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Lord Higgins: Debates on this subject certainly go back a great deal longer than 11 years; indeed, I would hesitate to say quite how long they go back--probably almost as long as the national insurance pension has been in existence. This amendment was drawn to my attention by Mr Paul Lewis who was writing an article for the Weekly Telegraph. He asked me whether I had noticed any amendments on this matter. I said that I would consider any amendments which were tabled. He reported the matter fairly in the article on 6th July 1999. Alas, all journalists are victims of their sub-editors' decisions and I do not believe that the headlines which were attached to the article reflected the views in the article. None the less, I have said that I shall consider this matter. I think we are agreed that this matter has caused considerable concern over the years. We should consider the principles involved.

We have to consider the exact nature of the national insurance pension, as we have done on a number of occasions on this Bill. I think we are all agreed that it is based on the contributory principle; that is to say, in exchange for making contributions one receives some benefits, in this case the national insurance pension. However, I believe that it is also broadly accepted--certainly if the noble Lord, Lord Goodhart, were here, he would stress this point--that it is not an insurance scheme and that the system is not funded. In reality, almost the moment Beveridge introduced the scheme there was a degree of inflation and although part of the pension was covered by contributions, it certainly was not the case that all of it was covered by contributions. It was largely made up by the taxpayer. Historically, that is probably the reason that the then government--and indeed all successive governments--have taken the view that they ought not to uprate those pensions which are drawn overseas in the same way as they uprate pensions at home for the reason that the difference between what was covered by contributions and what was not--certainly the vast bulk of it now is not covered by contributions--was paid by the taxpayer, and the people overseas were no longer paying tax into the general pool out of which the pension was financed.

The other reason was that rates of inflation, to which the uprating is related--if there is no inflation, there is no uprating--differed considerably between the country of origin, the United Kingdom, and wherever individuals migrated to. There are sound reasons of principle here although I understand that the position has been modified in some cases with regard to reciprocity. I hope that the Minister can clarify that position. I believe that reciprocity applies in some countries but not in others.

I hope that I have not misrepresented the article. I have received no formal representations about amendments but I have received a number of letters from people overseas, most of whom stressed the role which they played in the war before they emigrated. Presumably, therefore, they are stressing their military rather than other pensions. I do not know what the position is with regard to uprating

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military pensions. The noble Earl is right to raise this matter and no doubt the Minister can spell out exactly what the position is. However, despite the remarks which the noble Earl made about voting, I think that people might be rather surprised if I did an immediate U-turn on this issue because of that point. This is a difficult matter and many people who have gone overseas nevertheless retain a great feeling of loyalty to this country and may have fought in its defence. They therefore feel that this issue should be tackled. As I say, no doubt the Government can spell out the position.

Baroness Hollis of Heigham: I was trying to encourage my noble friend to join this debate but I was not successful.

This new clause has a single and familiar purpose; namely, to attempt to redress the situation where more than half of all UK pensioners living overseas do not receive annual cost-of-living increases in their retirement pensions. I am aware of the importance that some Members of the Committee and pensioners abroad attach to this issue. In return I believe that noble Lords know this Government's position. It is not dissimilar to the position of the previous government and therefore I do not think my response will surprise the Committee.

UK pensions are paid anywhere in the world and we pay some 840,000 pensioners in more than 150 countries. About half of those--some 450,000 of those pensioners--have what is commonly referred to as a "frozen" pension. That means that the pension remains fixed at the rate payable when a person ceases to live permanently in the UK, or at the rate initially awarded on retirement if a person is already resident abroad.

Upratings are paid only within the European economic area (EEA), in the Channel Islands, the Isle of Man and in about a dozen other countries where certain long-standing--I think mostly pre-1970--social security agreements exist. The policy on pensions abroad has been followed by successive governments ever since retirement pensions and widows' pensions became payable worldwide in 1955. We have made clear--as did the previous government--that changing this policy would not be a priority call on scarce resources. The Social Security Select Committee came to the same conclusion in 1996 when it considered the matter.

We also know that the total likely cost of uprating would be something like £275 million a year for all those affected countries. We do not think that it is a priority call on resources. I am afraid that we do not therefore propose to unfreeze those UK pensions paid abroad.

Earl Russell: I presume that figure of £275 million is a gross cost. I presume it does not include any saving to means-tested benefits arising from reciprocal uprating by other countries. Were we to include that figure, I imagine that it would be extremely different. I do not expect the Minister to enlighten me--

Baroness Hollis of Heigham: I can give the noble Earl the figures he wants, but the problem (particularly as regards Australia, New Zealand, South Africa and Canada) is the disproportionality between the number of UK pensioners living there as opposed to the number of

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their pensioners living here. The figures are approximate which is why I think the noble Earl's argument is not valid. According to my latest information, we have something like 205,000 UK pensioners receiving the frozen rate pension in Australia, but only about 17,000 former Australian residents--some of whom may be ex-British servicemen--live in this country under the current arrangements. There is that degree of disproportionality and I understand that it is even wider in South Africa and some other countries. Therefore, although there may be a reciprocal arrangement, that does not necessarily mean that there is equity in payment and that therefore there can be an offsetting with regard to income-related benefits.

Earl Russell: I not only thank the Minister for that answer, I congratulate her on having it at her fingertips. I find that impressive. I accept the point she makes; its justice is, of course, obvious. However, the fact that the netting effect is smaller than perhaps I might have hoped does not mean that that effect is not there. I accept that it is extraordinarily difficult to get a genuine net cost. But were one able to do it, that would be the figure for cost.

Of course I understand the point about scarce resources. But I also understand that it does not improve the reputation of politics as a whole--here I make no party point whatever because it applies to all of us--that we so often see a real mischief and simply do nothing about it. I do not know whether any noble Lords here read Matthew Parris's column about a week ago on Wormwood Scrubs. It dwelt on precisely this point; namely, how discouraging it is that people saw the mischief but did not really feel the impulse to do something about it, and so it continues. It is an old impulse. There is a case in 1628, to which I have referred before, when it was reported that troops who were unpaid were in danger of mutinying. The Lord Lieutenant said that there was no danger of mutiny as the troops were too naked to be seen marching in public. It is a great deal too easy for us to look at something like this and simply say, "Oh dear, it is awfully difficult". Of course it is extremely difficult, but if we want the trust of the people who elect us--and we all do--then we cannot leave too many of these issues unresolved. I hope that the Government will at least give some attention to addressing this problem on an international basis, with reciprocal agreements, possibly bilaterally with each country in turn. It would redress a mischief and it would do something to restore trust in politics. That needs to be done. With those words, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 92C not moved.]

[Amendment No. 92D had been withdrawn from the Marshalled List.]

Clause 52 [Claim or full entitlement to certain benefits conditional on work-focused interview]:

Earl Russell moved Amendment No. 92E:

Page 59, line 9, at beginning insert ("Subject to commission and publication of research into the actions and income of those disentitled to benefit,")

The noble Earl said: In rising to move Amendment No. 92E I shall speak also to Amendments Nos. 108A, 162A, 163A and 164 which stand in my name.

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We come now to the single gateway, the interviews which people are to have before being admitted to benefit. It is my understanding that if they do not have those interviews they simply do not get any benefit. I should be glad if that issue could be clarified because the press material on it has not been entirely consistent. I should hope to hear that there will be a loss of benefits for not attending the interview according to the words of the Labour Party manifesto and not according to the wording of the Prime Minister's speech in Amsterdam of February 1997. I should be very glad to hear that.

We have some fairly big questions arising out of the single gateway and some fairly technical questions that follow on behind. The big questions are about the nature of entitlement to benefit: how far the obligation is--as Mr Frank Field has been suggesting for some time--a contractual one and how far it is an entitlement arising from the state's duty to protect the population of the country. Is it an absolute entitlement or a conditional one? If conditional, how severe are the conditions that may be imposed?

We on these Benches have discussed the matter at considerable length. We hold the view as a party that it is not right for people to set out to draw benefit simply for doing nothing. At the same time we also hold the view both that total disentitlement is liable to have quite severe and possibly, in some cases, disproportionate effects, and that disentitlement is something which should be done with extreme caution, especially with numerous categories of vulnerable people. The purpose of the amendments is to put a string of conditions on the use of the disentitlement under the single gateway.

Amendment No. 92E seeks to insert a commencement clause--a condition precedent, as it is called; something which must happen before the disentitlement comes into force; namely, the commission and publication of research into the actions and incomes of those disentitled to benefit. I will come back to that in a moment.

Amendment No. 108A is a fairly straightforward provision of hardship allowance. I do not think that it needs too much explanation. Amendment No. 164 comes to the purpose of Amendment No. 92E by a different route. It requires a series of pilot studies of the effect of disentitlement to benefit; those studies to be commissioned and reported before the commencement clause comes into force. Amendment Nos. 162A and 163A are the new commencement clauses which are consequent upon these amendments. So we have two separate routes of pursuing the same objective.

The question of what happens to people disentitled to benefit is crucial to any cost-benefit analysis of how far disentitlement to benefit should go. The Minister knows that I have pressed her on this matter frequently. Research has only recently become available. The Demos report Destination Unknown deals with the very large number of people who are not entitled to benefit, not in education, not in training and not in employment. Most unwisely, I picked up the wrong pile of notes when I came in this morning, having been in the Chamber until one o'clock last night, so I do not have

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the exact figures with me. But among 16 and 17 year-olds the figure was, I think, 65,000; and for 18 to 24 year-olds I think it was a six-figure figure.

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