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Baroness Young: I, too, would like to say to my noble friend the Minister that I hope he will not accept this amendment. The arguments were very clearly set out by my noble friend Lord Dean.

I listened with great care to what the noble Lord, Lord Stallard, had to say and am very conscious of the hard cases that have arisen. Indeed, when I was a Minister in the Foreign and Commonwealth Office, I met groups of pensioners and frequently heard their case. But perhaps it is a very telling point that no government of any complexion have done anything about this point. When the Party opposite were in power, they did nothing. Nor have the present Government, for the reasons which the noble Lord, Lord Dean, set out, felt able to support it.

My noble friend Lord Pearson said that two fallacies existed. One was that pensioners did not know what they were doing. That may be the case, but when one is making what must be an important decision—namely, to emigrate—then one must look at the consequences, particularly in regard to one's income. I should think that one would ask a great many serious questions. I have not seen the leaflets concerned but if they need to be rewritten and made clear then that should be done. However, I believe in individual responsibility. When one is making such an important decision as moving abroad one should find out what the financial consequences may be.

I agree with those who say that at this stage we cannot commit the Government to an extra £230 million a year. It is a gross over-simplification to say that the Government can find that amount annually. I do not know what the Front Bench opposite will say. Commitments to huge increases in government spending, ultimately paid for from taxation, are unwise, particularly when the suggestion comes from your Lordships' Chamber. This is not the correct place in which to advocate that kind of expenditure.

It may be that, if all the pensioners returned, they would be a charge on the National Health Service and other services in this country, but it is most unlikely that most of them will return. The whole argument therefore is based on a sum we cannot deduce. We must face up to the cost of £230 million. That is a large sum of money and if it were indexed it would clearly cost more. It would be wrong to commit the Government to that amount at this stage. For those reasons I hope that my noble friend the Minister will not support the amendment, sympathetic as one may feel towards it. It would be inappropriate, and particularly so for this Chamber, to commit the Government to such vast sums of increased expenditure at this time.

Lord Boyd-Carpenter: I agree with my noble friend. This is the oldest issue of all in the national insurance world. I dealt with it many years ago when I was the Minister concerned and ever since it has been raised by

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oppositions and voted down by governments of all political colours. I venture to suggest that that practice will continue.

It may seem difficult to justify freezing someone's retirement pension. We must remember that the amendment is only concerned with retirement pensions. One or two speakers strayed on to other benefits such as service pensions, but they are not dealt with by the amendment. The amendment deals only with retirement pensions. Whenever a government had to face up to the issue, they rejected it. However, the possibility of reciprocal agreements is always open. I must confess to being responsible for negotiating a number of them, which probably benefited many people in many countries. There is also a good deal to be said for confining the relief to countries where it is possible to undertake reciprocal arrangements.

It is not right to say that we will suddenly reverse what has been the policy for the best part of 50 years. It is a considered policy and on the whole works well. No government will accept the change proposed by the amendment. It is clear that those going abroad as pensioners had full opportunity to find out what the effect of their absence would be. If they did not bother to find out, that is a pity. But information on the effect we are discussing was available to them, just as it was that they would be excused British taxation. That is perhaps also a relevant consideration. The people with whom the amendment is concerned pay no British tax; they pay whatever the tax may be in the country in which they have chosen to reside. Therefore, although they are on the whole worthy and admirable people, I hope that my noble friend the Minister will resist the amendment and do what all governments have done so far and which I believe all governments will continue to do for years to come.

Lord Belhaven and Stenton: When national insurance was introduced—a long time ago when I was quite young—we all assumed that pensions were contributory. If the Treasury has thrown the money away or wasted it in other ways, or perhaps not increased the contributions by as much as they should have done, that is not our fault. I do not understand what right that department, the DSS or the Government have to tell us where we must live after we retire. Also, people who have retired and who qualify for United Kingdom pensions, paid tax all their working lives. So I do not believe that the tax argument really washes either.

Lord Skelmersdale: To an extent my noble friend is right. If the state scheme was a fully funded one, the case for the amendment would be totally unarguable. I am sure that we would all accept that. Unfortunately it is not and never has been. Today's workers pay the pensions of today's pensioners in relation to the state scheme.

One point that has not been raised in the excellent defence put up by my three noble friends is how well today's worker, paying for the state pension, would take to the upgrading of the state pension paid abroad. I should have thought that they would take rather a dim view of it.

I want to take up two points made by the noble Lord, Lord Stallard. He said that index linking of British pensions paid abroad could be achieved by domestic

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legislation. The Bill is the domestic legislation the noble Lord chooses to achieve that object. I agree that if it is to be done, it must be done by domestic legislation. The other point that occurs to me is that when we are talking of pensioners paying tax, it is not only the 17.5 per cent., or in rare cases 8 per cent., VAT mentioned by the noble Lord, Lord Stallard. Pensions in this country are also taxable as income. There are people receiving pensions who have enough income generally, as my noble friend Lord Boyd-Carpenter said, to pay income tax. That point too must be thrown into the equation.

There seems to be a slight disparity of view between the Benches opposite. The noble Baroness, Lady Seear, said that if we could encourage reciprocal agreements she would be happy with that, so long as agreement was arrived at. I understood that to be what the noble Baroness was saying. However, the noble Lord, Lord Stallard, wants a one-sided amendment to primary legislation.

7 p.m.

Baroness Seear: The noble Lord must not take words out of my mouth. I would prefer what the noble Lord, Lord Stallard, has suggested. But if we cannot have that, I would settle for a reciprocal agreement. I am always open to a deal.

Lord Skelmersdale: I am grateful to the noble Baroness. I am well aware that she is always open to a deal, having had experience in social security matters debating with the noble Baroness on this and many other points in the fairly recent past. The point about a reciprocal agreement is that it must be reciprocal. It must be reciprocal in terms of payments; but, as importantly, it must be reciprocal in terms of the numbers being paid. If there is a great disparity in the number of Canadian pensioners here compared with the number of British pensioners in Canada, with the best will in the world, that cannot be reciprocal.

Lord Mackay of Ardbrecknish: This amendment requires the Government to pay retirement pensions in payment outside Great Britain at the same rate as if the beneficiary were still resident here and, as a few of my noble friends have kindly said, still paying taxes here—value added tax, excise duty, which has not been mentioned, and income tax. I was grateful for some support this time, unlike during the previous general debate earlier when I felt very much alone in my corner.

Baroness Hollis of Heigham: You were.

Lord Mackay of Ardbrecknish: As the noble Baroness has pointed out, I was alone in my corner at that stage. I have noticed with some interest that the noble Lord, Lord Stallard, has not managed to get his Front Bench to rise to their feet to make any kind of commitment on this issue. I suspect I can understand why.

This issue, as my noble friend Lord Boyd-Carpenter, who has been around these matters for very many years, rightly pointed out, keeps returning. People who go to certain countries and receive British pensions do not receive the annual cost of living increase for cost of

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living rises in this country. Those who emigrated when they retired continue to receive the pension at the rate payable when they left this country and those who emigrated when younger receive a pension payable throughout their retirement at the rate in force when they reached retirement age, as they may have had some qualifying years in this country before they left to go abroad; and, presumably, when they went abroad, they entered into pension schemes in Australia, New Zealand, Canada, or wherever, which built up over the years.

The expression commonly used about these pensions is "frozen". This provision existed in the 1948 Act. In 1955 United Kingdom retirement and widows' pensions were made payable anywhere in the world but normally at the rate in payment when the pensioner left the UK or retired when living abroad. So this policy has been pursued by successive governments since 1955. Clearly, the fact that the noble Lord, Lord Stallard, is arguing it here today means that he had absolutely no success in persuading his own government when they were in office during some of the years between 1955 and 1979.

There has been a debate with regard to whether or not people knew their pension would be frozen when they went abroad. I find it quite difficult to believe that someone taking the very serious step of moving abroad, either as a pensioner or as an economically active person, would not ask a number of questions, including what effect that would have on his pension. That must be particularly true for people who are already retired when they go abroad. If they asked that question, and if they told the Department of Social Security that they were emigrating, as they are advised to do, they would have received the leaflet NI38 Social Security Abroad, which would tell them that pension increases are not normally payable to people abroad. If they were to contact their local office they would be told the detailed position in the country they were going to if they wanted any clarification. If they did not take such advice, they might not know the position. But I believe that the DSS did provide and has provided over the years advice and I find it very hard to believe that people taking this quite serious step did not make at least some inquiries as to what their position would be vis-o-vis any remaining obligations that the United Kingdom had to them on pension matters or anything else.

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