Orders of the Day — Social Security Bill

House of Commons, 13 May 1998.

Oliver Letwin (Conservative, West Dorset)

On a point of order, Madam Speaker. The financial memorandum was issued before the Lords considered the Bill and contains figures in tens of millions. Since then, the financial effects have increased and the sums involved will be between £1.3 billion—and, if the amendments are accepted—at least £2.6 billion greater. Could you instruct me how the Government should proceed under such circumstances?

Betty Boothroyd (Speaker, West Bromwich West)

The matter that the hon. Gentleman has raised is not a matter for the Chair. The financial implications of the Bill are a matter for the Government. The hon. Gentleman can seek to catch my eye to put those points to the Minister at the appropriate time.

LORD CHANCELLORS PANEL FOR APPOINTMENT TO APPEAL TRIBUNALS

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Betty Boothroyd (Speaker, West Bromwich West)

With this, it will be convenient to discuss Lords amendments Nos. 2, 4, 7, 8, 98, 100, 101 and 113.

Keith Bradley (Labour, Manchester, Withington)

The amendments change the provisions relating to appointment of persons to the panel to act as members of appeal tribunals. The Bill currently provides for the Lord Chancellor and the Lord Advocate each to appoint a separate panel under clauses 6 and 7 respectively. The effect of the amendments is that the Lord Chancellor will be responsible for the appointment under clause 6 of a single panel for the whole of Great Britain. The amendments were prompted by the introduction of the Scotland Bill, which interacts with the operation of clause 7. Under the provisions of that Bill, there will be some changes to the role of the Lord Advocate. It is possible that the Lord Advocate, as a Minister in the Scottish Executive, might have functions similar to those which he currently exercises in relation to tribunals; however, the position will not be clear until after Scottish devolution has taken place. At that stage, the UK Government may consider transferring a Scottish Minister the function of making appointments to a panel in relation to Scotland, through provisions in the Scotland Bill for the further transfer of functions. We consider it important to have clarity in responsibility for the appointments and to preserve the independence of the panel and appointments to it. We have concluded that it would not be right to retain clause 7 in the knowledge that the functions it lays on the Lord Advocate would be removed through another Bill currently before Parliament. I commend the amendments to the House.

John Swinney (Scottish National Party, North Tayside)

I have listened carefully to the Minister's speech and read the various notes on the clauses and the amendments, but I do not fully understand why the Government believe it necessary to make such a change. If I heard the Minister correctly, he said that, once the Scottish Parliament and the Scottish Executive were functioning fully, it was either likely or possible for the power of appointment to be repatriated to a Minister who may be a member of the Scottish Executive. As I understand the Scotland Bill, the powers of the Lord Advocate in general will not be dissimilar to the powers of the Lord Advocate today, yet the Lord Advocate is to be stripped of an important power to make appointments to a tribunal. That raises the issue of more power haemorrhaging, on a temporary basis, to the Lord Chancellor's Department, and I wonder to what extent there will be enthusiasm for the power being repatriated to the Scottish Executive at some stage in the future. Once power has moved in one direction, it is hard to imagine it moving back to the Scottish Executive. I should be grateful for some explanation from the Minister on that point, and specifically on the process to be used by the Lord Chancellor's Department to ensure that the input that the Lord Advocate can clearly bring to the appointments process will be assured while the arrangements change. It is a point of interest and importance that, during the passage of the Scotland Bill, the Government resisted amendments that I tabled with the support of many voluntary organisations, which were designed to devolve to the Scottish Parliament the power of administering various aspects of social security. I stressed the importance of ensuring that a Scottish perspective was brought to the process of administering social security in Scotland. For example, the House has often debated the weaknesses of the administration of the benefit integrity project, and I should have thought that a Scottish perspective would bring tighter administrative processes to that project. I do not understand why the Government fiercely resisted my amendments then, given that we are now faced with proposals in the Social Security Bill to take more power away from one of the Ministers who may be a member of the Scottish Executive and who could act to secure Scottish interests. I seek clarification. I fear that an important power currently exercised by the senior Law Officer in Scotland may not be exercised by the Scottish Executive, and the temporary hiatus is unsatisfactory.

Keith Bradley (Labour, Manchester, Withington)

It would not be appropriate to repeat all the arguments advanced in debates on the Scotland Bill. Let us stick to the point that we are discussing. We are trying to ensure clarity during the interim period until the proper functions and arrangements for transferred functions in the Scotland Bill have been finally clarified. We do not want any delays or problems in the appeal system in the meantime, and we want to ensure its continued independence.

Simon Burns (Conservative, West Chelmsford)

The Minister says, "until the powers and functions have been clarified." What is the stand-by position if clarification does not work out in the way that I assume the Minister expects?

Keith Bradley (Labour, Manchester, Withington)

It is not our intention that the arrangements will not work out. We cannot hypothetically guess what would happen if something else does not happen.

Simon Burns (Conservative, West Chelmsford)

Will the Minister give way?

Keith Bradley (Labour, Manchester, Withington)

No. This is a small point, and I want to make progress. I take the point made by the hon. Member for North Tayside (Mr. Swinney) about the Lord Advocate's being made aware of, and involved in, discussions, and I shall write to the hon. Gentleman on it. We want to ensure a smooth transition of functions. Agreeing with what was universally agreed in the Lords will advance that process, and ensure that there is no confusion. I hope that that satisfies the hon. Gentleman, but I shall consider his point and ensure that he receives a written explanation if the arrangements that we intend to introduce will, in any way, undermine the Lord Advocate's opportunity to be involved in discussions.

CONSTITUTION OF APPEAL TRIBUNALS

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Betty Boothroyd (Speaker, West Bromwich West)

With this, it will be convenient to discuss also Lords amendments Nos. 5, 6, 9 and 108.

Keith Bradley (Labour, Manchester, Withington)

Lords amendments Nos. 3 and 5 are about the legal qualifications of tribunal chairmen or members. Concerns were expressed in Committee, and in other places, about the proposal that not all tribunals needed a legally qualified member. It was suggested that only a lawyer would have the skills and experience necessary to conduct the hearing of an appeal. The Government believe that a number of appeals could be determined by an appropriately trained person who does not have formal legal qualifications, but we want to adopt a pragmatic approach, and to introduce new, more effective and efficient arrangements for handling appeals. We have reconsidered both the kind of appeal that could be dealt with by a single, non-legally qualified panel member, and the administrative arrangements for selecting such appeals. We found that fewer than 5 per cent. of appeals could be dealt with in that way, and concluded that there would be no benefit in introducing such an arrangement at present, as the estimated number of cases is very small. We have decided that, at least for the time being, the practicalities suggest that there is a case for retaining lawyers on all tribunals. We may wish to reconsider the position following welfare reform and the introduction of simpler benefit structures, when it is possible that more cases would be suitable for determination by panel members without formal legal qualifications. Lords amendments Nos. 6, 9 and 108 clarify issues of detail concerning regulations—also in response to anxieties expressed here and in another place. Amendment No. 9 stipulates that regulations shall be made to provide for the composition of appeal tribunals; (b) the procedure to be followed in for allocating cases among differently constituted tribunals; (c) the manner in which expert assistance is to be given to the tribunals. As I said in Committee, it has always been the Government's intention to make regulations to provide for these matters; the amendments simply do so in the Bill. I remind the House that regulations made under clause 8(3) will be subject to the affirmative resolution procedure. I commend the amendments to the House.

David Rendel (Liberal Democrat, Newbury)

As the Minister might expect, I am delighted with the amendments, and I fully support what he is doing. We said in Committee that it might not be obvious at these appeals that legal points might be about to be raised, so I am pleased that Minister now accepts that many cases may involve legal implications, and that the cases which do not are so few and far between that it is not worth the risk of leaving out legally qualified people. It has always seemed to us likely that time and money would be saved by putting someone with legal qualifications on every panel. I still believe that to be true, and it seems that the Minister now more or less agrees. Even in Committee, the Government accepted that it was important that legal advice should be available at all times. The amendments are the obvious and logical conclusion of what they said then. In Committee, my good and hon. Friend the Member for Northavon (Mr. Webb) said: The Bill will make it possible for a single person to decide a social security appeal. Although the Minister has assured the Committee that that person will be 'a decent chap or chapess', there is no requirement that he or she have legal qualifications…it is possible that the person who comprises a single-member tribunal will have no legal qualification. Despite what the Minister has said today about including the requirement in the Bill, it is worth reminding the House of what he said in Committee: We do not accept that qualification requirements of tribunal members should be in primary legislation." — [Official Report, Standing Committee B, 4 November 1997; c.15–6.] I am delighted that the Minister has reversed what he said in Committee, and proud that my party made the point at the time.

Nigel Waterson (Conservative, Eastbourne)

I, too, welcome the amendments. It is also a great pleasure to see the Minister in his place, reminding me of many pleasant hours spent in Committee. As he rightly said, concerns were expressed there and elsewhere about this point—and I was one of those who expressed them. The Minister used the phrase "adopting a pragmatic approach", for which read "U-turn". I assume that that is the new spin doctor's term for a U-turn, and I look forward to the phrase appearing with dismal regularity throughout the rest of today. I had written down the phrase "a listening Government", but it seems that that hoary old chestnut has been put out to pasture—[Interruption.] I do not believe that the Minister actually used the phrase today, although it is perhaps so deeply embedded in his psyche that he thinks he did. At any event, we heard it used a great deal in Committee. It is just a pity that the Minister did not listen to us on this particular point. In Committee, the Minister was adamant that this was not the right way to go, but he left himself a small escape hatch by saying that the Government might have to revisit the issue following welfare reform. We know that that is a very long way off yet so we need not dwell on that at great length today. The Minister touched on the question of the affirmative resolution procedure. He is right to say that we will come to that in much more detail later. It is worth revisiting the Committee stage, when members of both Opposition parties not only put their views on the question of a legally qualified member or members of an appeals tribunal, but prayed in aid the views of several independent organisations. The Law Society was one. In its brief on the subject, the Legal Action Group said that it was opposed to the proposed change to the composition of tribunals, which would be a retrograde step. It went on to commend the present practice of a legally qualified chair. 4 pm In Committee, on Report and on Third Reading, the Opposition pressed the Government hard on the point that it was unacceptable for an appeal to be heard by a one-man tribunal who did not even have to be legally qualified. There was quite a long debate on the subject. The Minister remained courteous but absolutely adamant on the subject. He said that the proposed amendments to clause 8 would undermine one of the Government's key objectives—that of introducing an efficient and responsive appeals service".

Oliver Letwin (Conservative, West Dorset)

While my hon. Friend is expanding that extremely important point, let me ask him this. Does he agree that it would have been helpful if the Lords had brought forward amendments on what must have been 120 or so other subjects about which the Minister was equally adamant; I am thinking of all the occasions when we drew attention to excessive regulatory powers and he explained that it would be against the spirit of the Bill to make any changes?

Nigel Waterson (Conservative, Eastbourne)

My hon. Friend is exactly right. On any number of issues, the Minister stuck to his brief like glue, presumably for fear of something worse. There are some matters before us today on which we genuinely welcome his change of mind. It is a pity that we had to go through the entire Committee stage, and, indeed, other stages of the Bill's proceedings before that change of mind occurred—but we must not be churlish, and we must recognise that, on this issue, if not on others, he has got it right in the end. The Minister went on to say in Committee: We do not accept that qualification requirements of tribunal members should be in primary legislation." — [Official Report, Standing Committee B, 4 November 1997; c. 158.] That is very clear. He did say at one point that he would reconsider matters, but, after an intervention from the hon. Member for Northavon (Mr. Webb), he made it clear that it was a question of doing so not in drafting any amendments to the Bill, but in drafting the regulations. Therefore, it seems that the Minister has done a U-turn—or adopted a pragmatic approach, to use the correct language—on two issues in this instance. One is the need for the matter to be dealt with in the Bill itself, and the other is the central principle of legally qualified members of tribunals. The matter went to another place, which carried out its historic function of revising legislation. There, for reasons that remain a mystery to Conservative Members of this House, the Government did finally see sense. In answer to an amendment that was moved by Lord Archer of Sandwell, the Government accepted that at least one of the members of a tribunal should be legally qualified. As Lord Archer of Sandwell said in his speech on the Bill: at least one member of the tribunal shall have such a quality, leaving it to the president to decide who should take the chair on any specific occasion", making it a somewhat compromised proposal, but that found favour with the Government in the other place. There was a helpful contribution from Baroness Anelay about her experience as a member of tribunals for some 14 years. She said: Social security law is notoriously complex". I think that all right hon. and hon. Members agree with that, given the sort of problems with which we regularly have to deal at our advice surgeries and in our mail bags. It fell to Lord Hardie to accept the proposals in the other place. As he said: the Government have concluded that, for the time being at least, there is a case for the retention of lawyers on all tribunals." — [Official Report, House of Lords, 20 April 1998; Vol. 588, c. 94–2.] That was after discovering, after all this time—and as the Minister has acknowledged—that only about 5 per cent. of all cases heard by all tribunals can be dealt with by a one-man tribunal who is not legally qualified. The Minister was good enough not to use the phrase "the listening Government". The Government had every opportunity to listen at the time. As the Minister said in Committee, the Government wish to get the Bill into the public domain and to use the period between Second Reading and the Committee stage to listen to the views of interested parties and ensure that corrections and changes are made so that they can be properly debated in Committee." — [Official Report, Standing Committee B, 28 October 1997; c. 20.] That was a pious hope; the present change has been made very much at the last minute. I want to make a couple of points about another matter that is the subject of one of the amendments—the curious distinction between "shall" and "may". We had some debates about that in Committee, on one instance at my behest. We pointed out the strange wording in a number of different parts of the Bill. The Minister then said: I have a small comment about "may" and "shall". I am assured that this is the normal way of drafting regulations in the Bill; there is no sinister intention behind it."— [Official Report, Standing Committee B, 4 November 1997; c. 192.] Yet both in this and in later clauses, such as clause 13, the drafting has been changed to "shall". We might as well have saved our breath. I would be interested to hear from the Minister who is now assuring him that this is the normal way to draft these matters. In the other place, Lord Hardie argued that the change was necessary to make clear that regulations shall be made, to provide for the composition of tribunals." — [Official Report, House of Lords, 20 April 1998; Vol. 588, c. 961.] That was precisely the argument advanced by the Conservatives in this House, but again it was ignored by the Government. Having said that, we welcome the amendments, which have our support.

Keith Bradley (Labour, Manchester, Withington)

There is obviously some disappointment that I did not make it clear that we are a listening Government, so I put that on the record now. As a result of that listening, there is universal support for the amendments on both sides of the House.

DECISIONS BY SECRETARY OF STATE

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Betty Boothroyd (Speaker, West Bromwich West)

With this, it will be convenient to discuss Lords amendments Nos. 11, 14, 44 and 173.

Keith Bradley (Labour, Manchester, Withington)

These are all technical amendments. Amendment No. 10 would ensure that there continue to be rights of appeal against decisions on cold weather payments and winter fuel payments. Amendments Nos. 11 and 44 would replace "decision" with "revision" to clarify when references are being made to revised, rather than original, decisions. Amendments Nos. 14 and 173 are technical amendments, which would move provisions formerly contained in clause 12(2) of the original print of the Bill—now renumbered clause 11—into section 16(5) of the Industrial Tribunals Act 1996. The provision to be inserted into the 1996 Act is a re-enactment of section 58(4) of the Social Security Administration Act 1992—the Administration Act. I commend the amendments to the House.

Simon Burns (Conservative, West Chelmsford)

We are grateful, as ever, to the Minister for that brief but comprehensive explanation of the amendments. Listening to him, one would have thought that these were, as he said, straightforward, drafting, consequential amendments. If the Minister had read the Lord Advocate's comments in the other place, he would understand that there is a little more—although not a lot—to these amendments than meets the eye. However, in this era of spin doctors, he wants to gloss over that fact. I shall not detain the House for long in speaking about the certainty of the need for Lords amendments Nos. 10 and 14. However, I believe that the amendments typify the Government's slapdash approach to the Bill. As the Minister has plainly stated, the amendments are simple and straightforward, and ensure the maintenance of current rights of appeal against decisions on cold weather payments and winter fuel payments. The amendments are therefore perfectly reasonable propositions, with which I do not think any hon. Member would disagree. Nevertheless, the question must be asked: why were the provisions not in the original Bill? The answer is quite straightforward, although the Minister certainly will not give it to us. In the Mandelson school of spin doctoring, anything that the Government do that is wrong or slapdash is to be airbrushed out of existence, followed by a spin to minimise any embarrassment to the Government. The answer, which is straightforward, is that the Government plainly and simply forgot to include the payments in the list of relevant benefits. That was an extraordinary oversight. The Government's approach to the amendments was—as I said, and as our consideration of subsequent groups of amendments will show—typical of their general approach to the Bill. The need for the amendments is but an episode in a long-running saga of mistakes, slip-ups and incompetence, which have been typified by administration of the winter fuel payment scheme announced last November by the Chancellor. Although the Minister will not find it terribly palatable, the need for this group of amendments demonstrates the problems in the Government's approach. One problem, for example, is that 40,801 out-of-date cheques were sent to pensioners, who tried to cash them at their local post offices, but could not. Pensioners living in residential homes who should not have received a cheque received one. To compound the problem, pensioners who quickly cashed their cheque will be allowed to keep the money, whereas those who did not cash their cheque will be penalised by having to return it. There have been problems in determining the payment amount—£10 or £20—that pensioners should receive. My constituents have written to me about that problem, as I am sure that other constituents across the country have written to their hon. Members. I realise that Ministers are embarrassed by such problems, which show that, in their rush to impose the scheme, they have acted negligently and not properly thought through the scheme. They have been caught making some crass mistakes. Nevertheless, we welcome the fact that, as the Lord Advocate said in another place, the Government have at least had the nous to spot the mistake before the legislation is passed—thereby avoiding not only the need for further legislation to deal with the problem, but further problems with the legislative timetable in this Session. Lords amendments Nos. 11 and 44 deal with the thorny issue of the difference between "decision" and "revision". The issue is probably more important to aficionados and to those who have taken the time to read the Bill than it is to those who are not and have not. We dealt with the issue in Committee, and I am pleased to note that the Government—as they have been forced to eat humble pie—are prepared to make the amendments. In Committee, we made the point on the difference between the two words. The Minister assured us that there was no need to do anything about it, because the Government had got it right. They have now accepted that there is a need to change the Bill's wording, which is the purpose of Lords amendments Nos. 11 and 44. In the words of the Lord Advocate, the amendments are simply to improve or correct minor errors in the drafting of the Bill. I see that the new line from Millbank tower is to emphasise the fact that the Government are a listening Government. The Minister never fails to use that soundbite whenever possible. I have to tell him, in the nicest possible way, that if he really believed that and did not simply pay lip service to the concept to keep the Minister without Portfolio happy, he would have listened— [Interruption.] I can hear what the Under-Secretary of State for Social Security, the hon. Member for Southampton, Itchen (Mr. Denham) said; there is no need for him to be quite so cruel. If the Minister were genuinely prepared to listen, he would have listened to the points that we made time and again in Committee and would have tabled amendments at that stage, which would have saved the House's time today. I can reassure the Minister by saying that, because the amendments merely redress Government mistakes and slip-ups, we have no intention of opposing them. We welcome the fact that the Government are correcting their own mistakes prior to the legislation reaching the statute book. However, as the Minister would not answer our questions in Committee, I suggest that the next time he has the satisfaction of being in Committee, he listens more carefully to the Opposition's valid points and accepts them then, instead of wasting time on the Floor of the House to correct the Government's mistakes.

John Swinney (Scottish National Party, North Tayside)

I hope that the Minister appreciates how difficult it is being on the Opposition Benches when one has to follow the line of argument pursued by the hon. Member for West Chelmsford (Mr. Burns) —it is often terribly challenging. At various stages during the passage of the Bill, the sense has been abroad that the appeal rights of people entitled to benefits were being compromised. I think that the Minister will agree that that sense has prevailed and that it causes enormous concern to people who depend on particular forms of benefit. I am sure that we have all received representations from such people. Whether a conspiracy involving Millbank tower, Mandelson or anyone else is at the root of the problem, I appeal to the Minister to ensure that legislation is designed in such a way that it takes into account the anxieties felt by various groups of people who are dependent on benefits, and does not cause the unease that has been experienced in recent months.

Keith Bradley (Labour, Manchester, Withington)

The crucial philosophy behind the Bill is to ensure not only that people retain their right to appeal but that they get justice much more speedily than the current system allows. One of our constituents' biggest anxieties is the length of time that they have to wait for their appeals to be heard. Another is the lack of opportunity to clarify genuine mistakes and errors or to have a second look at the benefit calculation or entitlement at an early stage. The purpose of the Bill is to streamline the process without denying people their rights during that streamlining process. The amendments ensure that that element, which had been omitted from the Bill, is now included. Again, we have listened, and are ensuring that the Bill is as clear as possible. I commend the amendment to the House.

DECISIONS SUPERSEDING EARLIER DECISIONS

John Denham (Labour, Southampton, Itchen)

I beg to move, That this House doth agree with the Lords in the said amendment.

Betty Boothroyd (Speaker, West Bromwich West)

With this, it will be convenient to discuss Lords amendments Nos. 13, 72 and 103.

John Denham (Labour, Southampton, Itchen)

Members of the Standing Committee that considered the Bill will recall that I announced on 25 November last year our intention to introduce this measure, but it may be helpful if I explain exactly what it will do. When a company owes a contributions debt and fails to pay the debt in full, there will be an investigation to see whether the failure to pay the debt is due to the negligent or fraudulent behaviour of any or all of the directors or officers of the company. If it is, the Secretary of State may decide to transfer the debt and any associated penalty to the directors personally. During discussions in another place, peers of all parties supported the principles behind the measure. The Government are determined to stamp down on the minority of dishonest business people who defraud the national insurance fund of money that funds benefits for their own employees and other benefit claimants and pensioners. It is clearly essential that a power to transfer large debts to individuals should be accompanied by a robust appeal system. The clause provides for that, and I am pleased to draw the House's attention to the fact that, following discussions in another place, the Government amended the original drafting of the clause to strengthen the appeal arrangements. In particular, the Bill now states clearly that the onus of proving guilt will fall on the Secretary of State. A tribunal considering an appeal will undertake a complete rehearing of the facts. We intend that the measure will be used primarily, although not exclusively, to catch phoenix-type directors who deliberately and repeatedly fail to pay contributions—and usually PAYE tax—and then put the company into insolvency, having made a personal financial gain. The measure demonstrates the Government's determination to clamp down on business fraud. It will help small, honest businesses by tackling the unscrupulous minority who cheat both trade creditors and the Government of moneys owed. We cannot tolerate money that belongs in the national insurance fund to pay people's benefits ending up in the pockets of fraudulent directors. I hope that hon. Members on both sides of the House will fully endorse the amendments. I commend them to the House.

Oliver Letwin (Conservative, West Dorset)

Perhaps I have been asked to speak from the Front Bench on this important matter because the House is so full. In common with Liberal Democrat Members, we wholly support the aim of trying to do something serious about phoenix companies, although most of the action that needs to be taken against such companies is not in the Bill, but in other measures. We accept that there is an issue to be addressed in respect of contributions, tax and debts to trade creditors and others, and that action needs to be taken to ensure that moneys that are owed are recouped. However, the Minister took a slight liberty with exactitude when he suggested that, in another place, members of all parties supported what he described as the principles behind the group of amendments. In particular, I refer to amendment No. 72. Lengthy speeches were made by my noble Friends and by Lord Goodhart on behalf of the Liberal Democrats explaining exactly why the principles behind the amendment are repugnant to us and to the deepest principles of British jurisprudence. Today, we intend to establish the principles that we consider to be of the utmost importance to the legislation and generally. The problem is well illustrated by the remarks by the Under-Secretary of State for Social Security, the hon. Member for Manchester, Withington (Mr. Bradley) who said in respect of the previous group of amendments that the Government's aim—which we accept is an admirable one—was to streamline the process without denying the rights of individuals. Amendment No. 72 does exactly the opposite: it tramples over individual rights. In the context of phoenix companies, which have caused so much public concern, it is understandable that there should be an urge to legislate effectively. However, it is not right that the House should legislate in a way that ignores the proper rights of individuals, even in addressing a gross abuse. The most signal phrase in amendment No. 72 is in what would become section 121C(1)(b) of the Social Security Administration Act 1992. It states that, in order for the Secretary of State to take action, it must appear to him that the failure in question is attributable to fraud or neglect". In another place, Lord Goodhart gave an extraordinarily clear and powerful description of the amendment's effects. He said: the amendment is, I believe, plainly incompatible with the European Convention on Human Rights and therefore with the Human Rights Bill". He specifically referred to article 6 of the European convention, which provides: In the determination of his civil rights and obligations…everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law". Lord Goodhart went on accurately to describe the streamlined process, to which the Minister referred, that would be created by amendment No. 72. He asked: What happens under clause 63?"— now clause 64. He continued: First, the Secretary of State, through members of her staff, investigates the reason for the company's failure…Secondly, the Secretary of State, through another member of staff, concludes that the failure has been due to the fraud or neglect of a director". Lord Goodhart did excessive justice to the phrasing in the clause, because the Secretary of State needs to conclude only that it appears that there was fraud or neglect. He said: There is no provision for any kind of hearing before that conclusion is reached. Thirdly, a personal liability notice is served on the director who is found culpable who becomes liable to pay contributions to the Secretary of State. Lord Goodhart summarised the situation poignantly when he said: The Secretary of State is the plaintiff, the prosecutor and the judge. There is no independent and impartial tribunal. Lord Haskel attempted to rebut the remarks made by Lord Goodhart and my noble Friend Lord Higgins, and his remarks have strange echoes for many hon. Members on both sides of the House who attended to what was said when the Child Support Agency was set up and to what has been said on many occasions about administrative practice. Lord Haskel said: Decisions in these cases will be taken by a specialised unit". How reassuring. How could anything go wrong if a specialised unit is to make the decisions? Lord Haskel said that the unit will have the necessary training and expertise to deal with the issues involved. To within two words, those are the words spoken by another Minister in another place who was explaining why the CSA would be sure to get all its actions right. Lord Haskel said: I emphasise that these are not entirely new areas of work for the Contributions Agency…Secondly, a decision will be made only after all the relevant facts have been fully investigated. How frequently we find that the vast apparatus of the social security system achieves perfection in ensuring that a decision is made only after all the relevant facts have been fully investigated. Presumably that is why there are no errors in the CSA's activities, why the Benefits Agency has no Members of Parliament submitting cases to it and asking for facts that have not been fully investigated to be examined afresh and why, in short, the system is perfect. Following that grand assurance, Lord Haskel said: I hope that this reassures your Lordships that we will be taking all reasonable steps". The long and short of it is that, in another place, a senior advocate, who is also the Liberal Democrat spokesman, raised a serious question about the compatibility of amendment No. 72 with the European convention on human rights, which the Government are enacting. Lord Haskel, speaking for the Government, replied that we should be reassured that there would be no human rights problem because the decisions would be made by a specialised unit after all the relevant facts were known and the administrators could be relied on to protect human rights. Nobody in this House could possibly accept that as an adequate rebuttal of Lord Goodhart's points, which were echoed by my noble Friend Lord Higgins. If we look deeper and ask whether a legal explanation of the compatibility of the amendment with the European convention on human rights was given, I fear that we find no greater assurance. Lord Haskel told the other place: So far as concerns the European Convention on Human Rights, we have discussed the matter…and with officials…We are satisfied that the clause meets the Government's obligations".— [Official Report, House of Lords, 23 April 1998; Vol. 588, c. 1277–80.] That was the last thing he had to say on the matter. Despite the fact that there were two meetings outside the other place between representatives of Opposition parties and the Government, and despite the fact that Lord Goodhart made a learned, long and forceful speech about the matters, all the Government did was state that they were satisfied—without answering the logic—that the amendment would be compatible with the European convention and to laud the administrative practices. 4.30 pm It may be asked—indeed, hon. Members who want to retire for tea or supper probably are asking—why on earth the Opposition should be going on at such length about such a matter. I shall explain. We are dealing with a case of personal liability. Ostensibly, it concerns a civil penalty. Indeed, Madam Speaker—Mr. Deputy Speaker, I do apologise—on various occasions, the Government have made much of the fact that the penalty is a civil one. However, it is a very strange kind of civil penalty. When a phoenix company or a purportedly phoenix company collapses and fails to pay a contribution that it owes, the director or directors—the amendment allows for an extension to the manager or managers—may be charged an amount that forces that person into bankruptcy and is out of all proportion to the gain that he could conceivably have made from acting on behalf of the phoenix company, unless there was a further fraud of a vast extraction of funds from the company. There could be cases in which it appears—I stress the term—to the Secretary of State that there has been a fraud or neglect, to which I shall return, in which the director responsible for the neglect, or who appears to the Secretary of State to have been responsible, has benefited from his directorship of the phoenix company to the tune of, shall we say, £20,000 or £30,000, and finds himself faced with a penalty, with compound interest, of £200,000, £300,000 or £400,000. That does not strike me—I very much suspect that it would not strike any hon. Member—as an ordinary civil penalty. It has all the appearance of a criminal penalty. The crucial constitutional difference, Madam Speaker, between a civil penalty and a criminal penalty, about which we in the House ought to be concerned, is that a criminal penalty is an attempted deterrent. I apologise, Mr. Deputy Speaker. I have not meant to call you Madam Speaker throughout. I had it so firmly fixed in my mind that Madam Speaker, with all her majestic presence, was in the Chair. I shall try to refrain from addressing her hereafter. The attempt is not one to allow one party in a civil case to recapture a loss from another party. It is an attempt by the state to create a deterrent against an action that the state believes—and we all accept—is a fraud and wrong, if it has been genuinely conducted in such a way. The Government have, in effect, accepted that the act and penalty are criminal ones; there is no other reason why they should have instituted an appeal process in which, as the amendment specifically states, the burden of proof is on the prosecution. One would not see that in ordinary civil litigation, but, of course, we would in the tradition of British criminal justice. The Government virtually admit—and certainly ought to admit—that this administrative action relates to a criminal or near-criminal penalty for what is effectively a criminal act. There is a particular problem, because when the Secretary of State takes such a director not to court but to an administrative tribunal that the Secretary of State has set up, he or she is trying to show that tribunal that neglect has occurred. If the neglect is shown to have occurred, the effective criminal penalty can be levied. That is an extraordinary state of affairs, because neglect is a highly charged and difficult term and concept. Even in the case of an ordinary, honest company, it is difficult to be sure whether what a particular director has done is neglectful or otherwise. However, it would be easy to argue that there was neglect, as long as one was arguing it before a tribunal that was not especially acute in its legal judgments. I admit that there has been—thank the Lord—a concession, a listening, by the Government.

Simon Burns (Conservative, West Chelmsford)

A climbdown.

Oliver Letwin (Conservative, West Dorset)

I would not want to be as aggressive as to describe it in those terms, but the Government have listened to our argument that at least one legally qualified person should be on the tribunal panel. However, I fear that their listening has not been profound, because no provision has been made for all members to be judges or otherwise legally qualified. It could be that two of the three are not legally qualified. What is going on? The Secretary of State, through an administrative action, is taking to an appeal tribunal constituted by the Secretary of State—a tribunal two of whose members may not have legal training—a person who is liable to be subject to what is, in effect, a criminal penalty, without a jury. The Secretary of State must then persuade the appeal tribunal that that person should be subject to the criminal penalty because he or she is guilty of the highly vexed charge of neglect, on which even a court with a judge and jury might—indeed ought to—find it difficult to decide. I fear that what we have here is something different from a streamlined process that does not deny the rights of individuals. There is indeed streamlining—that is the admirable side of the case—but it is a streamlining which I fear rides roughshod over deep principles of British jurisprudence.

Julie Kirkbride (Conservative, Bromsgrove)

I am interested in what my hon. Friend says, but those of us who have not followed the Bill in as much detail as he has would like to know what the position is at present, how directors of phoenix companies are dealt with, what the change is with regard to the Secretary of State's powers, and who sits on the tribunal. My hon. Friend has gone into some detail about those things, but I am afraid that, at the moment, I am still a little uncertain about the precise arrangements.

Oliver Letwin (Conservative, West Dorset)

My hon. Friend asks some important questions, and I can best answer them by referring her to the straightforward and simple amendment that Lord Goodhart suggested in the other place. It shows clearly both what the current position is and how it should be changed. Lord Goodhart simply suggested that the word "appears" should be replaced by the word "is". That would force the matter before a court, which is exactly where it would currently lie, and where it ought to lie. In the end, a court ought to decide criminal penalties and whether the actions alleged to have occurred did occur. A court should decide whether the person in question is sufficiently culpable to be adjudged to deserve a criminal penalty, if the action itself is adjudged to have occurred. That is all we are asking for—a little bit of listening on the spot. We did not see much of that in Committee.

Nigel Waterson (Conservative, Eastbourne)

A pragmatic approach.

Oliver Letwin (Conservative, West Dorset)

How right my hon. Friend is; a pragmatic approach is all we ask—a slight change of wording, which must already have been considered by Ministers and officials, because it was proposed in another place. That slight change in the wording would have the miraculous effect of rescuing the Bill, which, as was pointed out in Committee, is already deficient in many respects concerning unrestrained regulation, and bringing it into the terrain occupied by the fine traditions of British criminal justice. The Minister has a golden opportunity to make that slight listening gesture: a small pragmatic concession to good sense. If he does not do that, this or a subsequent Government will have to amend the legislation once they recognise that some individuals' rights are not respected properly because to the structure that the amendment creates.

Edward Leigh (Conservative, Gainsborough)

I have some experience in this area, as, in January and February, I was engaged as a barrister in a seven-week fraud trial involving a phoenix company. Therefore, I may have as much recent practical experience in this area as anyone. I shall try to explain some of the difficulties associated with fraud charges concerning phoenix companies, why I think that the speech by my hon. Friend the Member for West Dorset (Mr. Letwin) was so apposite and why the House should pause before embarking on a novel legal procedure. Fraud trials are immensely complex and difficult to determine. We are not dealing with simple facts concerning shoplifting, bodily harm or the usual nuts and bolts cases that come before the criminal courts. The fraud trial with which I was concerned involved a phoenix company whose directors were charged with setting out deliberately to close the company. There were no fewer than 3,000 separate exhibits in the trial. There were initially three defendants, but one defendant pleaded guilty. The trial lasted for seven weeks and initially involved three Queen's Counsel, three juniors and solicitors. Hon. Members might think that the trial cost a lot of money—and it did. It cost a lot of money because people's freedom was at stake. At least two of the defendants were people of previous good character: they were upstanding and credible members of society, and the trial was the most important event in their lives. As it happens, they were found guilty—I shall not go into the details of what happened to them. It took seven weeks to determine the matter in a public court, where the case was aired fully, with enormous attention paid to detail. The Government's proposal is similar to what they are proposing in the Crime and Disorder Bill—I serve on the Committee that is considering that legislation, and I am making similar points there. The Government are short-circuiting our traditional and very careful ways of determining guilt. In the Crime and Disorder Bill, the Government are introducing all sorts of measures, such as anti-social orders, curfews and so on. Ministers argue that they will not criminalise anyone because they will be civil procedures. They claim that cases will be determined on the balance of probabilities—as will occur in this instance, which is even more worrying. At least matters will be brought before the magistrates court under the Crime and Disorder Bill. In this case, the Government apparently propose to establish a private inquiry. As my hon. Friend the Member for West Dorset explained to the House, a Government Department will effectively initiate the proceedings. It will be the prosecutor of those proceedings, it was initially to be the defendant in the proceedings—perhaps that will not occur now—and it will be the final judge of the proceedings. If it was the 18th century, people would be up in arms about that. They would be extremely concerned that a Government Department could pursue company directors and other upstanding members of society who are engaged in legitimate business. I know from practical experience—I spent eight weeks this year examining the matter in detail as it applied to one company—that it is incredibly difficult to resolve such issues. The company with which I was concerned was in Barnsley. For years, it had traded successfully as a subcontractor for British Coal, which had increasingly asked small companies to go into the mines on salvage operations. The company was run by a tremendous character—everyone in the industry knew him—but he flew by the seat of his pants and had, before the new directors were brought in, built up enormous debts with Customs and Excise and the Inland Revenue. When he was told that his company would go under, he brought in an accountant, who was subsequently charged with fraud, and an investor with experience of investing all over the world—he was a considerable business man—who was also subsequently charged with fraud. The charges against them were that they had created a phoenix company—they had closed down the first company, deliberately leaving behind the debts to the Inland Revenue and to Customs and Excise, and set up a new company, which also subsequently closed down. 4.45 pm During the trial, these matters were extremely difficult to understand. I think that I am of moderate intelligence—although I am not nearly as bright as my hon. Friend the Member for West Dorset—but, for the first three months in which I read the papers and ploughed through the 3,000 separate exhibits, I found the terms of art incredibly difficult to understand. People who engage in fraud are not fools; they cover their tracks. We are not talking about a poor old lady nicking Kellogg's packets at the supermarket. At the end of the lengthy trial, it was determined that the defendants had been engaged in fraud. However, there were further complications, as British Coal had started to close down the contracts to the company. The second company went into debt, not because of inefficiency, but because British Coal had turned off the tap, as it were—that was, effectively, the company's defence.

Oliver Letwin (Conservative, West Dorset)

My hon. Friend makes a massively learned contribution, which clarifies matters. Does he agree that the measure could create an even worse situation than the one that he is describing, as we could be dealing not with fraud, but with neglect? From his vast experience of these matters, can he cast any light on how difficult it might be for a court, let alone a tribunal, to establish what constituted such neglect—not even undue neglect—as to lead to a director facing a quasi-criminal penalty?

Edward Leigh (Conservative, Gainsborough)

I am glad that my hon. Friend has made that point, as that has worried me for some time. Fraud has to be proven, which is extremely difficult. We hear numerous complaints in the House about lawyers wasting public money, but it is difficult to determine whether someone has set out to commit fraud. However, it is possible to find out; in the case with which I was dealing, the jury found some pointers that showed fraud. Difficult as it is to prove fraud, how much more difficult is it, as my hon. Friend the Member for West Dorset said, to prove neglect? Is neglect a matter of incompetence or the changing market, for example? If I was conducting a hearing in the rather alarming specialised unit that is proposed, I am not sure how I could prove neglect. We want to hear much more from the Minister about how the specialised hearings will be conducted. I am also worried about the penalties. One of the defendants in the trial had no equity in the company, but was an accountant who was paid a fee. The jury concluded, rightly or wrongly, that the fee was out of all proportion to the advice that he gave to the second company. There were literally days of evidence about the amount that he charged. As I understand the clause, an accountant who received a relatively low fee could be held liable for massive debts—more than £2 million in the case that I have cited. We have deliberately created complex company law over generations to try to encourage enterprise and convince directors that, as long as they do not act fraudulently, they have some protection against the vagaries of the marketplace. Many companies went down in the 1980s through no fault of their own. The issue has been blown up because of the few lackadaisical, or perhaps criminal, directors who have allowed companies to go under and then started new ones; but the criminal courts are there to deal with that. If the Government are convinced that there is a real problem, they must bring those people before a British judge and jury, and prove beyond reasonable doubt that they are guilty, in which case they should go to prison, or be fined, or both. We are about to enter another massive recession. How many companies will go under through no fault of their own? How many directors will wonder whether they will be liable for national insurance contributions and whether some civil servant will sit in judgment on them? In the case in which I was involved, it was all very easy: we sat in a comfortable court in London, five years after the company had gone under. Do we remember what was happening in the coalfields five years ago? Debates were raging in the House and miners were losing their livelihoods. The directors' defence was that they were fighting to save the company. The first defendant had put his whole life into the coal industry, but the company went down. The jury found that he must have known what was happening, and that although he might have been trying to save the company—which was in trouble, perhaps because of investment problems—he deliberately took the decision that the only way in which to save the business that he loved—he employed 150 people—was to close down the first company and leave the debts behind. Was that defendant fraudulent, negligent or dishonest? All those issues were being determined five years later. What will happen to company directors in future? At least now they have the comfort of knowing, as they struggle with the difficulties of the marketplace, that the company may go down, but that they will not be dragged before a court and have their names besmirched in mud unless they have acted fraudulently. If they have not lied and cheated, they can rely on traditional British justice. Company directors may be dragged to some secretive tribunal run by the Government, and forced to cough up tens of thousands of pounds and to lose the homes in which their wives and families live. They will have no traditional rights, no jury and perhaps no proper legal aid to help them to deal with the thousands of pieces of paper: if anybody thinks that modern companies are easy to investigate, they are deluding themselves.

Oliver Letwin (Conservative, West Dorset)

My hon. Friend raises another point, to which I did not refer earlier as I wished to bring my remarks, which were perhaps overlong, to a conclusion. Does my hon. Friend agree that the amendment makes it by no means clear, even in conjunction with the schedules, that the directors in question will be able to have proper legal representation at the tribunal?

Edward Leigh (Conservative, Gainsborough)

If that is so, I am absolutely horrified. If the Government tell those companies, which will undoubtedly go under in the next 18 months or two years, that they will be brought before the tribunal with no right to legal aid, that is frightening. It is simply not right. I therefore hope that my hon. Friend will press the Government on this matter. Given the complexity of the issue, it is impossible for people to defend themselves. I think that I have made my point and need not weary the House further. I hope that I have shared with the House my practical experience of dealing with the issue this year, and have convinced some hon. Members of the practical difficulties. I am prepared to accept that the Government are being entirely honourable, are rightly concerned about the curse of phoenix companies, and want to do something about it. We have been dealing with the same problem in the Crime and Disorder Bill. However, one cannot identify a social or moral ill in society and simply dispense with hundreds of years of traditional civil liberties and legal remedies. A short cut cannot resolve that issue, because that may cause more injustices and problems in the future. I therefore beg the Government to think again on this issue.

John Denham (Labour, Southampton, Itchen)

A number of important points have been made in this discussion. I recognise the support for action against phoenix directors. Companies that go insolvent with unpaid national insurance debts cost about £150 million a year, of which about £50 million is because of phoenix directors. The hon. Member for Gainsborough (Mr. Leigh) spoke at some length. His impact on me may have been similar to the impact that he had on the jury in the case to which he referred, although he did not say which side of the case he was on. I recognise the concerns that have been raised about the European convention on human rights, but we are satisfied that the Bill meets our obligations under that convention.

Oliver Letwin (Conservative, West Dorset)

I apologise to the Minister for intervening so early in his remarks, but he has repeated almost verbatim the words of his noble Friend the Baroness Hollis of Heigham, and has not exposed the logic. Can he now tell us exactly on what basis the Government are satisfied that the Bill is coherent with the European convention?

John Denham (Labour, Southampton, Itchen)

Hon. Members will have to make their judgment on this matter. Clearly, we seek advice on these issues, and Ministers must make a judgment on the right position. It is not unusual for officials to take decisions on behalf of the Secretary of State. The clause provides for cast-iron appeal rights where the onus of proof is on the Secretary of State. I shall return to that important point. As has been recognised, changes were made in the original proposals on those appeal rights, and those are now reflected in the amendments. I reiterate that there is a further appeal right on whether the debt was originally due from the company. The personal liability notice will now stipulate not only the total unpaid debt and the amount being transferred to the individual concerned, but the proportion of the debt for which the recipient is held liable, to enable him to check the calculations used and show exactly what degree of culpability has been found to fall on him. Another important point is that it has been made explicit in the Bill that the onus of proof in any appeal under the provision falls on the Secretary of State rather than on the appellant. That is an important point because it has been suggested that matters such as negligence are difficult to prove. That is why it is important to state in the Bill that the onus will be on the Secretary of State to establish that case.

Edward Leigh (Conservative, Gainsborough)

Will the Secretary of State have to prove those matters beyond reasonable doubt? Will the burden of proof be the same as in a criminal trial, or will it be on the balance of probabilities, as in a civil trial? I suspect the latter.

John Denham (Labour, Southampton, Itchen)

The balance of proof will be on the balance of probability at the tribunal, but it is worth making the point that the measure is a companion to the introduction of the offence of fraudulent evasion. When the Contributions Agency identifies a director who is hiding behind the shield of limited liability and deliberately withholding the national insurance contributions deducted from his employees' wages, it will be able to choose the better course between transferring the debt and penalty to recover the money from the guilty person's assets, and taking a criminal prosecution, which could send the rogue or accomplices, such as a crooked accountant, to prison for up to seven years. Different alternatives would be available to the agency, depending on the situation it uncovered.

Oliver Letwin (Conservative, West Dorset)

I am grateful to the Minister who, with characteristic courtesy, has given way again. First, his answer to my hon. Friend the Member for Gainsborough (Mr. Leigh), so far as it was a clear answer—in part, it was—was very disturbing, and coherent with what I understand from the amendment. Secondly, why should we believe that it would ever be the intention of the Secretary of State to use the criminal law to establish a fraud or a similar offence if he had open to him the avenue of establishing before a tribunal—two of its members would not be lawyers, and a lawyer for the defence may not be present—that neglect had occurred on the balance of probability?

John Denham (Labour, Southampton, Itchen)

I heard the points made by the hon. Gentleman in his opening remarks, but I do not accept his case. He claimed that a tribunal was the same as a criminal penalty. If a crime was committed and a prosecution taken, a person could be sent to prison for up to seven years. In serious cases, the appropriate action would be to attempt to ensure that such a serious penalty was imposed under the criminal law. The hon. Gentleman would agree that imprisonment for up to seven years would be a greater penalty than any charge levied as a result of the measures. On the procedure, I make it clear that people would be able to bring legal representation to the appeal hearings. The Bill does not affect the legal aid provisions, which are properly dealt with elsewhere. We have guaranteed full protection, under an enhanced and suitably qualified and independent appeal system. There are clear precedents for the measures, notably section 61 of the Value Added Tax Act 1994, which places the burden of proof explicitly on commissioners of Customs and Excise when VAT penalties are transferred to directors of companies. Serious and determined action is required where a director has neglected to carry out duties in respect of national insurance. Directors must understand that there is a clear obligation to deduct and pay over contributions.

Edward Leigh (Conservative, Gainsborough)

The Minister is dealing with the problem of neglect, but I press him further on what he means. Are we discussing neglect in the general management of a company or in contributing national insurance contributions? I am sorry to weary the House, but in my experience, there is often extensive correspondence between Customs and Excise and directors concerning back payments of national insurance contributions. Customs and Excise and the Revenue authorities often deliberately decide not to over-press a company for payment, because that would close it down and kill the goose that may lay the golden egg. How would the specialised unit prove neglect, and would neglect relate only to payments or to the general conduct of a company?

John Denham (Labour, Southampton, Itchen)

The matters in the Bill clearly relate to national insurance matters.

APPEAL TO APPEAL TRIBUNAL

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this, it will be convenient to discuss Lords amendments Nos. 16, 85 and 87.

Keith Bradley (Labour, Manchester, Withington)

This group of amendments is our response to the Delegated Powers and Deregulation Committee report, which I am pleased to say generally concurred with our view about the necessity for the large number of regulation-making powers in the Bill. However, the Committee made a number of recommendations for changes and we have been able to meet its concerns in all cases. Lords amendment No. 15 makes clear how the Department intends to use the regulation-making power in clause 13(2) to make certain decisions unappealable.

Nigel Waterson (Conservative, Eastbourne)

I am grateful to the Minister for giving way so early in his speech. I hope that he has not lost sight of the Select Committee's recommendation in its 10th report, dated 14 January this year, that even changing to an affirmative procedure was not sufficient, at least in the context of clause 13(2).

Keith Bradley (Labour, Manchester, Withington)

I regret having given way. If the hon. Gentleman listens to the rest of my explanation, he may find some comfort. As I said, Lords amendment No. 15 makes clear how the Department intends to use the regulation-making power in clause 13(2) to make certain decisions unappealable. It explicitly prevents regulations from including any decision that relates to the conditions of entitlement to a benefit—in other words, it prevents them from removing the right of appeal from an outcome decision. It clarifies that the power will be used only to prescribe administrative decisions, which do not carry a right of appeal at present. Lords amendment No. 16 is technical and puts beyond doubt the circumstances that will attract a right of appeal under clause 11. Clause 11 deals with supersession of earlier decisions. Appeal rights will be granted where the Secretary of State acts on an application for a decision to be superseded, even if ultimately the amount of the award is not changed. If the Secretary of State acts on an application, a new outcome decision will be generated, whether or not the amount of benefit in payment changes. However, in some cases, an application for supersession has no prospect of success because it is clear that there has been no relevant change in the customer's circumstances; for example, where a person tells us something that is irrelevant to the decision maker, or the application for supersession cannot possibly change the original decision. In those cases, it is not practicable or sensible for the Secretary of State to act on the application. Lords amendment No. 16 ensures that the decision not to act will not be a decision under clause 11 and will not attract appeal rights. Lords amendments Nos. 85 and 87 make specified regulation-making powers in the Bill subject to the affirmative, rather than the negative, procedure. They make a direct response to recommendations in the report of the Delegated Powers and Deregulation Committee, which argued that it would be helpful to the House to have the opportunity for further debate on some of the key sets of regulations to be made under the Bill. First, the new clause makes subject to the affirmative procedure three groups of regulation-making powers concerned with appeal tribunals. Clause 8(3) relates to the composition of appeal tribunals and the allocation of cases among differently constituted tribunals; paragraph 11 of schedule 1 provides for the delegation of certain functions of appeal tribunals to authorised officers—clerks to the tribunals; and paragraph 3 of schedule 5 contains the power to provide regulations for striking out or reinstatement of proceedings. Secondly, the new clause also makes the powers in clause 13(2) and paragraph 8 of schedule 2 subject to the affirmative procedure. That change works in tandem with Lords amendment No. 15 to give further clarity about the Government's intentions towards the maintenance of existing rights of appeal. Thirdly, the new clause permits regulations, also subject to affirmative procedure, to be made under clause 70. They will align rates of child benefit for lone parents and couples with children. We studied the Delegated Powers and Deregulation Committee's report carefully and found it extremely helpful. The Government are happy to accept that there are issues on which the detail in regulations will be of interest to the House, over and above our debate on principles during proceedings on the Bill. I commend the Lords amendments to the House.

Nigel Waterson (Conservative, Eastbourne)

I congratulate the Minister on the sheer effrontery of his remarks. It is certainly true that the Minister listened, but, sadly, he did not listen to members of the Standing Committee. If he had, he would have heard my remarks, and those of my hon. Friend the Member for West Chelmsford (Mr. Burns) and numerous other hon. Members. We told him time and again in words of one syllable that he was wrong, but he consistently refused to take our advice. Yes, he has listened—he deserves one or two marks out of 10 for that—but to the Select Committee, not the Standing Committee. He was brought up short by that Committee's swingeing criticisms, to which I shall return in a moment—[Interruption.] Sadly, the Minister is not listening to me at the moment, but I am resigned to that. I shall try to help him by speaking in words of one syllable. A pragmatic approach is again being adopted. That is obviously today's theme. There will be no U-turn in the face of strong and well-worded criticism from the Select Committee, but a pragmatic approach: there is no more talk of a listening Government. That said, there has been at least a partial vindication of the position taken by the Opposition in Committee. At the time, we might as well have gone fishing, or done anything other than tell the Minister that he was wrong. I recall the sub-plot that ran through the Committee stage—the mysterious case of the missing draft regulations. With his habitual courtesy, the Minister promised at an early stage that draft regulations would be produced for the Committee so that we could have at least a flavour of the type of regulations that he would impose under the Bill. We waited, and waited, and waited, but draft regulations came there none. Although we had saluted the Minister's desire to be helpful, the Committee became increasingly restive at having no chance to see draft regulations. Perhaps they were lost in the post; I do not know. The effect of the amendments is clear. They reduce the scope of the regulations that the Minister defended so stoutly in Committee by giving a different definition to the words "prescribed circumstances". It is worth dwelling for a moment on points made in Committee, when the official Opposition consistently opposed the extensive regulatory powers in the Bill. My hon. Friend the Member for West Chelmsford said: As we said on the first sitting, many of the changes will be made not by the Bill but through regulations, which I suspect we will not see in draft form during the proceedings of the Committee. How right he was. We are being asked to approve a pig in a poke because we will not know the small print of those regulations or the detail of how the Government will seek to use their powers."—[Official Report, Standing Committee B, 28 October 1997; c. 13.] As I have said, the Minister, despite his best efforts, consistently failed to provide the Committee with the draft regulations. The amendments amount to a significant U-turn on the Bill's regulatory powers. Quite properly, they fix certain limits on the regulations that can be made. In particular, the new provision after clause 75 provides that many regulations that flow from the Bill will be subject to affirmative resolution, which I called for in Committee. In Committee, I also quoted some respected independent organisations that shared our view. Perhaps the most telling quotation, to which we returned more than once, came from the Child Poverty Action Group—not exactly regarded as a wing of the Conservative party—which referred to the skeletal nature of the Bill". I endorsed that description. 5.15 pm The Law Society also gave us the benefit of its view, stating: A further point of concern is that the Bill gives the Secretary of State extensive regulation-making powers, making it extremely difficult for Parliament and those affected by the Bill's provisions"— and it is they who really matter— to assess their impact or desirability. It is hoped that Ministers will be able to provide more detailed information in order to clarify their intentions during the passage of the Bill. As we have heard, that was a pious hope. Another briefing, from the Social Security Law Practitioners Association—judging from its title, it ought to know what it is talking about, and it represents people who act regularly for clients in social security matters—said: We believe that the current grounds upon which a decision of an adjudication officer may be reviewed work well and that such grounds should be laid out in primary legislation."—[Official Report, Standing Committee B, 28 October 1997; c. 77–78.] Again, the Minister felt unable to accept that point in Committee. At that time, the Minister sought to defend his position partly on the ground that draft regulations would in due course be considered by the Joint Committee. He felt that that was a defence against regulations that would have too swingeing an impact on people affected by the Bill. I said that it was my privilege and pleasure during my first Parliament to serve as a member of the Joint Committee that scrutinises secondary legislation. The Minister said nothing to disabuse me of the view that he had failed to see the difference between scrutiny and control—which is an entirely different thing—as regards secondary legislation. The plain truth is that the Joint Committee considers more than 3,000 instruments a year, covering the entire range of Departments. As is made clear in the rules prepared for the House by the Clerk, the Scrutiny Committee is concerned not with the merits of statutory instruments but with such matters as whether the authority conferred by the parent Act has been exceeded and whether the drafting is defective. That is totally different from what the Minister seemed to believe, which was that the task of the Scrutiny Committee is to consider the merits of individual statutory instruments. As the Procedure Committee's fourth report, on delegated legislation, put it—rather well—the work of the Scrutiny Committee is painstaking and unglamorous and goes largely unregarded in the House. I heartily agree, but no matter how well its members do their job, they are not doing what the Minister thought they were there to do. As the House knows, there are two procedures for dealing with statutory instruments—the affirmative and the negative procedure, although they have changed a little in recent years. At the moment, an affirmative instrument is automatically referred for debate to a Standing Committee unless the Government are willing to afford a debate on the Floor of the House. The fourth report says that the Government may freely disregard negative instruments, although Ministers are in a position to concede the affirmative procedure in the course of debate on a Bill in Committee. That is precisely the point that we kept making to the Minister during our Committee debates. It would have been perfectly possible to rethink the issue on the hoof and to accept that some—perhaps all—of these matters should be subjected to the affirmative procedure. As the second edition of "Statutory Instrument Practice" makes clear: Negative procedure provides a less stringent form of parliamentary control than affirmative". That is precisely the point that we debated time and again in Committee. The Bill sailed through the Committee unencumbered by any draft regulations and went to another place. There it met an immoveable object, in the form of the Lords Select Committee on Delegated Powers and Deregulation. Its conclusions on the Bill deserve repetition. The 10th report states: There is an exceptionally large number of delegated powers in this bill, and it is difficult to strike the right balance in relation to some of these powers. The Committee touched on the need for flexibility, which the Minister did mention in Committee, but went on to say: Some of the delegated powers in the bill break important new ground". The Committee expresses profound reservations about the contents of the Bill without the Lords amendments. Let us not forget that the Committee exists to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny"— precisely the point that we made over and over again in Committee. The Lords Select Committee took written evidence, not least from the CPAG and the National Association of Citizens Advice Bureaux. Given that those independent organisations agreed with the Opposition's concerns in Committee, the Minister should have given us a more serious hearing at the time. The Committee went on to say of clause 13: The Committee does not consider that affirmative procedure is the appropriate answer to its concerns about clause 13(2) … It is arguable that primary legislation should establish the essential rights of appeal in any area of the law … The Committee sees no objection to a power to confer additional rights of appeal … But as the bill stands there are no rights of appeal which could not be removed by regulations under clause 13(2) or paragraph 8 of Schedule 2. The Committee wishes to draw attention to this point, and invites the House to consider whether it is right that Ministers should have so wide a power to deny appeals from their own decisions. Given that the Committee uses guarded and measured language, these are damning and devastating criticisms of the Department's approach to the Bill and its regulation-making powers. That point was so clear and obvious in Committee that I remain amazed by the fact that the Minister felt unable to recognise it. He has had a firm slap on the wrist from the Select Committee, but, far from coming here in a mood of contrition and apology for getting it so wrong, he has had the effrontery to try to take credit for what amounts to another massive climbdown—or "pragmatic approach". What a pity that that approach was not in evidence in Committee.

John Swinney (Scottish National Party, North Tayside)

It appears that the Government have put their case this evening, only to be confronted by a series of hurdles designed to make it difficult for them to change their position. I want to speak to Lords amendment No. 87, a new clause. I welcome the fact that the affirmative procedure is to be used for the regulations made under the new clause. Bearing in mind the fears raised by the proposal to reduce benefit for lone parents, the public would be staggered if they believed that Parliament was not according to issues of such sensitivity the sort of scrutiny afforded by the affirmative procedure. It is important to assure our constituents that regulations of this nature will be subjected to the closest possible consideration by the House. The public need reassuring that there will be such scrutiny of a variety of aspects of the legislation. They need to know that enough parliamentary time will be devoted to issues raised by the Government in future, whether they relate to changing the constitution of appeals tribunals or to powers to reduce benefits to lone parents. These are fundamental issues; if Parliament cannot devote the right amount of scrutiny to them, it will be failing in its duty to the public. That is why I welcome the Government's response to the Lords amendments.

Julie Kirkbride (Conservative, Bromsgrove)

I had the privilege of serving on the Standing Committee some time ago. Before being elected, I sat up in the Press Gallery as a journalist, and I can only describe what the Minister has said this evening as a U-turn. We should like more of them in other areas of the Bill; at any rate, the Government are eating a good deal of humble pie tonight, given what they said during that interminable Standing Committee—[Laughter.] It was my first experience of a Standing Committee, and the debates sometimes seemed rather long to me. We are grateful that the Minister has listened to the concerns that we expressed in Committee. When the Bill was in Committee last autumn, it seemed symptomatic of the then new Government that they were arrogant enough to propose that these measures should be put through without proper scrutiny. We were often left in the dark, not knowing whether Ministers meant to employ the affirmative or the negative procedure—or indeed what they were proposing. It is important that the Government have now accepted that when we are spending a great amount of public money, the public should at least know where they stand with regard to appeal procedures and to other things that the Government were trying to slip in. I have many constituents who are concerned about their rights and the appeal procedures on the benefits that are available to them. The regulatory framework must be made much clearer, so I am grateful for the U-turn that Ministers have made tonight. We should like more as we proceed, but I thank the Minister for his interest so far.

Keith Bradley (Labour, Manchester, Withington)

I find it extraordinary that the Opposition have the effrontery even to raise the issue of secondary legislation. Year after year when they were in government, they introduced skeletal Bills, such as the Jobseekers Bill, on which I am sure the hon. Member for Bromsgrove (Miss Kirkbride) reported in her former life, in which, as she will have noted clearly, most of the provisions were in secondary legislation. The file of papers on secondary legislation was 10 times thicker than the Bill itself, so we will take no lessons from the Opposition.

Nigel Waterson (Conservative, Eastbourne)

Will the Minister give way?

Keith Bradley (Labour, Manchester, Withington)

No, I am making my point. We understand that there is a reshuffle in the air on the Opposition Benches. We were not brought up short by the Delegated Powers and Deregulation Committee because it accepted our principle that most of the detail should be in regulations. Out of more than 100 regulation-making powers, it commented only on five. It vindicated our assertion in Committee that the structure in the Bill was right and the use of powers was appropriate. Yet again, the hon. Member for Eastbourne (Mr. Waterson) is confusing that Select Committee with the Joint Committee on Statutory Instruments, which he continually refers to. They are different. The Select Committee looks at whether we have appropriate powers, whereas the Joint Committee looks at specific regulations and decides whether those powers are being exercised appropriately. It has not looked at regulations yet in this respect. The comments are appropriate in relation to the fact that the Select Committee examines the generality of the use of powers.

Nigel Waterson (Conservative, Eastbourne)

I thank the Minister for giving way because we may be able to save a bit of time by my intervening at this stage. I am well aware of the difference that he mentions because, of course, I served for some four or five long years on the Joint Committee, but my recollection of the Standing Committee is that, at one point, he was trying to defend the Bill as it stood by saying that the regulations would be considered in due course by the Joint Committee. I do not think that he fully appreciated or had a complete grasp—I may be doing him an injustice, in which case he will put me right—of the narrow compass of the Joint Committee's responsibilities.

Keith Bradley (Labour, Manchester, Withington)

We are in danger of compounding the confusion and the difference of view that we had in Committee—and still do—even further. The Committee that I was referring to was the Select Committee, which scrutinises the generality of the powers. The hon. Gentleman refers to the Joint Committee on Statutory Instruments, which considers these matters only when it has such instruments before it and examines whether those powers are being used appropriately. There was confusion in Committee on that point, and there continues to be. What is important is that when regulations are laid—we have to recognise that this is a long and technical Bill—they are correct. If they are not, we would only be criticised again for having to amend or replace them and, again, the Opposition would say that we had not done our job properly. As we have made clear, we shall also use the ad hoc group on implementation, which will help us to implement the Bill. Representatives from the Child Poverty Action Group, the National Association of Citizens Advice Bureaux and Age Concern, for example, are serving on that group, so their views will be taken into account as the Bill is implemented. I am sure that we have noted the general welcome from hon. Members on both sides of the House for my announcement on statutory instruments. It would be wrong to delay the House any further by not approving them.

REDETERMINATION ETC. OF APPEALS BY TRIBUNAL

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

Amendment No. 17 allows a tribunal chairman, who is considering an application for leave to appeal against a decision of a tribunal, the discretion either to set aside that decision and refer it back to an appeal tribunal, or to grant leave to appeal to a commissioner. As clause 14 is currently drafted, the chairman would be required to set aside an erroneous decision and refer the case for redetermination by a tribunal. Concerns were expressed in another place that a chairman would be required to set aside an erroneous decision even where he had been outvoted at the tribunal on the same issue, which could place him in a difficult position.

Simon Burns (Conservative, West Chelmsford)

On a point of information, will the Minister confirm that, notwithstanding what he has just said about this issue being raised in another place, it was also raised in the Committee upstairs in this House?

Keith Bradley (Labour, Manchester, Withington)

I cannot confirm it in the sense that I do not have Hansard in front of me, but I am sure that the hon. Gentleman must be referring to some comment that he made in Committee and I would not in any way wish to undermine that position. If he now wishes to take credit for the amendment, again, we are all on the same side on this one.

Simon Burns (Conservative, West Chelmsford)

The Minister is right in his surmise. It was raised in the Committee of this House, so will he tell the House: if it was so compelling an argument in another place, why did he not listen and why was it not compelling in Committee?

Keith Bradley (Labour, Manchester, Withington)

If we go down that route of argument, there would no point us discussing these amendments and the Government laying out their position on accepting them. The parliamentary process is a total process: through Second Reading, Committee, the Lords and back again. Throughout that process, not just in parts of it, we are a listening Government. I am pleased that we have listened very carefully to the arguments throughout that process and have come to a conclusion on them.

Simon Burns (Conservative, West Chelmsford)

rose—

Keith Bradley (Labour, Manchester, Withington)

I wish to make progress. I do not think that we need to make a fuss about nothing on this point.

Simon Burns (Conservative, West Chelmsford)

If the Minister gives way, it will save me having to make a speech

Keith Bradley (Labour, Manchester, Withington)

In that case, I am only too delighted to give way.

Simon Burns (Conservative, West Chelmsford)

I will keep to my commitment, as the Minister has generously given way. If he is part of such a listening Government and the legislative procedure is an on-going complete sequence of events, why did his Government not listen to the message that was being sent on single parents in the vote last December? Why does he cherry-pick which issues he is going to listen to and claim the credit for listening to?

Keith Bradley (Labour, Manchester, Withington)

rose—

Keith Bradley (Labour, Manchester, Withington)

Thank you, Mr. Deputy Speaker. I completely agree with your ruling on that point. Concerns were expressed in another place that a chairman would be required to set aside an erroneous decision even where he had been outvoted at the tribunal on the same issue, which could place him in a difficult position. The Government have considered the matter further and have made appropriate amendments to ensure that the chairman has the option to refer cases back to a tribunal for determination. Amendment No. 18 is consequential on the amendment to clause 14(2). It ensures that a decision will always be set aside and referred for redetermination wherever the principal parties agree that a decision is erroneous in point of law. Without the amendment, it would not be clear whether the chairman could override their request if he agreed that there was an error of law and were to exercise his discretion, under the amended subsection (2), not to refer the case for redetermination. These are sensible provisions and I commend the amendments to the House.

APPEAL FROM TRIBUNAL TO COMMISSIONER

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

Amendments Nos. 19, 20, 21, 83, 84 and 86 ensure that the Lord Chancellor retains the necessary regulation-making powers that he currently has in respect of proceedings before commissioners. Amendment No. 24 allows the presiding social security commissioner to have a casting vote where there is an equal division in votes. Amendments Nos. 22, 23 and 25 relate to the handling of applications for leave to appeal to the social security commissioners. The amendments will allow the chief commissioner to direct that such applications be considered by a tribunal of commissioners. In recent years, there have been instances where an application for leave to appeal and its determination were crucial to a number of other applications. In those cases, determination by a tribunal of commissioners would help to ensure clarity and consistency in the application of the law. Such a power is likely to be exercised infrequently by the chief commissioner—perhaps no more than two or three times each year—but it offers clear benefits for the development of social security law. Amendments Nos. 26, 114 and 123 are technical. They ensure that the Bill contains provisions for decisions on child support and vaccine damage payments to be final, and for findings of fact contributing to decisions on child support and vaccine damage to be made conclusive by regulations for the purposes of further such decisions. This mirrors provisions already made for social security benefits. The amendments also ensure that such findings of fact can be made conclusive across all the Department's business areas. I commend the amendments to the House.

Simon Burns (Conservative, West Chelmsford)

I should be grateful for some straightforward clarification on some of the amendments. I have no problems with what the Government are seeking to do, having read the Hansard from the other place with great care. However, there are some confusing points of fact and I would appreciate it if the Minister could elaborate on them. If he would prefer to do so through interventions to save time, that would help our proceedings. My understanding is that in the original drafting of these clauses the Lord Chancellor was given various regulation-making powers. He had the power to make regulations defining what could and what could not be appealed from an appeals tribunal to a commissioner. Unless I am wrong in my understanding of the proceedings in another place, on Report the references to the Lord Chancellor's powers were removed. What is causing me particular concern—because I do not understand how it dovetails with the Minister's remarks—are the Lord Advocate's comments on 20 April. He said that references to the Lord Chancellor's regulation-making powers in Clauses 14 and 15 are no longer necessary."—[Official Report, House of Lords, 20 April 1998; Vol. 588, c. 984.] Perhaps the Minister could elaborate whether that has happened because of some drafting requirement as a result of amendments to the Bill, or because there has been a change of heart. That leads me to two other points of clarification. The Minister may say that the Government have had to make some of the changes as a result of the Scotland Bill. Indeed, that issue arose when we discussed the first group of amendments today. Changes had to be made to the Bill because the Minister rather perspicaciously claimed that he wanted to get it right and was therefore withdrawing parts of the Bill until there was clarification of the consequences of the Scotland Bill when it became law. 5.45 pm Why have those powers been removed from the Lord Chancellor? If it is not because of a technicality or drafting issues, what is the reason? Why were they withdrawn at the time that they were? I ask that not to be obtuse, but when we were scrutinising the Bill in Committee in this House the Scotland Bill had already been published, so the Government must have been aware of any potential problems or any desire to seek clarification. I have been wondering why there was no attempt to make these changes in Committee or on Report in this House. This may not be connected, but was it anything to do with what was happening at the other end of the building with regard to the Lord Chancellor? Perhaps the Government did not want to give any more ammunition to the press—a stick to beat the Lord Chancellor with—given his problems with the redecoration of his apartment with taxpayers' money—

Simon Burns (Conservative, West Chelmsford)

You are absolutely right, Mr. Deputy Speaker. I certainly do not want to stray into that controversy or open old wounds. I was just, in passing, wondering whether that incident had any bearing on the timing of the Government's proposal to change the Bill. No doubt the Minister, who is in listening mode, will have heard my point and will want to clarify the issue—within order and without causing any problems for the Chair—when he replies. The hon. Member for Cardiff, West (Mr. Morgan)—who used to be a Labour Front-Bench spokesman, but who failed to find a place in the first Administration and now sits on the Back Benches—suggested that perhaps the country did not really need a Lord Chancellor at all. That was a slightly off-message line to take. Perhaps that, too, has some bearing and the Government are chipping away at the Lord Chancellor's powers through these amendments. If the Minister, as a matter of information, will fully clarify these points so that we can understand what we are being asked to approve, I shall be eternally grateful.

Keith Bradley (Labour, Manchester, Withington)

I will cut away all the verbiage and get to the clarification of the amendments that the hon. Gentleman seeks. I hope that he will find comfort in it. The Lord Chancellor is currently given the power to make procedural regulations with respect to proceedings before commissioners through section 189(2) of the Social Security Administration Act 1992. He is required by section 189(10) to consult the Lord Advocate before making regulations under the Administration Act. Both subsections are repealed by the Bill. Amendment No. 84 re-enacts those provisions to allow the Lord Chancellor to continue to be able to make regulations in respect of proceedings before commissioners after consulting the Lord Advocate. Such regulations may relate to the determination of any matter by commissioners, or leave to appeal to, or from, the commissioners. Therefore, Lords amendment No. 84 makes references to the Lord Chancellor's regulation-making powers in clauses 15 and 16 unnecessary. Lords amendments Nos. 19, 20, 21, and 83 remove references to the Lord Chancellor, in clauses 15(11) and 16(6), and consequentially amend clause 75(1). I am sure that that explanation clarifies the position, and that the hon. Member for West Chelmsford will be happy to accept those Lords amendments.

SUSPENSION IN PRESCRIBED CIRCUMSTANCES

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

Lords amendments Nos. 27, 28, 29 and 30 clarify the circumstances in which entitlement to benefit may be terminated following a suspension of payment of benefit. Clause 22 contains provisions to suspend payment of benefit when a doubt arises about whether a person is entitled to benefit, and to terminate entitlement following suspension. The intention has always been that entitlement will terminate only when someone fails to comply with an information requirement that the Secretary of State imposes to resolve the issue that led to the suspension. The amendments make that limitation explicit in the Bill, in response to concerns expressed in another place. Lords amendment No. 71 relocates clause 59 into the section of the Bill dealing with "benefits". Currently, the clause is incorrectly located in the section of the Bill dealing with "contributions". The amendment rectifies a technical error in the current draft of the Bill. I commend the amendments to the House.

RESTRICTIONS ON ENTITLEMENT TO BENEFIT IN CERTAIN CASES OF ERROR

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

Clause 27 contains provisions to deal with restrictions on entitlement to arrears of benefit following a decision by a commissioner or court which reinterprets the law in a particular area. The clause replaces and clarifies sections 68 and 69 of the Social Security Administration Act 1992. Lords amendments Nos. 37 and 58 clarify the fact that restrictions on payment of arrears will apply regardless of whether a claim or application is made before or after the date of the relevant determination. The other amendments in the group will ensure that the provisions of clauses 27 and 44, and paragraph 47 of schedule 6, comply with European Community law and with the European convention on human rights. As originally drafted, the provisions would have required that only the person involved in the lead case—the case that leads to a reinterpretation of the law by a commissioner or a court—would have any increase in their benefit entitlement paid without any restriction. All others who are affected by the new interpretation of the law would have had any increase paid from a common date set—the date of the determination in the lead case.

Simon Burns (Conservative, West Chelmsford)

In the light of debates on the Bill in another place, why is the Minister so confident that the provisions will comply with the requirements of the European Court of Human Rights? On what evidence has he based that conclusion?

Keith Bradley (Labour, Manchester, Withington)

I am confident—because of the thorough-going nature of the debates in the other place, and the expertise that has been applied to the matter both there and within my own Department—that the assurances that I have given will be complied with. If the hon. Gentleman has doubts on the validity of that statement, I should be very grateful if he will say how he thinks it is defective. If I am not able now to deal with his specific point on how it is defective, I shall certainly write to him about it.

Simon Burns (Conservative, West Chelmsford)

On that specific narrow point, will the Minister confirm whether he has had specific meetings with officials to discuss the issue?

Keith Bradley (Labour, Manchester, Withington)

I should certainly not be commending the amendments to the House if I were not satisfied, through my officials, that the information that I am providing is correct. I say again that, if the hon. Gentleman believes that there is any defect in my statement, I should be very happy to hear what it is. In the light of that information, we will reconsider the matter, and I shall write to him with a detailed response. However, he has not yet given me any details of a problem. If he wishes to record in Hansard the problem that he perceives in the statement, perhaps we will be able to deal with it.

Simon Burns (Conservative, West Chelmsford)

I should like to clarify one point. In no way was I suggesting that the Minister might be less than straightforward. I should hate for him—perhaps inadvertently, in his comments—to put that on the record. I have no doubt about the Minister's integrity. However, in debates in the other place, there was a great difference of opinion and confusion about the extent and accuracy of the provisions' compliance—when it comes to the crunch—with requirements. I was simply wondering whether the Minister has more information on that matter.

Keith Bradley (Labour, Manchester, Withington)

No. I merely repeat the point that—as the hon. Member for West Dorset (Mr. Letwin) is only too aware—all legal matters are always open to interpretation. I believe that the amendments will ensure compliance with European law. I am not suggesting that I am an expert in the field; I rely on advice on those matters. If the hon. Member for West Chelmsford (Mr. Burns) or any other Opposition Member thinks that there is a specific defect that I am not dealing with, I should be grateful to be told what it is. I shall deal with the point in writing, and try to provide further assurance. Conversely, if the information shows that we should reconsider the matter, that will be done. In no sense am I trying to mislead the House. I am merely trying to state what we believe to be the case. The matter has been considered both in the House and in another place, and I am moving and speaking to the amendments on that basis. The amendments will ensure that restrictions on arrears will not apply to other cases that are being appealed or to claims or applications that are held up by the Secretary of State while awaiting the outcome of lead cases. I say again that I believe that the provisions are in compliance with the requirements of European Community law and the European convention on human rights—although I should be happy for the matter to be debated further if there are views to the contrary. With those assurances, I commend the amendments to the House. Lords amendment agreed to. Lords amendments Nos. 32 to 37 agreed to.

REVIEW OF DECISIONS

John Denham (Labour, Southampton, Itchen)

I beg to move, That this House doth agree with the Lords in the said amendment.

John Denham (Labour, Southampton, Itchen)

These are technical amendments to clauses 38 and 73, which deal with the social fund. Although they are essentially drafting changes to clarify matters that the House has already discussed, it may assist the House if I briefly remind hon. Members how the social fund measures in the Bill fit together to form a coherent package of improvements. 6 pm The simplification of budgeting loans in clause 69, the ability to recover social fund overpayments in clause 73, and their associated review procedures in clause 38 all represent further significant steps towards our goal of achieving an active, modern service. Their combined effect will be to make the social fund system more user friendly for the customer, more efficient for staff to administer and more secure for the taxpayer. Amendments Nos. 38, 39 and 41 to clause 38 clarify the review procedure for dealing with discretionary social fund overpayments. Amendments Nos. 40, 42 and 43 are consequential technical changes, which again ensure that "appropriate officers" and social fund inspectors need only follow the special review procedures when they are reviewing determinations on the grounds that the applicant misrepresented or failed to disclose information. I should make it clear that nothing in these amendments affects the applicant's right to apply for a review, either of the original determination in his case or of the determination that there has been an overpayment. Amendments Nos. 79 and 80 are technical amendments to clause 73. Amendment No. 80 tidies up the legislation, and amendment No. 92 ensures that the new discretionary social fund review procedures to support the budgeting loans scheme and the recovery of overpayments can be operated by social fund officers before the introduction of appropriate officers under part I of the Bill. As a result of the measures in the Bill and of the amendments before the House, the social fund will in future be simpler to understand and more cost-effective to administer; it will also be seen actively to support people back into work, and be based on integrity and honesty. I commend the amendment to the House.

Oliver Letwin (Conservative, West Dorset)

I shall attempt to remember that you are in the Chair, Mr. Deputy Speaker, and that I begin my remarks with you in the Chair, rather than in the presence of Madam Speaker. This set of amendments constitutes a set of dogs that have not barked or a set of Ministers who have not listened—an extreme example of the latter phenomenon, I fear. Clause 38 was much debated in Committee. It was perhaps not as well debated by the Opposition as it should have been because it was I who spoke. However, having read my remarks, I find that although they were not as elegant or eloquent as perhaps they should have been, they had the great merit of being true. They remain true, alas, because nothing has been done to remedy the great deficiencies that were then observed in clause 38, which are indeed symptomatic of the deficiencies that run through the Bill, to which attention was also drawn many times by my colleagues and which were also highlighted in another place. Let us first consider clause 38(1)(a). It states that a review of a social fund determination shall be made within such time and in such form and manner as may be prescribed". The Minister may recall that, with some assistance from the hon. Member for Newbury (Mr. Rendel), we drew attention to the question whether there ought to be a time limit which, as the Minister made clear, would have affected the length of time that the Government could take before they instituted a review without an application from a customer. On that occasion, the Minister took no heed of the request. We are told that this is a listening and pragmatic Government, so one would have expected that between the time of our debates in Committee and the Bill entering another place, Ministers would have had time to reconsider and would have seen the justice of a 28-day time limit, in those circumstances at least. No such luck—unless my eyes deceive me, there is not the slightest reference to a time limit in the multitude of amendments to clause 38. No luck, no listening, no pragmatism. That will affect individuals who will find themselves being reviewed, perhaps long after the fact, without any means of responding—unless the Government do exactly what the Minister said they would do when the issue was raised in Committee. The Minister said: We have made clear our intentions in Committee". By that he meant: In the majority of cases, 28 days will give claimants ample time".— [Official Report, Standing Committee B, 18 November 1997; c. 367.] He made it clear that he intended to introduce regulations that would set a 28-day limit. We are now in an extraordinary situation. The Minister accepted the justice of the claim that there ought to be a time limit and said that he would bring forward regulations to deal with it, but, in the intervening months, he has not put before this House or their lordships a draft—

Oliver Letwin (Conservative, West Dorset)

Clearly, I would not wish to challenge your ruling, Mr. Deputy Speaker, but I think it is material to the amendments before us to say that they fail to have the effects that they could and should have had if the Minister were the representative of a listening Government. However, I move on in order to avoid—

Oliver Letwin (Conservative, West Dorset)

I am very grateful to you, Mr. Deputy Speaker. As a relatively new Member, and as someone who is very new to a brief sojourn on the Front Bench, I shall pay great attention to your suggestions and requirements. I deal now specifically with amendment No. 38. Clause 38(1)(b) states that a Minister may review a social fund determination in such other circumstances as he thinks fit. It was not quite with the "wild surmise" of Cortez that I came across amendment No. 38, but it was with a slight beating of the heart in anticipation of finding that, after long rehearsals in Committee, the Minister would indeed bring forward in amendment No. 38 an answer to precisely the terrible problems caused by that part of the clause. In Committee, I said: What an extraordinary concept in such a context—the power is completely unconstrained."—[Official Report, Standing Committee B, 18 November 1997; c. 365.] We went on to observe that we could very well have had before us a Bill that simply said that the Minister may do anything in such circumstances as he thinks fit, and that it would have been a very much shorter Bill than this extremely long one and could have saved us from much further consideration, but it would not have been in accordance with the way things are done under the British constitution. I came to amendment No. 38 thinking that it would solve the problem because it adds to the clause a precise provision relating to the review. It allows a review to take place on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact". The problem is that amendment No. 38 in no sense replaces clause 38(1)(b). Unless I am much mistaken, it adds still further licence—and that is an extraordinary thing to do. Clause 38 provides an unconstrained power of review—without the constraint of circumstances or even an objective test of the constraint of circumstances. The Minister said in Committee: we cannot achieve the degree of flexibility that we want when detailed provisions are set out in primary legislation".— [Official Report, Standing Committee B, 18 November 1997: c. 367.] In pursuit of that flexibility, the Minister drafted clause 38(1)(b), giving himself an absolutely open field. Then, presumably, one of his officials—I cannot imagine that he dreamt it up himself—suggested that there might be just a scintilla of doubt about whether at some time it might be necessary to do something that the wholly unconstrained power provided in clause 38 might not allow in an iron-cladded way without challenge from judicial review. I can only imagine that some brilliant, imaginative, ingenious lawyer in his Department suggested the possibility that some judge might be so steeped in the arcana imperii that he could find the basis for judicial review of a Minister's review of a determination in circumstances that he thought fit, but somehow avoided falling within the letter of the law. As a result, we have a majestic additional provision that the Secretary of State may review such a determination on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact". To any ordinary layman, amendment No. 38 is wholly unnecessary. It expands what is already astonishingly wide licence. However, when one considers it further, the position gets worse. We have failed utterly in our repeated efforts to understand what concrete circumstances the amendment addresses that are not addressed by clause 38(1). We continue to wrestle with the problem, but we are utterly defeated. If a determination had been made and the applicant had misrepresented or failed to disclose a material fact, any rational Minister would think it fit to review the determination. I cannot imagine any circumstances on the face of the earth that would make it more plausible for a Minister to think it fit to review a determination than if someone had made an application and then failed to disclose or misrepresented a material fact. I bow to the Minister's immense imagination, of which I have had personal experience on numerous occasions in the House and outside, and ask him whether he has been able to dream up a circumstance in which he would not think it fit to review a determination if the applicant had failed to disclose or misrepresented a material fact. I do not anticipate his being able to provide such an explanation, because I do not believe that an ordinary human being can furnish one—not even someone as brilliantly imaginative as the Minister. We have to ask why the amendment was introduced in another place. I was defeated by that, so I spent some time investigating the Official Report there. Earnestly, as a seeker after truth, I tried to find out from the Official Report in another place what was the logic that underlay this wholly mysterious clause. Perhaps there was a completely different logic, which revealed a vast new array of concerns that did not arise in Standing Committee. After all, the Minister had plenty of opportunities to introduce such an amendment in Committee. Surely something must have happened in the intervening period that revealed to the Minister the necessity for such a bizarre amendment. Astonishingly, the Official Report in another place does not reveal the slightest trace of an explanation for the amendment. It is most puzzling. Unlike our previous debate about phoenix companies and their directors, where a gross abuse of constitutional and jurisprudential precedent has been perpetrated and the House will have cause to be ashamed of itself, amendment No. 38 does not matter in that human sense—at least, I hope not. It is simply a case of bad legislation that provides belt and braces and will probably undo itself in the process. Probably what will happen is that some lawyer, perhaps looking back at our debates, but perhaps not, will struggle desperately to find out how clause 38(1)(b) relates to what will become clause 38(1)(c) and make sense of it and, as a consequence, the full force of the clause will be modified in court. 6.15 pm If the right hon. Member for Llanelli (Mr. Davies) were here, I am certain that he would be able to offer us guidance as he has done previously in Welsh debates. However, I cannot speculate about that. If we have what appears to be a very bad overlap—an unnecessary paragraph—the Minister should offer to remove subsection (1)(b)—that would be marvellous—or, which would be less good, not to insert amendment No. 38. The two together certainly make no sense whatever. Finally, I refer briefly to amendment No. 41. The Minister has described it as a technical amendment; in a sense, it is. It tells us that, in making a determination, an inspector shall act in accordance with any general directions…and…take account of any general guidance". I am not suggesting that all hell will break loose as a result of amendment No. 41—manifestly not. Probably the great majority of people will never hear of amendment No. 41. I suppose, alas, that most people will never hear of amendment No. 38 or clause 38 or indeed of me or my speech.

Simon Burns (Conservative, West Chelmsford)

Nor will most people here.

Oliver Letwin (Conservative, West Dorset)

Indeed, as my hon. Friend points out, nor will many hon. Members. Yet amendment No. 41 enshrines rather a horrible principle that is all too familiar to those of us who sat through the interminable hours of debate in Committee. My hon. Friend described them as pleasurable, and they were from time to time, but only due to the charm of the Ministers and not to the charm of the legislation. We frequently found an extreme predisposition towards generality in respect of regulation-making powers and powers of review and determination. Here we find that generality in the very language of the Bill. Amendment No. 41 refers to "general directions" and "general guidance". I do not know why the word "general" is included. I do not know what the Minister and his officials think would have been lost in the drafting of the amendment had it stated that "an appropriate officer or social fund inspector shall act in accordance with any directions issued by the Secretary of State and take account of any guidance issued by the Secretary of State." However, I know that words are not included in legislation introduced by any Government without a particular purpose. As the meaning does not require the term "general", it must have been included for a particular purpose. I take it that it is there to allow the Secretary of State to give guidance or direction on topics wholly unrelated to the determination of a review and to allow an appropriate officer or social fund inspector to have regard to a variety of issues that the applicant might have considered wholly irrelevant. If that is the purpose—the Minister is more than welcome to clarify the issue in an intervention or in his reply to the debate—it is quite sinister. I am sure that the Minister does not intend any ill to befall people. Ministers will be aware, from many cases before the Benefits Agency, that citizens advice bureaux repeatedly find that, because of the bewildering array of other regulations, directions and guidance, innocent, ill-informed applicants experience treatment that they had not anticipated. If the inclusion of the word "general" is to permit exactly that kind of articulation, it is, to put it mildly, regrettable. I have laboured—undoubtedly, looking at the faces of Labour Members—

Keith Bradley (Labour, Manchester, Withington)

Look at the Opposition Benches.

Oliver Letwin (Conservative, West Dorset)

I assure the Minister that I would be amazed if I found a great army behind me. I have laboured mightily over the amendments, but I believe, difficult as Ministers may find it to credit, that it matters how legislation is worded. It matters whether the general power given to the Secretary of State by legislation has been appropriately constrained. It matters whether the clauses overlap. It matters whether individuals, when they apply for benefits, are clobbered by provisions that they have never heard of because a clause they have never heard of gives the Secretary of State a power that no rational human being would want included in a Bill, which got through the House of Commons because nobody mentioned it. I hope that this listening, pragmatic Government will now see fit to make minor adjustments, to bring the Bill back into line with common sense.

John Denham (Labour, Southampton, Itchen)

There are several reasons why I hope that the hon. Member for West Dorset (Mr. Letwin) never becomes a Social Security Minister, one of which is the danger that he would face of having so many of his speeches on this matter read back to him. Amendment No. 41 has been drafted to be consistent with the wording and construction of the legislation introduced by the Conservative Government in 1986 and consolidated in 1992. I accept that the hon. Gentleman has sincere reservations about the way in which regulations are drafted, but the form and wording of the amendments are consistent with previous practice, which was followed by Conservative Governments.

Oliver Letwin (Conservative, West Dorset)

I thank the Minister for his characteristic patience in giving way. First, I do not take responsibility for previous practice, which is long running and dates back to earlier Governments than the previous one. Secondly, I hope that the Minister will not advance the argument that this matter is like public expenditure: the Government can do anything wrong as long as the practice is consistent with that of a previous Government.

John Denham (Labour, Southampton, Itchen)

I shall cover the other substantive points—

Simon Burns (Conservative, West Chelmsford)

Answer this point first.

John Denham (Labour, Southampton, Itchen)

It is fair to say that the drafting of legislation should—unless we can find reason to change it—reflect existing legislation on the issue. When considering the Bill, we found no reason to change the form of wording used in the Act. In his second set of questions, the hon. Member for West Dorset asked me to explain the purpose of the group of amendments. We are dealing with reviews that are necessary because there has been misrepresentation or failure to disclose a material fact. The current position in law is that if a discretionary social fund overpayment results from misrepresentation or failure to disclose a material fact, the amount cannot be recovered unless the customer voluntarily agrees to repay it or civil action is taken against him. Discretionary social fund overpayments are often relatively small sums, and civil action is not always cost-effective. That means that overpayments are being written off, which allows people to profit from fraud. The intention of clause 73 is to close the loophole in the primary legislation. We want to amend clause 73 because, although it introduces the express provision to allow the Secretary of State to recover such overpayments when a determination has been made, it does not provide the power to determine that an overpayment has occurred or to quantify it. The intention is to amend clause 38 to make it explicit that appropriate officers will determine that an overpayment has occurred and decide the amount to be recovered. If I understood the hon. Gentleman correctly, he seeks clarification on why the amendments are necessary. They are necessary to enable the Bill's purpose—which we discussed in Committee—to be carried out.

CHILD SUPPORT: APPEALS TO APPEAL TRIBUNALS

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

Amendments Nos. 45 to 51 and 120 make minor changes to the provisions for child support appeals in clause 42 and schedule 6. Amendments Nos. 102, 122, 129, 130, 133, 134, 136, 137, 142 and 144 clarify the appeals process for decisions on child support that are not directly part of the formula assessment. Amendments Nos. 124 and 175 allow for regulations to provide further appeal rights if they prove necessary. When a tribunal considers a departure application, the discretionary nature of the decision means that a slightly different procedure is followed from the one for other appeals. Amendments Nos. 133 and 136 insert a provision that ensures that the same procedures are followed for departure appeals as at present. In addition, amendments Nos. 133, 136 and 102 clarify the rules for appeals against reduced benefit directions. The Bill gives two rights of appeal against the benefit penalty imposed when a lone mother refuses to co-operate with the Child Support Agency without good cause. The amendments remove that dual provision, but ensure that parents with care can still appeal against the decision to impose a reduced benefit direction, based on the application of child support law to their case. Amendments Nos. 122, 129, 130, 134, 137, 142 and 144 deal with appeals against the contribution to maintenance paid by some non-resident fathers who claim benefit. The Bill contains no right to appeal against such decisions, and the amendments correct that omission. I commend the amendments to the House.

VACCINE DAMAGE PAYMENTS: DECISIONS SUPERSEDING EARLIER DECISIONS

Keith Bradley (Labour, Manchester, Withington)

I beg to move, That this House doth agree with the Lords in the said amendment.

Keith Bradley (Labour, Manchester, Withington)

These technical amendments relate to the vaccine damage payments scheme. I hope that hon. Members will allow me to present them as a set rather than individually. Amendment No. 59 is a minor amendment to clause 45. Clause 45 inserts a new section 3A into the Vaccine Damage Payments Act 1979. In effect, it replaces section 5, which deals with reconsideration of the Secretary of State's decision on a claim for a vaccine damage payment, and ensures that there continues to be provision for claimants to be notified of decisions. Amendment No. 60 is an amendment to clause 46. It allows the Secretary of State to make regulations on the procedures to be followed by appeal tribunals that hear appeals against vaccine damage payment decisions. I commend the amendments to the House.

PAYMENTS TREATED AS REMUNERATION AND EARNINGS

John Denham (Labour, Southampton, Itchen)

I beg to move, That this House doth agree with the Lords in the said amendment.

John Denham (Labour, Southampton, Itchen)

The amendments enable us to mirror, in national insurance, changes to the income tax treatment of shares carrying a risk of forfeiture and of convertible shares, as announced by my right hon. Friend the Chancellor of the Exchequer in his Budget. The amendments provide for regulations to treat as earnings any amount on which the earner is chargeable to income tax under the provisions of sections 140A to 140H of the Income and Corporation Taxes Act 1988. That would allow for regulations to treat as earnings, for national insurance, gains derived from share ownership taxable under provisions to be introduced in the Finance Bill. The Finance Bill changes give business legislative certainty about the tax position. Similar changes are needed for national insurance purposes. Part of our aim of modernising national insurance is that, where it is sensible to do so, national insurance rules should be aligned with income tax rules. It is important that national insurance rules keep in step with changes to income tax so that business is not faced with the burden of administering two sets of rules for the same type of remuneration. The amendments provide the most practical way in which to mirror in national insurance legislation the income tax changes in the Finance Bill, and I commend them to the House.

New clause

John Denham (Labour, Southampton, Itchen)

I beg to move amendment (a) to the Lords amendment, leave out the first 'subsections' and insert 'subsection'.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this, we may consider Government amendment (b) to the Lords amendment, Lords amendments Nos. 65, 73, 117, 147 to 153, 160 to 162 and 164, Lords amendment No. 166 and Government amendment (a) thereto, Lords amendments Nos. 167, 168 and 176 to 179. I should inform the House that amendment No. 64 involves privilege.

John Denham (Labour, Southampton, Itchen)

This group of amendments puts into effect changes to the structure of national insurance contributions for employees and their employers from April next year. It also includes two amendments that overturn the changes made to the Government's proposals in another place. In his Budget statement on 17 March, my right hon. Friend the Chancellor of the Exchequer announced a radical reform of the national insurance system. The amendments are a crucial part of that strategy. They help to make work pay by increasing take-home pay for every employee who pays national insurance contributions, they encourage employers to create jobs for people moving from welfare into work, and they cut red tape for business by simplifying the structure of employer contributions. The measures follow the recommendations made by Martin Taylor, the head of the Government's tax-benefit review, following his wide consultation with business. Overall, they are a major step in the Government's drive to bring the national insurance system up to date with the modern labour market. I shall explain the effect of the amendments in more detail. The main thrust of the changes is provided by Lords amendment No. 64, as it would stand with amendments (a) and (b). In the form originally introduced by the Government, amendment No. 64 would reduce employees national insurance contributions without affecting the ability to build up rights to contributory benefits. I shall deal later with the changes made in the other place to the Government's proposals, and more particularly with the amendments that will overturn those changes. For the moment, I should like to concentrate on the Government's proposals. As a result of the Government's amendments, employees would pay contributions only on that part of their earnings that exceeds the lower earnings limit—currently £64 a week. Under the current system, employees pay no national insurance contributions when their total earnings are below £64 a week, but when earnings reach the lower earnings limit, they have to pay contributions at a rate of 2 per cent. on all their earnings up to that point. That perverse "entry fee" costs every employee who pays contributions £1.28 a week. It means that some employees earning above the lower earnings limit receive less take-home pay than their colleagues whose gross earnings are lower. That is clearly an absurdity, and the amendments put an end to it. From April 1999, employees will pay contributions only on the part of their earnings that exceeds the lower earnings limit. That will help to ensure that people find work attractive. It supplements the other steps that the Government are taking to make work pay. Amendment No. 64 also makes three major changes to the structure of employer national insurance contributions. First, at the moment, employers begin to pay contributions when earnings reach £64 a week. The amendment will enable the Government to raise that threshold to the level of the single person's tax allowance—set at £81 a week this year. That will bring the system more closely into line with income tax, thus making it easier for employers to administer the two systems side by side. Secondly, in parallel with the change to employee contributions, the employer entry fee will be abolished so that employers will not have to pay contributions on any earnings below the level of the single person's allowance. Thirdly, the amendment simplifies the structure of employer national insurance contributions, bringing in a single rate of 12.2 per cent. in place of the four separate rates that apply now. The package of changes to employer national insurance contributions is revenue neutral for employers as a whole. The changes will reduce the national insurance costs that employers face in respect of about 12.5 million people who earn below £450 a week. For example, employers will pay around £1.80 a week less for someone earning £155 a week, and £5 less for an employee on £220 a week. Those changes will make a very real difference. They will encourage employers to create jobs for people moving from welfare into work. The reform of employer contributions will also remove distortions that mean that, when employees' wages increase, their employers' national insurance costs can increase by more than the wage rise itself. Simplification of the structure will reduce the amount that employers need to spend on administering the system. Amendments Nos. 65 and 73 ensure that the proposed single rate of employer contribution will apply to the new class IB contribution. That is the new class of contribution being introduced in the Bill as part of the measures to enable employers to put items subject to national insurance in annual PAYE settlement agreements. Amendment No. 147 makes a similar change in respect of class IA contributions paid by employers on company cars and car fuel provided to employees. I must make it absolutely clear that none of those changes to employee or employer national insurance contributions will affect people's rights to benefits and pensions, or their ability to build up such rights. We have taken specific steps in amendment No. 166 to ensure that the changes do not reduce the rebates for employers with occupational pension schemes contracted out of the state earnings-related pension scheme. That means that people's future contracted-out pensions will not be affected. Government amendment (a) to amendment No. 166 is a consequential amendment required to correct a technical deficiency. Excluding those needed to reverse the changes made in the other place, the remaining amendments in the group are Nos. 117, 148, 149, 150, 151, 152, 153, 160, 161, 162, 164, 167, 168, 176, 177, and 178. Those make changes to schedules 7 and 8 by way of minor consequential amendments arising from the new contribution structure. I must also draw the attention of the House to the fact that contributions payable into the national insurance fund are the subject of Commons privilege. That means that it is the privilege of this House to introduce measures on that subject. It is, of course, a privilege which the House is able to waive, and I invite the House to do so in this case. I now turn to amendments (a) and (b) to Lords amendment No. 64, which seek to remedy the damage caused by the introduction into our measures of changes put forward by members of the Conservative party in the other place—changes that are ill judged, irresponsible and imprudent. The Conservatives seek to introduce into the Bill a change that my right hon. Friend the Chancellor of the Exchequer has said that he will make at a later date. It is indicative that the only amendments that the Opposition seek to make to the structural national insurance measures relate to an idea that they have stolen from our Chancellor. Those amendments would have a damaging effect. They would remove access to certain contributory benefits from up to 1 million low-paid workers, four fifths of them women. They would cut future SERPS, occupational and personal pensions for millions of others, and they would reduce national insurance contribution revenue by almost £1.5 billion a year without any consideration of whether the financial circumstances are right. I will go on to say more about those effects later; they show how reckless the Opposition amendments really are. However, the main arguments advanced by the Opposition in the other place for their amendments were not—

Julie Kirkbride (Conservative, Bromsgrove)

I am somewhat perplexed by what the Minister has just said. If he claims that we are filching an idea from his own Chancellor, why does he condemn what we propose?

John Denham (Labour, Southampton, Itchen)

Because of the timing, and the way in which the Conservative party has sought to bring the changes forward, which, as I have said, is imprudent and reckless.

Simon Burns (Conservative, West Chelmsford)

Why?

John Denham (Labour, Southampton, Itchen)

I shall deal with that point in a moment. The main arguments made for the amendments by the Opposition in another place were nothing to do with the substance of the measures introduced by the Government in the Bill, so one can only assume that the Opposition agree with the measures themselves, but are reluctant to say so. The main arguments were not even to do with the substance of the changes that the Opposition sought to make. Instead, they revolved around the fact that the Chancellor had announced his intention to raise the lower earnings limit as part of future reforms, but that the Government had not included the change in the Bill. The Opposition argued that their amendments were necessary to give the House the opportunity to debate the Chancellor's intentions. Those arguments make no sense. I suspect that, in part, they were put forward by the Conservative party to deflect attention from the damage that would be caused by the ill-thought-out changes that they sought to make. I have no doubt that people found it helpful to hear from the Chancellor about a change that he intends to make in the future. Early notice helps business to prepare for future changes, and gives everyone a clear picture of the direction that the Government are taking.

Oliver Letwin (Conservative, West Dorset)

If the Minister thinks that people would have found it helpful for the Chancellor to talk about changes that he intended to make in the future, why did the Chancellor not say that he intended to make those changes in the future?

John Denham (Labour, Southampton, Itchen)

The Chancellor clearly indicated that he intended to make the changes in the future, and I will come to that point again in due course. In developing his Budget proposals, the Chancellor felt that now was not the time to implement the change. That is clearly for him to decide. He must judge when financial circumstances are right for a measure with such significant revenue implications. As he explained, he would not implement the change until accompanying measures were in place to ensure that people did not lose access to contributory benefits as a result. It is not, and never has been, the Government's intention to make that change to the lower earnings limit in April 1999. The Chancellor never said that it was. That is why the Government did not introduce the measure in the Bill.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

Is the Minister now saying that the Hansard record of his right hon. Friend's Budget speech is incorrect?

John Denham (Labour, Southampton, Itchen)

I do not really appreciate the point that the hon. Gentleman is trying to make. I do not believe that there is anything in the Hansard record or elsewhere that suggests that the Government intended to make the change to the lower earnings limit in April 1999.

Geoffrey Clifton-Brown (Conservative, Cotswold)

rose—

John Denham (Labour, Southampton, Itchen)

I shall listen to what the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has to say—

Geoffrey Clifton-Brown (Conservative, Cotswold)

On that very point.

John Denham (Labour, Southampton, Itchen)

I must make some progress. I shall listen to what the hon. Member for Chingford and Woodford Green has to say, but it is clear that it is not and never has been the Government's intention to make the change to the lower earnings limit in April 1999. That is why the measure is not in the Bill. Secondly, the House debated the Chancellor's Budget for a week. It has had ample opportunity to discuss every measure included in the Chancellor's announcement. The House and the other place will have ample opportunity to debate the alignment of the lower earnings limit with the single person's tax allowance, and the accompanying changes to benefit rules, when the Government bring forward the necessary primary legislation. That will be the time to debate the issues—when the Government have put forward detailed proposals on all aspects of them, and we have the proper legislation in front of us—not now, on the back of the Opposition's ill-considered amendments.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Perhaps the Minister will clarify what the Chancellor said in his Budget speech, which was: Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings.—[Official Report, 17 March 1998; Vol. 308, c. 1106.]

John Denham (Labour, Southampton, Itchen)

I hope that this will prove the opportunity to ensure that we do not waste a considerable time on a discussion of the interpretation of those words. The "Shorter Oxford English Dictionary" defines "further" as meaning at a more advanced point of time, and I am certain that at a more advanced point of time we shall bring forward the changes mentioned by the Chancellor in his Budget statement. I hope that the time of the House will not be wasted on the debate on the issue in another place, which, if I may say so, was not the finest debate I have read. The Opposition have nothing of substance to say about the measures, and they will fail to make any serious case about the wording of the Chancellor's statement. It is perfectly clear that "further" means at a more advanced point of time, and I am sure that the changes will be brought forward at a more advanced point of time—but it will be at the right time. I hope that, now that I have dealt with that matter, Opposition Members will not seek to waste the time of the House any further.

Desmond Swayne (Conservative, New Forest West)

rose—

John Denham (Labour, Southampton, Itchen)

I suspect that this may be on the same point, in which case I should not take a further intervention—but I shall risk it.

Desmond Swayne (Conservative, New Forest West)

Is not all this the consequence of the fact that the Chancellor's statement bore so little resemblance to the Red Book that underpinned it, and of the Chancellor's habit of hyping up everything that he has to say and offering jam tomorrow? Did that not give people legitimate expectations that what he said meant jam today?

John Denham (Labour, Southampton, Itchen)

No. To argue that the amendments were needed to give the House a chance to debate the issue is puzzling in the extreme. We have had such an opportunity, and we shall have further opportunities. Let me turn to the impact that the Opposition's proposals would have in the absence of amendments (a) and (b) to Lords amendment No. 64. It is especially necessary for me to do so as the House may divide on the matter. There is no doubt that, in terms of work incentives, the increase in the lower earnings limit would have very beneficial effects. It would increase take-home pay by up to £1.70 a week for every person who pays national insurance contributions. It would also further align the national insurance system with the tax system, thereby adding to the policies that the Government have already introduced to reduce burdens on business. In those respects, of course, we favour the measure. We would. After all, as I have said, it is the Government's own policy. Unlike the Opposition, however, the Chancellor recognises that those effects are only part of the story. The change would mean that, in the absence of any other changes, up to 1 million people earning between £64 and £81 a week would cease to have access to certain contributory benefits. They would no longer get jobseeker's allowance if they became unemployed. They would no longer get statutory maternity pay if they became pregnant and many of them would no longer build up rights to a state pension for when they retire. That is, in part, why the Chancellor is not introducing this measure in April 1999. He made it clear that those low-paid workers would be protected against benefit losses. It will take time to bring forward and implement proposals on how that should be done, but it must be done.

Oliver Letwin (Conservative, West Dorset)

The Minister's case would have much more force if the Chancellor had made the changes that he intended to make in the Finance Bill. By introducing them in the Social Security Bill, did he not give the Minister the chance to make precisely those consequential changes about whose absence the Minister is complaining?

John Denham (Labour, Southampton, Itchen)

The hon. Gentleman misses the point. It takes time to prepare the sort of changes that can alter policy while protecting the benefit rights of people on low pay. Those changes cannot simply be willed overnight: they must be prepared carefully. It will take time to introduce and implement those proposals, but that must be done. It would not be right to introduce measures that have not had proper consideration and preparation. The proposals from the Conservative party blithely ignore all those issues. They make no attempt to protect low-paid workers against benefit losses or to help the millions of others whose future SERPS and contracted-out pensions would be cut as a result. That is not this Government's idea of modernising the system, and I am sure that the millions of losers would share our view. There is another gaping hole in the substance of the Opposition's proposals. Raising the lower earnings limit to the level of the single person's tax allowance would reduce contributions revenue by approaching £1.5 billion a year from next April. A change with revenue implications of that magnitude can clearly be introduced only when financial circumstances permit. In his Budget considerations, the Chancellor decided that the time would not be right in April 1999. That is for him to judge. In introducing the measures into the Bill, the Opposition have taken no account of those crucial considerations. They are pushing for a change to be made outside of Budget deliberations, without offering any proposals on how the Government should deal with the revenue shortfall that would result. Their amendments give us no clues, and that is imprudence in the extreme. The changes proposed by the Opposition drive a sledgehammer through the Government's carefully considered plans for restructuring the national insurance system. The Conservatives have taken a good idea and turned it into a bad one. They would take up to a million people out of the reach of certain contributory benefits, and they would reduce national insurance revenue by approaching £1.5 billion, with no indication of how the hole should be filled. The changes are irresponsible and imprudent. I therefore urge the House to reverse the changes made in the other place by agreeing to amendments (a) and (b) to amendment No.64. The Government's package of proposals has been widely welcomed. It will help to make work pay. If the new structure was in place today, were every employee paying national insurance would pay £1.28 a week less. Our proposals will also encourage employers to create jobs for people moving from welfare into work, and they will simplify the administration of the scheme for business. The overall effect will be to improve work incentives and make it more attractive to employ those moving from welfare into work. The Government will build further on the measures in future reforms, but only when the time is right and when the benefit implications have been properly addressed. I urge the House to support this radical package of reforms by agreeing to this group of amendments.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

We would not be having this debate in the context of the Bill—which is an absurdity—if the Government had not decided to dump all their national insurance changes on the back of legislation that had nearly completed its passage through the House of Lords. It is ironic that, although the Government have spent most of their first year saying how much they disagree with the other place and how little they regard what it does, they turn around at the first opportunity and put changes concerning a major part of their Budget at the back end of a Bill which had almost completed its Committee stage in the other place. That means that we have only today in which to discuss the measures in this House. Given the Government's previous concern that elected chambers should have full rights of scrutiny, it seems strange that they did not follow the normal course and introduce a separate Bill in this place. It might have proceeded reasonably quickly and received a proper Committee stage when all the issues could have been discussed in detail. In essence, the Government have set out to avoid this Chamber for as long as they can with this legislation and have backtracked on their position regarding the other place, which verges on hypocrisy. However, I shall not dwell on that, as I wish to move on to the amendments. There is concern that the Government's changes were not announced by the Chancellor in his Budget. I shall come to that matter in due course. In summary, there has been an abuse of this place and its processes by a Government who want to have their cake and eat it by saying what they like about the other place while using it as and when they see fit. In the Red Book, the Chancellor described the national insurance changes as the biggest reform to the structure of national insurance contributions since 1975, at a cost of around £1.4 billion a year from April 1999. I said at the time of the Budget that, by and large, we agreed with the national insurance changes. We believed that they were part of a natural process of reform, and I welcomed them. The changes follow those made by Lord Lawson when he was Chancellor, and I see no reason to oppose them. The Minister knows that, so we shall not waste too much time discussing the absolute merits of the case. I had several concerns, but I raised them at the time and I shall not repeat them now. My noble Friend Lord Higgins moved the amendments in the other place in an attempt to point out the Chancellor's deception at the time of the Budget. The Chancellor essentially said one thing and then did another. In his statement of 17 March, he announced several changes to the national insurance contributions scheme, which we have discussed. At the time—his words are quite important—he said: I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country. Almost immediately—again, his words are important—he added: Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected." — [Official Report, 17 March 1998; Vol. 308, c. 1106.] The Chancellor was absolutely clear about what he was saying: his choice of words was vital to the meaning of the speech. He did not, as the Minister claimed, use the word "future"; he used the word "further". There is a reason for that. All hon. Members know—or they should know—what a Minister means when he uses the word "further" in a speech about legislation. We assumed—as did those in the Gallery and others—that, when the Chancellor used the word "further", he meant that, linked to the Budget would be further announcements regarding the process of change that he had announced. If he had used the word "future", we would have known that the changes were not connected with the Budget and would not necessarily be involved with it. When the Chancellor said: Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings", I know that I was not alone in understanding that to mean that employees would be included as part of the reform. Members of the press made the same assumption. In a front-page article the day after the Budget, The Daily Telegraph stated: no workers will pay National Insurance contributions on the first £81 of earnings". On the same day, similar front-page coverage in the Financial Times—a newspaper not given to over-statement—said: Employers and employees to pay no national insurance on the first £81 of wages. Two major newspapers, among others, made clear what the Chancellor was doing. Many members of the public were left with the impression that the changes that the Chancellor had announced—and which the papers had confirmed—would take place; they knew that the effects would be substantial, particularly on their take-home weekly pay. They thought that the changes would amount to a reduction in personal taxation. Two days later, the "Money Box" programme on Radio 4, which is not a station given to overstatement—

Phil Hope (Labour/Co-operative, Corby)

But was it accurate?

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

If the hon. Member for Corby (Mr. Hope) had listened to "Money Box", he would know that it was precise about most of the Budget details. The interviewer said, in response to a caller that a lot of people seem to think that they won't have to pay any National Insurance until their earnings hit eighty one pounds a week. I mean, even I've been a bit muddled by this. An expert from Scottish Equitable, Mr. Stuart Ritchie, replied: No, the Chancellor got this a little bit wrong in his speech…and newspapers are actually still getting it wrong today". Even two days after the Budget, commentators were still trying to figure out exactly what the Chancellor had promised. Newspapers and radio programmes were all saying that the Chancellor had a made a mistake—that was the best that they could say about it. When I studied the Red Book directly after the Budget, I could not find any figures that were relevant to the raising of the lower earnings limit, even though I looked hard. The Minister mentioned the complications—the need to sort out contributions, who would receive benefits and the effect on pensions. He rightly said that measures would have to be introduced and further discussions would have to take place. Why did the Chancellor suggest the changes if he had no intention of implementing them in the next financial year? He said that he was flagging up the idea and that he would make the changes, but there is no provision for them in the Red Book. He was not simply saying that there was too little time before April next year; the Red Book clearly shows that he had no intention to introduce them.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend makes exactly the right point. Is he aware that the Red Book states, in paragraph 3.31 on page 45: The lower earning limits for employees will remain unchanged (at £64 in 1998–99)"? That is totally contrary to what the Chancellor said in his statement.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

My hon. Friend is absolutely right. The Chancellor said: I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country. Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings." — [Official Report, 17 March 1998; Vol. 308, c. 1106.] None of the newspapers and broadcast media managed, at the time, to connect that statement with the Red Book, which made it clear that, in reality, the Chancellor had no intention of introducing the changes. When the Chancellor appeared before the Treasury Select Committee, my hon. Friend the Member for Grantham and Stamford (Mr. Davies) asked him why he had used those words and what his intentions were. Remarkably, the Chancellor replied: I said: 'Future reforms will also ensure that no-one pays National Insurance for the first £81'. The word is 'future'. One can almost see him knitting his brows and glaring: These are reforms we intend to make. However, he had not used the word "future". If he had done, the media would not have made a mistake; they would have read the Red Book and asked, "Future? Which year does that mean? It is not in the Red Book, so it must be way out in the future." The Chancellor made his original statement so that the media would write a favourable story, even though it was not based in reality. The Chancellor knew that few members of the public or the media would read the Select Committee's report—the thought that the media do not dwell on Select Committee reports is strange to hon. Members, I know—so he thought that he would try to rewrite the record. However, the record stands. The Chancellor crafted his Budget speech well into the night—there was no chance that a word would slip out. He was content to let people believe that the raising of the lower earnings limit was part of the package of Budget measures—he wanted the public to believe that he was reducing their tax. He did not correct the papers the following morning; he did not send them letters saying, "You've got it wrong. You're misleading the public—that is not what I meant." He let the impression stand for that critical 24 hours during which the public are most focused on the changes in the Budget. Why did the Chancellor do that? The answer can be found in an article in The Guardian, which reported that the Budget had been heavily tested with focus groups before it was announced to the House. It said: Focus groups tested tax plans: Experiment in lifting Budget secrecy hailed as a success. It is clear what happened. The Treasury was considering ways in which to raise the lower earnings limit, but had obviously not found a way to ensure that, as the Chancellor pledged, all employees earning between £64 and £81 would have their right to benefits protected. We understand that difficulty—the Government will have to resolve it. The focus groups were, clearly, positive about the proposed change. They were told that their tax burden could be reduced, so they said: "That's wonderful. We rather like that." The Chancellor was not blind to that—the Labour party is not blind to focus groups, even though it is blind to everything else—so he hit on a plan: he would ensure that the Budget speech left the public with the impression that the changes would be made. He wanted to have his cake and eat it—he wanted to make minimal changes without going the whole way. When my hon. Friend the Member for Grantham and Stamford confronted the Chancellor with the curious discrepancy between the Budget speech and the tables in the Red Book, the Chancellor made a crude attempt to rewrite the record. He did not want everyone to cotton on to the point. These national insurance changes were dumped on the back end of the Bill in the other place because the last thing that the Government wanted was proper scrutiny in Committee of the whole House, which would have given the media plenty of time to realise exactly what was going on. The Government love to talk about democracy and debate, but they hate discussing legislation. They are apparently strong on reforms of the other place, although we have yet to see what those will be, but they jumped at the first opportunity to bypass the Commons, because they worry about legitimately, democratically elected Members of Parliament scrutinising a deliberate attempt to force the press, the media and the public onto the wrong course in order to generate a warm feeling among the public. I am extremely grateful to the House of Lords for giving us the chance to discuss these matters by amending the proposed national insurance changes. We finally have the opportunity to expose the Chancellor's little scheme and his serious economy with the truth. We intend to support the original Lords amendments, and we will certainly oppose the changes proposed by the Minister. When a Chancellor makes a speech as important as the Budget statement, which, after all, is arguably the single most important speech made by him or possibly by any member of the Government, the whole country hangs on his words. It is the only speech that I know of which is regularly broadcast in full and analysed as it is going on; it is commented on and digested by experts; it covers the front pages of the following day's newspapers; and it dominates the television news on the day. That coverage is not of press releases but of the Chancellor's words. He knows as well as anyone else in the House that the words that he chooses are vital. There is no way in which he would play fast and loose and not bother about the phrasing that he uses.

Chris Leslie (Labour, Shipley)

Will the hon. Gentleman give way?

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

In a minute. The Chancellor would not want anybody to get the wrong impression, leading to a wrong result in the media the following day. The words were carefully crafted. If the Government amendment is defeated and the Lords amendment is sustained, the Government will have serious thinking to do about the contributory principle. The Minister knows that, in any case, there is a serious debate that must be engaged in, because, with the moving of the Contributions Agency across to the Treasury, we are already concerned with the contributory principle and what will happen to it. It is perhaps high time that that debate was brought more into the open. I had hoped that that would happen with the pensions reforms, but I recognise that that is a matter for another day. If the Government allowed the Lords amendment to be made, there would be plenty of time for us to have a proper, rational and reasonable debate that could assist them to find ways in which to resolve the matter. When the Chancellor makes a statement as powerful as the one that he makes on Budget day, he chooses his words carefully and knows full well the effect that they will have, and there is no way in which the House can let him slide away from an obligation that the general public believe him to have committed himself to: they expect to be better off each week, beyond the changes to the employer contributions, and that expectation was deliberately raised by the Government. The Chancellor must answer for that. The Government should explain tonight why they persisted in allowing that misleading statement to run in the media without correction for the first, most crucial, 24 hours.

Quentin Davies (Conservative, Grantham and Stamford)

The Government have still not given the country an answer on what should be the future role of national insurance and whether they intend to make it part of the tax system. Elements of the Government's proposals, such as the decoupling of benefits from employer contributions and the merger of the Inland Revenue with the Contributions Agency, certainly tend in that direction. Will national insurance be treated as tax, or shall we maintain the contributory principle in our welfare system? The Government remain undecided after a year. 7.15 pm Even more important than those issues of substance, however, is the great issue of how the Government mean to treat with the British people. Do they intend to be straight with the British people? Will Ministers state the facts as they are, or will they prevaricate, try to deceive by sleight of hand and imply something that they know not to be the reality? Will they try to bury major items of legislation in an inappropriate Bill, on which we have only a few hours for discussion? Those are crucial issues concerning Parliament's role in legislation and the Government's obligation to be straight with the electorate. Even if we are overridden on the substance of this debate by the Government's large majority in the House, those issues will remain, demanding an answer from the Government. Before I discuss the Chancellor's unedifying behaviour in this matter, let me say that I do not think that the Minister helped the Government's credibility by the way in which he dealt with some of the specific issues raised by the Lords amendment. If I heard him correctly, he said that implementing, as the Conservative party wants to do, the proposal that the Chancellor appears to have made in his Budget speech to eliminate employee class I national insurance contributions below the income tax threshold would mean that employees earning less than that amount would lose their benefit entitlements. That is a terrible misrepresentation, because the fact is that the Chancellor said: Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected."—[Official Report, 17 March 1998; Vol. 308, c. 1106.] That proposal specifically eliminates the danger to which the Minister attached such importance tonight. He cannot possibly rubbish a proposal that includes the protection that he says is lacking. That is no way in which to deal with important matters. The Minister then had the nerve to say that the changes in national insurance contributions introduced in the Budget would not damage benefits for employees. He specifically said 10 minutes ago that the changes would not damage the position of those who are opted out from the state earnings-related pension scheme. I am particularly amazed that the Minister had the effrontery to say such a thing tonight, because when he and I debated this matter recently in a Delegated Legislation Committee, I made it absolutely plain—he could not deny the fact—that, although the new arrangements for SERPS rebates compensate those who have contracted out into personal pensions, they do not compensate those who have contracted out into salary-related occupational pension schemes, and that the SERPS rebate for money purchase schemes is actually being reduced.

Oliver Letwin (Conservative, West Dorset)

My hon. Friend is making this important point with great force. Does he agree that it was remarkable that the Minister did not refer to the distinction between money-related schemes and money purchase schemes? One would have thought, given the previous exchange, that he would at least try to claim that the provision affected the money-related scheme. Is it not now clear that he has admitted the very point that my hon. Friend made earlier?

Quentin Davies (Conservative, Grantham and Stamford)

Indeed. We shall have to read Hansard very carefully. One must count one's spoons carefully with this Government. When we read this debate in Hansard, we shall see that the Minister had the nerve to say that the position of those who contracted out from SERPS was being protected. He knows that the position of a substantial number of employees who contracted out into salary-related occupational pension schemes is not being protected. Far from being protected, the position of those in money purchase schemes will be worse and they will get less by way of a SERPS rebate. The Minister's speech did not meet the most elementary demand for clarity and straightforwardness which we expect of a Minister of the British Government. A Minister cannot come to the Dispatch Box to deal with this matter and leave out two thirds of the picture.

Chris Leslie (Labour, Shipley)

rose—

Oliver Letwin (Conservative, West Dorset)

rose—

Quentin Davies (Conservative, Grantham and Stamford)

I shall give way first to my hon. Friend and then, of course, I shall give way to the hon. Member for Shipley (Mr. Leslie).

Oliver Letwin (Conservative, West Dorset)

Will my hon. Friend focus on an important corollary to this matter? Does he agree that the issue might become even more important with the compulsion on stakeholder pensions, especially if they turn out to be salary related? Does he agree that that creates an extremely interesting tension between the Minister's utterances tonight and in a previous encounter, and what he seems to propose for occupational pensions?

Quentin Davies (Conservative, Grantham and Stamford)

My hon. Friend puts his finger on an extremely sensitive and interesting point. That is another area of governance of this country where the Labour Government, after a year in office, simply cannot make up their mind what to do about compulsion in relation to stakeholder pensions. They have been discussing the matter for months and have still reached no conclusions. Here again, we must watch carefully what they say because there will be all kinds of slippery talk and attempts to deceive, while providing for a future argument that no formal lie was stated. We must watch for every trick in the book on this important matter.

Chris Leslie (Labour, Shipley)

The hon. Gentleman mentioned two thirds of the picture. Can he clarify—I know that he wants to be responsible—whether the Opposition amendments made in the other place would leave a hole in the Exchequer finances of £1.5 billion from the financial year that starts in April 1999? How does the Conservative party propose to fill that hole? Would they add it to the national debt, raise additional taxes, or cut public services?

Quentin Davies (Conservative, Grantham and Stamford)

Had the hon. Gentleman been following the proceedings of the Treasury Select Committee—no doubt he has not had time to do so; he cannot be blamed for being unable to follow the proceedings of every Select Committee—he would know two things. First, in dealing with the Budget, I made a range of proposals and criticisms, so one would have to explain across the range where one would have made different decisions on both the expenditure and revenue sides. Secondly, when the Chancellor appeared before the Treasury Select Committee, I put to him the specific point that the hon. Gentleman correctly raised because I thought that it was possible to read the Chancellor's words in Hansard and believe that they carried the meaning ordinarily attached to them in the English language. Thus, when he said that further measures would be introduced to eliminate employee national insurance contributions of up to £81 a week, I, like the rest of the country—The Daily Telegraph and everyone else who has been quoted—naively believed that he was to be trusted. I assumed that that was what the Chancellor genuinely intended to do, so I asked him, "How come you made that commitment, Chancellor, but in your Red Book—your projection of revenue and expenditure for the following four-year period—you take no account of the revenue cost of that measure?" If the hon. Gentleman reads the record of that sitting of the Treasury Select Committee, he will see that it was precisely that exchange that led to the comments that my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) quoted to the House.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

Is not that the main point? My hon. Friend is making the point from his position in the Select Committee. However, if, as the Minister said, the Chancellor clearly intended to take such action, why was it not structured in the Red Book? Why did not the Chancellor announce in this year's Budget that everything would start from April next year? In this case, such action is not even mentioned in the Red Book, other than to say that it would not be done.

Quentin Davies (Conservative, Grantham and Stamford)

I could not agree more. Once the Chancellor had decided to promise further measures eliminating class I national insurance contributions below £81 a week, and decided to make no provision for that proposal in the Red Book, he was caught both ways. He was coming before the House either to make a proposal that was not costed, which was a serious failure for a Chancellor of the Exchequer, or to make a promise that he knew perfectly well was completely bogus. Arguably, that was an even greater failure—certainly a greater moral failure, if not a greater failure of competence. Clearly, he was guilty of one or the other. I can only imagine that the reason for the Chancellor's committing that colossal error was that he underestimated the intelligence of the public and of Conservative Members. He will live to regret that, among many other things.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I wonder whether there is a more sinister point to all of this—disagreement within the Labour party about its social security policy. Perhaps the Minister for Welfare Reform, who has genuinely campaigned in the House for years to look after the low-paid and the disadvantaged, wanted that measure, but was restrained by the Chancellor from bringing it about. When the Budget statement was produced, Labour Members did not know who would win.

Quentin Davies (Conservative, Grantham and Stamford)

I agree with my hon. Friend. Clearly, in this matter, as in others, the Government do not know whether they are coming or going. They do not know whether it is Tuesday or Saturday. We have been waiting for more than six months for a White Paper on stakeholder pensions. My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) reminded me that we had a White Paper on welfare reform at the end of March. It was long on questions and platitudes, but extremely short on answers and solutions. It said that any reforms would be carried out over 10 or 20 years. I suppose that that is the Chancellor's definition of "future", and that everything will now be deferred until after the next and subsequent elections. That is the nature of the Labour Government and how they deal with urgent national problems. I have not finished dealing with the way in which the Minister presented Government policies. There is a third way in which he was less than absolutely clear with the House and the British public in presenting the effects of the national insurance changes. He said that it was unambiguously good news for employers, or at least for all employers with employees earning less than £500 a week. He must know—in which case he should make it clear—that that is not the position. The provision does not have a straight-line effect. If the Minister looks at page 47 of the Red Book—I sometimes wonder whether Ministers in this Government bother to read it—he will see chart 3.3, which is very peculiar and compares the effect of the introduction of the new rates of employer national insurance contribution with the current regime. We know that, in respect of employees on more than £500 a week, employers will pay more class II contributions, but some employers will pay more on modest earnings of between £100 and £200 a week. The table is clear: an employer will pay more than under the old regime for an employee earning £150 or £160 a week. However, the employer will pay less for an employee earning £170 or £180 a week. 7.30 pm The anomalies are extraordinary. It is not true that the measures are unambiguously good news for employers and reduce the burden of national insurance contributions at low levels of income, only to be compensated by an increase at higher levels of employee incomes. There is one message in ministerial rhetoric and in the handout from Walworth road, and another reality in the detail of the Treasury documents. You, Mr. Deputy Speaker, may think that I have been harsh on the Under-Secretary—after all, he has come to the House only to do his master's bidding—but I have been extremely kind to him, compared with what it is necessary to say about the Chancellor of the Exchequer. The Chancellor may simply have made a mistake. He said "further" when he meant to say "future". In the spirit of generosity that is part of the tradition of the House, we not only take account of that as a theoretical possibility, but hope that it ultimately proves to be the correct hypothesis.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

I do not think so.

Quentin Davies (Conservative, Grantham and Stamford)

My hon. Friend does not think so, but perhaps he is less generous minded than I am.

Oliver Letwin (Conservative, West Dorset)

Is my hon. Friend neglecting the gyroscopic spinning of the Chancellor's servants? If the Chancellor had made such a mistake, would not Mr. Whelan have been informing the press of the catastrophe in 25 minutes, let alone 24 hours, and asserting that it was merely a slip of the stenographer's hand?

Quentin Davies (Conservative, Grantham and Stamford)

I agree with my hon. Friend that that is part of the evidence that there was not a simple mistake. A serious issue is before us, because there are only two possibilities: either the Chancellor made a mistake or he deliberately spoke with forked tongue. It would be extremely serious if a Chancellor of the Exchequer of the United Kingdom had deliberately spoken with forked tongue. That goes way beyond the economic significance of tax changes, issues of mere competence or the attractions and costs of different political programmes to the heart of the integrity of the House, and the integrity of government. I want fully to consider the possibility that there was a mistake. I am the first to acknowledge that we can all make mistakes or slips of the tongue. I am no less likely to make such mistakes than anyone else, but there is a simple remedy in this place: an hon. Member simply apologises to the House. That is extremely easy to do, and the tradition of this place is that, once an hon. Member has apologised, no further sanctions are called for and the matter is at an end. That has been the basis of the honour of the House of Commons for centuries, as you, Mr. Deputy Speaker, know as well as—indeed, better than—anyone. The Chancellor never took that opportunity. Instead, he did something extremely serious which, sadly, can only confirm his serious guilt in the matter. He said something in the House and, to cover himself when it became clear that there was a fundamental contradiction between what he had said in the Budget speech and the Red Book, which was issued after it, he had the Treasury put out a completely false version of the text. We are familiar with Governments in the past—not, I am glad to say, in this country—who have adopted the Orwellian method of retrospectively changing the text of speeches, but I did not expect that in this country in my political lifetime. I have in my hands the text of a press release put out by the Treasury after the Budget speech and after the row had begun. It is identical to the Budget speech in Hansard and is headed "check against delivery". We must check carefully when a speech by the Chancellor is delivered or committed to paper. It says: Chancellor of the Exchequer Budget speech, 17 March 1998". I read the speech, and the text corresponded exactly to Hansard, until I reached page 13, which states: Future reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. I thought that I must have made a mistake, had a brainstorm or imagined something; indeed, if I had had a dream, it would have been a nightmare. I looked again at Hansard, and the speech refers not to future reforms, but, as we all heard the Chancellor say, to "Further reforms". That is a very serious matter. Although the incident is a credit to the integrity of Hansard, the Government, unlike some totalitarian regimes, are not in a position retrospectively to doctor Hansard. Nevertheless, the Treasury saw fit to put out a document purporting to be an exact text of the Budget speech. One key word had been changed, which, I fear, is evidence that there was no mistake made in good faith, but a deliberate attempt to disguise reality—to speak with forked tongue. I am being very careful, Mr. Deputy Speaker, not to use an unparliamentary expression.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. The hon. Member for Grantham and Stamford (Mr. Davies) is being very careful. I shall not ask him to withdraw the words "forked tongue", but I ask him to be careful in choosing his words.

Quentin Davies (Conservative, Grantham and Stamford)

If hon. Members have not got the point by now, they never will. The Government can do only one thing to undo the damage that they have done to their credibility by behaving in such a way. They must, even at this late date, make a full and grovelling apology for this attempt to pull the wool over the eyes of the British public. It was doomed to failure, because they misunderstood and underestimated the intelligence of the British people, and the fact that the Opposition were wide awake and would not let them get away with it.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend the Member for Grantham and Stamford (Mr. Davies) is in good voice and form this evening, and he has made many telling and interesting points. His main point is that the Government's left hand did not know what the right hand was doing, because it is clear that the Government had a genuine intention to remove from the national insurance net those people who earn less than £81 per week. I mentioned that dichotomy in my speech on Second Reading of the Finance (No. 2) Bill and I quoted the relevant passage from the Chancellor's Budget speech. It is worth repeating that again, so that the House can be crystal clear about what exactly the Chancellor said. He said: Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly eamings."—[Official Report, 17 March 1998; Vol. 308, c. 1106.] That cannot be made much clearer—the crystal clear import of that statement is that anybody earning less than £81 per week would not pay national insurance. However, as I pointed out to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), paragraph 3.31 of the Red Book states: The lower earnings limit for employees will remain unchanged (at £64 in 1998–99). Therefore, either the Chancellor was right or the Red Book was right, but they could not both be right. What is so tragic and so dreadful about all this is that it is the low-paid who are being misled—inadvertently—by what the Chancellor said on Budget day. That is cruel. If it had been you or I, Mr. Deputy Speaker, who had to suffer a pound or two more paid in national insurance, we should have been in a position to pay that increase.

Desmond Swayne (Conservative, New Forest West)

Speak for yourself.

Geoffrey Clifton-Brown (Conservative, Cotswold)

If my hon. Friend were earning less than £81 a week and suddenly expected to have a little more take-home pay, he would have been absolutely delighted by what the Chancellor said, but he would have been dreadfully disappointed when it subsequently came to light that he had not quite understood what the Chancellor really meant. I am on serving on the Standing Committee on the Finance (No. 2) Bill and members of that Committee have discovered that that Bill provides for an unprecedented transfer of secondary powers to Treasury officials. For example, clause 158 provides that all the necessary regulations connected with the implementation of the single European currency can simply be delegated to Treasury officials by secondary legislation. The Bill before us now similarly transfers huge powers to officials by secondary legislation. The message is that if the Chancellor cannot get it right on Budget day, it will be put right subsequently by secondary legislation. That is a highly unacceptable way to go about these matters. It is a complete abrogation of the sovereignty of the House of Commons. We are here and, over the centuries, we have been given the power, enshrined in the Parliament Act 1688, to be the money-granting authority. There is no higher money-granting authority than the House of Commons. To abrogate that responsibility by secondary legislation is unacceptable.

Desmond Swayne (Conservative, New Forest West)

Does my hon. Friend accept that this amounts to something approaching the continental pattern of government by decree? Does he agree that it represents a complete negation of the achievements of the Chartists, who saw the question of the suffrage as a knife-and-fork question, a bread-and-cheese question?

Geoffrey Clifton-Brown (Conservative, Cotswold)

I totally agree with my hon. Friend. It is an abrogation of the achievements not only of the Chartists, but of the Long Parliament of the 13th century. Throughout the long history of Parliament, the House of Commons has had primacy as the money-granting authority. Here we have a Government, in an unprecedented way, transferring powers to officials in the Treasury, whereas we in this place should be ensuring that such measures appear in primary legislation and are subject to the full glare of scrutiny, both here on the Floor of the House and upstairs in Committee, so that when things are not as they should be, the Opposition—and, I have no doubt, the Labour party when it goes back into opposition in due course—have the opportunity to correct the Government of the day. The Government may well rue the day they embarked on the process of a huge transfer of power, because, having transferred it to Treasury officials, they will find it hard to claw back. Ministers do not have the proper scrutiny and control over secondary legislation, and we find that that control slowly slips still further towards Europe. That is a wholly undesirable state of affairs. Much more importantly, I dislike the whole concept of national insurance. What we should do is abolish national insurance altogether and put it totally on income tax and corporation tax. That is a much fairer basis for taxation, because those are properly progressive taxes. Paragraph 3.30 of the Red Book reveals the huge distortion caused by the national insurance system, which the Conservative amendment made in the Lords started to address. To be fair, the Government have recognised that. It is worth noting, because it is at the heart of this debate, that paragraph 3.30 states: The current structure of NICs bears particularly acutely on the low-paid and discourages job creation at the lower end of the earnings distribution. Steps in the structure of national insurance, whereby a one penny increase in pay can trigger an increase in NICs of up to £6.30 a week". In other words, a 1p increase in pay can trigger a 630 per cent. increase in tax. If that is not a massive distortion in the tax system, I do not know what is. Paragraph 3.30 says that the structure of NICs distorts the labour market, discouraging progression up the earnings ladder. These distortions are greatest at the lower earnings limit". To raise that lower earnings limit immediately and not wait a whole year is precisely the point of the Conservative Lords amendments. Paragraph 3.30 says that a rise in earnings from £63.99 to £64 a week triggers a NIC charge (the 'entry fee') for employees of £1.28 and for employers of £1.92 a week", and says that that is one of the last remaining causes of people being worse off when they earn more. That should be eliminated for ever, and thank god when it happens. I support the Conservative Lords amendments, because of that distortion and that huge disadvantage for the low-paid. My own Government should have put it right years ago. I urged my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) to do that when he was Chancellor and I am sure that, had the Conservative Government been returned to office, he would have paid close attention to the problem. Considering how much the Government have been able to reduce this country's debt burden, one might have thought that they would be prepared to spend £1.4 billion—which they have committed themselves to spending next year in any case—on helping some of the lowest-paid people in our society who are living in the most appalling and mean conditions. One might have thought that the Government would be only too anxious to introduce that measure as quickly as possible. The amendments are wholly right and I urge the Government to take them away, look at them on behalf of the low-paid, some of whom can hardly afford to feed themselves, and see whether they cannot be more generous and enact the provisions immediately. We all recall that for employees earning more than £81 a week, the employer's rate will be increased to 12.2 per cent. The Red Book makes an interesting point about this, saying: The employer package is revenue-neutral, so that the burden of employer NICs as a whole will remain unchanged. There is no reason why the employer changes could not have been made immediately. It is reprehensible that rather than the measures being included in the Finance Bill—as they would have been in the past—they have been tacked on to a measly Social Security Bill at the eleventh hour. This demonstrates all too clearly that the present Government do not know what they are doing, and did not think the matter through before introducing a Budget. The Standing Committee considering the Finance Bill is finding serious flaws in nearly every clause, because the Government have not consulted those who are most involved: tax practitioners, accountancy bodies and lawyers. If they had done as we did when we were in government, and taken the trouble to consult such experts—which, frankly, is the only correct thing to do—they might have produced a rather more orderly Bill, and might have avoided some of the more elementary errors. I have written a paper on the reform of the state pension. The general issue of pensions is directly relevant to the change in national insurance contributions proposed in the excellent Lords amendments. One of the core problems encountered by the Minister today was how he could make up the amount if the lower earnings limit was raised from £64 to £81 a week. In my paper—which I submitted to the Minister for Welfare Reform, as a contribution to his White Paper and his review of the pensions system—I proposed a credit for all low-paid people, all people who were out of work and all working housewives who were earning less than the national insurance lower earnings limit. I feel that people who would normally expect such a credit should receive it, and that there is no reason why the Government cannot compensate for the rise in the lower earnings limit. It is clear from the demographic trends that if nothing is done about the state pension, it will wither on the vine. When the time comes for me and you, Mr. Deputy Speaker, to retire—in many years' time—we shall suddenly find that the state pension is worth considerably less than it is now in real terms. The Government will have to deal with that problem; otherwise, it will cost all of us who are in work a good deal of money. Allied to that problem is the problem of the state earnings-related pension scheme. We must encourage all people of working age, especially young people, to take out a second pension—through the national insurance system, if we must do that, or, in my book, through the income tax and corporation tax systems. We must provide a mechanism to make that possible. I think that the Minister for Welfare Reform wants that as well, but that the Chancellor has imposed a constraint because of the cost involved. The Government must tackle the issue of second pensions. If they do not, they will be chucked out, and a future Conservative Government will have to tackle it. The abolition of advance corporation tax credits suggests to me that the Government are not interested in people's ability to retire with a decent pension and with dignity. As a result of 18 years of excellent government by the Conservative Administration, more than 50 per cent. of people retired with some form of second pension. That was a worthy achievement. People who have their own pensions can choose how to spend their money in their old age, and are much less dependent on the state. In this and other measures imposed in the previous and current Budgets, the Government are driving people into increasing dependency on the state. They want to level everyone down to the lowest common denominator. I was sent here by my constituents to improve the lot of everyone in the country, including the lower-paid and, in particular, pensioners—especially pensioners who have little money and rely on benefits. I want future generations not to have to rely on a measly state pension topped up by some form of benefit; that is a disgrace to society, with which any well-meaning Government should try to deal. I have drawn attention to the distortion involved in the marginal rate of tax which is shown in the Red Book. An increase of 1p in someone's income can result in an effective national insurance increase of 630 per cent. The Government should do something about that: if they are not prepared to, they should consider themselves an utter disgrace, and the sooner they are chucked out because they are uncaring, the better.

David Rendel (Liberal Democrat, Newbury)

I hope that the tone of my speech will be more tolerant than that of the last two speeches. I sympathise to an extent with the view expressed by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) and others; it is odd that such a major part of the Budget should be introduced in the form of a Lords amendment to a Social Security Bill. I think many people would consider it an unusual and, in some ways, undemocratic way of making a major alteration. In that respect, I have some sympathy with the Conservative party. It must be said, however, that the Lords amendment was introduced because a large number of hereditary peers outvoted peers who were not hereditary. Conservative Members have referred to abuses of the parliamentary system; surely that is an abuse considerably further up the scale than anything that the Government are trying to introduce, or any method that they are attempting to employ. Many people outside would think it a rather odd use of parliamentary time to engage in what will probably be three and a half hours of debate about whether the Chancellor said further or future, whether the change was the result of a slip of the tongue or was introduced deliberately and how the two words came to be muddled up—and, indeed, the exact meaning and implication of the two words. People might consider it not entirely sensible for those who have been sent here to represent their constituents to engage in such a debate.

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

Having recalled the Budget debate and the subsequent media coverage, does the hon. Gentleman not see that there was a clear recognition that changes were made that were relevant to employees? The public would have understood that because of what they read and listened to. The coverage that took place in the 24 hours, or perhaps two days, after the Budget speech is what people will have absorbed most; that is what will have given them an understanding of where the Government were going. There is nothing unintentional about that.

David Rendel (Liberal Democrat, Newbury)

I do not deny for a moment that people probably gained an impression—which was not to be realised in practice—of what the Chancellor intended. Perhaps we are all to blame for not pointing out how wrong, or how misleading, the Chancellor had been. Let me make what is perhaps an even more important point. I am surprised that the main Opposition party makes such a fuss about the matter. Surely one of the things that put people off political parties is finding that they have been misled. I would expect the fact that many people who expected their national insurance contributions to fall have found that they have not fallen to be very damaging to the Government. I would expect the fact that the Government were able to mislead people in the short term to be to their disadvantage, and I am surprised that the Conservative party is complaining.

Quentin Davies (Conservative, Grantham and Stamford)

I entirely agree that trying to deceive the British public is not good politics and that the Government will pay a price for it. The important thing about the word that was used is not whether the Chancellor said future or further but why, having said the one, he then tried to make out that he had said the other. It is the cover-up which is sinister and which requires an explanation from the Government.

David Rendel (Liberal Democrat, Newbury)

I have no idea whether it was a slip of the tongue or deliberate, and I do not think it desperately important. The fact is that the public were given one impression, only to find now that it was wrong. They will take against the Government for that reason. I should have thought the Conservatives would be pleased about that instead of castigating the Government so much for it. The increase in the lower earnings limit is welcome, whenever it comes. I sympathise with Conservatives who find it disappointing that it is not to happen in the first year. We, like everyone else, are disappointed by that.

Desmond Swayne (Conservative, New Forest West)

Does the hon. Gentleman agree that any reading of the Red Book suggests that the change is never to come?

David Rendel (Liberal Democrat, Newbury)

The Red Book appears to give no indication of it, but that does not mean to say that it will never come. There is every impression that the Government still intend to introduce the change at some point. The Red Book comes out each year; if the Government intend to effect the change next year I expect them to change the Red Book then. Our original criticism—the Chancellor certainly hoped to overcome it—concerned the difficulties caused for those who no longer pay contributions in terms of their rights to contributory benefits. When the changes are made, it is critical that, alongside them, changes to eligibility for contributory benefits are also made. People who no longer pay national insurance on the lower part of their income should retain their rights in that respect. One of the most widespread criticisms of the welfare system is that benefits are sometimes not provided for those who most need them, maternity benefits being a case in point. Women on the lowest pay tend to be those who have to go without the benefits, which to most people seems absurd. The fact that the system is contributory has done the damage and has led to a great deal of justified criticism. If we are to change the threshold at which contributions are paid, we need to overcome the difficulty I have described by making the necessary other changes alongside. That is why it is right on this occasion to support the Government's amendment—the two measures must go through together. They will both be welcome; I hope that they will be put into effect as soon as possible. The Lords amendment would prevent that, which is why it is important to amend it in the way the Government propose.

Desmond Swayne (Conservative, New Forest West)

I fear that I shall be unable to match the passion and anger of my hon. Friends the Members for Grantham and Stamford (Mr. Davies) and for Cotswold (Mr. Clifton-Brown). My heart is filled more with disappointment than with anger. I regard it as a bit rich of the Under-Secretary to accuse my party of irresponsibility and of being precipitate in our haste to bring in the Chancellor's plan to change the lower earnings limit to £81. We have been accused of not thinking the issue through properly and of not giving sufficient consideration to its financing or the rules protecting the benefit rights of those who would be affected. The Red Book trumpets the reform as the most radical reform of national insurance since 1975. The trouble is that tagging it on to this and subsequent amendments severely restricts the time available for scrutiny and consultation. It is therefore a bit rich of the Government to accuse us of irresponsibility for opposing amendment (a). My hon. Friend the Member for Cotswold has already pointed out that the amendments contain a range of open-ended powers that enable the Government to make changes subsequently, without reference to legislation.

Oliver Letwin (Conservative, West Dorset)

Does my hon. Friend agree that that is characteristic of the Bill and that such general powers are to be found throughout it?

Desmond Swayne (Conservative, New Forest West)

It is also characteristic of the Finance Bill. My hon. Friend the Member for Cotswold was right to correct me when I drew attention to the Chartists and their desire for no taxation without representation. That question goes much further back, to the Long Parliament, when ship money was the issue at stake. The Executive was raising taxes without the authority of the Commons. That led to the grand remonstrance, which in turn led to a complete change in the polity of this nation over 20 years during which the governance of the country was turned upside down.

Oliver Letwin (Conservative, West Dorset)

Would my hon. Friend agree, on reflection, that there is a remarkable similarity between Dr. Prynne, of ship money fame, and Mr. Whelan?

Desmond Swayne (Conservative, New Forest West)

That is a pertinent point. Ship money was actually a very fair tax, subsequently imposed by Parliament itself during the interregnum. The basis on which it had been calculated was fair and proper. What was wrong with the tax, just as with these arrangements, was that it did not have the proper authority of Parliament—at least not under Charles I. I want to move on some 400 years now, to Lords amendment No. 64. My constituents thought that the Chancellor was raising the lower earnings limit for national insurance contributions to £81 a week—as witness column 1106 in Hansard for 17 March. My constituents can hardly be blamed for doing so: their representative sitting here during the Budget statement also thought that that was what was going to happen. I was thinking about the interview that I had agreed to give subsequently to Meridian Television, and my mind was concentrated on that. I heard the Chancellor's message with mixed feelings. My natural elation at the beneficial nature of the change was tempered only by my nervousness at knowing that I had to face the cameras and pour cold water on the Budget statement. Those contrary emotions rivalled one another. The Under-Secretary will remember the interview well, because he shared it with me. He will no doubt recall my nervousness and inability to make up my mind one way or the other about the Budget. Had I had the benefit of the subsequent revisions and the gloss that has been put on that statement, I might have made a better fist of the interview. Equally, my constituents could not be blamed for thinking that the lower earnings limit for national insurance contributions was to be raised to £81 because a disproportionate number of them read The Daily Telegraph, on the front page of which it was headlined on 18 May. For those few corporate bureaucrats who persist in reading the Financial Times, it was in that as well. My constituents were given the clear impression that the lower earnings limit was to rise to a new limit of £81 and, of course, much joy attended that announcement. As my hon. Friend the Member for Cotswold has said, that would have had significant advantages for all people on lower incomes, particularly those who might properly be considered to move within what has often been characterised as the unemployment or benefits trap. Now they discover that this is a measure for the future. It is to be jam tomorrow, or, more properly, as any examination of the Red Book will reveal, beyond tomorrow—not so much jam tomorrow as the people's strawberry jam having been adulterated with wooden pips by the Chancellor himself. Frankly, I would prefer the Budget as it was originally given by the Chancellor. That is why I wish to vote against Government amendment (a) to Lords amendment No. 64: to keep the Budget as it was and to preserve the Chancellor's original intention. The Under-Secretary has said that it is most irresponsible of us to do so. He has referred to the huge hole in the finances that will emerge as a consequence. Perhaps I might be permitted to express an entirely personal opinion. It is my view that the Chancellor's Budget may have significantly overtightened the fiscal stance beyond what is advisable and that we might be thankful of a loosening of some £1.4 billion in the months to come, bearing in mind the significant difficulties in which the manufacturing sector already finds itself, so I reject any argument of irresponsibility that the Under-Secretary makes on the ground of fiscal loosening. The Under-Secretary has said that we are irresponsible in that we have not properly thought through the protection of the rights of people who will benefit from this measure—the protection of their rights to benefit.

Geoffrey Clifton-Brown (Conservative, Cotswold)

One of the benefits of having to sit through these long debates is that one has an opportunity to scrutinise the Government's documents more carefully. My hon. Friend referred to a fiscal tightening in the Budget; there is no question but that it is a fiscal-tightening Budget. Is he aware of paragraph B.19 on page 116 of the Red Book, which clearly states: Net tax receipts are projected to grow by 6 per cent. in 1998–99, rather faster than money GDP"? That absolutely goes to prove that this is indeed a severe fiscal-tightening Budget.

Desmond Swayne (Conservative, New Forest West)

I thank my hon. Friend for that intervention. I fear that I do not have his eye for detail or his intellectual rigour in examining these things. I read the Red Book as an amateur, but, without being able to refer to chapter and verse, as he has done, I could clearly see that there was scope for a more generous fiscal stance in the Budget. It was certainly my belief that it was desirable to do that. I am deeply fearful of the consequences of our fiscal stance; I have already referred to the situation that the manufacturing sector faces. I reject entirely the argument that, in proposing this measure, we are being fiscally irresponsible. 8.15 pm We have been accused of irresponsibility over the protection of social security benefits. I sat here on this Bench listening to the Chancellor's statement. He said that social security benefits would be protected. We now discover that he said so irresponsibly, according to the criteria that were defined by the Under-Secretary. The Chancellor had not, it appears, thought through the means by which the benefits would be protected, so if I and anyone else looking to vote against amendment (a) are to be accused of irresponsibility, the same applies to the very statement that the Chancellor made. I cannot be expected to run the country from the bottom, but I can be expected to vote for the Lords amendment and, in so doing, put proper pressure on the Chancellor to think through how these benefit rights are to be protected while a fiscal hole appears in his Budget arithmetic.

Oliver Letwin (Conservative, West Dorset)

I should like to discuss three issues. The first relates closely to the powerful speech by my hon. Friend the Member for Grantham and Stamford (Mr. Davies)—I thought that it was one of the most bravura performances that I have heard since coming to the House—but takes his argument one stage further. It relates to the point that the hon. Member for Newbury (Mr. Rendel) raised: why are we concerned about further-future dispute, the minutiae of Hansard against press releases and so forth? To answer that question, one has to consider a further question—perhaps I should say the future question. What was it that the Chancellor and Mr. Whelan between them were trying to achieve by the manoeuvres, first, of raising expectations, secondly, of fostering the raised expectations by not spinning to deny them and, finally, of denying that the expectations had ever been raised by issuing a press release, which, so to speak, retrospectively uncorrected the statement? What was the purpose of that? It is a strange set of occurrences. We have to inquire of two highly intelligent and experienced people—the Chancellor, perhaps the most experienced and intelligent member of the Government, to judge by much of what has been said about him; and a man who is regarded as the rival of the legendary Mr. Campbell in his management of the press. What did those two highly intelligent and experienced people seek to achieve by those manoeuvres? I cannot bring the power of analysis that my hon. and, I would say, learned Friend the Member for New Forest, West (Mr. Swayne) has brought to the historical exposition of the matter. I cannot be expected to be certain of this highly speculative inquiry, but I do think that there is a likelihood—a strong and serious likelihood—that what was going on was a conscious attempt to try to make the British public attend to one item, in order to make them attend less to other items in the Budget. I may be wrong. I would be happy if the Minister were to contradict what I say, or if subsequently, his hon. Friends were to deny it, but that must be—stripping away all the rhetoric and politicking of this place and places outside—the most likely explanation of what was being done. It was hoped that the British public could be persuaded that there was something so nice in the Budget for them, alongside all the other goodies—

Desmond Swayne (Conservative, New Forest West)

Could it possibly have been that the Government hoped that the public, thinking that there was to be a raising of the lower limit of national insurance contributions, would be so blinded by that that they would not notice the abolition of retirement relief on capital gains tax, which has cost a constituent of mine—of very modest means—a staggering £55,000?

Oliver Letwin (Conservative, West Dorset)

My hon. Friend may be right in suggesting that the Government wanted to throw that item into low relief, but the Budget contained other such items—for example, it made it less favourable to be married. The Government presumably did not want the public to concentrate on that, either.

Julie Kirkbride (Conservative, Bromsgrove)

Would my hon. Friend speculate on matters between Mr. Whelan and Mr. Campbell? I am not sure that Mr. Campbell would be pleased by my hon. Friend's suggestion that it was all Mr. Whelan's idea and therefore had not come from the Prime Minister's office.

Oliver Letwin (Conservative, West Dorset)

My hon. Friend is taking me dangerously close to deep waters with thin ice over them. I fear that the Chair would call me to order if I indulged in further speculation about the liaison between Mr. Whelan and Mr. Campbell—which is, indeed, most interesting. I will let the matter rest on the naive supposition that we are dealing here merely with the Chancellor and Mr. Whelan, and their motive. Whether it was the particular measure mentioned by my hon. Friend the Member for New Forest, West or other measures, as in any other Budget, this Budget contained measures which the Government did not wish the public to spend much time thinking about. However, there were also some measures that they did wish the public to think about, and they threw those into high relief. I do not think that it is any coincidence that the points made by my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) about what appeared not just in the press, but on the front pages, were the very matters that we are now discussing. I do not think that it is an accident, because I attribute to Mr. Whelan—not to mention Mr. Campbell—the greatest possible dexterity in steering editors towards those items that the Government would like to see on the front pages, and away from those that they would not like to see. That is not always successful, as is the case with the Foreign Secretary at the moment—

Iain Duncan Smith (Conservative, Chingford and Woodford Green)

Does my hon. Friend think that had a front-page item appeared that the Government thought was not favourable, they would have let it stand and let the media commentators pursue it, enlighten the public and take it further? Or does he think that they would have used their undoubted arts to stamp on it, get rid of it, get the paper to retract it, or even go so far as expecting it to apologise for referring to it?

Oliver Letwin (Conservative, West Dorset)

Good heavens, the Government would have been there in a trice. The whole formidable armoury of their technology and their Government machine would have enabled them to clamp down on such a story in an instant. That is well established. In fact, the Government fostered the measure on to the front pages to distract attention from other items. The hon. Member for Newbury (Mr. Rendel) is sitting in his place with his customary courtesy, but looking for all the world as though this is a ludicrous diversion. Why, he wonders, are we concentrating upon such a matter? It is because it tells us something about a process which even the hon. Gentleman, to do him justice, thinks a little strange—the process which underlies this group of amendments, which the Government introduced in the other place. The Chancellor, most remarkably, is attempting to enact a major part—indeed, a signal part—of his Budget without reference to this House until a very late stage, and then only for a very short debate, by means of introducing in the other place a series of amendments in a quite different Bill. There is a profound link between the strange manoeuvrings of the Chancellor, with his fervour, and Mr. Whelan, with his fostering of the fervour and of the mistaken impression, and Mr. Whelan's subsequent future, and the process of going behind the back of this House and into another place to legislate. That profound link is that both are evasions of the parliamentary process. Both are means by which, instead of exposing issues to the full glare of debate in this House in an open fashion so that the public know what is happening, the issues are concealed—the issues that the Government do not wish to be dealt with in this House and before the public. They have arranged matters so that a few people, latish in the evening, are debating serious matters, preferably without attention, following a great splurge of publicity in which the pubic have been misled—consciously misled by the fine arts of Mr. Whelan—into believing that something very nice is being done for them. I accept the point made—very poignantly, as always—by the hon. Member for Newbury that if we were an unprincipled and unscrupulous Opposition, all this would be a delight to us in one respect. After all, the next election is not won today or tomorrow, so it should be a delight to us—and, presumably, to the hon. Gentleman and his colleagues—that the Government will eventually be found out by the very many people who expect to benefit from a very nice benefit, but who, in the event, will not get it for the foreseeable future. In fact, it is not a delight to us to be in circumstances in which the Government treat the House with such contempt that they do not mind using a statement in this House—above all, a Budget statement—purely for the purpose of manipulating the press, and then subsequently using a parliamentary device to minimise debate on a crucial measure that raises vast sums of money and has a great impact on the tax and benefit system. That is not a trivial point; it is one of the utmost seriousness. I admit that there is an element of frivolity and amusement because we are able to attack a Chancellor who is not present, but the point underlying this debate is deadly serious and deserves to be answered. It was not answered in the Under-Secretary's opening remarks. I do not know whether the Minister for the Environment, who is now sitting on the Front Bench, or the Under-Secretary will answer it, but I hope that someone will—

Desmond Swayne (Conservative, New Forest West)

Will my hon. Friend reflect on the fact that where the Government have introduced very significant tax-raising measures, that has been done in a complicated way that has ensured that no one has noticed, but that where they have introduced measures that amount, in effect, to a giveaway, their approach has been quite the opposite?

Oliver Letwin (Conservative, West Dorset)

That is exactly the point that I am making. The contrast is between that which appears to be done in the light and that which is done, as far as is possible, in the dark. That is not the way to conduct government. My second point relates to a matter raised by my hon. Friend the Member for New Forest, West in response to a serious accusation made by the Under-Secretary. The hon. Gentleman described the efforts of our noble Friends to amend the Bill, in the way that the Government's amendment would reverse, as irresponsible. As my hon. Friend pointed out, there were two elements to the accusation. One related to what was said to be the irresponsibility of not correcting the problems associated with the contributory principle—the problems for people who would otherwise lose their benefit—as part of raising the lower earnings limit. The hon. Member for Newbury is learned in these matters and he spoke about them at great length in Committee and elsewhere. He pointed out his distaste for the contributory principle, at least so far as it affects people lower down the chain. He was making the argument—I hope that he will intervene if I am misrepresenting him—that people on lower earnings should not have to contribute in order to qualify for some of the benefits which, currently, require contributions in order to qualify. That is a serious argument and it may, in part, be right. However, that was not the substantive issue that the Under-Secretary raised. His argument was that we had failed to allow for the fact that it would take a long time to sort out—mechanistically, legally and through legislation—the problem that would arise in trying to protect the benefits of people below the £81 limit but above the £64 limit if amendment No. 64 were introduced without other changes. The Under-Secretary of State for Social Security told the House that it was impossible—I am not sure that he used that word, but that was certainly the burden of his remarks—for the Government to introduce appropriate provisions in the other place. The fact is that, at that very time, the other place was itself producing a vast array of measures. The "Lords amendments to the Social Security Bill" is a huge document. Although I am not an experienced parliamentarian, I have not, since being elected to the House, seen anything like that number of amendments. After speaking to other hon. Members who are much older and more experienced than I am, I have been assured that the number of amendments in this group of Lords amendments is wholly exceptional. 8.30 pm The Government were therefore tabling in the other place a vast array of technically complex amendments. They took months and months to do so. In Committee, we ended discussion on the matter months ago, but it took months for the issue even to reach Second Reading in the other place—although the Government had ample opportunity, if they so wished, to ensure that that happened earlier. The Government took their time on this measure. The Under-Secretary was trying to tell the House that, in all those months, it was impossible for the Government—with all their ingenuity, and with all their officials supporting them; after they had, as my hon. Friend the Member for New Forest, West said, considered the issues sufficiently to allow the Chancellor to make the statement that the benefits would be protected—to find a way of dealing with the problem of people who are below the £81 and above the £64 limit, and who should continue to be entitled to have their benefits.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I wonder whether my hon. Friend agrees that the genesis of the problem was the pledge made by the Labour party during the general election that it would not increase income tax? Having put themselves on that specific hook, they were unable to introduce measures that would have been wholly popular and helped some of the lowest paid and most vulnerable people in our society.

Oliver Letwin (Conservative, West Dorset)

I am grateful to my hon. Friend for his intervention. I shall deal in a moment with that matter, which is the second part of the gravamen of the attack made by the Under-Secretary—which was to do with whether a surplus was available for distribution. We will come back to that matter. I should like to continue on the question of whether the Government could have produced mechanistic devices to remedy the problem of entitlement to benefit for those between the current and proposed lower earnings limits.

Des Browne (Labour, Kilmarnock and Loudoun)

As entertaining as this discourse is, does it not substantially misrepresent the Minister's argument, which is that the Chancellor's view is that this is not the appropriate time to be making such changes? The Minister's view was not that it could not be done, but that it would take time. He also said that the Chancellor had decided that this was not the appropriate time to make the changes, and that it was the Chancellor's prerogative to decide on the appropriate time.

Oliver Letwin (Conservative, West Dorset)

I shall deal with precisely that point in the second part of my remarks. I agree that that was part of what the Minister said.

Des Browne (Labour, Kilmarnock and Loudoun)

It is what he said.

Oliver Letwin (Conservative, West Dorset)

No, it was not. If the hon. Gentleman reads Hansard tomorrow, I think that he will find that the Minister made two points. I took careful notes of what he said. The first point was that there was not time to consider what would have to be done about the very specific problem of benefit entitlement. Secondly—exactly as the hon. Member for Kilmarnock and Loudoun (Mr. Browne) said—he asserted that it was the Chancellor's prerogative to decide whether the money was available.

Des Browne (Labour, Kilmarnock and Loudoun)

On this occasion, I intervene not because the hon. Gentleman has misrepresented the Minister's comments but because he has misrepresented mine. I reminded the hon. Gentleman that the Minister said that it was the Chancellor's prerogative to decide when the time was right.

Oliver Letwin (Conservative, West Dorset)

I agree that that is exactly what the hon. Gentleman said, and I shall deal with exactly that matter of whether the Chancellor should have taken that decision. However, that was only half of the Minister's argument; the other half was about insufficient time to make the change on benefit entitlement. It is not only a matter of the Government not mustering the resources to make the change—although I am somewhat surprised about that—because the matter is much more serious than that. At least pro tem, the change could have been made with little difficulty. It certainly would not have required a Bill as large as the Social Security Bill, or such a vast array of Lords amendments. The Government could have simply introduced a straightforward amendment, allowing it to be "deemed"— a simple word which the Government have used repeatedly in the Bill, and elsewhere—that people who had not made their contributions, but whose incomes lay between the earlier and later earnings limits of £64 and £81, had made such contributions as they would have made regardless. I do not say that that solution is perfect. It may be that, over time, the ingenuity of officials and Ministers would lead to a superior solution.

David Rendel (Liberal Democrat, Newbury)

If, as the hon. Gentleman says, it would have been comparatively simple to have done that, why did not he or other Conservative Members table an amendment to that effect for this debate?

Oliver Letwin (Conservative, West Dorset)

We did not table such an amendment because of the problem of trying to table amendments at this stage.

Oliver Letwin (Conservative, West Dorset)

Had I realised that it was possible, I would have done it. The serious question is why our noble Friends did not table an amendment in the other place during their consideration of the Bill, when, manifestly, it could have been done. I know, from discussion with those who were responsible, why it was not done. I believe that our noble Friends concluded that the Government were never planning on accepting Lords amendment No. 64. My noble Friends' sole reason for forcing the amendment through in the other place was to make the point—when the Bill was considered in this place, so that debate was focused on the issue—that it is the proper prerogative of the House to debate money issues, and that it is quite wrong that such a provision should go through on the nod in another place. It would have been perfectly appropriate for my noble Friends to table a deeming amendment, but it was not necessary for them to do so to achieve their objective. However, it is something which the Government could have done. If Ministers had said—there were repeated discussions on the matter—"We accept the burden of the amendment. We should like to table, by agreement, a further amendment deeming a benefit entitlement", I do not suppose—and I do not suppose that the hon. Member for Newbury supposes—that my noble Friends would have objected to it. Such an amendment would have been acceptable and would have done the job, although perhaps not perfectly. Nevertheless, the possibility utterly kiboshes the Minister's assertion that there was insufficient time to make the change. There was time to do so. An amendment would have taken less than half an hour to draft, and less than half an hour for the House to pass. It would also have been acceptable to those tabling the amendment. Why was such an amendment not tabled? One was not tabled—taking us back to the earlier assertions—because the entire procedure was so bizarre. The Government had no intention of allowing such a change to occur at this time—which takes us to the very point made by the hon. Member for Kilmarnock and Loudoun which I now propose to deal with.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I wonder whether my hon. Friend agrees that part of the difficulty in developing the type of credit system that I mentioned in my speech is the knock-on effect of the gateway benefits that it would involve, such as housing benefit, council tax reduction benefit and other benefits? It is therefore not simply a matter of giving credits to those earning between £64 and £81 a week.

The rest of the debate is in Hansard.