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Lord Goodhart: My Lords, although I welcome the fact that many people will be taken into the contributory benefit network, are the Government prepared to consider taking a further step and look at the possibility of moving from benefits which are based on contributions, in particular the state pension, to a system under which the state pension would be based on residence in the United Kingdom?

Baroness Hollis of Heigham: My Lords, we shall be producing a pensions Green Paper by the end of the year. A whole range of such issues will be discussed in that. In practice, one qualifies for a state pension through one's national insurance contributions or, if one is a married

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woman, by virtue of one's husband's contributions. Alternatively, one can qualify for income support, which is higher than the state retirement pension level now. So, in practice, we already have universal state pensions such as the noble Lord describes.

Baroness Turner of Camden: My Lords, is my noble friend aware that because many women tend to work part time for long periods, the laws in relation to contributory benefits discriminate against women much more than men? Is there not a possibility that that discrimination could lead to a possible future reference to the European Court of Justice?

Baroness Hollis of Heigham: My Lords, I understand that the UK arrangements comply with EC law. The German equivalent of the lower earnings limit was tested in the European Court recently and was upheld.

Baroness Miller of Hendon: My Lords, as the effect of the national minimum wage on new recipients of the national minimum wage will be an increased liability for tax and national insurance, and a loss of benefits, including housing benefit, does the Minister agree that the Treasury may very well be the main beneficiary of the national minimum wage, rather than the low paid? If the Minister does not agree with that analysis, will she find out whether the Government will be willing to publish some case studies of the net financial effect of those new recipients receiving whatever they receive as a result of the national minimum wage?

Baroness Hollis of Heigham: My Lords, it is certainly true that the national minimum wage should reduce people's reliance on means-tested benefits by something like £343 million a year. In other words, taxpayers will no longer subsidise the exploitative low-pay employer. That must surely be desirable.

The wider question is this. For far too long Britain has been a country of low pay, long hours and low productivity. The employers offering the lowest pay are those who also demonstrate the lowest productivity. With the national minimum wage our expectation is that for the first time there will be an incentive for employers to invest in people as well as plant, and thus raise the productivity of our economy, which is what we all need to see to face the future.

Constitutional Reform and the Channel Islands

3 p.m.

Lord Wallace of Saltaire asked Her Majesty's Government:

    Whether their plans for constitutional reform include modernisation of the relationship between the Channel Islands and the United Kingdom.

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The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, we have no plans to change the existing constitutional relationship between the United Kingdom and the Crown dependencies.

Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. I believe I have the most recent document on the constitutional relationship between the Channel Islands and the UK; it is dated April 1971. I refer to the joint memorandum by the Home Office and the Foreign and Commonwealth Office. Does the Minister agree with the statement in the document that the British islands are an entity in the eyes of the world and that Her Majesty's Government will be held responsible internationally if practices in the islands overstep the limits of acceptability? Does he also accept that the picture reputedly given by the Edwards Report, of which I have seen a draft, is of an islands administration overwhelmed by the scale of the funds now passing through and severely under-staffed? Does he agree that that raises questions regarding the good governance of the islands and their relationship with the United Kingdom, which ought now to be investigated?

Lord Williams of Mostyn: My Lords, the latest paper that I have on the constitutional relationship between the Channel Islands, the Isle of Man and Her Majesty's Government was published in 1973. It is the report of the Kilbrandon Commission, which I commend as fascinating reading. We are responsible under international law for the islands' international relations and for their defence. They have a domestic competence and they have no representation at Westminster. The present relationship seems to work well.

The report produced by Mr. Andrew Edwards is to be published on Thursday. It is probably more appropriate if I comment on that report when your Lordships have had time to read and inwardly digest it.

Lord Waddington: My Lords, does the Minister agree that the Government's support for the OECD document on so-called harmful tax competition poses a potential threat to the relationship between the United Kingdom and the Channel Islands, as does the campaign in Europe for tax harmonisation?

Lord Williams of Mostyn: My Lords, the OECD document was drawn up in consultation with Her Majesty's Government. It includes a saving clause which relates to the relationship between Her Majesty's Government and the Channel Islands. Based on my personal knowledge over the past year and a half, I can say that relationships are good and harmonious because we do our best to maintain a co-operative and friendly relationship between the three islands and Her Majesty's Government.

Lord Lester of Herne Hill: My Lords, will the Minister add to the Written Answer that he kindly gave on 27th July regarding the date by which the European Human Rights Convention will be implemented in the Channel Islands and the Isle of Man so as to ensure

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equal protection for all British citizens throughout the United Kingdom and the islands in regard to basic rights and freedoms? Is the draft legislation available? Please may we examine it and know when it is likely to be published and in force?

Lord Williams of Mostyn: My Lords, all three islands have quite a good record in that context. The Attorney-General of Jersey raised with the then Home Office officials the possibility of enacting such legislation as long ago as 1992 and was told that the Home Office did not think it a good idea. The States of Guernsey issued a public statement on 22nd May this year anticipating that they would be able to submit a draft law to the Home Office for the usual pre-audit before the end of the year. In December last year, the Isle of Man made it plain that it intends to introduce legislation to give effect in Manx law to the ECHR.

Lord Jenkins of Putney: My Lords, is it not desirable that they should also mark and learn from it first?

Lord Williams of Mostyn: Yes, my Lords.

Lord Renton: My Lords, as a member of the Kilbrandon Commission perhaps I may confirm that the people of the Channel Islands have democratic self-government while enjoying the full protection of the United Kingdom and with the advantage of being represented by the United Kingdom in almost all international affairs.

Lord Williams of Mostyn: My Lords, yes. As the noble Lord indicates, the islands have domestic competence and authority as to their own legislation, subject to the override that Her Majesty's Government have the residual powers in respect of the overall good governance of the islands. That was stated in the Kilbrandon Report and, I am happy to repeat, remains the true constitutional analysis.

Lord Wallace of Saltaire: My Lords, does the Minister accept that, since the Kilbrandon Commission reported, the scale of offshore funds handled by the Channel Islands has altered astonishingly, and that that raises large questions regarding the future legal and financial relationship between the Channel Islands and the United Kingdom?

Lord Williams of Mostyn: My Lords, the noble Lord is right. There has been a substantial inflow of capital--international capital in particular--to the islands. That was one of the reasons why my right honourable friend the Home Secretary asked Mr. Edwards to carry out his review. He has consulted the islands widely and they have been extremely helpful and co-operative. The report will be hot from the press on Thursday of this week.

The Lord Bishop of Winchester: My Lords, I am grateful for the Minister's remarks. I speak as the bishop who serves the two Channel Islands bailiwicks of

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Guernsey and Jersey, although of course that does not mean that I speak for them in this House. Will the Minister give the House an assurance--especially at this time of particular interest and attention in the light of the forthcoming publication of the Edwards Report itself rather than of leaks and drafts--that all those who speak either on behalf of the Government or as their representatives in any sense will be as well informed as the Minister has shown himself to be this afternoon on the constitutional position? Does he recognise that in the light of some comments made over the past months in another place and elsewhere, there is a need to offer some reassurance on these matters to the population of the Channel Islands?

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