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T H E

P A R L I A M E N T A R Y D E B A T E S

OFFICIAL REPORT

IN THE FIRST SESSION OF THE FIFTY-FIRST PARLIAMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

[WHICH OPENED 27 APRIL 1992]

FORTY-FIRST YEAR OF THE REIGN OF

HER MAJESTY QUEEN ELIZABETH II

SIXTH SERIES VOLUME 209

THIRD VOLUME OF SESSION 1992-93

House of Commons

Monday 8 June 1992

The House met at half-past Two o'clock

PRAYERS

[ Madam Speaker-- in the Chair ]

Oral Answers to Questions

SOCIAL SECURITY

Disability Living Allowance

1. Mr. Evennett : To ask the Secretary of State for Social Security what is the average length of time for processing a disabled living allowance claim ; and if he will make a statement.

The Minister for Social Security and Disabled People (Mr. Nicholas Scott) : Information is not collected in that form, but claims to disability living allowance are now being processed at the rate of nearly 9,000 a week in total, and the figure is steadily rising as staff gain experience with the new system.

Mr. Evennett : I thank my right hon. Friend for that encouraging reply. Can he confirm that disability living allowance ensures that help goes to those who really need it, especially to the severely disabled? Can he confirm that it is the Government's intention to commit more resources to help the disabled?

Mr. Scott : I thank my hon. Friend for those remarks. We are determined to ensure that disability living allowance goes to the maximum number of people entitled to it. I am particularly pleased that we have received


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153,000 claims for top-up benefits from people who were receiving mobility allowance or attendance allowance under the old system and who are claiming for the other component under DLA.

Mr. Rooney : Is the Minister aware that, as a consequence of the admirable introduction of disability living allowance, claimants of the old mobility and attendance allowances face delays of up to nine months--I can quote instances since the Minister shakes his head--while their claims are processed, and delays of five months for adjustments such as a change from a day rate to a 24-hour rate of attendance allowance, because of the work load? Is he taking steps to increase the number of staff to process the applications, as far too many are outstanding?

Mr. Scott : All those under the age of 65 who are entitled to attendance allowance or mobility allowance will have been automatically transferred to disability living allowance under the new system. As hundreds of thousands of claims are being processed, I should be surprised if there were not an occasional hiccup or delay. If the hon. Gentleman cares to let me have details of any cases, I shall pass them to the Benefits Agency for urgent attention.

Mr. Thurnham : Can my right hon. Friend confirm that the Government have an excellent record of spending on the long-term sick and disabled? Since 1979, such spending has increased by 168 per cent. in real terms, or £8.7 billion in cash terms.

Mr. Scott : I can certainly confirm that. We are spending nearly £9 billion a year more than was spent under the last Labour Government and we also have a better target system for benefits for disabled people.

Mr. Alfred Morris : Is the right hon. Gentleman aware that the Benefits Agency has told me that targets for delivering attendance allowance were not met either in February or in January? Is not failure to deliver benefits on time to the terminally ill a very serious matter and deeply disturbing? What good is financial help that arrives


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posthumously? Can he assure the House that the 2,426 claims that he told me about on 1 May have all now been resolved within the Government's targets?

Mr. Scott : I hope so. Obviously we are anxious that claims for the terminally ill, under the special rules, are met urgently. We were not helped by a surge of claims under that rule--90 per cent. of the people who applied were not entitled to the allowance. In practice, that meant that the claims of some of the people who were entitled to it were delayed.

Community Care

2. Mr. Tony Lloyd : To ask the Secretary of State for Social Security what information he has concerning the consistency of payment of community care grants and loans between his Department's offices.

The Secretary of State for Social Security (Mr. Peter Lilley) : Social fund officers are provided with a framework of directions and guidance which allows them to meet highest priority needs wherever they occur. No two people's circumstances are precisely the same. That is why exact comparisons are rarely possible and why social fund officers have to use discretion in determining priorities.

Mr. Lloyd : Is not there something ridiculous and outrageous about a local office refusing one of my constituents a grant that he needs to provide furniture to move into ground-floor accommodation because, following a number of heart bypass operations, his health would be put at risk if he were to continue living in upstairs accommodation? Will the Secretary of State make it clear that he totally disapproves of my constituent's life being threatened because the Department's officers will not provide a grant?

Mr. Lilley : The hon. Gentleman would have been frank with the House had he informed it that the inspector in that case overturned the decision and made the award that the hon. Gentleman wanted. That shows that our system for reviewing such cases works. The hon. Gentleman would have far more cause to complain if inspectors invariably upheld original decisions rather than put them right--as in this case.

Mrs. Roe : Does my right hon. Friend agree that the previous single payment system led to massive abuse and the grossly inequitable distribution of resources? Will he confirm the social fund budget for the current financial year?

Mr. Lilley : My hon. Friend is correct. The previous single payment system was unsustainable and unfair. Eighty per cent. of the payment made under it went to 17 per cent. of the recipients, and there were gross variations in different parts of the country. Under the social fund budget, we have been able to make £300 million available in the current year-- a 32 per cent. increase on the previous year.

Compensation Recovery Unit

3. Mr. Illsley : To ask the Secretary of State for Social Security whether he has any proposals to reform the compensation recovery unit.


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The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt) : The compensation recovery unit was set up in 1990. To date it has recovered more than £32 million from negligent employers and other compensators. We have no plans to reform the unit or the scheme as a whole.

Mr. Illsley : Is the Minister aware that the unit is failing to recover the amount projected and that its cost seems by far to outweigh the benefits? Is the Minister further aware that as claimants settle for less than the £2,000 compensation limit, insurance companies are enjoying windfalls because they are not compensating claims at the proper level?

Mr. Burt : The scheme was based on well-established Beveridge principles to which successive Governments have subscribed--such as that there should be no double compensation in accident cases--and on the Public Accounts Committee recommendations, which in 1987 criticised previous arrangements. It is the intention not that moneys should be recovered from individual claimants but that compensators' insurance companies live up to their liabilities. I dispute the hon. Gentleman's remarks concerning the unit's cost-effectiveness. By the end of 1991, its running costs were £3.5 million and its receipts were £15.6 million. Receipts will continue to increase, which will benefit taxpayers as a whole, and individual victims of accidents will not be left any worse off.

Mr. Wigley : Is the Minister aware that the scheme's clawback operation is hitting some people unacceptably hard? When compensation of between £10,000 and £15,000 is granted after a long run in the courts before settlement is reached, the net benefit to the individual may be only £3,000 or £4,000. Surely that was not the Government's intention when they introduced the rules. Can the Minister arrange for them to be reviewed in the light of experience?

Mr. Burt : The hon. Gentleman is correct to say that it was not the intention that the scheme should work in the way that he describes. He and other right hon. and hon. Members do a service in bringing the scheme and its basis to the attention of all involved in personal injury litigation. It is the intention not to recover money from the individual claimant who was the accident victim but to recover it from the insurance company or negligent employer. It is possible for every settlement to take into account the benefits that must be recovered to the state. That is what should occur and if it happens in each and every case, there should be no loss to the individual.

State Pensions

4. Mr. Barry Field : To ask the Secretary of State for Social Security how many pensioners were receiving state pension in (a) 1979 and (b) 1991.

Mr. Lilley : Nearly 10 million people received a basic state pension in 1991, as against 8.75 million in 1979. That represents a 14 per cent. increase.

Mr. Field : I congratulate my right hon. Friend on his new position. He has been a great friend, whether in his response to Customs and Excise cutters or Monopolies and Mergers Commission inquiries. This afternoon, I


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invite my right hon. Friend to be a friend to the pensioners who receive a 25p increase on reaching their 80th birthday. Will he ordered a review, because surely the £26 million that that costs would be better spent on pensioners who are truly in need, rather than on the clapped-out doctrine of universality? Such a ministerial review would be just as welcome as the money that is to be paid into the Maxwell pension funds that were plundered by that socialist brigand.

Mr. Lilley : I am grateful to my hon. Friend. However, I am afraid that, on this occasion, I have nothing to offer him as good as launching a cutter. Although the 25p increase has been a longstanding arrangement, we have been able to improve the lot of the poorer pensioner by increasing the premiums of income support. In the past three years that has had the effect of increasing by £700 million the amount of money going to less well- off pensioners. I think that that is the way to go.

Mr. John D. Taylor : Does the Secretary of State agree with the principle that men and women should receive the same pension and that they should qualify for it at the same age, as is the European Community's objective?

Mr. Lilley : We accept the objective of equalising the pension age. We have put out a discussion document and that discussion period is due to end at the end of the month. I approach with an open mind all the different options as to how this can be achieved. I should also make it clear, as a number of people imagine that agreement on a particular age will be achieved rapidly and that it will be implemented immediately, that every other movement to an equal age or an equal pivotal age, has taken a very long time to introduce. People of 59 years of age need not think that a change will influence them next year, and the same applies to those who are 64.

Mr. Nigel Evans : Does my right hon. Friend agree that one of the greatest threats to pensioners and their incomes is inflation, which is an indiscriminate and cruel tax? During the last year of the previous Labour Government, inflation ate into almost a quarter of pensioners' real incomes.

Mr. Lilley : That is correct. In fact, in one year, it was more than a quarter, as 27 per cent. of savings were wiped out by inflation. There can be no more cruel or unjust tax than that. By contrast, our record has been exemplary, as we have increased the living standards of pensioners overall. During our period in government, living standards have risen by 34 per cent. in real terms, which is five times as rapid as the rate of increase under the previous Labour Government.

Mr. Allen : May I welcome the Secretary of State to his first Question Time? He has an opportunity that falls to very few men--to make millions of women happy. Will he tell the House, and the millions of female pensioners who are approaching pension age and those who are already drawing their pensions, what his plans are for the pension age for women? Earlier, he said that he had an open mind on that, so will he say whether that open mind includes a pension age for women of 63 or of 65? Many millions of women are anxious to hear his answer and I invite the Secretary of State to reassure them.

Mr. Lilley : The hon. Gentleman offers something even more enticing than launching cutters. I assure him that I


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have an open mind which embraces all the options, more than are included in our discussion document. We have outlined a number of options for equalisation at the ages of 60, 63 and 65, and for the periods of retirement at which people would either retire early with a lower rate of pension or later with a higher rate of pension. All the options are being considered. Because we have asked people to tell us their ideas during the discussion period, it would be foolish of me to pre- empt that discussion and the benefits that we will obtain from people's contributions to it by making a premature decision.

Social Fund

5. Mr. Cox : To ask the Secretary of State for Social Security what plans he has to review the present working of the social fund ; and if he will make a statement.

6. Mrs. Ewing : To ask the Secretary of State for Social Security what was the total amount made available by his Department in the current financial year for (a) social fund loan payments and (b) community care grants ; and if he will make a statement.

7. Mr. Tom Clarke : To ask the Secretary of State for Social Security when he next expects to meet the Child Poverty Action Group to discuss the social fund.

Mr. Scott : In 1989, we commissioned a major study from the university of York's social policy research unit into the social fund. When considering its report, which will be published shortly, we shall also take into account the recent report of the Social Security Advisory Committee and the views of other bodies, including the Child Poverty Action Group, which is due to meet the Under-Secretary of State for Social Security, my hon. Friend the Member for Bury, North (Mr. Burt) on 7 July. We all welcome him to the Dispatch Box today.

We routinely monitor the fund. We have made a number of improvements and have injected significant additional resources. This year, we have substantially increased the discretionary budget. We have provided £211 million for loans and £91 million for community care grants. The total discretionary budget of £302 million is almost £75 million higher than the April 1991 figure.

Mr. Cox : I thank the Minister for that reply. However, is he aware of the comments that have already been made by the Campaign for the Homeless and Roofless--CHAR--to which many hon. Members belong? It has said that the present funding and the way in which the scheme works are totally inadequate for people coming out of institutional care or bed-and-breakfast accommodation and trying to build a new life in suitable accommodation. The fund as it now works does not meet their needs. Will the Minister assure the House that those views will be taken into account?

Mr. Scott : Indeed, there is little doubt that they will be taken into account, as I was a founder member of the parliamentary panel for CHAR and last week attended an important seminar close to the House, where the campaign's views were expressed vehemently. Of course I shall take its views into account, but the more dispassionate views of the social policy research unit will also play a part in our thinking.


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Mrs. Ewing : In announcing the increase in the discretionary element of that budget, what estimate has the Minister made of the reduction in the number of people who are refused a loan? For example, last year 19,000 people were refused a loan because they were too poor to repay the debt. If we want to target money to the poorest sections of society, we should ensure that those who are most in need are guaranteed some form of assistance. In addition to the reports that the Minister has already mentioned, will he take account of the effective reports by the Convention of Scottish Local Authorites?

Mr. Scott : Of course I shall take account of that. The number of people who are refused because of inability to pay is a mere fraction of the overall number refused. The majority are refused because they do not meet the basic criteria for the fund.

Mr. Tom Clarke : Will the Minister encourage his hon. Friend to take the Secretary of State with him when he meets the Child Poverty Action Group? When he meets it, he will hear that the number of rejections for loans has doubled since 1988 and that the number of rejected community care applications-- which are important--now exceeds 70 per cent. Precisely how do the Government intend to respond to the various reports, including that of their advisory committee? In particular, how can the Government justify any social security system that excludes the right of appeal?

Mr. Scott : First, there is a review system within the scheme, which is a speedier and more effective way of handling first-level requests for reconsidering cases. In the longer run, there is the social fund inspectorate. The Social Security Advisory Committee paid tribute to the independence of the social fund inspectorate in its consideration of appeals. We have responded to the increased demands on the social fund by providing the extra resources that I announced earlier. The hon. Gentleman will know that the fund for his local office was increased by nearly 16 per cent. for the current year, so we are responding to pressures on the fund. However, in response to a variety of reports that either have been or will be produced, we shall look again at its future.

Mr. Bowden : Is my right hon. Friend aware that there is an element of lottery and luck in whether an application is accepted? If there are pressures on the local social security budget, it depends at what time of year an application is made, and that can vary from one area to another. Will he look at that problem and ensure that it is levelled out between social security areas?

Mr. Scott : In any scheme that depends on discretion there are bound to be differences between offices about apparently similar cases. They may not always be exactly the same. Obviously we are anxious to ensure that pressures on local budgets are dealt with, sometimes within the year, but, more generally, as we deal with the balance between demand and need in our year-on-year allocations.

Mr. Pickles : Given the sort of claims made on the social fund, it is extremely important that decisions are made quickly. Will my right hon. Friend give an undertaking that the present arrangements whereby most decisions are made within a few days will continue? Will he ensure that


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the position is monitored and that decisions are normally made within a few days, particularly those related to reviews?

Mr. Scott : We are conscious that the social fund meets exceptional needs and circumstances outwith the normal provisions of the social security system. Therefore, we want speedy decisions--those on crisis loans are normally made within 24 hours.

Mr. Kirkwood : Does the Minister accept that the York university study provides a valuable opportunity to have a fundamental review of how the social fund works? From what he said earlier, am I to understand that that report will be produced before the summer recess and that the Government will give their response to it within that time? Will he consider the recent work done by the Policy Studies Institute that clearly shows that when the social fund was orginally introduced in 1985-86, about 2 million families were dependent on long-term benefits over a substantial period, whereas the most recent figures for 1988 show 4.5 million families in that position?

Mr. Scott : As the hon. Gentleman says, there have been and will be a number of reports and representations on the future of the social fund and the Government want to consider all those once they have been produced. Yes, I would expect the York university report to be available before the summer recess.

Mr. Bradley : Will the Minister be more positive today? I am sure that he is aware that the vast numbers of applications to the social fund are from young and homeless people seeking to set up their first homes and are for household items. Many of those people cannot afford to repay the cost of such items from the meagre income support that the Government give them. Does he support the recommendation of the Social Security Advisory Committee to change the scheme to ensure that non-repayable start-up grants are given to such people? They could then buy essential items such as beds and cookers and would not have to stay in inadequate accommodation. They could set up their first home without the burden of debt that they would incur if they had to use their benefit to buy such items.

Mr. Scott : At the risk of repeating myself, we want to look at all the reports and the various recommendations that they contain. In 44, 000 cases people who applied for loans were given community care grants instead.

Pensioners (Christmas Bonus)

8. Mr. David Atkinson : To ask the Secretary of State for Social Security if he will make a statement on the future of the Christmas bonus for pensioners.

The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe) : We have no plans to change the basis for payment of the Christmas bonus for pensioners.

Mr. Atkinson : Can my hon. Friend confirm that, unlike the situation experienced under the last Labour Government, the Christmans bonus will be paid this year? Does she accept that, as the bonus has remained at the same value for so long, it has become increasingly difficult to justify it in cost-effective terms? Therefore, will she seek


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to review the value of the bonus with a view either to substantially increasing it or, as I favour, to merge it with a substantially increased state retirement pension?

Miss Widdecombe : I have great pleasure in confirming that the Christmas bonus will be paid this year. The reason that it will be paid is that the Conservative Government made it a statutory entitlement rather than a discretionary payment, thus avoiding for ever the situation that occurred in 1975 and 1976 when, despite the grand promises of the Labour party about what it would do for pensioners, the Labour party did not manage to pay any Christmas bonus for those two years. I well understand what my hon. Friend says about the value of the bonus having declined, but to restore it to its original level would cost £720 million. My hon. Friend should reflect that that equates well with the £700 million per year that the Government have targeted towards poorer pensioners--a better use of resources than the universal uprating of benefit.

Mr. F. Bennett : Does the Minister agree that pensioners have made a magnificent contribution to this country and should be sharing in any increase in prosperity? As the Government have broken the link between pensions and earnings, how are pensioners to enjoy any of the extra prosperity? Is this not a good opportunity for the Government to restore the value of the Christmas bonus?

Miss Widdecombe : Pensioners have enjoyed the benefit of the increased prosperity to such an extent that the value of their total incomes has risen by 34 per cent. under the present Government. Under the last Labour Government, it rose by a mere 3 per cent. I do not think that the hon. Gentleman is in the best position to lecture us about helping pensioners to share in prosperity. More pensioners than ever before now own their own homes, have savings in addition to their pensions and have occupational pensions. They are sharing in prosperity-- [Interruption.]

Madam Speaker : Order. This is Question Time--and answer time.

Family Credit

9. Mr. Hague : To ask the Secretary of State for Social Security how many families are expected to gain from the recent reduction in the number of hours that must be worked in order to qualify for family credit.

Mr. Burt : We expect a substantial number of families to gain from the change to family credit introduced in April. So far, around 35, 000 families have claimed it as a result of the Government's reducing the minimum number of hours required to 16 per week.

Mr. Hague : Will my hon. Friend confirm that there have been some 2.5 million successful claims for family credit since its introduction in 1988? Is that not an encouraging statistic? The further improvement will be welcomed, because it opens up the benefit to more families on low incomes, while still not creating a disincentive to work.

Mr. Burt : Yes, the change will be widely welcomed, particularly by lone parents. Many lone parents want to work and the change will make it more worth their while to do so. My hon. Friend is also correct in regard to the


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number of claims, which has increased from some 243,000--for the equivalent family income supplement--to some 350,000.

Dr. Godman : Will the Minister confirm that the take-up rate for the benefit is only about 50 per cent., although when the benefit was introduced Ministers boasted about a projected 90 per cent. take-up rate? When will the Government improve the rate, or are they content with such an abysmally low figure?

Mr. Burt : In terms of expenditure, the take-up is about 65 per cent. What the Government can boast of is the fact that the amount provided in family credit is about double the amount that was provided in family income supplement. That is all taking place in the context of a social security budget which has increased by 52 per cent. in real terms. That is the extent to which we have improved on anything that the last Labour Government was able to do for people.

Mr. Willetts : Will my hon. Friend confirm that four times more families now receive family credit than received family income supplement in 1979? Does that not represent considerable progress in the reduction of disincentives to work?

Mr. Burt : My hon. Friend makes the point very effectively. Those who receive family credit are paid, on average, about £35 per week, whereas the equivalent family income supplement was about £15 per week. We have a great commitment to low-income working families and family credit is the best-known benefit with which we assist them ; the success of the scheme over the years shows how important it is to many families.

Mr. Meacher : The recent change involves a huge disincentive to work, because the loss of income support passported

benefit--particularly mortgage interest cover--far outweighs any gain in family credit. Does the Minister really consider this an advance? As a result of the change, 80,000 claimants in need will lose free school meals and access to the social fund, and those without children will receive nothing. Is this not yet another own goal by the Government? Short-sighted cuts in public expenditure will serve only to deepen the dependency culture that the Government are supposed to be against.

Mr. Burt : The own goal has been scored by the hon. Gentleman, who has reminded the House of the success of family credit and the fact that more people have been transferred from income support to family credit as a result of the change. Those who previously gained through income support have not lost, because their position has been protected, and the increase in the number who have come on to family credit over the years--far more people receive it than received support through the Labour Government's schemes--shows how popular and effective our scheme has been.

Pensioners (Mortgages)

10. Mrs. Angela Knight : To ask the Secretary of State for Social Security what proportion of pensioners are owner-occupiers and have paid off their mortgage.


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Miss Widdecombe : I am pleased to tell my hon. Friend that nearly half of all pensioners own their own homes. Ninety- four per cent. of home-owning pensioners have no outstanding mortgage at all.

Mrs. Knight : Will my hon. Friend confirm that nearly all pensioners who own their homes have no mortgages, and therefore possess a valuable asset which gives them extra security in their old age? Would she care to compare provision in this country with that in the rest of Europe? Most British pensioners receive a flat rate, regardless of income, whereas in other European countries low earnings ultimately mean much lower pensions.

Miss Widdecombe : I congratulate my hon. Friend on her question and can indeed confirm that 94 per cent. of pensioners who own their homes have no mortgage. My hon. Friend raises a very important point with regard to the rest of Europe. Despite what is often said by Opposition Members about how good European pensions are, the fact remains that in France and Germany the pension is earnings related, so somebody who has been a low earner will get a low pension. Perhaps even more important, we alone give a woman a pension in her own right.

Maxwell Pensions

11. Mr. Eastham : To ask the Secretary of State for Social Security what is the additional cost to date to his Department in connection with the collapse of the Maxwell pension funds.

Mr. Lilley : My Department stands to meet the costs of guaranteed minimum pensions for the 240 Headington plan pensioners who have not been paid their May or June pensions. The amounts payable are currently being assessed.

Mr. Eastham : Does the Minister appreciate the sheer misery of the 32,000 people who have been treated so shabbily? Is it not about time that the Government faced up to their responsibilities? I refer to the behaviour of the Department of Trade and Industry and some of the banks. Is the Minister aware that other companies that have been buying and selling pension schemes ought to be brought to book?

Mr. Lilley : I do indeed recognise the plight of the Maxwell pensioners and will be making a statement after Question Time, if I catch your eye, Madam Speaker. The hon. Gentleman mentioned the numbers involved. As I said in my "Dear colleagues" letter, 35,000 people have pensions or are members of pension funds within the Maxwell group. About 15,000 of those people are guaranteed their pensions by Mirror Group Newspapers. Of the other 20,000, some 9,000 are retired and 11,000 are future pensioners. I mention those figures to give an idea of the scale of the problem.

Mr. Rathbone : What are the Government doing to recoup some of the costs from the Maxwell family and other companies? My constituents and many others are fed up with the way the Maxwell family seems able to go on living some sort of high life elsewhere in the world.


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Mr. Lilley : I am certain that my hon. Friend's point will be echoed throughout the House. It is up to the liquidators to trace the assets that have been dissipated, and they will naturally be looking in that quarter as well as others.

Mr. Cryer : In view of the extra cost to the Secretary of State's Department, would it not be prudent for the Department to draw up legislation to stop the stealing of pension funds and their removal from these shores to offshore areas such as Liechtenstein? The Secretary of State may recall that the trend was started many years ago by Duncan Sandys, who shifted money from this country to the Cayman islands--

Madam Speaker : Order. I hope that the hon. Member will not go into too much detail, thus anticipating a statement that is to be made later. I should like a direct question from the hon. Member for Bradford, South (Mr. Cryer).


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