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Lord Rix: My Lords, I apologise for being late. I saw on the annunciator what was taking place, but unfortunately the lift appeared to be engaged.

I noticed that when Lords Amendment No. 17 was being debated in another place Dafydd Wigley made reference to me and the regulations on which we had received assurances from the Minister at the last stage of the Bill in your Lordships' House. Reference was made to the fact that I was speaking on behalf of Mencap. May I make it quite clear, I was not speaking on behalf of Mencap. I was speaking on behalf of old people, like myself, and hope that the Minister can assure me that the regulations to which she referred at the last stage of the Bill in your Lordships' House will refer to "old age pensioners", not exclusively to people with a learning disability.

Baroness Hollis of Heigham: My Lords, I respond first to the points on timing, which were raised both by the noble Lord, Lord Higgins, and the noble Baroness, Lady Greengross. I cannot go much beyond what I said. The Social Security Select Committee has issued a consultation paper. The Government will be looking at responses to that paper. In the autumn there should be draft regulations for the Social Security Select Committee and the Public Administration Select Committee to comment on in advance of those regulations coming to your Lordships' House.

The noble Baroness said that if they were not satisfactory she hoped that the House would reject them. If it did, people who were entitled to money would get none. Perhaps she might wish to reflect on that position further.

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On the point raised by the noble Lord, Lord Rix, I am happy to confirm, as I did when he pressed me at Report stage, that people with a severe and continuing mental disability, and those speaking for them, their advocates, would be covered.

The noble Lord's first question was about money and how the Government arrived at the figures of £8 billion to £23 billion. Basically, the assumption of £8 billion is that on the protected rights scheme, with a deferral until October 2002, and then the introduction of the protected rights scheme, we expect approximately 5 million applications, which therefore costs the £8 billion figure. Under the noble Lord's amendment virtually everybody would qualify. I know the noble Lord does not believe this, but that is the legal advice I have received, so he may wish to take these figures seriously. Under his amendment, the 4 million pensioners on SERPS, as well as 16 million people of working age, would qualify. That would mean a potential eligibility of 20 million people as opposed to 5 million. That is how the Government judge the cost of £23 billion. The veracity of those assumptions can be tested but that is the basis for them.

The noble Lord's second point was about the two steps. It is true that Government are undertaking two steps, as he described it. The difference between us is this. I believe that if people did not know what the changes were, they cannot usefully say what they would have done had they known. If they did not know, they did not know. That seems to be the gap between the noble Lord and myself.

Within social security more generally, whether someone does or does not know is not a defence or a claim of entitlement. For example, when a person becomes a widow, when there is a change of benefit status, or whatever, or if there is any change in regulations, the DSS does not expect to send out leaflets individually notifying 20 million people in receipt of benefit. It expects information to be gained through leaflets, provided that the leaflets available at the local offices are correct.

The problem was that the leaflets were incorrect. The information was incorrect. With the protected rights scheme we are addressing the problem we inherited--not that people may or may not have known of the change in the law but the fact that a smaller group was clearly misled by the information received. The protected rights scheme is to address that very real problem of misinformation--the equivalent, if you like, of government mis-selling.

I hope that with that explanation we are correcting the problem we inherited. We are seeking the widest possible consultation. I hope that as a result your Lordships will be satisfied in the autumn when the appropriate regulations are considered and that your Lordships will accept the Commons response to Amendment 17.

On Question, Motion agreed to.

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18After Clause 41, insert the following new clause-

(" . A person shall be able to hold both a stakeholder pension and an occupational pension concurrently and without financial penalty.")
The Commons disagreed to this Amendment for the following reason--
18ABecause it would involve charges on public funds, and the Commons do not offer any further reason, trusting that this reason may be deemed sufficient.

Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on its Amendment No. 18, to which the Commons have disagreed for their reason numbered 18A. This amendment was intended to enable people to be members of both the stakeholders scheme and an occupational scheme and make tax privileged pension contributions into each scheme at the same time. The amendment would, however, be ineffective because the legislation which governs such contributions is contained in Inland Revenue legislation, which this amendment does not alter. In any event, the Government have recognised, and were consulting at the time, that greater flexibility would assist people to build up pension savings. On 5th July the Government announced that people earning up to £30,000 a year will be able to save an extra £3,600 a year in stakeholder pensions, as well as saving in an occupational pension scheme. This means that almost 90 per cent of employees contributing to occupational schemes will be able to enjoy the benefit of stakeholder pensions as well. This announcement has been widely welcomed by the pensions industry.

The Government do not, however, believe that the cost of further extending this concession--which is what the amendment would have done--can be justified. Our partial concurrency benefits almost 90 per cent of people at a cost of £150 million. To extend it by the extra 12 or 13 per cent, for example, to people with incomes above £30,000 would incur a cost of a further £250 million for the better off. This Government believe that it is right to target available resources on moderate and low earners, and those most likely to be moving between schemes and therefore might find themselves in a confusing situation. That is what our proposals will do and I hope your Lordships will welcome them. I therefore ask your Lordships not to insist on their original amendment.

Moved, That this House do not insist on their Amendment No. 18 to which the Commons have disagreed for the reason numbered 18A.--(Baroness Hollis of Heigham.)

Lord Higgins: My Lords, it would not be appropriate for me to rise in the role of Oliver Twist. The Government have made a considerable concession on the arguments, although they propose to implement it in a different way from that which we envisaged. The level at which the Government regard people as low paid, medium paid or highly paid seems to fluctuate rather wildly between one part of the Bill

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and another, but £30,000 a year in this context is not an unreasonable level. While we would have preferred full concurrency, the argument is accepted.

There is one question for the Minister. Does she envisage that that limit will eventually be indexed?

Baroness Hollis of Heigham: My Lords, I should imagine so but I should want to take advice.

The reason for the £30,000 figure is that stakeholder pensions were designed for those with an income of between £10,000 and £20,000 but, given indexation and people's climb up career ladders and so on, many of those on pensions of £18,000 or £19,000 may go up to about £25,000 or £27,000. The Government do not want people inadvertently committing a fraud by continuing one pension scheme while coming into an occupational pension scheme.

I am pleased that the noble Lord and the industry welcome our new position. I am also delighted that many people will have greater protection for their old age. I commend the Motion to the House.

On Question, Motion agreed to.


26AAfter Clause 60, insert the following new clause-

.--(1) The Secretary of State shall review the operation of this section when--
(a) a report on the armed forces pension scheme has been laid before Parliament by the Secretary of State for Defence; and
(b) the results of any public consultation upon a report as cited in paragraph (a) above have been published;
and a report of any review carried out under this section shall be laid before Parliament.
(2) Subject to subsection (3), a widow in receipt of a widow's pension under any of the enactments mentioned in subsection (4) ("the DSS pension") and in receipt of a pension paid under the Armed Forces Pension Scheme shall on remarriage or when living together as husband and wife with a member of the opposite sex only retain the Forces Family Pension (attributable).
(3) Subsection (2) does not apply to a widow in receipt of a basic pension under section 44 of the Social Security Contributions and Benefits Act 1992; and a widow in receipt of such a pension who has remarried or is living together as husband and wife with a member of the opposite sex may not retain the Forces Family Pension (attributable).
(4) The enactments referred to in subsection (2) are--
(a) the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983, and any order re-enacting the provisions of that order,
(b) the Personal Injuries (Civilians) Scheme 1983, and any subsequent scheme made under the Personal Injuries (Emergency Provisions) Act 1939,
(c) any scheme made under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939, or the Polish Resettlement Act 1947 applying the provisions of any such order as is referred to in paragraph (a),
(d) the order made under section 1(5) of the Ulster Defence Regiment Act 1969 concerning pensions and other grants in respect of disablement or death due to service in the Ulster Defence Regiment.")

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The Commons disagreed to this amendment for the following reason--
26ABecause it would involve charges on public funds, and the Commons do not offer any further reason, trusting that this reason may be deemed sufficient.

3.30 p.m.

Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 26 to which the Commons have disagreed for the reason numbered 26A.

The reason given in the other place for rejecting your Lordships' amendment was that it infringes its financial privileges, but there are other reasons. Your Lordships will be aware that last Thursday the Government announced their intention to allow widows and widowers to keep their Armed Forces attributable pension should they choose to remarry. This will be achieved through secondary legislation and therefore the new clause inserted in the Bill is no longer required. I am sure that all noble Lords will want to join me in paying tribute to the War Widows Association and to the noble Baroness, our noble friend, Lady Strange, who have campaigned so assiduously to ensure that the war widows who are currently in receipt of an attributable Armed Forces pension can continue to receive the payment if they decide to remarry.

As your Lordships will know, the Government have been examining the case for changing the services' occupational pensions as part of the current review of the Armed Forces Pension Scheme. That review is looking at the whole package of pension benefits and the outcome will be subject to full public consultation.

I am pleased to be able to advise the House that one of the recommendations of the review will be that all widows or widowers of service personnel covered by the new pension arrangements will be able to keep their service pension for life. That is regardless of whether the death was attributable to service or to some other cause. As is normal with changes to pension schemes, this provision will apply to future service and future pension recipients only.

It was in the knowledge of the recommendations of the review that at earlier stages of the Bill I asked the House to wait and not to cut across it. However, as the timing of the review has slipped somewhat, it seemed right in the context of your Lordships' concerns that we should bring forward and announce that part of the review. It was always intended to arrest your Lordships' concerns.

In addition, we have recognised the exceptional circumstances in which the Armed Forces operate, so we intend to ensure that widows and widowers already in receipt of an attributable pension will be able to retain that pension should they decide to remarry. The new provision will be operable as soon as we are able to amend the existing legislation.

Therefore this change will be introduced ahead of the introduction of any other recommendations made by the review. It does not require primary legislation. It can be introduced using regulations in the

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prerogative instruments, which will need to be amended, approved by the Queen and placed before Parliament before the policy can be implemented. The rules applying to each of the services can be changed by subsidiary legislation to be effective in the autumn.

Furthermore, the new clause excludes widows who qualify for a category A DSS retirement pension. We see no reason why, in the spirit of your Lordships' concerns, widows and widowers who have reached pension age should not be allowed to remarry and keep their pension if they want to do so. The amendment tabled by the noble Baroness, Lady Strange, did not go far enough, so we propose to go further and extend the right to retain the war widows pension on remarriage to those who are currently over pensionable age.

The Government have announced that they will introduce amendments to the existing service pensions regulations. We will provide that in future widows and widowers will be able to retain their attributable pension should they decide to remarry. The intention is that the legislation will be in place in the autumn and will go further than provided for in this clause. The wider pension review will come forward with provisions for existing servicemen, which your Lordships' debate cut across.

For that reason, we are accepting the substance of your Lordships' recommendations. It was part of the review which slipped in time but we are going further and extending the provision to those over the age of retirement. In the light of that, I hope that your Lordships will be pleased not to insist on their amendment.

Moved, That the House do not insist on their Amendment No. 26 to which the Commons have disagreed for the reason numbered 26A.--(Baroness Hollis of Heigham.)

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