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Orders of the Day — Child Support, Pensions and Social Security Bill

House of Commons, 24 July 2000.

MAINTENANCE CALCULATIONS AND TERMINOLOGY

Angela Eagle (Labour, Wallasey)

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

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this we may discuss Lords amendments Nos. 2 to 14, 64 to 66, 68 to 72, 78, 79 and 84. I remind the House that privilege is involved in Lords amendments Nos. 17, 18, 26 and 39. If the House agrees to any of those, I shall ensure that the appropriate entry is made in the Journal.

Angela Eagle (Labour, Wallasey)

This is a large group of minor amendments and I do not intend to speak to each one in turn, although if hon. Members have specific points on the detail, I shall be happy to try to deal with them. The amendments are technical and are necessary to ensure that the Bill, as drafted, achieves what is intended. They make a number of minor improvements or clarifications to the text or remove unnecessary duplication. Amendments Nos. 1 and 2 avoid duplication by removing unnecessary definitions. Amendments Nos. 8, 9 and 11, relating to the new civil penalty of disqualification from holding a driving licence, are necessary because of changes currently being made to the Powers of Criminal Courts Act 1973. The group of amendments relating to clauses 16 and 17 contains technical changes to remove duplication in the Bill as currently drafted. Amendment No. 69 is a technical amendment intended to put the intention of the Bill beyond doubt in relation to the means by which a non-resident parent must meet his child support liability.

REGULATIONS

Angela Eagle (Labour, Wallasey)

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

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this we may discuss Lords amendments Nos. 62, 63, 67 and 77.

Angela Eagle (Labour, Wallasey)

This group of amendments sets a maximum level of income to be used in the child support maintenance calculation. The effect is to cap child support liability at a high level, which will vary with the number of children for whom a non-resident parent is responsible. Amendment No. 62 sets the maximum net income for child support purposes at £2, 000 per week, which represents a gross income of around £170, 000 per annum. The normal child support rates and the adjustment for children living with the non-resident parent will apply to that maximum to produce a cap on liability for one child of £300 per week. The maximum liability for two children will be £400 and, for three or more, £500. Those figures will be reduced proportionately if there are children in the non-resident parent's second family and adjusted to reflect shared care. Amendment No. 63 provides that the maximum level of income for that purpose can be changed by affirmative regulations should that prove necessary. Amendments Nos. 67 and 77 provide for the courts to award top—up child maintenance should child support liability be capped. As I made clear during the debate on the issue in Committee, we believe that children should come first, whatever the non-resident parent's income. Children should be able to benefit from a non-resident parent's wealth in the same way as they should if they lived with the parent. The argument advanced by Opposition Members that maintenance should in some way be related to the subsistence needs of the child only—the need to be clothed, fed and housed—is not only impracticable, but wrong. However, as my right hon. and noble Friend Baroness Hollis said in another place, we accept that the arguments on a maximum level of liability are finely balanced. There is a respectable case to be made in favour of a cap on maintenance, based in particular on the argument that, because the financial affairs of the very wealthy are often much more complicated than those of the average earner, a simple formula-based approach to setting child support liability may not always produce a just outcome. We remain convinced that court-based agreements should, in the main, be settled in line with Child Support Agency rates. That will avoid fluctuations in the level of maintenance where the parent with care moves on or off benefit. That is why, under the reformed child support scheme, we propose to open access to the CSA for "private" non-benefit cases where parents are unhappy and the new court order has been in place for at least a year.

Steve Webb (Liberal Democrat, Northavon)

For information, can the hon. Lady give the House an idea of the number of cases that will be affected by the cap?

Angela Eagle (Labour, Wallasey)

The hon. Gentleman has asked that question before. We had debates about that in Committee. I made it clear that the number of people likely to be affected by a change was very small—in this case, about 120 people, and we think that that might be an over-estimate. We have been persuaded, however, that, in the case of very high earners, the courts are better placed to unravel their financial affairs and to come to a sensible conclusion about the proper allocation of property, spousal maintenance and child maintenance. Without a cap on child support liability, the courts might find it impossible to settle the family's financial affairs properly. With a cap, the courts will be able to work from a fixed maximum child support liability while settling other financial arrangements. That is why we have agreed to set the cap at a high level, so long as the child or the parent with care can go back to the court for "top-up" maintenance. That means that, where child support liability is capped, parents with care or the children concerned will be able to seek additional maintenance from the courts.

Eric Pickles (Conservative, Brentwood and Ongar)

On the affirmative resolution, will the hon. Lady give some guidance on whether the figure of £170, 000 may be moved in either direction—either up or down?

Angela Eagle (Labour, Wallasey)

I assume that it would be up to the Government of the day to put anything in regulations and for the House to debate and to consider them. However, I have emphasised that we think that it is important that the cap be set at a very high level; thus, we have set it at such a level. I assume that, in the more general use of that power, the level would be moved up to take account of prices and general movements in prices and earnings. [Interruption.] Is the hon. Member for Brentwood and Ongar (Mr. Pickles) seeking to intervene?

Eric Pickles (Conservative, Brentwood and Ongar)

indicated dissent.

Angela Eagle (Labour, Wallasey)

I thought that the hon. Gentleman was hovering. We have agreed to set the cap at a high level, and agreed that it is appropriate that it should be at that level, so long as the child or the parent with care can go back to the courts for "top-up" maintenance. That means that, where child support liability is capped, parents with care or the children will be able to seek additional maintenance from the court. In that way, children will still be able to share in the wealth of very wealthy parents, but the way in which that takes effect will be for the courts to determine in the light of broader considerations than the CSA could countenance. In practice, a cap set at the levels that we propose will have little effect in child support terms; this comes on to the point raised by the hon. Member for Northavon (Mr. Webb). Currently, there are very few non-resident parents on the CSA's books with income at levels which could mean that their maintenance liability under the new scheme would be capped. The effect will rather be on the way in which the courts divide up capital, property and income in cases in which substantial sums are at stake, and in which the CSA is unlikely to be involved. The amendments will allow the courts, in establishing financial arrangements for very wealthy parents, to work from a fixed maximum child support liability—the most that could be required if either parent came to the CSA. That should make it easier to establish the other aspects of the financial package.

Eric Pickles (Conservative, Brentwood and Ongar)

I must confess to having been concerned about the Minister's health a few moments ago. Something seemed to be sticking in her craw when she made those magnificent statements about looking after very wealthy parents. We debated the matter at length in Committee. I shall spare the House quotations from what the Minister said then—unless she insists—but in fact she said the opposite of what she has said today, and said it quite forcefully. Instead, let me quote something else. As I began my Second Reading speech with a quotation from P.G. Wodehouse, I think it only right now to give another, which strikes me as entirely apposite. I think it was in "The Code of the Woosters" that Bertie, trying to get a point across to Jeeves, spoke of a man walking in the fog one night with his dog. The dog kept pulling at his trousers, trying to stop him. At every tug, the man got angrier—until the fog cleared, and he found that they were standing on the edge of a precipice, looking down. I feel that the Government have at last seen the fog clear, and have realised that they were standing on the edge of a precipice. Without this upper limit, the CSA would be swamped with cases. The hon. Member for Northavon (Mr. Webb) made a good point. It matters not a jot that we are talking about 120 people now; my point in the amendments that I tabled in Committee and on Report was that the CSA would be swamped. It is, however, a little disappointing that the measure relates only to the very rich, and thus has the potential to bring about what would be nothing short of spousal dispersal. I think it wrong of the Minister to reject the idea that the Child Support Act 1995 was about supporting children, because that is exactly what it was about. Even with the concessions that were wrung out of the Minister in the other place, there is no mechanism in the Bill allowing the child to benefit directly. I am surprised that the Minister looks surprised at what I have said, because it has been made clear in all our debates. Under the Bill, the resident parent with care could use the sums for any purpose. Nevertheless, the Government have made a concession—owing mostly, we understand, to the tenacity of Lady Hollis, who argued strongly against the Minister and in favour of the amendment. We are glad that Lady Hollis won, and grateful to the Government for putting a reasonable face on their defeat in the Commons. However, I shall make a prediction. I think that, as the number of cases for the CSA start to increase because of the £170, 000 upper limit, the Minister will be very grateful for an affirmative resolution procedure that might change that limit. I suggest that she bring a large bottle of water to the appropriate Committee, because more things will stick in her craw.

Steve Webb (Liberal Democrat, Northavon)

There is rejoicing on the Liberal Democrat Benches as well, but for a rather different reason. The amendments show that the Government have finally accepted our arguments about the essence of their CSA reforms. This group of amendments recognises the principle that the formula will not fit certain cases. People involved in those cases will be able to go to the courts, and the courts will be able to examine the individual circumstances of those cases and get the answer right. It is the first breach in the armour, and the first concession to the argument that we have maintained all along—that the formula is too rigid, that individual circumstances vary greatly, and that cases have to be considered by the courts on a case by case basis. We very much welcome the chink in the armour—the concession that the very rich are a special case. However, I hope that—as new Labour is for the many, not the few— not only the rich are made an exception and get the benefit of a court examining their individual circumstances, but that, one day, that special treatment is given also to the poor. We very much welcome Lords amendment No. 15, and we commend the Government on accepting the principle of our argument.

Angela Eagle (Labour, Wallasey)

I welcome the widespread acclamation for the Government on making the concession. We listened to the arguments, and we recognised that they were finely balanced. Opposition Members should, however, realise that the change will affect very few people. I wonder whether the prediction made by the hon. Member for Brentwood and Ongar that the CSA will be swamped with such cases is part of an economic prediction that the United Kingdom will continue to do extremely well under a Labour Government and that vast numbers of people will be earning well over the maximum of £170, 000 annually, so that they will be affected by the cap. If that is his prediction, I agree with him.

Eric Pickles (Conservative, Brentwood and Ongar)

The hon. Lady is living in a parallel universe if she thinks that I was suggesting that. I am simply suggesting that, now that she has looked after the rich, lots of middle class people who would not have been affected by the measure will be drawn into the CSA and that the CSA is not capable of treating them. The Government will find that they have to reduce the £170, 000 cap simply because of the sheer injustice being inflicted on those who have much more modest incomes.

Angela Eagle (Labour, Wallasey)

We all have to remember—this partly addresses the issues raised in his brief speech by the hon. Member for Northavon—how the CSA developed. It was created initially because the court system completely failed parents with care and their children. The Bill, from start to finish, has been about creating a CSA that works, so that we can ensure that maintenance goes to parents with care and their children. Many of those children are living in poverty because they do not receive the support that is due to them from their non-resident parent. Achieving that objective is at the centre of the Bill. In the past, the courts have been an expensive failure. As the Bill nears the completion of its passage, we all have to work together to ensure that the CSA is properly equipped to do its job—to get maintenance flowing to the many children who are currently without it.

New Clause

Jeff Rooker (Labour, Birmingham, Perry Barr)

I beg to move, That this House agrees with the Lords in the said amendment. Lords amendment No. 16 requires the Secretary of State to lay before the House a report from the Government Actuary setting out medium-term projections of the effect on the national insurance fund, and contribution rates, of uprating the basic state pension in line with earnings. The Government have no objections at all to publishing the figures as requested. Indeed, the information is effectively an amalgamation of the figures that are already contained in two reports that the Government Actuary publishes. The first is the uprating report which is published early each year. That report contains information showing the effect on the balance in the national insurance fund, in the current and forthcoming year, of the Government's proposals for uprating of benefits and re—rating of national insurance contributions. The second is the quinquennial review, which shows longer-term projections. That report gives snapshots up to 2060–61 and includes a table showing the level of contributions required to keep the national insurance fund in balance. The figures are given both for earnings and for price upratings. The information is therefore not new. but I caution the House that there are all sorts of caveats on projections for more than a couple of years ahead. The surplus is the difference between two huge figures each year, but, subject to the normal caveats that I have mentioned, the Government are happy to accede to the amendment and to ask the House to accept it.

Steve Webb (Liberal Democrat, Northavon)

The background to the amendment is the long campaign by Baroness Castle to persuade the Government to restore the link with earnings. During this Parliament, the noble Lady has pressed the Government hard, and the Government have twice attempted to buy her off. The first occasion was under the previous Secretary of State, when she threatened troublesome amendments at a Labour party conference. She was told then that there would be a review, and she withdrew her plans. The review duly came and went, yet there was no significant change to the basic state pension, which retained its link to prices. Baroness Castle then tabled an earnings-link amendment in proceedings on this Bill in the House of Lords. I am not an expert on the finer points of procedure there, but Labour peers said that the noble Lady had been "mugged". I am not sure what that means, but there was clearly some attempt to block that amendment. Later in the proceedings, this rather modest amendment was accepted. In debate with Baroness Hollis, Baroness Castle said that the Minister's total indifference to the strengthening of the basic pension arises from the fact that not only she, but also the Government, abandoned the principle of state insurance altogether. There has been plenty of evidence of that this year. In April, the Government raised pensions by 75p. Last week, in his comprehensive spending review, the Chancellor of the Exchequer handed out £43 billion yet did nothing for the basic state pension, and this amendment should be seen in that context. The Government were elected on a manifesto pledge that pensioners would share fairly in the rising prosperity of the nation. The CSR was about carving up that prosperity, but not a penny could be found for pensions. The amendment provides that, until 2005–06, the Government should publish estimates of the effect on the national insurance fund of earnings linking as well as price indexation, and Baroness Castle made a passionate speech about the Government's disregard for the principle of social insurance. However, the Government accepted the amendment, which should have made us suspect that it would have no effect. Baroness Hollis gave the game away when she said that the Government have accepted the amendment and are happy to do so…we are just splicing together two sets of reports.—[Official Report, House of Lords, 19 July 2000; Vol. 615, c. 1097-1102.] The Minister of State said the same thing when he moved the amendment—that two bits of information would be placed between one set of covers. That will not change the fact that the Government do not believe in the long-term future of the basic state pension as a true foundation for income in retirement. What will be the effect of the annual report provided for in the amendment? A copy of the report will be placed before Parliament, but does that mean that there will be a chance every year for the House to debate the level and uprating of the basic state pension? I suspect that it does not. I suspect that the report will simply disappear into the Library of the House after publication and that it will not change any element of the Government's policy. I am sure that Baroness Castle intended the amendment to secure a real change in what the Government are doing with the values of the pension. 5.30 pm We are concerned that the amendment does not go far enough. It requires information that is currently published to be published under a single cover instead of two. I am disappointed that Baroness Castle was unable to go further and table an amendment that would not merely have required the reporting of information on the level of the basic state pension, but would have put pressure on the Government to increase it forthwith. The Liberal Democrats have advocated specific rates of increase, which the Chancellor should have brought forward in the comprehensive spending review last week. We have argued that there should be an across-the-board increase of £5 for all pensioners but that the older pensioners, who have suffered the most from the breaking of the earnings link, should see larger increases. We have suggested £10 at the age of 75 and £15 at the age of 80. That is a structural idea, which would go beyond the amendment and would involve the Government in not merely reporting facts but doing something about the real value of the state pension. When Baroness Castle said in the Lords that the Government had abandoned the principle of state insurance altogether, she was right. The Government argue that anything except money on the state pension is acceptable. When we said that we would increase the pension for the older pensioners, Baroness Hollis responded in another place that that would not be well targeted; yet the winter fuel payments are even less well targeted than any addition to the basic state pension, which is the subject of the amendment. We are disappointed that Baroness Castle was able to get only this amendment through in another place. We believe that the amendment was accepted by the Government only because it lacks any teeth. We hope that we will get some assurances from the Government that although the Chancellor may have wanted to keep his powder dry in the comprehensive spending review, we will see not just a few extra reports under a single cover but some serious increases in the basic state pension. Pensioners not only expect that, but have a right to it.

Michael Martin (Deputy Speaker, Glasgow Springburn)

I remind the House that we are debating the amendment before us, not amendments that were tried in another place and did not succeed.

Paul Flynn (Labour, Newport West)

I am baffled by the speech of the hon. Member for Northavon (Mr. Webb), because I have no idea why the Liberal Democrats did not table their own amendment if they thought that the one selected was not strong enough. Baroness Castle's amendment went through on Wednesday, and there has been plenty of time since then to table others. I applaud the Government for accepting the original new clause in the other place and for accepting the strengthening of the new clause by adding the words and in order to enable Parliament to determine the introduction of such annual increases. To me, that means that we will have a chance to debate—and, I hope, to vote on—the level of the basic pension.

Jeff Rooker (Labour, Birmingham, Perry Barr)

Just so that I can disabuse my hon. Friend of that idea, let me remind him that amendment (a) to amendment No. 16 has not been selected.

Paul Flynn (Labour, Newport West)

I accept what my right hon. Friend says. Life is full of disappointments. We must go back to our original position—the Government are at least accepting what was moved in the other place, which is something of a breakthrough. We already know what the Government Actuary will say. He gave evidence on 28 June to the Social Security Committee inquiry into pensioner poverty. When asked to express his view on the result of restoring the link with earnings, he said that it could be increased for up to the next five years without any additional increase in national insurance contributions. The money is already there. Other evidence has been given in answers to the written questions tabled by my hon. Friend the Member for Bethnal Green and Bow (Ms King), to the effect that without any increases in national insurance contributions beyond inflation, the link can be restored up to 2011. Not only would that not require any additional contributions—

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. I think that the hon. Gentleman is going so far that he is about to start, or has already commenced, debating an amendment that has not been selected. He cannot do that. He has given a little background as to why the Lords amendment is before us; now he must speak to the Lords amendment.

Paul Flynn (Labour, Newport West)

Thank you, Mr. Deputy Speaker. The acceptance of the amendment will give new heart to the 106 Members who signed early-day motion 1 and to those who signed early-day motion 985, which relate specifically to pensions. The fact that money has been sprayed in all directions is an act of gross injustice to pensioners, if there is no remedy for the insult of the 75p increase on the basic pension. That must be put right. I believe that the Government are moving in that direction. I cannot imagine why they hesitate for a second to announce that, for the foreseeable future, the link with earnings will be restored. It is affordable, it is justified and it would be hugely popular.

John McDonnell (Labour, Hayes and Harlington)

I welcome the amendment. Like my hon. Friend the Member for Newport, West (Mr. Flynn), I too almost got excited because I thought that amendment (a) to amendment No. 16 had been accepted—but such is life. The amendment will allow us to debate, at an early date, the earnings link with pensions. Although Baroness Castle was thwarted in her attempt to restore the link—as were several Members of this place—she managed to secure that fundamental report, which, I hope, will be made in the autumn. That will enable us to compare the costs of the Government's current array of benefits for pensioners with the restoration of the link for which we have argued for so long. Previous debates have made it clear that many pensioners welcome the litany of improvements—the increased fuel allowance, free eye tests and the reductions in VAT—and the benefits that they would provide. However, the demand from all the pensioners organisations is for an increase in the basic pension and for that increase to be protected in the long term by a link with earnings in future. They argue that that is the only way to ensure that pensioners share in the growing wealth of the country.

Dafydd Wigley (Plaid Cymru, Caernarfon)

Does the hon. Gentleman agree that the pressure is to make up for the loss since 1981? That would now amount to £30 a week. The report would provide yearly information, but not a means to make up that loss.

John McDonnell (Labour, Hayes and Harlington)

Clearly, the information in the report would enable us to calculate the loss, but it might go further. A report issued by the Department of Health this month showed growing inequality, both in general and because of increased pensioner poverty. More than 30 per cent. of pensioner households have incomes that are below half average earnings. A fifth of pensioners live in dire poverty—in unsatisfactory housing or in houses that have been condemned as unsuitable for human habitation. The report proposed in the amendment should highlight such matters. However, unless it is followed by action—by which I mean an order enabling Parliament to determine the restoration of the earnings link—pensioners will be disappointed. Recently, there has been much reporting about memos to the Prime Minister on how to get the Government back on track and how to ensure a place in history for the Prime Minister and the Government. One way to restore the Government's record among pensioners is through the proposed report. It will show that we can restore the link with earnings, which can be afforded by the national insurance fund. Pensioners would not only be lifted out of poverty but out of continued dependence on means-tested benefits. I urge the Government not only to accept the amendment but to think again about its implications for long-term policy.

Frank Field (Labour, Birkenhead)

I welcome the amendment. Given that the House can guess where the sympathies of my right hon. Friend the Minister of State lie on the issue, I hope that, before the provisions of the amendment are effected, an announcement will be made to the House that there will be an increase in the national insurance pension, weighted to older pensioners. Those of us who canvassed in the local elections realise what a hiding we received because of this matter. I hope that the Government will not merely issue a report, but will take action before it is published.

Jeff Rooker (Labour, Birmingham, Perry Barr)

I am grateful for the contributions of my hon. Friends—I also consider the hon. Member for Northavon (Mr. Webb) to be a friend. Anyone would think that the Government did not accept amendments in the House of Lords, but we did. There is no argument about that. However, at the risk of upsetting noble Lords, especially Lord Higgins and Lord Goodhart, I think that the comments that they made last week at columns 1101–02 of Lords Hansard after my noble Friend Baroness Hollis had accepted Lady Castle's amendment were impolite and insincere—and I mean that. If I were a little less diplomatic, I would probably say that those comments were outrageous but one does not say that about Members of the other place. Given the remarks of the hon. Member for Northavon, I want to make one point clear so that there is no ambiguity. I do not want to sound pompous, but we are making law by accepting amendments to the Bill. We have accepted the amendment that has come from another place. The actual words on the amendment paper—not what people think they mean—will go on to the statute book. It will not be an annual report, because the amendment does not call for that. There will be a report at the earliest available opportunity, which is likely to be in January. That is when the normal report on uprating appears and it is based on the uprating statement. The figures will be amalgamated from the quinquennial report and that is the earliest opportunity that the House would normally have to see those figures. The amendment calls for a report up to 2005–06, and we have accepted that. It is not practical to produce a report for when we return from the recess. The hon. Member for Northavon can rattle on all he likes about the Government's action but I remind him that, when push came to shove, he and the Liberal Democrats even voted against the 75p increase this year.

John McDonnell (Labour, Hayes and Harlington)

Although it is true that we are debating the words that will appear in the Bill, is my right hon. Friend also clear that we are sending a message to pensioners that the Government have not closed their mind on the restoration of the earnings link with pensions?

Jeff Rooker (Labour, Birmingham, Perry Barr)

We are sending out all kinds of messages. By the time the report is published—the earliest available opportunity would normally be in January—the Government will have fulfilled the commitment that we gave on Budget day to put forward our proposals for consultation on the pension credit. That will be a radical departure from the status quo arrangements. Although there is still much work to be done over the coming weeks, we will keep that commitment and thereby enhance the debate and send all sorts of signals to pensioners. I assure my hon. Friend of that. I do not want to digress, but, as one of my hon. Friends said, simply restoring the link would not, of itself, help the poorest pensioners. Hon. Members who simply advocate restoring the link as a mantra must also have the courage to say, "But this will not get any more money fast to poorer pensioners. They won't gain from that of itself." That is why we need the pension credit.

Steve Webb (Liberal Democrat, Northavon)

Is the Minister saying that the amendment means that we shall have a report in January that will include figures that we would have had anyway, together with figures from the quinquennial report that would also have been available? What additional information will the amendment produce next January that we would not have had anyway? Will he clarify that point?

Jeff Rooker (Labour, Birmingham, Perry Barr)

I made it clear that the information requested in the amendment is already available from two different sources, and I explained what they were. We will make sure that that information is pulled together in one of the publications. I do not want to be hung out to dry on this, but, in the normal process, the earliest opportunity—the one that is of most use to the House—to publish the information would be in January. The information requested in the amendment is already publicly available. There is nothing new about that at all.

Paul Flynn (Labour, Newport West)

If the information is available, why did the Department of Social Security refuse to give me information about the state of the national insurance fund in 2003 and 2004, which it has done twice in response to parliamentary questions in the last six months? Does the Minister agree with Baroness Castle that targeting sounds like a good idea, but in fact is another way of describing means testing?

Jeff Rooker (Labour, Birmingham, Perry Barr)

I do not accept that, and I am not going to get into a row with the goddess of the Labour movement in an argument between the two Houses. She knows that, and I have told her on more than one occasion that I am not going to do that. Without the details, I cannot respond fully to my hon. Friend's question. It may be that he was referred to the Government Actuary's report. As I said, there are big caveats on the figures published years in advance, which may be why Ministers chose not to give what could have been a misleading answer to my hon. Friend's question. However, it is open to him to come back and ask the question again.

PRESERVATION OF RIGHTS IN RESPECT OF ADDITIONAL PENSIONS

Jeff Rooker (Labour, Birmingham, Perry Barr)

I beg to move, That this House disagrees with the Lords in the said amendment. The amendment relates to inherited SERPS, and I have to say that I do not believe that it is appropriate to have a debate on the issue at this point. I do not think that any hon. Member could accept the other place tabling amendments that could lead to substantial additional spending of public money running into billions of pounds, which is the implication of the Lords amendment. However, I accept why the Lords did that. We made an announcement about inherited SERPS and explained what we planned to try to do, following reports from the Parliamentary Commissioner for Administration and the National Audit Office. As I said before, the matter is probably the single greatest example of public maladministration since the war and is a major problem. We accept that putting it right, however one chooses to do so, will cost billions of pounds. Since we made the announcement in March, we have not been able to put any more flesh on our plans. Indeed, we said that we would not and explained that we hoped to come back before the end of the year with proposals for regulations for an inherited SERPS scheme. People are working on the issue, and the Social Security Advisory Committee has issued a consultation paper, responses to which are due in August. We shall examine those responses carefully. The Select Committee on Social Security and the Select Committee on Public Administration have taken evidence on the issue as well, so we have to have draft regulations for them to consider. In the meantime, many people at the Benefits Agency headquarters in Leeds are working to prepare the scheme. We have to look at all kinds of matters, such as how many people might apply. We do not know whether there will be 50, 000, 5 million or 10 million applications, or even more. When we do not know how many people will apply, it takes an awful lot of background work to work out the parameters of the scheme so that it will have the capacity to deal with telephone and other inquiries. Just because we have not given any details does not mean that we are not doing anything about the situation. For example, we have to cover an issue raised in the other place, which is what kind of appeals will be processed. For instance, how do we deal with people with a severe mental disability, who may have started to suffer from dementia since making an inquiry about SERPS? We have to deal with all those matters before we introduce a scheme. The House of Lords wanted to give the Government a nudge to remind them that they had not fallen asleep, and to ensure that the inherited SERPS scheme worked and that the Government were doing something. All that I can say is that, with the best will in the world, we intend to introduce proposals for a practical scheme that meets the original criteria that we set out regarding those people who had been, or felt they had been, misinformed, with the burden of proof being the Government's responsibility, as the ombudsman said. However, it is far too early to curtail and corral the Government in the way that the amendment seeks to do. In effect, the amendment completely wrecks anything that we plan to do with the inherited SERPS scheme, so I urge the House to disagree with the Lords.

Eric Pickles (Conservative, Brentwood and Ongar)

Strangely enough, I agree with most of what the Minister said, but I do not agree that the amendment wrecks the Government's intentions. They have made very clear how they will deal with the inheritance rules on SERPS. The amendment would prevent any backsliding on their commitment. The right hon. Gentleman is right to say that this is the biggest incident of maladministration since the second world war, and I, for one, certainly accept responsibility on behalf of the previous two Conservative Governments. The present Government cannot escape responsibility because we knew less than a year ago that benefits offices were giving duff information to people making inquiries, and we know even now that things are not right. We are fortunate to have several excellent reports on the subject. I draw the attention of the House to the report of the National Audit Office and the Department of Social Security's internal audit service to the permanent secretary at the Department. Page 1 says that in view of the extensive consideration in 1999 given to the issue of misleading information, we are concerned that from November 1999 to 10 January 2000 contradictory lines were taken in official correspondence and other sources of information about the legal position after 5 April 2000. Even now, we do not have a complete grip on the problem. No Member of the House can feel smug about their involvement in this issue. The House singularly failed to check the Executive on these important measures. However, I suppose the time must come when the blame game has to end. I am pleased that the right hon. Gentleman sought to deal practically with the problems. Guidelines have been issued and Ministers have given clear assurances in Committee, in this House and in another place. We also have the NAO's recommendations and the ombudsman's report. It is to the Government's credit that they accepted the ombudsman's report. As my noble Friend Lord Higgins has said several times in another place, generally there are no clear recommendations in that report. However, it makes two recommendations that are reasonably clear. First, on page 13 in paragraph 32, the ombudsman states that the Department should provide redress on a global, rather than an individual, basis. Secondly, he says that the burden of proof, to which the Minister referred, that a claimant would not have acted differently had he or she not been misinformed rested on the department. I realise that we do not yet have regulations on the subject, and I suspect that one reason for the amendment is to give the Government a prod about that, but it seems clear from what the Government said in another place and in Committee that they intend to provide redress on an individual basis. I understand that people who want to receive compensation under the Government's scheme have to jump over two hurdles. They have to show first, that they were misled by information, and secondly, that they sustained a loss. If the Government accept the ombudsman's report, they will have to prove otherwise. However, we know from what they have said that they will not have many records to disprove claims. They have set themselves an uphill struggle. Baroness Hollis was most helpful in a debate on 6 July 1999, when she said: There is a very real issue of proof…No record is kept of telephone calls, any more than a record is normally kept of conversations at the desk. Paper records are kept for about six months. But if someone asserted that he had received that misleading advice, I suspect it may well be the case that the Government would have to prove that he had not, rather than the contrary, because there would be no evidence to counterbalance it.—[Official Report, House of Lords, 6 July 1999; Vol. 603. c. 847.] Any claimant who says that he walked into the Department's local office in one of the many parliamentary constituencies and picked up a leaflet that did not contain the information about SERPs must have a case. It would be impossible for the Government to prove otherwise. On 15 March, The Daily Telegraph reported a suggestion that the Government were seeking written evidence that claimants had originally made a claim.

Jeff Rooker (Labour, Birmingham, Perry Barr)

That is not true.

Eric Pickles (Conservative, Brentwood and Ongar)

The right hon. Gentleman says that it is not true, and that reassurance is good enough for me so I will not pursue the point. We need to see regulations reasonably soon. Given the issue of burden of proof, the lack of records and the right hon. Gentleman's reassurance, the effect will be the same whether or not the amendment is agreed to because the Government will not be in a position to disprove claims. People will only have to say that they went into an office and picked up a leaflet about retirement in which SERPS was not mentioned, so they did not take the necessary precaution of increasing their private provision. It matters not a jot how Members vote this evening, the effect will be the same. If the NAO is right, we are looking at a cost of £8 billion, admittedly over a number of years, but that cost is very great.

Steve Webb (Liberal Democrat, Northavon)

I agree with the noble Friends of the hon. Member for Brentwood and Ongar (Mr. Pickles) more than he does, because I agree with the amendment, and we will not support the Government's motion to disagree. The Minister said that he wants to keep his options open—I hope that I am paraphrasing him fairly—and that the Government are in the process of drawing up regulations, so they do not want to close off any avenues. They think that the amendment may constrain their future actions. However, in saying that he is admitting that he can envisage circumstances in which the Government might want to breach the presumption in the amendment. In other words, he can envisage the introduction of regulations that do not presume that people have received incorrect or incomplete information unless they can prove that they have done. 6 pm It is clear that the ombudsman is in no doubt. In the other place, Lord Higgins read out at some length correspondence that he had had with the ombudsman, and I shall repeat a couple of key phrases. In a letter to Lord Higgins, the ombudsman stated: I suggested to the Department that the onus of proof was therefore reversed. It was for the Department to prove someone would not have acted differently if they had not been misinformed…The presumption had to be that anyone who could reasonably claim to have been misled and in consequence to have acted, or failed to act, to their detriment had a prima facie claim for redress. Lord Higgins pointed out that people will still have to prove that they suffered loss as a result. Therefore, there are two issues: were the people given incorrect or incomplete information, and did that cause loss? People will still have to prove loss, but the presumption will be that they were given duff information, unless the Government can prove otherwise. When the amendment was debated in the Lords, lengthy consideration was given to the question of incomplete information, as opposed to incorrect information, which, in turn, raises a broad spectrum of issues. The fundamental question is, when legislation as far-reaching as the Bill is passed, should people be informed individually? However, if the House approves the amendment, all we will be saying is that people who say that they were given incomplete information can be presumed to be telling the truth. The Government would not be required to do anything about that; even if the amendment were made, the regulations need not bind the Government to compensate everyone who was given incomplete information. In my view, compensation should be given, but that is not what the amendment would do; it merely reverses the burden of proof and leaves the Government free to make regulations based on that assumption. I hope that the Government are not telling the House that they reserve the right not to reverse the burden of proof. The ombudsman has made his views clear and Baroness Hollis stated that the Government accepted the arguments regarding reversal. Therefore, if the amendment is not accepted, how does the Government envisage the scheme operating? Baroness Hollis said: When the time comes for people to make their claims, we envisage asking them a few questions about how and roughly when they saw a leaflet.—[Official Report, House of Lords, 27 June 2000; Vol. 614, c. 771-72, 777.] We are talking about events occurring from 1986 onward—leaflets that were read in the late 1980s. When I asked the Minister about the position of married women on the reduced rate, saying that many were misled, he replied that it all happened ages ago and that no one could prove that—yet the Government appear to want to keep open the option of requiring people to do precisely that. At issue is not merely whether or not people read a leaflet, but whether or not they visited a citizens advice bureau: Baroness Hollis said that going to a citizens advice office or Age Concern, both of which were misled by dodgy leaflets, would be good enough. Therefore, if someone makes a claim, the DSS official will ask, "When did you see the leaflet?", to which the individual might reply, "I didn't see a leaflet, but I got the wrong impression." The official will then ask whether the individual went to a citizens advice bureau or Age Concern. That strikes me as being an extraordinary process. The crucial point is that people will have to believe it is worth their while making a claim, but if there is a whiff of a suggestion that, when they phone up, they will be asked to provide proof, most will not bother; if there is any suggestion that they will be asked questions about how and roughly when they saw a leaflet, some will think that they cannot possibly remember. We shall be dealing with people who have passed retirement age: the Minister specifically mentioned people who are mentally impaired, but most people cannot remember what leaflet they looked at 10 years ago, let alone the person they chatted to at an advice centre. I am extremely concerned that the Government want to retain the option of not reversing the burden of proof. Just before the debate, I received some comments from Age Concern, which strongly supports the amendment. It says that, unless the amendment is made, it will still be up to individuals to make a claim; to provide details of how they were misinformed; to show they relied on this information…and to show that they may suffer financially. That is a lot of hurdles. Showing that one has suffered financially will be extremely difficult, especially because the proof consists of having done nothing—one did not opt out, even though one might have done, because the scheme appeared to be a good one. The Government have a moral duty to erect the fewest hurdles possible, but, although they have nodded in the direction of reversing the burden of proof, they appear to want to keep their options open. Some pensioners contacted Age Concern about the existing proposals, not the amended version; they want the amendment to be made. One said: The majority of those misled are pensioners, many may not feel up to the task of convincing the DSS that their claim is valid. We have to make it as easy as possible to claim because, otherwise, people will not do so; reversing the burden of proof is crucial. Another pensioner said: Continuing the uncertainty is a constant source of distress and erosion in our lives. Can I please make my application soon, remove this worry and enjoy the time left to us? The amendment would help to end that uncertainty, because it would guarantee the reversal of the burden of proof. The fact that the Government do not want to accept it suggest that they want to change tack in the near future. We want to reassure pensioners. We think that the Lords and the Conservative Front Benchers in the other place were right. I hope that their hon. Friends in this House will support their colleagues at the other end of the Corridor. We certainly shall.

Jeff Rooker (Labour, Birmingham, Perry Barr)

As I said at the outset, we have no scheme to lay before the House, so it is not possible to go into the sort of detail that hon. Members want. However, let us be straight: the purpose of the amendment is to insert into primary legislation a provision ensuring that any applicant to the inherited SERPS scheme will be deemed to have been given incorrect or incomplete information unless the Department can prove otherwise. The effect would be to allow people who have neither sought nor received information to be deemed to have received incomplete or incorrect information. That almost amounts to a policy reversal.

Steve Webb (Liberal Democrat, Northavon)

indicated dissent.

Jeff Rooker (Labour, Birmingham, Perry Barr)

Yes, it does. The ombudsman estimates that deferring the policy change for 30 months until 6 October 2002 and introducing an inherited SERPS scheme to cover those who were misled or misinformed would cost up to £8.2 billion by 2050, so we are not talking about Government penny-pinching. However, the amendment would increase the costs significantly by opening up the scheme to people who were not misinformed because they never asked for information: reversing the policy by making the amendment would result in a cost of £23 billion by 2050. We have made it clear that we want to protect people who were given incomplete or incorrect advice. We do not record telephone calls, so we have no evidence. Claimants will sign a form, which has not yet been designed, saying that they phoned an office; they will sign and date it as is normal with a DSS form. We will not be able to challenge that statement—we shall have to accept what they say. That is the burden of proof under which we shall be working. The amendment would extend that protection to people who were never advised and who never asked any questions. I cannot believe hon. Members want to make a decision far in advance of the Government introducing a scheme after considering the Select Committee reports and the advice of the Social Security Advisory Committee. It would be barmy to make such a decision when the cost of the amendment, at up to £23 billion, is three times greater than the highest figure suggested for our proposals.

Eric Pickles (Conservative, Brentwood and Ongar)

I apologise for interrupting the Minister in full flow. On the question of telephone calls, if people make that call, sign the form and there is no proof that they acted in any way other than they say they did, does the fact of their having done nothing and having made no additional provision constitute sufficient proof, or will something else be required?

Jeff Rooker (Labour, Birmingham, Perry Barr)

The hon. Gentleman will have to wait for us to come forward with the scheme. People will have to say at some time or another that they might have done something differently. That naturally follows if they were misinformed. They will have to say that they did not do something that they would have done owing to bad information. That is the purpose of an inquiry about SERPS in the first place. The hurdle would be information that led someone to a certain course of action; they would tell us about the false information on which they had relied. It is not such an onerous hurdle for people to say that they made a call, the date of which they cannot remember, and were reassured that they and their spouses would be okay and that, say, the claim would be 100 per cent. As a result, they did not take action to protect their position. People could tell us that they had received advice confirming that their claim would be chopped to 50 per cent. in 2000, which subsequently led them to take out a life policy that they were mis-sold.

Steve Webb (Liberal Democrat, Northavon)

There are two aspects to the amendment: incomplete information and incorrect information. I said clearly, and the record will show, that it does not follow that, on agreeing the amendment, regulations would require the Government to do anything about people who received incomplete information. The amendment would merely create the presumption that if somebody said that something had happened and the Government could not disprove it, it was so. However, on incorrect information, they should have to do something. Does the Minister agree with the ombudsman when he said: I suggested…that the onus of proof was therefore reversed?

Jeff Rooker (Labour, Birmingham, Perry Barr)

We have accepted the ombudsman's report and that is what we shall try to implement. I make the point made by the hon. Member for Brentwood and Ongar (Mr. Pickles) about the global solution, which is important. I remember that before I entered the House there was an argument about a misleading answer given by the right hon. Member for Henley (Mr. Heseltine) when he was Minister of Aviation hack in 1972. He gave as an excuse that his answer was global—but that is another point. I have my Q and A before me; I will give the hon. Member for Brentwood and Ongar the question and the answer because it makes an important point. Does the scheme provide a global solution as recommended by the ombudsman? Yes. The ombudsman's concern, as Mr. Buckley himself said to the Public Administration Committee, was that it seemed impractical and unfair to put people through something like the special payments scheme that the Department already runs, in which they would be required to describe their circumstances in some detail and why they were entitled to redress. The inherited SERPS scheme therefore must be based on the presumption that anyone who could reasonably claim to have been misled…had a prima facie claim for redress. There is no doubt about that; that covers, globally, the people who were misinformed and feel that they have been misled.

Dafydd Wigley (Plaid Cymru, Caernarfon)

If the Government successfully disagree with the Lords amendment, will the Minister give an assurance along the lines that organisations concerned with specific aspects of the questions, such as Mencap, which deals with people with learning difficulties, will be fully consulted on the scheme? The question was raised by Lord Rix, and he did not press his amendment on that understanding. Will the Minister give such an undertaking?

Jeff Rooker (Labour, Birmingham, Perry Barr)

Yes, when we bring forward the scheme in draft and in full, there will be full and adequate consultation with all those who have an interest. That is not meant to be a qualification. Achieving the task will be very difficult. The lower estimate of doing so is £8 billion, but we have no idea of the number of claimants, and the upper estimate, as I have said, is £23 billion. That is huge public expenditure. To listen to some hon. Members, who suggest doing so willy-nilly, 10 times a day, it could be paid for from the surplus in the national insurance fund. It would not be sensible to amend the legislation. Doing so would completely scupper our proposals for an inherited SERPS scheme. I cannot put it plainer than that.

New Clause

Jeff Rooker (Labour, Birmingham, Perry Barr)

I beg to move, That this House disagrees with the Lords in the said amendment. With reference to the previous amendment, I must say that in all my years in the House, I have never before been present for a Division in which every vote for the amendment would have cost £1 billion. Lords amendment No. 18 deals with concurrency. I will not detain the House for long. The Government have met the spirit of the amendment through the recent announcement by the Inland Revenue that concurrency with stakeholder pensions would be allowed on salaries up to £30,000 a year. That covers 87 per cent. of people in defined benefit schemes—a considerable number—at a cost of £155 million. Full concurrency would cost up to £400 million. In other words, it would cost about £250 million to cover the remaining 13 per cent. of people, which cannot be justified. I hope that the House will accept the Government's view that we should disagree with the Lords in the amendment, but that the spirit of it will be met by Inland Revenue regulations.

Jacqui Lait (Conservative, Beckenham)

I, too, welcome the fact that the Government have moved to accept concurrency up to a salary of £30,000. Originally they were reluctant to contemplate such a figure, regarding it as a tax break for the rich, and said that they would consider concurrency for low and moderate earners. Throughout our deliberations on the Bill, we have discovered how interesting are the Government's definitions of lower and moderate earners, which vary from time to time. For example, stakeholder pensions are available for "moderate earners" on £10,000 a year. My definition of a moderate earner is not someone who earns £10,000 a year, but we shall go with the Government. 6.30 pm By increasing the limit to £30,000, the Government have responded to industry concerns that people should be able to take advantage both of an occupational pension scheme with defined benefits and a stakeholder pension. That makes it easier for people with a stakeholder pension to decide, for example, to accept a job that has an occupational pension scheme with a defined benefit. Other arrangements could have created a barrier. There is also a benefit for people who have not provided for themselves as well as they should have done over the years, even under an occupational pension scheme. In those circumstances, the stakeholder pension can be used for an additional voluntary contribution. An irony remains in the regulations. Perhaps the Minister cannot explain it; it may be down to the Inland Revenue. It is ironic that higher earners—those who are in an occupational pension scheme and earn more than £30, 000—are barred from buying a stakeholder pension for themselves, but can buy one for their non-working spouses, children or grandchildren. That applies to every Member of Parliament. It contradicts the class-conscious attitude reflected in the views on the tax break for the rich. The 13 per cent. to whom the Minister referred could take out stakeholder pensions for members of their families, who would consequently be able to take advantage of the tax break. Conservative Members would prefer full concurrency, to avoid the ironies that I described. I understand that the Liberal Democrats also support full concurrency. Having pointed out some aspects that still require amendment, we welcome the Government's realisation that there is a need to make stakeholder pensions concurrent up to £30, 000. We therefore do not want to disagree with them.

Steve Webb (Liberal Democrat, Northavon)

Like the hon. Member for Beckenham (Mrs. Lait), I shall be brief, because we support the important concession that the Government have made. I believe that they made it during proceedings on the Finance Bill last week—but I stand to be corrected on that. We have taken the view throughout our proceedings that the Government pay lip service to the notion of simplicity, while creating an awful jumble in the pensions regime. Full concurrency would be ideal, and far simpler than the Government's proposals. They have had to introduce a threshold and devise laws for the years to which the threshold will apply; it is not yet clear whether it will be indexed. Such matters add to the complexity of the system. We would therefore prefer full concurrency. However, we recognise that the Government have travelled a long way from their initial intransigence. The hon. Member for Beckenham said that people who earned more than the threshold figure might contribute money to a pension for their non-working spouses or children. Good luck to them. Many such non-working spouses might not be those people's spouses when they reach retirement age. If we can ensure that they have pensions in their own right, so much the better.

PROHIBITION ON DIFFERENT RULES FOR OVERSEAS RESIDENT ETC.

Jeff Rooker (Labour, Birmingham, Perry Barr)

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

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this we may discuss Lords amendments Nos. 20 to 22, 59 and 60.

Jeff Rooker (Labour, Birmingham, Perry Barr)

The amendments were tabled at the last minute, and it is fair to explain briefly why. Amendments Nos. 19 to 22 would provide a power to make regulations that may specify exemptions to the current provisions of clause 54. Amendments Nos. 59 and 60 would delay the commencement of the clause by amending clause 83. The amendments relate to directive 98/49/EC, and are designed to safeguard the occupational pension rights of workers who move to other member states of the European Union. The Government supported the directive because it protects workers who have occupational pension rights, and wish to exercise their rights to move freely in the European Union. The directive extends good practice that already applies in the United Kingdom to the treatment of occupational pensions throughout the European Union. It therefore promotes labour mobility in the EU. The terms of the directive state that provisions to implement it must be included in domestic legislation by July 2001. When the directive was adopted, the Government's understanding, which was based on extensive consultation with the pensions industry in the United Kingdom and elsewhere in the European Union, was that UK schemes already complied with its provisions. During the Bill's passage through the other place, we were alerted to the practice of a small number of UK schemes that pay annual increases in pensions based on the rate of inflation of the country of residence, not that of the UK. That point was never raised during consideration of the directive. We have tabled the amendments to avoid UK legislation causing UK schemes to be in breach of current UK law, even though the directive might not be breached. I can give further and better particulars if the House desires. The amendments have been tabled to include in UK law provisions that, because we did not know about the few schemes whose practice is slightly different from most pension schemes, we believed already operated.

Jacqui Lait (Conservative, Beckenham)

I shall be brief. I congratulate the Government on listening to pension industry worries so late in the day when the problem was identified. It is perhaps a lesson to us all that no one should introduce legislation at the last minute, before it has been thoroughly discussed with all the relevant groups. We do not want to hold up the amendment, and we are glad that there is time for matters to be rectified and for necessary action to be taken. However, the lesson that needs to be learned is that EU directives need long and careful consultation. A new pensions directive is floating around; I sincerely hope that we shall not experience the same problems with it.

CONSTITUTION AND PROCEDURE OF PENSIONS APPEAL TRIBUNALS

Jeff Rooker (Labour, Birmingham, Perry Barr)

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

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this we may discuss Lords amendments Nos. 24 and 25.

Jeff Rooker (Labour, Birmingham, Perry Barr)

Clause 59 provides for a more flexible composition of the pensions appeal tribunals by permitting the Lord Chancellor to appoint to the pool of tribunal members who are available to hear individual cases lay members alongside legally and medically qualified members. The amendments recognise anxieties that the clause as originally drafted may have restricted the numbers of people with knowledge or experience of service life who would be available to serve on tribunals. The amendments would give the Lord Chancellor a duty to appoint persons with knowledge or experience of service in Her Majesty's naval, military or air services to the pool of tribunal members. The Bill continues to provide for the appointment of people with other experience, including persons with knowledge or experience of matters relating to the disabled. It was always intended that the Lord Chancellor would continue to appoint people with knowledge or experience of service life to the pool of tribunal members, and it is important that that is crystal clear in the Bill.

Jacqui Lait (Conservative, Beckenham)

This is becoming a routine, but I am pleased about the amendment, and pleased that the Government have included in the Bill the requirement that people with service experience should be members of the tribunals. We discussed the matter in Committee and tried to persuade the Minister to accept our amendment to that effect. He was conciliatory, and said that he hoped that people with such experience would serve on the tribunals, but he did not suggest that he was prepared to rewrite the Bill. I am therefore enormously grateful to the other House for persuading Baroness Hollis to accept the amendment, to ensure that service personnel will continue to be members of tribunals. I thank those who initially brought the issue to my attention, and I thank the Government for accepting the amendment.