individuals that they do not go on the dole when they are out of work. They make their own pension arrangements, and probably have private medical insurance. So where is the mischief to the
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National Insurance Fund? Those people prefer to work in that way. They do not seek the benefits of employment protection legislation.
If the Government make operating through an intermediary so unattractive, there is a danger, particularly in the oil industry, of the intermediaries going abroad. It is a world-wide industry, and there are plenty of other countries that would be only too happy to have the skills that Aberdeen can provide. If one major professional contractor left Aberdeen, the rest would probably follow. The result would devastate the city's economy and, although it is of no concern to this Parliament, would cause severe difficulties for Aberdeen City Council, Aberdeenshire council and, I hope it is in order for me to say, the Scottish Parliament.
I could go on, but it is late. I hope that, even at this late stage, the Government can be persuaded to withdraw this clause. If they will not, I hope that the noble Lord, Lord Higgins, will consider testing the opinion of the House on Amendment No. 184.
Lord Campbell of Croy: My Lords, in introducing the government amendments, the noble Lord, Lord McIntosh of Haringey, described the changes that have been introduced since the Committee stage. In addition, a revised regulatory impact assessment has been published this month. I was invited to the seminar in London but I could not possibly get to it at short notice from northern Scotland because of my engagements there.
The issue of employment through personal service companies, known as intermediaries, needs to be examined carefully. I think we are all agreed on that. I agree with the remarks of my noble friends Lord Higgins and Lord Jenkin and I shall not expand on them. The original proposals would have penalised entrepreneurial enterprise—the opposite of New Labour's declared aims. I am advised that the revised version is likely also to cause damage. I am told that it could make matters worse for small businesses. The most vulnerable are those offering information technology and computer software services.
Since my remarks in Committee, I have received many complaints about this clause. It is surprising how many areas of our national activities it affects, especially where specialist work is required by a firm for only a few months. I endorse what my noble friend Lord Higgins said. Of course, we do not condone deliberate attempts to avoid national insurance contributions and PAYE. Besides the information technology industry, there are other industries and professions which are affected. An example which has been mentioned is the North Sea oil and gas industry. Its engineering and other specialist requirements offshore mean that specialists come only for a short time to do particular jobs. It would be cumbersome and unnecessary for individuals to have to be taken onto the roll of the companies concerned just for a few weeks or a few months. It does not make sense for them to be directly employed by the larger firms in that industry.

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There is also a fear about partnerships in general which provide consultancy services to various industries. That takes us into the professions. There are worries about accountants, doctors, architects and other professions. That kind of approach could lead to problems in those areas too.
Small enterprises might have to go out of business. That is where foreign competitors would gain advantages. The noble Lord, Lord McIntosh, pointed out that foreign competitors have to follow the same rules and would not be able to produce one-man companies. If our small companies go out of business, that is where the foreign competitors could gain.
There is much concern about the clause in sectors which are important to the British economy and, where the oil and gas industry are concerned, particularly Scotland and the north-east of Scotland. The noble Earl, Lord Kintore, spoke about that so I shall not say more. He and I both know the situation in northern Scotland, and it could be a devastating setback for the economy there, and also for Britain as a whole, if the oil and gas industry were to suffer greatly from these changes.
Lord Hughes of Woodside: My Lords, I had no intention of speaking in this debate until I heard the two noble Lords from the north-east of Scotland. If I had any doubts about the need for the clause before, I have none after hearing their speeches. What was apparently a fairly minor point now spreads to the extent that doctors, technology and the whole of the North Sea oil industry are in danger of collapse because of this amendment. Are they really trying to persuade this House that an amendment dealing with national insurance contributions will end the North Sea oil industry? I have never heard such bunkum in my life and I hope we are not going to listen to it.
Lord Campbell of Croy: My Lords, I do not know how long the noble Lord has been in the Chamber, but he has got hold of completely the wrong end of the stick. This provision was introduced in the other place as a new clause, but it is a major change, proposing major alterations. It is not something to be dismissed in the way that the noble Lord tries to do.
Lord Hughes of Woodside: My Lords, with due respect, noble Lords, certainly the noble Lord, Lord Campbell, have said in the House that the oil industry in the North Sea could—all right, he said "could"—be at serious risk.
Lord Campbell of Croy: My Lords, setback.
Lord Hughes of Woodside: My Lords, I believe the matter has been grossly exaggerated. The noble Lord may care to reflect that the Aberdeen Chamber of Commerce was reported as saying that the allegations that 17,000 people might have to leave employment in the North Sea and go to work in, of all places, the
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Soviet Union is somewhat an exaggeration of the situation. We should dispose of the argument here and now.
Lord Campbell of Croy: My Lords, neither the noble Earl nor I mentioned that figure, nor did we mention the Aberdeen Chamber of Commerce.
Lord McIntosh of Haringey: My Lords, I take it that I have to reply to two kinds of objections in this fascinating debate. One is about process and the other about product, the real issue. The debate has been very heavy on process and rather light on product. On the basis of what I have heard, there has not been any convincing argument for the Government to agree to withdraw this clause.
I should like to deal first with process, which in my view is the less important issue. The Chancellor, quite unusually and with great regard for public consultation and feeling, announced a tax avoidance measure in advance. Normally, such a measure would be introduced in the Budget and there would be no opportunity for debate other than in Committee in another place on the Finance Bill. There would be no debate in this House and no opportunity to table amendments and give the matter the kind of consideration that noble Lords have given it. The Chancellor, with unprecedented concern for the public, announced this matter in advance. It was introduced at the first opportunity in another place at Report stage on the Welfare Reform and Pensions Bill.
I totally reject any suggestion that it would have been possible to introduce these amendments in Committee. They were introduced the first time it was physically possible to do so. Those amendments were available for debate. Admittedly, there was a guillotine, but they were debated in the other place in full in a way that, under the previous government, they would never have been considered in this House because of the principle, to which I adhere, that the Finance Bill is concerned with the Consolidated Fund, and the National Insurance Fund is a matter for other legislation.
The noble Lord, Lord Higgins, accuses me of poor consultation. I shall turn to that in a moment. I recall that he did not give me any notice of his bombshell of 23rd March 1987; nor did he emphasise that what happened in 1987 was for that Session only and that no government of either persuasion had sought to introduce it again. Perhaps it was thought not to be a very good idea and it would be better that the Finance Bill should be concerned with the Consolidated Fund and that matters concerned with the National Insurance Fund should not be taken out of the purview of this House. If that is what the noble Lord proposes, so be it. However, that would be the effect of what he proposes. That would certainly be the effect if this clause were removed from the Bill. It would not be considered at Third Reading, and I am not sure that it would ever come back again. We would have to introduce it in another way.
The second accusation about process is concerned with the nature of the consultation. The consultation was incredibly detailed. We sent out over 1,800 copies

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of the original proposals, held two consultative meetings with 38 representative bodies and received 1,700 written comments and suggestions. We have paid attention to them and fundamentally changed the proposals as a result. Am I supposed to apologise for that? Certainly not. In particular, having had the satisfaction of everybody else I am told that the Professional Contractors Group still objects. I remind the noble Lord that the group was present at our seminar last week in support of the noble Earl, Lord Kintore. When the representative of that group was asked whether there was anything to complain about in the consultation he said that there was not. As a qualification, he said that the Revenue was determined to achieve its objective and it would not budge, but he did not complain about the nature of the consultation. I do not take those objections very seriously. The current convention of this House and another place on the consideration of these matters is greatly to the advantage of this House. It is astonishing that the noble Lord should seek to change it.
Lord Jenkin of Roding: My Lords, before the noble Lord leaves the question of process, will he comment on the allegation that, while the Revenue was still talking to bodies, the revised proposals were already in draft and ready to be published? That seems to me to be a thoroughly disreputable way of misleading people.
Lord McIntosh of Haringey: My Lords, that is way over the top. Of course, we have been considering ways in which to respond to consultations which have been coming in since April of this year. If there was a meeting at a time when consideration was advanced, what is wrong with that? There have been other meetings and consultations and there have been plenty of other opportunities. Nobody else has complained about the nature of the consultation, except those who have clearly been filling the e-mail and mail boxes of noble Lords opposite. Noble Lords will forgive me if I pass on to the more important matter of the content of the clause.
The noble Lord, Lord Goodhart, made a worthwhile point. He said that in returning to the existing tests that have been built up by case law over a considerable period we have to consider whether those tests are adequate. He said that they would have to be reconsidered. I totally reject the view of the noble Lord, Lord Higgins, that we were receiving information about these for the first time. These tests have been built up by the courts over many years. They are not new to anybody, and certainly not new to the noble Lord, Lord Higgins, nor to anybody like me who has run a small business.
If the Tax Law Review Committee wishes to make comments about the nature of these tests, of course we are open to suggestions as to how they should be improved, subject to the legislation and case law. We have yielded to the thrust of the consultation, which is that we should go back to the existing law and not introduce a new and simpler criterion.
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We are told, as a new complaint, that this means that the intermediaries will have the additional burden of paying the national insurance contributions and, in due course, the tax. They can get out of that immediately; they can abolish single-person companies. Like my market research interviewers with whom I have bored noble Lords in the past, they can go back to their PAYE being calculated by their employers without the device of a single-person company. If the tax avoidance benefits are removed, that is exactly what they should do.
Lord Goodhart: My Lords, in that case does the Minister not think there is a risk that the clients would simply refuse to take them on on that basis?
Lord McIntosh of Haringey: My Lords, if that were the case, it would have been the case for 30 or 40 years. In market research, where that has always been the case and there has always been a requirement on research companies employing interviewers to keep a payroll for them, those research companies would have taken advantage of any loophole. Nothing new is being proposed. If there is no abuse of this kind, there is no supposition that there will be abuse in the future.
Since we are talking about these single person companies, these intermediaries, let us rid ourselves of the illusion that these are entrepreneurs. They are not entrepreneurs in the sense that the noble Earl, Lord Kintore, or the noble Lord, Lord Jenkin, spoke about; these are persons working entirely for themselves and by themselves who have chosen to set up a company, maybe for legitimate reasons, but in some cases in order to avoid paying a national insurance contribution and PAYE by paying themselves in the form of dividends rather than in the form of earnings. As soon as they become real entrepreneurs and employ somebody else or expand, they can no longer do that because they have to have a payroll. This clause will not then apply to them.
All the talk we have heard about the IT industry, the North Sea oil industry and all this emotional stuff is way outside the scope of the amendment. We really have no case to answer here. We are doing a simple thing to get rid of tax avoidance. We are doing it in a way which, after consultation, has received the approval of virtually everybody who has been consulted, and the idea that we should back down now on the arguments we have heard is simply not acceptable. I beg to move.
On Question, amendment agreed to.
[Amendment No. 167 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 168 to 180:
Page 75, line 10, leave out from ("his") to end of line 11
Page 75, leave out lines 12 to 16 and insert—
("(2) For the purposes of this section—

(a) "the intermediary" means—

(i) the third person mentioned in subsection (1)(b) above, or

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(ii) where the third person does not have such a contractual or other relationship with the worker as may be specified, 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.")
Page 75, line 21, leave out ("relevant payments or benefits,") and insert ("the specified amount of relevant payments or benefits (the worker's "attributable earnings"),")
Page 75, line 22, leave out ("client") and insert ("intermediary")
Page 75, line 23, leave out ("client") and insert ("intermediary")
Page 75, line 24, leave out from ("of") to end of line 26 and insert ("the worker's attributable earnings;")
Page 75, line 30, leave out from ("of') to ("period") in line 32 and insert ("the worker's attributable earnings for any specified")
Page 75, line 33, 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;")

Page 75, line 44, leave out ("third party") and insert ("intermediary")
Page 76, line 1, at end insert ("persons, whether—

(i)")

Page 76, line 4, after ("1988)") insert (", or

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

Page 76, line 12, 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.")

Page 76, leave out lines 18 to 28
On Question, amendments agreed to.
[Amendment No. 181 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 182 and 183:
Page 76, line 40, leave out ("third party") and insert ("intermediary")
Page 76, line 45, leave out from beginning to end of line 2 on page 77
On Question, amendments agreed to.
Lord Higgins Lord Higgins moved Amendment No. 184:
Leave out Clause 71
The noble Lord said: My Lords, I wish to test the opinion of the House.
11.15 p.m.
On Question, Whether the said amendment (No. 184) shall be agreed to?
Resolved in the affirmative, and amendment agreed to accordingly.
Clause 72 [Earnings of workers supplied by service companies etc: Northern Ireland]:
[Amendments Nos. 185 to 203 not moved.]
11.25 p.m.
Lord Goodhart Lord Goodhart moved Amendment No. 204:
Leave out Clause 72
The noble Lord said: My Lords, this is the twin of Amendment No. 184 relating to Northern Ireland, moved formally.
Clause 76 [Supply of information for child support purposes]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 205:
Page 82, line 7, after ("State") insert ("or the Department of Health and Social Services for Northern Ireland")
The noble Baroness said: My Lords, this amendment inserts a reference to the Department of Health and Social Services for Northern Ireland into Clause 76. That will enable the Inland Revenue to provide information to DHSS Northern Ireland in the same way that Clause 76 allows it to provide information to the Child Support Agency in the rest of the United Kingdom.
Noble Lords might find it helpful if I give a brief explanation of Clause 76. It will permit the Inland Revenue to supply, on a discretionary basis, information about the income of self-employed parents. The amendment is necessary because the Inland Revenue is a UK-wide organisation. It is therefore not possible for Northern Ireland legislation to create this discretionary gateway.
The provision will he used when the CSA or DHSS have exhausted their normal lines of inquiry in pursuing self-employed non-resident parents who are failing to support their children as they should. At this point, the tax information that the self-employed nonresident parent gave to the Inland Revenue may be used to calculate a safe and accurate level of
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maintenance assessment for the purposes of child support. This is a carefully targeted provision which deals with a long-standing difficulty. It is a sensible extension to a necessary and carefully targeted provision. I commend it to the House. I beg lo move.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 206 and 207:
Page 82, line 12, after ("State;") insert—

("( ) the Department of Health and Social Services for Northern Ireland;")

Page 82, line 13, leave out ("his") and insert ("either of them")
Clause 79 [Regulations and orders]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 208 and 213:
Page 83, line 26, after ("orders") insert("(other than orders under section 68(2))")
Page 84, line 25, after (" 56") insert ("or 75")
Page 84, line 26, at end insert—
("( ) Without prejudice to the generality of arty of the preceding provisions of this section, regulations under section 56 or 68 may provide for all or any of the provisions of the regulations to apply only in relation to any area or areas specified in the regulations.")
Page 84, line 31, leave out ("person") and insert ("authority")
Page 84, line 32, leave out ("person") and insert ("authority")
Page 84, line 33, leave out ("he, or they,") and insert ("the authority, or the authority and the Treasury,")
Clause 80 [Consequential amendments etc.]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 214:
Page 85, line 3, leave out paragraph (c)
Schedule 12 [Consequential amendments]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 215 to 222:
Page 142, line 41, leave out from ("court") to ("make") in line 42 and insert ("shall not, in the same proceedings,")
Page 142, line 44, leave out ("nor

(b)") and insert—

("(5) Where, as regards a pension arrangement, the parties to a marriage have in effect a qualifying agreement which contains a term relating to pension sharing, the court shall not—

(a) make an order under section 12A(2) or (3) of this Act; or

(b) make a pension sharing order,

relating to the arrangement unless it also sets aside the agreement or term under section 16(1)(b) of this Act.
(6) The court shall not").
Page 143, line 2, at end insert—
("(7) In subsection (5) above—

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(a) "term relating to pension sharing" shall be construed in accordance with section 16(2A) of this Act; and

(b) "qualifying agreement" has the same meaning as in section 25(3) of the Welfare Reform and Pensions Act 1999."").

Page 143, leave out lines 17 to 24
Page 144, line 22, after ("or") insert ("sets aside or")
Page 145, line 26, at end insert—
("Income and Corporation Taxes Act 1988 (c. 1")
12A. In section 659D(2) of the Income and Corporation Taxes Act 1988, for "24(1)" there is substituted "25(1)".")
Page 146, line 27, after ("paragraph") insert ("(a)")
Page 147, line 34, after ("after") insert ("this")
[Amendment No. 223 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 224 to 262:
Page 148, line 6, after ("Part") insert ("III or")
Page 148. line 14, at end insert—
(" . In section 183(3), for "and 97(1)" there is substituted ", 97(1) and 101 I".")
Page 153, line 46, after ("(1)(a)") insert ("and")
Page 153, line 46, leave out ("and (2C)(c)(i)")
Page 155, line 9, at end insert—
("(17) At the end of Part I insert—
"The Welfare Reform and Pensions Act 1999
43A. In section (Charges by pension arrangements in relation to earmarking orders) of the Welfare Reform and Pensions Act 1999 (charges by pension arrangements in relation to earmarking orders), for "section 23" substitute "section 22A or 23"."").
Page 155, line 26, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 155, line 35, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 155, line 43, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 156, line 4, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 156. line 19, after ("creditors") insert ("("the")
Page 156, line 21, after ("of") insert ("the")
Page 156, line 24, leave out ("does not represent excessive contributions") and insert ("is not recoverable")
Page 156, line 27, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 156, leave out lines 47 and 48
Page 157, line 18, leave out ("on the debtor's estate")
Page 157, line 21, leave out ("debtor") and insert ("transferee")
Page 157, line 24, leave out ("debtor") and insert ("transferee")
Page 157, line 31, leave out ("36C(1)") and insert ("36F(1)")
Page 157, line 38, leave out ("lesser") and insert ("smallest")
Page 157, line 40, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 157, line 41, after ("contributions,") insert—

("( ) so much (if any) of the amount of the unfair contributions (within the meaning given by section 36D(6)) as is not recoverable by way of an order under section 36A of this Act containing provision such as is mentioned in section 36B(1)(a),")

Page 157, line 47, leave out ("on the debtor's estate")
Page 158, line 12, leave out ("on the debtor's estate")
500
Page 159, line 23, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 159, line 31, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 159, line 35, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 159, line 51, after ("creditors") insert ("("the") Page 160, line 2, after ("of") insert ("the")
Page 160, line 5, leave out ("does not represent excessive contributions") and insert ("is not recoverable")
Page 160, line 8, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 161, line 24, leave out ("lesser") and insert ("smallest")
Page 161, line 26, leave out ("represents excessive contributions") and insert ("is recoverable")
Page 161, line 26, after ("contributions,") insert—

("( ) so much (if any) of the amount of the unfair contributions (within the meaning given by section 342D(5)) as is not recoverable by way of an order under section 342A containing provision such as is mentioned in section 342B(1)(a),")

Page 161, line 26, after ("contributions,") insert—

("( ) so much (if any) of the amount of the unfair contributions (within the meaning given by section 342D(5)) as is not recoverable by way of an order under section 342A containing provision such as is mentioned in section 342B(1)(a),")

Page 163, line 27, leave out ("section 342C(7)") and insert ("sections 342C(7) and 342F(9)")
Page 164, leave out line 22 and insert—
("77. The Administration Act has effect subject to the following amendments.
77A. After section 140E insert—")
Page 164, line 43, at end insert—
("77AA. In section 170(5) (enactments conferring functions in respect of which Social Security Advisory Committee is to advise)—

(a) in the definition of "the relevant enactments", after paragraph (ad) insert—

"(ae) sections 56, 68 and 75 of the Welfare Reform and Pensions Act 1999;"; and.

(b) in the definition of "the relevant Northern Ireland enactments", after paragraph (ad) insert—
"(ae) any provisions in Northern Ireland which correspond to sections 56, 68 and 75 of the Welfare Reform and Pensions Act 1999;".").
Page 164, line 43, at end insert—
("77AAA. In section 189 (regulations and orders—general), after subsection (7) insert—
"(7A) Without prejudice to the generality of any of the preceding provisions of this section, regulations under any of sections 2A to 2C and 7A above may provide for all or any of the provisions of the regulations to apply only in relation to any area or areas specified in the regulations.").

501
Page 164, line 43, at end insert—
("77B. In section 190 (Parliamentary control of orders and regulations), in subsection (1) (instruments subject to the affirmative procedure), before the "or" at the end of paragraph (a) insert—

"(aa) the first regulations to be made under section 2A;"").

Page 165, line 27, at end insert—
(''Social Security Act 1998 (c.14)
81. In Schedule 2 to the Social Security Act 1998 (decisions against which no appeal lies), after paragraph 5 insert—
"Work-focused interviews
5A. A decision terminating or reducing the amount of a person's benefit made in consequence of any decision made under regulations under section 2A of the Administration Act (work-focused interviews)." ").
Clause 81 [Transitional provisions]:
Lord Goodhart Lord Goodhart moved Amendment No. 263:
Page 85, line 20, leave out from ("day") to end of line and insert ("specified in regulations")
The noble Lord said: My Lords, the amendment deals with a short and simple point and, as it is late, I hope to move it quickly. I certainly have no intention of dividing the House on it. I believe that your Lordships have had enough for today.
Clause 81(3) now provides that pension sharing orders cannot be made in proceedings which start before Clause 19 of the Bill comes into force. I agree that pension sharing orders should not be made where the divorce proceedings have been started a substantial time previously. However, once the Bill has been enacted and it is clear that the power to order pension sharing will come into force, people are likely to hold up the start of their divorce proceedings until the pension sharing provisions come into force. That will create a log jam and, indeed, I suspect that that may already be happening.
My proposal is modest. I suggest that when the Government decide on the date on which they are going to bring into force Clause 19—which I assume is likely to be some time after this Bill is enacted—they should make a commencement order for Clause 19. At the same time they should make an order directing that Clause 19 applies to divorce proceedings begun after a date which is, say, three months earlier than the date on which it is intended that Clause 19 itself should come into force. Therefore, if a commencement order is made in, let us say, April bringing Clause 19 into force on 1st October next year, the power to make pension sharing orders should apply to any proceedings started after, say, 1st July next year.
That would enable the courts to start making orders as soon as Clause 19 comes into force. The courts will have in front of them divorce proceedings waiting to be dealt with and the proposal in the amendment would reduce what would, I fear, be a serious log jam
502
problem in divorce proceedings. Otherwise, I believe that from now on, wherever there is a prospect of a pension sharing order, divorce proceedings will simply be held up and there could be cases where a husband who is confident that there is a possibility of divorce on the basis of a five-year separation may decide to bring forward his divorce proceedings simply in order to avoid the risk of a pension sharing order being made.
That is a simple point. If the Government are not willing to accept it, so be it. I beg to move.
Baroness Hollis of Heigham: My Lords, the simple answer is that the Government are not willing to accept the amendment. The amendments return to an important issue raised by the noble Lord at Second Reading: the Government's intention that pension sharing should apply only to divorce proceedings that commence on or after the day on which the pension sharing provisions come into force.
At Second Reading the noble Lord, Lord Goodhart, suggested that it would be reasonable to extend pension sharing to those cases where divorce proceedings begin after the Bill has received Royal Assent, as opposed to its implementation, which we are expecting at around the end of the year 2000. I disagree. It is a general principle of English and Scottish law that retrospective legislation should be avoided wherever possible. Many of those who gave evidence to the Social Security Select Committee on this issue shared that view. For example, the Solicitors' Family Law Association. in its evidence to the committee, were adamant that the Bill should forbid retrospection even in those cases where hardship was claimed. That is why the committee recommended that the Bill should make it absolutely clear that pension sharing may be used only in cases where the application for divorce is made after the pension sharing provisions come into force.
I accept that some cases of hardship may arise. I understand that there is a risk that some couples will choose to defer divorce proceedings until pension sharing becomes available and the extra distress that deferment may cause. However, on balance, the Government agree with the Select Committee that the case against retrospection is more persuasive. That is why we acted upon it. I understand that the overwhelming consensus in the legal profession is that the policy is right. It is easy for people to understand. It will spare pension schemes from having to deal with a surge of work immediately after implementation.
In the light of that and the fact that we are responding to the position endorsed by the vast majority of the legal profession, I hope that the noble Lord will withdraw his amendment.
Lord Goodhart: My Lords, before I do so, I should like to say that I believe that the Minister and her advisers have got it entirely wrong. I simply do not see how saying that pension sharing arrangements should

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apply to divorce proceedings which commence after the Bill itself has been enacted could possibly be retrospective. Quite plainly they are not. Of course in an entirely different sense pension sharing will be retrospective in that it will apply to pension rights which have accrued before the date on which the Bill is passed. I have no objection to that.
I believe that what I am proposing here cannot possibly be regarded—
Baroness Hollis of Heigham: I thank the noble Lord. I do not challenge him on the definition of retrospection as it applies to pensions that have accrued in the past. I should like to make that clear. However, there is often a difference between the date of Royal Assent and the date of implementation. The noble Lord knows that perfectly well. Many Bills are passed, but implementation is set for some later date because of the need for regulations to be passed, IT systems to be set up and so forth. That often happens when new benefit legislation is introduced, and that was certainly the case with JSA.
I do not know of any case in social security where, having passed a Bill with implementation coming in at a later date, some cases have been allowed to take effect before implementation. For this measure, by definition, the date of implementation is not Royal Assent. At that point the legal profession will not necessarily be ready to go.
Lord Goodhart: My Lords, I am unable to accept that pension sharing applying to divorce proceedings commenced after the Bill has been enacted is in any sense, as it is usually understood, retrospective. Be that as it may, this is simply a practical point and there is no great point of principle here. However, I believe that the courts will find themselves with a serious practical problem. So far as I can see, from now until the Bill is implemented—we have been told that that may happen towards the end of the year 2000—divorce proceedings are going to be delayed, and there will be a serious logjam. But it is not my intention to press the amendment, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 264 and 265 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 266:
After Clause 82, insert the following new clause—
CORRESPONDING PROVISIONS FOR NORTHERN IRELAND
(". An Order in Council under paragraph 1(1)(b) of Schedule 1 to the Northern Ireland Act 1974 (legislation for Northern Ireland in the interim period) which contains a statement that it is made only for purposes corresponding to those of this Act—

(a) shall not be subject to paragraph 1(4) and (5) of that Schedule (affirmative resolution of both Houses of Parliament), but

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(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.")

Schedule 13 [Repeals]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 267 to 269:
Page 167, line 4, column 3, at end insert—

("Section 12A(8)(b).")

Page 167, line 18, column 3, at end insert—

("In schedule 3, paragraph 45(a).")

Page 168, line 53, at end insert—

("1999 c 10 Tax Credits Act 1999.

In Schedule 1, paragraph 2(d).")

Clause 84 [Commencement]:
[Amendment No. 270 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 271:
Page 86, line 21, at end insert—
("( ) The following provisions shall not come into force until such day as the Treasury may by order appoint—

(a) sections 69 to 74;

(b) section 80(1) so far as relating to paragraphs 72, 74 to 76 and 78 to 80 of Schedule 12; and

(c) section 83 so far as relating to Parts VI and VII of Schedule 13.")

[Amendments Nos. 272 and 273 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 274 and 275:
Page 86, line 28, leave out ("paragraph 77") and insert ("paragraphs 12A, 77 to 77B and 81")
Page 86, line 31, leave out ("section 82,") and insert ("sections 82 and (Corresponding provisions for Northern Ireland),")
[Amendment No. 276 not moved.]
Clause 85 [Extent]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 277 to 284:
Page 87, leave out lines 15 and 16 and insert—
("( ) Part I;")
Page 87, line 19, at end insert—

("( ) sections (Supply of pension information in connection with divorce etc.), (Charges by pension arrangements in relation to earmarking orders) and (Interpretation of Part III);")

Page 87, line 27, after ("61") insert (", 64(17)")
Page 87, line 27, leave out ("and 74 to 77") and insert (", 74 to 77A, 77AAA, 77B and 81")
Page 87, leave out line 32
Page 87, line 41, after ("paragraphs") insert ("12A and")

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Page 87, line 41, after ("73") insert ("and 77AA")
Page 88, line 8, at end insert ("; and

( ) section (Corresponding provisions for Northern Ireland).")

Clause 86 [Short Tide and general interpretation]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 285:
Page 88, line 22, at end insert—
("( ) For the purposes of the Scotland Act 1998, the following provisions shall be taken to be pre-commencement enactments within the meaning of that Act—
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(a) paragraphs 8(3) and (4) and 10 of Schedule 12; and

(b) so far as relating to those provisions, sections 79. 80(1) and 84(1) and (5).").

The noble Baroness said: My Lords, we opened with a bang and we end with a whimper, to coin a cliché. This is a technical amendment which will allow Scottish Ministers to exercise powers in relation to two small elements of Scottish family law which relate to valuing pensions at divorce and for convenience are contained in the Bill. I beg to move.
House adjourned at twenty-one minutes before midnight.