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Lord Ezra: It is quite clear from the remarks of the noble Lord that he feels sympathetic towards the issue, as we all do. He reminded us that local authorities have a discretion, but the discretionary terms he read out seem to be extremely widely drawn. There is a view that they are not applied as extensively as the Minister implied, although he admitted that he did not have details. It depends on what the noble Baroness, Lady Hollis, decides, but it is for consideration that we should return to the matter. If the Minister objects to the present form of words perhaps we can find some other form of words which would deal with these difficult cases more effectively than they are dealt with at present.

Baroness Hollis of Heigham: The noble Lord, Lord Ezra, spoke also for those of us on these Benches. We noted that the Minister had genuine sympathy for the problem. He does not know the scale of the problem because apparently the department has not undertaken research to identify the scale of the problem, even though this is a major issue in community care and for his fellow Ministers in the Department of Health. I am a little surprised that the Minister had been unable to acquire more information to buttress his case. Certainly the information which has come from both the Alzheimer's Disease Society and Age Concern suggests that, although local authorities have a discretionary power, that discretionary power is used increasingly seldom and certainly not in a manner which would float a spouse off the need for income support.

It is also clear that at the core of the issue is the same problem as we discussed in relation to divorce; namely, that a pension cannot be divided as it would be were a woman widowed.

The Minister's reply is inadequate. We shall need to return to the matter. Providing him with information concerning individual cases is not enough. A principle is involved. Half of the pension which is reflected in the situation of widowhood should be assignable to the spouse where the expenses of the domestic home and so on continue. It is a principle that we should like to see reflected on divorce and also reflected here. It is clear that local authorities cannot be expected to make good the problem on a discretionary basis.

Lord Mackay of Ardbrecknish: There is an advantage in leaving this as a discretion. The noble Baroness talked about half the pension. That should be judged in the light of individual circumstances. I do not want to read the words out again, but they indicate that, in order to maintain the spouse at home, it would be reasonable to take into account factors such as the usual standard of living of the spouse at home. The spouse may have outgoings which are

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higher than average, for whatever reason. I would not be willing to draw such a hard and fast line as specifying half of the pension.

Baroness Hollis of Heigham: I wonder what the Minister thinks is the reason for tabling the amendment at all. Two of the most eminent organisations in this field—the Alzheimer's Disease Society and Age Concern—recognise that, although there may be a nominal discretion for local authorities, it is not being exercised in ways which allow the spouse decent maintenance because of the need for fees to provide for private residential care.

Lord Mackay of Ardbrecknish: I am grateful to the noble Baroness for giving way. When I discussed the amendment with officials I raised the question of whether complaints were being received and there was information on individual cases. Subsequently they contacted Age Concern, which I am told knows of no cases. I am therefore more than interested to hear of cases from Members of the Committee who have such information. That is a sensible way to proceed. That is the advice that I received about Age Concern. I did not want to bring that into the debate because I am more interested in encouraging such cases as there are to be brought to my attention. However, my officials contacted Age Concern which knows of no cases in the same grim circumstances portrayed by the noble Baroness.

Baroness Hollis of Heigham: I am surprised because my briefing, with which I did not trouble the Committee, includes three or four cases from Age Concern. Perhaps I can pass that briefing to the Minister if he wishes. I am puzzled. However, eminent organisations have identified a problem. There is a discretionary power for local authorities, but in their straitened financial circumstances they are not exercising that discretion. At present they have to underfund statutory services. As a result many women find themselves in a situation which they could never have foreseen and which we in this Chamber could mitigate.

The unhelpful and uninformative response of the Minister—although entirely sympathetic in tone—is not enough. A sympathetic tone is not good enough when people in this situation are being left almost destitute because the husband they have nursed for 10 or 15 years has developed Alzheimer's disease and they have no resources. We shall return to the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.15 p.m.

[Amendments Nos. 182C and 182D not moved.]

Clause 114 agreed to.

Lord Stallard moved Amendment No. 183:

After Clause 114, insert the following new clause:

("Entitlement to retirement pensions not to be affected by absence from Great Britain

. Section 113(1) (a) of the Social Security Contributions and Benefits Act 1992 (which, except where regulations otherwise provide, disqualifies a person for receiving any benefit under Parts

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II to V of that Act, and precludes an increase of any such benefit being payable in respect of any person as the beneficiary's wife or husband, for any period during which the person is absent from Great Britain) shall cease to apply in relation to a retirement pension of any category or graduated retirement benefit (including any increase of the amount payable in respect of any such retirement pension for adult and child dependants) payable under that Act; and accordingly a person who is absent from Great Britain shall be entitled to be paid the same amount in respect of any of those benefits as if he were resident in Great Britain.").

The noble Lord said: The amendment is intended to ensure that expatriate pensioners living abroad shall be entitled to be paid the same amount in respect of retirement pensions as if they were resident in Great Britain.

The amendment gives us an opportunity to rectify an injustice which has existed for many years despite numerous attempts in both Houses of Parliament to remedy it and mounting public disquiet both here and abroad about the discrimination practised against expatriate pensioners, mainly in Commonwealth countries such as Canada, Australia, New Zealand and South Africa.

At present United Kingdom law permits pensions to be paid anywhere in the world. However, unless the beneficiary lives in a country with which the UK has concluded a social security agreement which provides for the indexing of pensions, his or her benefits are not adjusted annually for increases in the cost of living. They are frozen at the rate which existed when he or she left Britain or when he or she reached retirement age.

Obviously that creates a number of anomalies. There are many variations in pensions in those countries, depending on when the beneficiaries retired and how long they have lived there. Most of them will have qualified in the same way that we do: through contributions for benefits. That means that some people receive less pension than others with exactly the same contribution qualifications. That situation creates many problems.

At present some 400,000 United Kingdom state pensioners worldwide have their pensions frozen. The great majority, some 340,000, live in Commonwealth countries. Approximately 300,000 pensioners living in 33 other countries, including all the countries in the EC and the USA, have their pensions index linked. They qualify for all increases because they have that arrangement. The arbitrary division based on domicile is because the United Kingdom has bilateral social security conventions which provide for index linking in those 33 countries, excluding the Commonwealth countries to which I have referred.

Inevitably, after debates on this issue in this House and in another place we are asked why that is the situation. People outside do not understand why one can live in America and receive a full index-linked pension, when those living next door in Canada receive £4.50 or £7.50 for exactly the same contribution qualifications. They are entitled to ask why. The main reason given by the Government for maintaining that arbitrary and manifestly unjust situation is cost. In a reply given by the Prime Minister some time ago, the estimated cost was about £35 million. We have had estimates ranging

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from £100 million to £300 million. The current estimate is £230 million. That has to be found from social security.

However, it can be argued that those pension entitlements are not social security benefits, but state superannuation —there is a difference—which has been earned through individual contributions. Although £230 million might seem a high figure, it is a drop in the bucket. It represents a tiny percentage of available funds: one-third of 1 per cent. of the total social security budget.

Another reason put forward by Government for not indexing overseas pensions is that the position is the fault of previous social security legislation. They outline a number of enactments. The Government state that in 1955 it was decided that pensions payable abroad should be paid permanently at the rate initially awarded without any subsequent cost of living increases. Most of the agreements with other countries outside the EC which allow increases to be paid there were entered into a long time ago when constraints were not so bad as now.

Moreover, that is a poor defence. We are no longer in 1955 but in 1995. The Government have already blown that argument sky high by introducing bilateral conventions which mean that nearly 300,000 British pensioners living abroad have their pensions index linked. One cannot argue that the position results from previous legislation and then, through altering the legislation by introducing conventions, and so on, achieve the result that 300,000 pensioners receive upgraded pensions. There is a contradiction.

Some Government spokesmen have conceded that full indexation of British pensions worldwide could be achieved by a change in our domestic legislation. We would not have to go through any palaver and nonsense. That result could be achieved by a change in domestic legislation and that is what we seek.

Moreover, the Government concede that the relationship between the contributor and the state is an agreement giving entitlement to benefit, whose apportionment is clearly beyond their discretion. An insurance company which arbitrarily paid some of its superannuates less than others would be totally laughed out of court. The position is unthinkable.

The Government argue that the social security system is designed primarily for people living in this country. Money received by pensioners in the UK is largely spent on goods and services in the UK. They say that pension money received by those resident in Australia is not clawed back in the UK via indirect taxes. But, again, the UK retirement pension must not be confused with the many social security schemes which are funded by taxes. The British worker buys his retirement pension, which is in fact a state superannuation scheme, and discrimination by domicile is inappropriate and unacceptable.

It is a strange argument to advance that index linking is denied because some 17.5 per cent. of revenue from indirect taxation would be lost. We have often asked the question, "What would happen if those pensioners with overseas domicile were to come back?" Alternatively, if they do not come back, who has calculated how much is saved by the Exchequer in benefits relating to health,

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social services, residence, and many others? If one wishes to argue that 17.5 per cent. of revenue from indirect taxation is lost, one has to argue that, by the same token, one is saving money which would have to be spent if those pensioners were still living in the UK.

Again, the Government state that the agreement between an individual and the state is that payment contributions will give entitlement to benefit subject to certain conditions, which are set out in leaflets. They emphasise that one condition is that retirement pension upratings are not generally payable abroad. But contributors to national insurance funds are not made aware of that condition. I have never yet met a pensioner who was informed when his pension was due, "Don't forget that if you leave this country, you won't get any increases". It may be that that condition is written in the small print. But one cannot blame people who have been brought up to believe what was clearly outlined by Sir Norman Fowler in his 1985 Green Paper. Paragraph 2.6 states:

    "in return for contributions, benefits would be given as of right".

Paragraph 2.7 states:

    "all insured people—rich or poor—would pay the same contributions for the same security".

The Green Paper continues at paragraph 2.8:

    "the basic national insurance pensions must remain as an entitlement earned by people from paying national insurance contributions. That has been at the heart of our national insurance system since its inception and the Government is committed to it".

With those assurances, and it being written in Government documents, why should one search for a tatty sentence which states, "Yes, but we did not mean you to leave the country"? That document does not state that; it clearly sets out the position.

I do not wish to take up too much time. However perhaps I may refer to one or two letters that I have received which I believe are important. One is from the High Commissioner of Canada who outlines the position there. He states:

    "Since 1977, the Government of Canada has sought to persuade the British Government to negotiate a social security agreement that would provide for this index-linking (to inflation) of UK pensions paid to the 118,000 British pensioners in Canada. This issue has been brought up at every level. It was also raised when Prime Minister Chrétien met with Prime Minister Major in June 1994, on the occasion of the commemoration of the 50th anniversary of D-Day. At that time, Mr. Chrétien stressed the injustice of freezing the pensions of tens of thousands of servicemen, and their widows, who fought in the UK during World War II and who have decided to spend their retirement years in Canada. I too raised the matter with Prime Minister Major this January but to no avail. The UK has consistently rejected the Canadian approaches because of the costs of indexing its pensions in Canada. I should add that the British Government does not try to defend the obvious unfairness of the current UK policy on pension indexation".

He then cites some examples which indicate the anomalies to which I referred. He states that the average UK retirement pension paid in Canada amounts to £20. The amount goes down to £4.50, with steps in between. But the average is a pension of £20 compared with the retirement pension in this country of £57.50 for a single person. In Canada the pension, translated into sterling, is £91.78. There is a tremendous difference. The majority of the 20,500 UK pensioners in Canada who receive pensions of less than £10 a week are women—

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a total of 17,600. Therefore, 85.5 per cent. of pensioners living on reduced pensions in Canada are women. The Canadian Government are particularly anxious to resolve the issue this year, given that it is the 50th anniversary of VE Day.

In Australia, a press release states:

    "The Minister for Social Security, Peter Baldwin, said today that he hoped the United Kingdom Government would finally do something about indexing British pensions paid to people in Australia ... The Australian Government has tried many times to raise the issue of the non-indexation of British pensions with the UK Government so that the current social security agreement between Australia and the United Kingdom could be amended to provide for indexation. The Australian Government is, and has been, ready to re-negotiate the Social Security Agreement to provide for indexation".

So who is stopping it? We have asked on numerous occasions why negotiations could not start with those countries for reciprocal agreements in the same way as they were conducted and completed last year with Finland. That was the 33rd country to qualify. Mr. Baldwin continued:

    "When one of our pensioners goes to live in the United Kingdom or anywhere else for that matter, we index the pension twice a year to protect them".

So an Australian here is indexed twice a year to protect his pension but a Briton living in Australia is starving, or at least is in trouble. So Mr. Baldwin is also hoping that the debate which, he says, is to take place in the House of Lords this week—his timing is perfect—will be an opportunity to ensure that British pensioners living overseas,

    "finally get a fair go. The same fair go that we give our pensioners who live over there. It would also give the same treatment to British pensioners living in Australia as, say, British pensioners living in many other countries such as the Philippines, Turkey, Barbados, the United States of America and Europe, who all have their pensions indexed".

I have another item from Australia News which refers to recent discussions that have taken place between the Australian Government and the Foreign Secretary, Mr. Douglas Hurd. The article refers to a number of difficult issues in recent years that had been solved. There were the Maralinga and Nauru compensation issues. After many discussions, those have been resolved. The only blip left in the UK/Australian relations is the outstanding issue about the pensioners and index-linked pensions. Senator Evans, Australian Minister for Foreign Affairs, said that the Australian Government had to top up the pensions of British pensioners living in Australia because the British Government had declined to index-link them, even though they did so for British residents living in European countries.

I conclude by saying that this selective and quite unwarranted discrimination is suffered by people who have served their country well as taxpayers and electors. We can remind ourselves of the propaganda at colossal cost; a few years ago the Central Office of the Conservative Party spent vast sums in trying to persuade all those people to vote in a general election. All those who have been denied pensions were asked for donations to the election funds with a form to fill in giving their vote by proxy or in some other manner. "We need their votes, we need their money, but we cannot pay them their pensions". So they are penalised

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for obeying an irresistible longing to spend their declining years with their children who are now raising families in the former Dominions, once viewed by the British Government as the natural destination of our young emigrants. We can all remember the schemes through which young people were persuaded to go to Australia immediately after the war, in their thousands, to take up residence there. Those people have grown up, but their parents are still here. If they decide to go to live there and watch their grandchildren grow up—a perfectly normal thing to do—they are penalised.

In her speech at the Normandy ceremony, Her Majesty the Queen said:

    "You deserve the nation's thanks. May we, your fellow countrymen, be worthy of what you did for us".

I suggest that we can test and display our worthiness by voting tonight for the amendment to ensure that expatriate British pensioners receive fair and just treatment, by index-linking their pensions. I beg to move.

6.30 p.m.

Baroness Seear: I shall be extremely brief as the noble Lord, Lord Stallard, made the case so fully. I wish to underline three of the points that he raised. The first is that the pension is a statutory right because, unlike social security which is based on need, it is based on the right arising from contributions paid throughout the time that the pensioner was in this country.

Secondly, and very important, I know that the Government will say that the problem is money—"We cannot do it because of the money". What is to prevent them getting a reciprocal agreement? We have such agreements with other countries and if the Government give an undertaking that they will embark on a reciprocal agreement, that would go a long way towards establishing what we want.

Thirdly, where there is such a right, based on the claim to a pension which anyone who has contributed to a pension has, it is not good enough to say, "We can't afford it". That would be to say that a principle is of no consequence if it is expensive. If the principle is that people are entitled to the pension, then the money must be found from some other source which is a less good cause. That is all one can say. If it is a right, the money must be found in some other way. One cannot just disregard a moral obligation based on a right and say "In this case it is too difficult to find the money", when the money is being spent in other ways from which it could be taken.

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