House of Commons Hansard Debates for 28 Mar 1990

Mr. Tim Smith : New clause 19 constitutes a major step forward for millions of occupational pensioners in the United Kingdom and I congratulate my right hon. Friend the Secretary of State on introducing it. It represents a

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sensible balance between the interests of the employers and of employees. What my right hon. Friend has done is the right way to proceed in legislation affecting occupational pension schemes. He gave us some figures on the present position.

Of course, occupational pension schemes are voluntary arrangements. The hon. Member for Oldham, West (Mr. Meacher) said that employers provide occupational pensions for their own benefit because they want to attract or retain staff. I recognise that, but such schemes are voluntary arrangements, so it is sensible for legislation to reflect what is already best practice. Practice has improved over the years and the occupational pension schemes have changed out of all recognition in the past 20 years. By the new provisions, my right hon. Friend is reflecting what is already best practice and telling occupational pension schemes to bring themselves up to best practice.

If we were to go as far as the hon. Member for Oldham, West wants, we would be in a different position, because we have to consider the trade-off between improving existing schemes, as the new clause will do, and extending the coverage of occupational pension schemes. Although millions of employees are members of occupational pension schemes, many employees are not. In an ideal world, everyone who had a job would belong to an occupational pension scheme, but if we were to impose upon occupational pension schemes the open-ended commitment that the hon. Gentleman has in mind it would be very difficult because we do not know what future rates of inflation are likely to be.

It would be difficult to fund the schemes and would act as a major deterrent to any employers considering starting up an occupational pension scheme for the first time. Those employers are usually small employers, because most large employers already have such schemes. We are talking about what is a sensible burden to place on small businesses. I do not believe that what the hon. Gentleman has in mind would be sensible. It would be seen as a great burden by small businesses, so they would simply decline to introduce occupational pension arrangements for their employees, and very little would be achieved in the process.

Mr. Meacher : I hope that the hon. Gentleman has taken on board the essential point that I was making. Whether inflation is high or low, there tends to be the same ratio between investment yields and the retail prices index, which is the basis of pension increases. Even if the RPI rises, in the middle or longer term investment yields tend to rise roughly in the same proportion.

Mr. Smith : The hon. Gentleman forgets what happened in the late 1970s when, it is no coincidence to report, we had the misfortune to have a Labour Government. On Second Reading, I referred to two interesting tables which appeared in the report of the Occupational Pensions Board which show the way in which the investment yield on occupational pension schemes has improved over the past 10 years, as a result of which we now have large surpluses. We are not entitled to assume that we will always have large surpluses on pension schemes. 7.45 pm

When we had the misfortune to have a Labour Government, pension schemes were regularly in deficit. Of course, the employees expected the employers to make up the deficits and that is exactly what they did. They

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sometimes had to transfer considerable additional sums to the pension schemes to ensure that they could meet the liability. We are now considering a further extension of those liabilities, and I accept that it is the right time to make that extension. However, if we were to go further and make the change that the hon. Gentleman has in mind, and if we were to return to those dark days of poor economic and investment performance, it would be extremely difficult for employers to meet the commitment that the hon. Gentleman has in mind. The past five years have been very different from the six years of Labour Government. There has been a great transformation and no comparison can be made. However, we are not entitled to assume that that will continue for ever.

By definition, occupational pension schemes are instituted for the long term. We are talking about long-term commitments, long-term investments and long-term liabilities. That is why it is sensible to proceed cautiously. My right hon. Friend the Secretary of State, who has great expertise in these matters, has always taken a cautious approach.

The new clause constitutes a sensible balance. I accept what the hon. Member for Oldham, West said about actuaries and how they always produce different figures and assumptions, but actuaries may say that, as a result of the new clause, which will involve an extra commitment for many schemes, it will be necessary to increase the funding of those schemes by increasing the employers' or the employees' contributions.

I am sure that the hon. Member for Oldham, West realises that Members of Parliament have to pay such a large contribution to their pension scheme because we already have indexation. Our contribution is 9 per cent., which is very high.

Ms. Clare Short (Birmingham, Ladywood) : That is because we have so many early leavers.

Mr. Smith : Early leavers are an occupational hazard here. I was an early leaver once and I do not wish to repeat the experience, and I am not expecting to do so. That may be a particular difficulty, but we pay 9 per cent. because of the generous indexation provision in the House of Commons pension scheme. It is the open-ended arrangement that the hon. Gentleman wants. A contribution of 9 per cent. is nearly double what most employees pay as members of occupational pension schemes, and during the recent debate on the matter there were complaints about the contribution which hon. Members make. I am not sure that such a high level of contribution would be welcomed by people in industry generally. We should understand that, if we were to introduce the change that the hon. Gentleman has in mind, employees or employers would have to pay such a rate. There would be a substantial increase in contributions and that would be a considerable additional burden on business, would make it particularly difficult for small businesses and would lead to a reduction in the number of members of occupational pension schemes. Presumably that is exactly the opposite of what the hon. Gentleman hopes to achieve.

My right hon. Friend has found a sensible balance in the new clause. It will involve a major improvement for millions of members of occupational pension schemes, and the House should welcome it.

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Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I intervene briefly to ask only a couple of questions, because I am more interested in progressing to the later stages of the Bill. I welcome new clause 19, which is complicated. It enshrines a schedule and brings the benefits that have already been mentioned. Why did not the Government take the power to vary the 5 per cent. limit? The hon. Member for Oldham, West (Mr. Meacher) made a valid criticism of the new clause, because there may be circumstances in which the 5 per cent. ceiling is considered onerous and unfair. In the past, Social Security Ministers, in a variety of guises and on a variety of benefits, have resorted to the power of regulation to amend such things as child benefit, which the Government have the power to increase annually but have not exercised. The Secretary of State could use such devices to ensure that yearly returns on schemes are fair and in line with the retail prices index. No doubt there is a technical reason why that is not possible, but it is worth pursuing.

The welcome changes made by new clause 19 may not take effect until 1 January 1992. The Government have had the report of the Occupational Pensions Board for several months, and Ministers have been considering the new clause for many months. Why might it be January 1992 before the benefits take effect? If it will take the Government that long to finish their homework, why did they not move the new clause during next year's Social Security Bill?

I am sure that the Minister will deal with that, but subject to those qualifications I give the new provisions a warm and enthusiastic welcome.

Mr. David Shaw (Dover) : I welcome new clause 19. The improvements in private sector pension schemes under this Government are to be welcomed. The proposal for guaranteed minimum increases is extremely good.

As an accountant, during the period of office of the previous Labour Government in the late 1970s, I had some experience of company audits. One of the major accounting tasks for the year was to examine a company's pension fund to ascertain the deficit and whether the company was capable of making available the financial resources to meet it. During the period of price and dividend restraint, deficits increased enormously as profits were curtailed. Deficits in pension funds often were not capable of being met within a year or two, and as auditors we had to take a strong view of whether a company could survive. Many companies did not and their auditors had to say that the directors were unable to continue in business. While the Labour Government were in office between 1974 and 1979, companies closed because of deficits on their pension funds. Dividend restraint had a severe effect, because 40 per cent. of all dividends are paid into pension funds and life insurance schemes. The significant amounts that are paid can contribute to whether a pension fund is in deficit or surplus.

I further welcome new clause 19 because it will benefit about 10 million people. I am sorry that my right hon. Friend the Secretary of State did not say that it will benefit many women who have jobs for the first time as a result of the growth in employment under the Government. It will be good for women generally, who have taken the opportunities for equality provided by the Government, and as a result the pensions and economy will be fairer and more balanced.

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It is churlish for Labour Members to criticise the limiting of the increase to 5 per cent. During the late 1970s, they were unable to provide significant investment returns and much of British industry showed minus investment returns. They should not complain that the Government are trying to ensure increases in private pension plans. I do not know why they want to hark back to the late 1970s, when British industry showed negative returns and growing deficits in pension funds.

There is a danger of getting trapped in the wording of the legislation. One moves into theoretical areas, whereby if the legislation says that there will be a 5 per cent. increase, one assumes that such an increase is possible. Legislation is not responsible for growth in the economy. Growth in the economy provides increases in pensions. Legislation provides only a best intention and a practice that might be followed. Without growth in the economy, which we have had under the Government, there will be no growth in pensions. Unless the economy continues to expand as it has under the Government, and unless we have another decade of Thatcherism--

Ms. Short : Another decade of Thatcherism?

Mr. Shaw : Unless we have another decade of Thatcherism, there will not be the increases in pensions that the hon. Member for Birmingham, Ladywood (Ms. Short) would like. I know that the hon. Lady sincerely wants increases in pensions, but she must accept that that will not happen under a Labour Government. She must accept that the pension increases under this legislation would not be possible under a Labour Government.

Ms. Short : The thought of another decade of Thatcherism is unbearable to me, to the rest of the nation and, if they are honest, to many Conservatives Members. We had economic growth before we had the present Prime Minister. I do not know whether the hon. Gentleman is aware of it, but he will find that since the second world war, and under different Governments, growth has increased by about 2.5 per cent. Pensions have been uprated and standards of living have increased. I am afraid that that was not invented by the present Prime Minister.

Mr. Shaw : I must disagree with the hon. Lady. The hon. Member for Oldham, West (Mr. Meacher) said that investment returns are the key. We have had economic growth since the second world war. The Conservative Government between 1951 and 1964 achieved phenomenal economic growth, which worked its way into investment returns. Under the Labour Governments of 1964-70 and 1974-79, not only was there a lower rate of economic growth than under Conservative Governments, but far more important was the effect of that on investment returns and on dividends paid into pension funds. I hope that the hon. Lady will accept that my accounting experience was that we had considerable deficits in pension funds between 1974 and 1979 and that much of British industry was technically insolvent because it could not meet its obligations to the pension funds that it had contracted to meet.

Mr. Wood : Does my hon. Friend agree that one of the features of the period between 1974 and 1979 was that borrowers gained while those who relied on pension funds suffered because investments were losing out? Any growth that there might have been in the economy did not benefit pension funds.

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Mr. Shaw : My hon. Friend makes a strong point. Any growth during the period of the previous Labour Government--few people have been able to measure growth under the Government--often benefited borrowers rather than savers. Because of the reduction in inflation and the increase in growth in the economy, which has started to filter through to savers, 16.5 million people are confident enough that savers will be rewarded that they are party to either private pension plans or life insurance savings schemes. We have increased people's confidence in saving. By encouraging people to save, we shall have a more responsible country. That is what the new clause is all about. Like the Budget, it provides great incentives for saving. People will not only save in their employers' pension plans but will feel more confident about saving generally in pension plans and about the rewards of saving.

The new clause is dependent upon the growth in the economy, on employers succeeding and having good rates of return and on those good rates of return working through into dividends and pension schemes that can afford to pay the pension increases intended by the Government. It is for those reasons that I welcome the new clause. 8 pm

Mr. Tim Devlin (Stockport, South) : I, too, welcome the new clause, which requires the payment of annual increases to members guaranteed up to the retail prices index or 5 per cent. It will give greater security to members of private schemes. I listened with interest to what my right hon. Friend the Secretary of State said about four-fifths of scheme members already obtaining increases. The new clause is especially welcome because it runs alongside the many other welcome provisions in the Bill that we discussed at great length in Committee. There is encouragement and security for private pension schemes across the board. The Bill already provides for the establishment of an ombudsman to investigate disputes, the establishment of a tracing service to help track down pensions held with previous employers, further protection for members of schemes that are wound up, further protection for members of schemes when they leave early, and a provision to enable the Secretary of State to introduce a new ceiling on self-investment for pension schemes. The Bill does a great deal to look after those who, together with their employers, have invested in private pension schemes.

In Committee I made much of the ITM/Head Wrightson Teesdale scheme, which illustrated the need for greater security for small investors in private pension schemes. I made one or two remarks which, having appeared in the record, might give a slightly incorrect impression. I wish to take a minute or two to place an accurate account on the record. I do not wish anyone to be misled by what I said in Committee.

The Davy Corporation sold the business of Head Wrightson Teesdale to ITM, a company operating in my constituency. Part of the sale agreement was that pension benefits no worse than those enjoyed by employees under the Davy Corporation scheme would be provided by ITM. That obligation was accepted by ITM. The Davy Corporation transferred from its existing pension scheme a sum of money that had been re-negotiated between the actuaries of the two companies to meet the accrued

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benefits of those employees transferring to ITM. When ITM went into receivership, its employees found that the benefits under their pension scheme did not match the benefits that they had been promised.

The problem was brought to the attention of the Davy Corporation, which contends that it fulfilled all its obligations to its previous employees-- first, by ensuring that the new employer committed itself to maintain the benefits of the pension scheme for its new employees, and, secondly, by transferring the correct sum of money to the new scheme. That matter is still under debate.

Since then, partly because I raised the matter in Committee and elsewhere, the Davy Corporation is voluntarily helping the investigation into why the benefits were short, because it recognises that the employees have no means of carrying out that investigation for themselves and because the trustees of the scheme--three individuals--do not have the financial resources necessary to investigate the position properly.

In Committee, we discussed the security for employees in schemes that might collapse, and what could be done to remedy the position. In particular, arguments were advanced about the establishment of a pensions omudsman. I still contend that it is interesting that two individuals who were trustees of the ITM pension scheme were later taken into employment as directors by a subsidiary of the Davy Corporation, subsequent to the ITM receivership. They were employed by ITM at the time of the sale of Head Wrightson Teesdale and became employees of the Davy Corporation subsidiary only after the receivership years later.

There is a major question about whether a proper value for the pension scheme was transferred between the companies. Of course, the Davy Corperation has no legal or contractual obligation towards the pensioners of that pension scheme. It is a difficult and highly complicated case and a good illustration of the reason why the new measures in this Bill are needed to protect the rights of employees. I hope to raise this case again, as it illustrates what can go wrong in the pensions world.

The new clause is a proper compromise between the interests of the employer and those of the employee. It is part of the Bill's much wider approach towards the whole question of private pension schemes. We need to encourage such schemes, but it is not the case that all schemes will always be in surplus. The scheme to which I have just referred and which I raised in Committee was significantly in deficit. I look forward to a report, at an early date, by the Davy Corporation actuaries detailing proposals to help those employees who lost when the company went into liquidation.

Mr. Newton : In my fairly extensive experience as a Social Security Minister at every level it has been rare that such a universally warm welcome should be given to my proposals. I shall bask in that for a moment, in the sure expectation that that mood is unlikely to continue throughout the night. I am grateful for the support that has come from all quarters. I am deeply admiring, even more so than previously, of the assiduous way in which my hon. Friend the Member for Stockton, South (Mr. Devlin) has pursued the interests of a significant number of his constituents--

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Mr. Frank Field (Birkenhead) : With a reading age of 12.

Mr. Newton : I do not know to whom the hon. Gentleman is referring, but as it sounded offensive I shall not pursue his remark. I say gently to the hon. Member for Oldham, West (Mr. Meacher) that it is wrong to talk of a Government U-turn in what I have said and done to change the balance of what was already a very significant proposal for schemes that are wound up. I understood him to be claiming credit for the Opposition, but I must disappoint him : what I have proposed is a very long way away from what I can only describe as the half-baked and irresponsible proposal that he made on Second Reading.

According to the hon. Gentleman's proposal, we should make schemes give away every scrap of their surpluses straight away, and if they could not then continue to pay the benefits to which that gave rise, they should be allowed to cut them again. That was his proposal. Mr. Kirkwood indicated assent.

Mr. Meacher rose --

Mr. Newton : I was not trying to enrage the hon. Gentleman.

Mr. Meacher : The Secretary of State's last comments were not worthy of him. He made a very silly knockabout comment which did not even begin to reflect what I said. However, instead of taking up time with another debate on what I said on Second Reading, I hope that the Secretary of State will read my Second Reading speech closely. If he then wants to talk about it, he will at least reflect accurately what I said.

Mr. Newton : I will not go any further down what is obviously a sensitive path. However, taking the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) as an independent arbiter, as he was nodding, he is obviously on my side in this argument.

It was suggested that we should have gone beyond the 5 per cent. ceiling of the legal requirement, as distinct from what we might like to see schemes do in certain circumstances. In the course of making points about that and asking whether the figure should be higher, the hon. Member for Oldham, West referred to inflation over the past 20 years and to the scale of investment surpluses that we have all seen in schemes over the past few years. The only comments that need to be made about that were eloquently made by my hon. Friend the Member for Dover (Mr. Shaw) in his excellent speech and by my hon. Friends the Members for Stevenage (Mr. Wood) and for Beaconsfield (Mr. Smith) in their equally eloquent speeches.

By taking the last 20 years, the hon. Member for Oldham, West includes a period in which inflation rose to disastrous levels under the previous Labour Government. Partly as a consequence of that inflation, more and more schemes found themselves in great difficulty because the investment surpluses on which the hon. Member for Oldham, West would rely did not exist. If we were to go beyond the requirements that I am proposing, even if there was the remotest possibility of the hon. Member for Oldham, West being the Secretary of State for Social

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Security imposing these requirements, employers are afraid that they would go bankrupt and that they would not be able to pay pensions.

Mr. Meacher : I do not want to prolong the debate. However, we must be absolutely clear that the very high level of inflation in the mid-1970s occurred for two central reasons. The first was the quadrupling of the price of oil that fed through all western economies after 1972-73. The second cause was the enormous and irresponsible credit explosion which Lord Barber, the then Chancellor of the Exchequer, unleashed on the economy, the effects of which lasted for the next four years. That is exactly what the former Chancellor, the right hon. Member for Blaby (Mr. Lawson), did between 1985 and 1987. Those were the causes of the inflation. Perhaps the Secretary of State should recall that in 1981, when this Government had been in power for two years, inflation reached 22 per cent.

Mr. Newton : That most certainly reflected the legacy of the Labour Government who had presided over the latter part of the 1970s. The serious point in the debate is that, in this area above all, it is necessary to strike a balance in the requirement that one imposes on schemes. If we overdo it and impose requirements that frighten off employers or which they believe in certain circumstances--some of which I speculated about already- -would become unsustainable, some employers who are already running schemes would consider whether they should continue to do that, and others which might be considering setting up schemes might decide that the risk of doing that was too great.

Of course the balance of considerations can be seen as changing from time to time. It is implicit in my proposals that we believe that, in present circumstances, the balance has moved decisively in favour of the additional requirements that I am now imposing. I also believe that, if we were to go much further--one or two in the industry have expressed doubts whether we may not have gone a fraction too far in our proposals--some people would be frightened off from having schemes or continuing the schemes that they have at present. We must strike a balance and I am sure that my hon. Friends believe that we have got it about right.

As my hon. Friend the Member for Beaconsfield stated, a balance must be struck with surpluses. He put his point very well. As happened in the late 1970s, if a deficit emerges, the employer is expected to make it up. I do not believe that it would be reasonable to create a double bind for employers. If they get it wrong one way and their actuaries under-forecast the amount of contribution that is required, the employer is expected to make it up without limit. If the employer and the actuary get it wrong the other way and they over-contribute, there is no way in which they can get any of that back. I believe that we have the balance about right.

8.15 pm

The hon. Member for Roxburgh and Berwickshire queried whether we should vary the 5 per cent. limit from year to year. Inescapably, employers and those who advise them must be able to look ahead at their commitments and plan for the contributions or investment provisions required to meet them. It is not possible suddenly to impose from year to year, according to the rate of inflation

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in any particular year, a sudden increase in commitment because by definition the employers would not have been able to account for that.

The hon. Member for Roxburgh and Berwickshire also referred to 1 January 1992. That is the likely date, although it is not certain. If I can bring it forward, I will. The reason for that date relates back to points made by the hon. Member for Oldham, West. In some cases, because of the new requirements that we are imposing, employers will have to look at the rate of contribution required in the scheme to ensure that they can meet those requirements. It is obviously right to give them some time to consider the scheme before imposing requirements on them. It would be wrong to say that, as from tomorrow, a requirement which employers had heard about only a few weeks ago and for which they had not funded should suddenly have to be met. We must give schemes some time to adjust.

I hope that I have covered most of the points raised in the debate. I am sorry if I inflamed the hon. Member for Oldham, West beyond what I had intended in what has in general been a very good-natured debate. I am very grateful to the hon. Member for Oldham, West for the supportive attitude that he has adopted, which I am sure will be continued throughout our debates this evening.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 21

Liability to maintain dependants

(1) After section 24 of the 1986 Act (recovery of expenditure on benefit from person liable for maintenance) there shall be inserted-- "Recovery of expenditure on income support : additional amounts and transfer of orders.

24A.--(1) In any case where--

(a) the claim for income support referred to in subsection (1) of section 24 above is made by the parent of one or more children in respect of both himself and those children, and

(b) the other parent is liable to maintain those children but, by virtue of not being the claimant's husband or wife, is not liable to maintain the claimant,

the sum which the court may order that other parent to pay under subsection (4) of that section may include an amount, determined in accordance with regulations, in respect of any income support paid to or for the claimant by virtue of such provisions as may be prescribed.

(2) Where the sum which a court orders a person to pay under section 24(4) above includes by virtue of subsection (1) above an amount (in this section referred to as a "personal allowance element") in respect of income support by virtue of paragraph 1(2) of Schedule 2 to the Income Support (General) Regulations 1987 (personal allowance for lone parent) the order shall separately identify the amount of the personal allowance element.

(3) In any case where--

(a) an order under subsection (4) of section 24 above is made against a person ("the liable parent") who is the parent of one or more children, in respect of the other parent or the children, and (b) payments under the order fall to be made to the Secretary of State by virtue of subsection (6)(a) of that section, and (c) that other parent ("the dependent parent") ceases to claim income support,

the Secretary of State may, by giving notice in writing to the court which made the order and to the liable parent and the dependent parent, transfer to the dependent parent the right to receive the payments under the order, exclusive of any

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personal allowance element, and to exercise the relevant rights in relation to the order, except so far as relating to that element. (4) Notice under subsection (3) above shall not be given (and if purportedly given, shall be of no effect) at a time when there is in force a maintenance order made against the liable parent-- (a) in favour of the dependent parent or one or more of the children ; or

(b) in favour of some other person for the benefit of the dependent parent or one or more of the children ;

and if such a maintenance order is made at any time after notice under that subsection has been given, the order under section 24(4) above shall cease to have effect.

(5) Except as provided by subsection (6) below, where the Secretary of State gives notice under subsection (3) above, he shall cease to be entitled--

(a) to receive any payment under the order in respect of any personal allowance element, or

(b) to exercise the relevant rights, so far as relating to any such element,

notwithstanding that the dependent parent does not become entitled to receive any payment in respect of that element or to exercise the relevant rights so far as so relating.

(6) If, in a case where the Secretary of State has given notice under subsection (3) above, the dependent parent makes a further claim for income support, then--

(a) the Secretary of State may, by giving a further notice in writing to the court which made the order and to the liable parent and the dependent parent, transfer back from the dependent parent to himself the right to receive the payments and to exercise the relevant rights ; and

(b) that transfer shall revive the Secretary of State's right to receive payment under the order in respect of any personal allowance element and to exercise the relevant rights so far as relating to any such element.

(7) Any notice required to be given to the liable parent under subsection (3) or (6) above shall be taken to have been given if it has been sent to his last known address.

(8) In this section--

"child" means a person under the age of 16, notwithstanding section 26(3)(d) below ;

"court" shall be construed in accordance with section 24 above ; "maintenance order"--

(a) in England and Wales, means--

(i) any order for the making of periodical payments or for the payment of a lump sum which is, or has at any time been, a maintenance order within the meaning of the Attachment of Earnings Act 1971 ;

(ii) any order under Part III of the Matrimonial and Family Proceedings Act 1984 (overseas divorce) for the making of periodical payments or for the payment of a lump sum ;

(b) in Scotland, has the meaning given by section 106 of the Debtors (Scotland) Act 1987, but disregarding paragraph (h) (alimentary bond or agreement).

"the relevant rights", in relation to an order under section 24(4) above, means the right to bring any proceedings, take any steps or do any other thing under or in relation to the order which the Secretary of State could have brought, taken or done apart any transfer under this section.

Reduction of expenditure on income support : certain maintenance orders to be enforceable by the Secretary of State.

24B.--(1) This section applies where--

(a) a person ("the claimant") who is the parent of one or more children is in receipt of income support either in respect of those children or in respect of both himself and those children ; and (b) there is in force a maintenance order made against the other parent ("the liable person")--

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(i) in favour of the claimant or one or more of the children, or (ii) in favour of some other person for the benefit of the claimant or one or more of the children ;

and in this section "the primary recipient" means the person in whose favour that maintenance order was made.

(2) If, in a case where this section applies, the liable person fails to comply with any of the terms of the maintenance order (a) the Secretary of State may bring any proceedings or take any other steps to enforce the order that could have been brought or taken by or on behalf of the primary recepient ; and

(b) any court before which proceedings are brought by the Secretary of State by virtue of paragraph (a) above shall have the same powers in connection with those proceedings as it would have had if they had been brought by the primary recipient.

(3) The Secretary of State's powers under this section are exercisable at his discretion and whether or not the primary recipient or any other person consents to their exercise ; but any sums recovered by virtue of this section shall be payable to or for the primary recipient, as if the proceedings or steps in question had been brought or taken by him or on his behalf.

(4) The powers conferred on the Secretary of State by subsection (2)(a) above include power--

(a) to apply for the registration of the maintenance order under-- (i) section 20 of the Maintenance Orders Act 1950 ;

(ii) section 2 of the Maintenance Orders Act 1958 ; or

(iii) the Civil Jurisdiction and Judgements Act 1982 ; and (b) to make an application under section 2 of the Maintenance Orders (Reciprocal Enforcement) Act 1972 (application for enforcement in reciprocating country).

(5) Where this section applies, the prescribed person shall in prescribed circumstances give the Secretary of State notice of any application--

(a) to alter, vary, suspend, discharge, revoke, revive, or enforce the maintenance order in question ; or

(b) to remit arrears under that maintenance order ;

and the Secretary of State shall be entitled to appear and be heard on the application.

(6) Where this section applies, the Secretary of State shall be treated for the purposes of any enactment or instrument relating to maintenance orders as if he were a person entitled to payment under the maintenance order in question (but shall not thereby become entitled to any such payment).

(7) In this section "maintenance order" has the same meaning as it has in section 24A above, but does not include any such order for the payment of a lump sum."

(2) Until such time as there comes into force an amendment of Schedule 1 to the Attachment of Earnings Act 1971 (maintenance orders to which the Act applies) which has the effect of including among the orders specified in that Schedule any order for periodical or other payments made or having effect as if made under Schedule 1 to the Children Act 1989, the definition of "maintenance order" in subsection (8) of the section 24A of the 1986 Act inserted by subsection (1) above shall have effect as if, in paragraph (a), after subparagraph (ii) there were inserted--

"(iii) any order under paragraph 1(2)(a), (b) or (c) of Schedule 1 to the Children Act 1989 (financial provision for children against their parents) ;".

(3) In section 26 of that Act, in subsection (3) definitions for purposes of sections 24, 25 and 26) after the words "section 24" there shall be inserted "24A, 24B".'.-- [Mr. Newton.]

Brought up, and read the First time.

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