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The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I thank the noble Baroness for giving way. I am sure

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that she does not mean to mislead the House, but unless the answer was changed, in the year 2020, in relation to pension splitting, the tax costs are indeed £80 million, but the savings are not £70 million but £20 million from pension splitting. The other £50 million is a saving, so to speak, already in the bag from pension attachment. The noble Baroness cannot count that twice. She might also read out the line of figures for 2037, which is a little different.

Baroness Hollis of Heigham: My Lords, the figures in the table given yesterday to the noble Lord, Lord Elton, are exactly the same information as was given to myself and those in another place about a month ago. The Government have simply presented them differently. Those people who would save on income support by earmarking will almost certainly go on to pension splitting. In other words, the savings by having a fair division of pensions at divorce will be £70 million in income support--as the Government say in the document--set against £80 million in loss of tax revenue, together with £10 million which is not specified here in court costs. That is cost-neutral.

Lord Elton: My Lords, since I asked the question, I think I might refer to the answer. The figure in the last line is not £70 million; it is £200 million.

Baroness Hollis of Heigham: My Lords, indeed. I gave the figures for 2020, as stated in the Written Answer. The Government have given figures for 2037. That is some 40 years and some seven governments away. Are we really assuming that tax law, income support and pension law will not have changed?

The Government state:

    "An indication of the possible growth path is shown in the following table"--[Official Report, 27/2/96; col. WA 98.]

The table shows an indication of the "possible" growth path. In other words, the figures for 2020 are 25 years away. Those show that the proposal can be cost-neutral.

Secondly, the Government argue that there are a host of technical issues involved. I am sure that there are. No one ever said that pensions were easy. We all "glaze over" at the word. But in meetings on 2nd February between the Department of Social Security, the Inland Revenue and the Treasury and representatives of the pensions industry some 49 technical issues were raised. Notes from the pensions industry show that in relation to 40 of them a resolution was reached. Only nine required further consultation. The industry and the Government meet each other on 40 out of 49 of those issues.

I am sure that the Minister will rehearse some of those 49 points tonight. He may let us off a few. As he rehearses them, I ask noble Lords to remember that the professionals at the sharp end, the Pensions Management Institute, state:

    "Most of the problems with pension splitting have already been thrashed out in the Pensions Management Institute's original report and in subsequent discussions with officials".

Those at the sharp end say that most of the problems have already been thrashed out. Even if the Government repeat the problems tonight, the industry has already thrashed out most of the solutions.

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Why does the industry want this measure? They want it because it is simpler than the existing arrangement, namely earmarking. There are fewer technical difficulties to this proposal, and that is why they wish it. As the noble Baroness, Lady Young, showed, the need for pension splitting is there. It can be at no cost to the taxpayer over the next 25 years. I ask the House: is 25 years not a reasonable time over which to look forward as to the likely costs? The Government say that their figures beyond that are only "possible" indicative growth figures.

Thirdly, the technical issues associated with pension splitting are fewer, according to those at the sharp end, than with earmarking. They believe that it is simpler.

In Committee, some 13 speakers were unanimous. The noble and learned Lord the Lord Chancellor agreed to consider the proposal sympathetically. We had real hopes. What we are now being offered is a Green Paper, which means that there can be no possibility of addressing the issue of fairness in pensions at divorce this side of a general election, and probably for several years after a general election. Yet, if ever the time was ripe, it is now. We have a Family Law Bill, Clause 14 of which deals with financial settlement on divorce. If you ring-fence the largest single asset so that it cannot be split at divorce, you cannot have financial fairness at divorce. We have in place a large and highly skilled team of civil servants working on pension issues. To delay a decision for four or five years means that they will be disbanded and their skills will be lost.

This is a matter of political will. It is not party political; some of the most effective speeches in Committee came from the Cross-Benches and the Conservative Benches. We ask the House to say today that we believe pension splitting is fair; that those at the sharp end of industry want it now; and women--particularly those loyal wives and mothers who face desertion--desperately need it now; and it can be done without cost to the taxpayer. Consultation can follow on the remaining technical issues. Accepting this amendment today would ensure that it happens and it is not left as an open question. The Government would determine the timetable. The measure would not have to be implemented until the Government were confident that they were ready. But this amendment would ensure that couples could have fairness on divorce. The proposal is decent, just, right and fair. I beg to move.

3.45 p.m.

Baroness O'Cathain: My Lords, in Committee I spoke in support of pension splitting. I need not repeat the detail of the arguments I used. My sole motivation was, and still remains, that if there is complete breakdown in a marriage and that breakdown is irretrievable, justice and fairness should be paramount in any financial settlement that follows.

It is only common sense to recognise that if such a devastating, demoralising and painful situation as divorce is the only possible outcome, the law should in all conscience be such that justice and fairness are the guiding principles, and there should be a clean break. In the aftermath of a divorce, who needs further

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uncertainty and recriminations? I suggest that the current method of dealing with the assets tied up in a pension leads to just that; whereas the amendment before the House would overcome that most undesirable continuing situation.

The voice of business is not heard as often in this House as it should be. But business has a deep and continuing interest in the amendment. Business supports this amendment and is quite prepared to shoulder the burden of the one-off administrative cost. Indeed, it would be seen as a short-term cost to guarantee the disappearance of a long-term administrative nightmare.

If these amendments were adopted by the Government, or indeed something like them, each partner in a divorce would have control over the asset in so far as each could elect to have the pension either earlier or later, or even at the same time as the erstwhile spouse. That is yet another advantage. It would restore dignity and self-worth to those who are shattered by the experience of divorce.

Since Committee stage, there has been much discussion on the issue. Support for the principle of these amendments has been strengthened. But I fear that there is still some residual doubt about the principle within the Executive, particularly within the Treasury. I hope that I am regarded as a fair-minded person. I try to abide by the tenet that one should not make judgments about other people's actions or interpret at a distance the motivation behind such actions. But in this case, I have the strongest suspicion that the Treasury's objection is on cost grounds alone.

We have already heard the arguments. Indeed, the noble Baroness, Lady Hollis, has already made the point. But I feel that it is not unfair of me to ask your Lordships to consider that the Treasury has benefited to the sum of around £660 million to date from the National Lottery. I can give a breakdown of that sum to my noble friend the Minister. The sums mentioned by the Treasury are nothing by comparison with what can be described truly as a windfall tax. That may not seem relevant to some people. But to many who are in dire distress it seems relevant and I have letters to prove it. We are supposed to listen to people, and some people are in appalling circumstances because of lack of pension splitting. We are told that there can only be pension splitting if it is done by primary legislation. Parliament must do it. These amendments or something like them will ensure that the objective of pension splitting is put on the face of the Bill.

I am most grateful for the Government's proposal to publish a consultative paper. I hope that going out to consultation is not a deliberate delaying tactic. I submit that the amendments could be accepted and that consultation paper issued. They are absolutely not in conflict. Following the due process of consultation, the machinery will be in place to effect the principle, provided that this amendment is accepted. Let me ask as an aside whether it is possible for the financial implications to be dealt with in the annual finance Bill, as it certainly seems to me to be an appropriate theatre.

The consultation period allows plenty of time to solve all the problems, imagined or real--problems that I may not have thought about and problems that the business

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community may not have fully grasped. Similarly, during the consultation period, the Government will have much more time to examine the whole issue and perhaps adopt some of the proposals from the professional bodies which have given us so much information over the past couple of months. I submit that this is not an unreasonable proposal. I support the amendment.

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