HL Deb 13 October 1999 vol 605 cc456-506

8.56 p.m.

Further consideration of amendments on Report resumed.

Clause 60 [Incapacity benefit: persons incapacitated in youth]:

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 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 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.

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.

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 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] 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 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 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 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 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 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 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 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 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.

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 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 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.
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 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 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—

  1. (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
  2. (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 moved Amendments Nos. 151 and 152: Page 124, line 30, at end insert—

  1. (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
  2. (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 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—

  1. (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
  2. (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—

  1. (a) section 110A (appointment of inspectors by authorities administering housing benefit or council tax benefit);
  2. (b) sections 122C, 122D and 122E (supply of information in connection with administration of housing benefit or council tax benefit);
  3. (c) section 126A (power to require information from landlords etc. in connection with claims for housing benefit);
  4. (d) section 182B (information about redirection of post); and
  5. (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 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 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 moved. Amendment No. 155: Page 72, line 37, at end insert—

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 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 moved Amendment No. 157: Page 128, line 16, at end insert—

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 moved Amendments Nos. 158 to 164: Page 133, line 41, at end insert—

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 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 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 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 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.

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.

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 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 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.

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"— 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. 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 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 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.

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 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 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.

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 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—

  1. (a) "the intermediary" means—
    1. (i) the third person mentioned in subsection (1)(b) above, or
      2. 495
    2. (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
  2. (b) a person may be the intermediary despite being—
    1. (i) a person with whom the worker holds any office or employment, or
    2. (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— Page 75, line 44, leave out ("third party") and insert ("intermediary") Page 76, line 1, at end insert ("persons, whether—
  1. (i)")
 Page 76, line 4, after ("1988)") insert (", or
  1. (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—
  1. (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;
  2. (b) for securing reductions in the amount of the worker's attributable earnings on account of—
    1. (i) any secondary Class 1 contributions already paid by the intermediary in respect of actual earnings of the worker, and
    2. (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 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 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 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 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 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 moved Amendments Nos. 206 and 207: Page 82, line 12, after ("State;") insert—

Page 82, line 13, leave out ("his") and insert ("either of them")

Clause 79 [Regulations and orders]

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 moved Amendment No. 214: Page 85, line 3, leave out paragraph (c)

Schedule 12 [Consequential amendments]:

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

  1. (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—
  1. (a) make an order under section 12A(2) or (3) of this Act; or
  2. (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—
  1. (a) "term relating to pension sharing" shall be construed in accordance with section 16(2A) of this Act; and
  2. (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 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—

Page 157, line 47, leave out ("on the debtor's estate") Page 158, line 12, leave out ("on the debtor's estate") 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— Page 161, line 26, after ("contributions,") insert— 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)— (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."). 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— 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 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 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 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 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—

  1. (a) shall not be subject to paragraph 1(4) and (5) of that Schedule (affirmative resolution of both Houses of Parliament), but
    2. 504
  2. (b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.")

Schedule 13 [Repeals]:

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 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—

  1. (a) sections 69 to 74;
  2. (b) section 80(1) so far as relating to paragraphs 72, 74 to 76 and 78 to 80 of Schedule 12; and
  3. (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 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 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—

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

Clause 86 [Short Tide and general interpretation]:

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—

  1. (a) paragraphs 8(3) and (4) and 10 of Schedule 12; and
  2. (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.

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