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The Earl of Onslow: My Lords, that is an interesting development. Is the Minister saying that no Bills will be supported in another place until the noble Lord, Lord Burns, has reported? If he reports that a ban will cause economic distress to the countryside, is the Minister saying that the Government will pay immense attention and listen? I thought she went rather a nice long way down that line. I liked it.

Baroness Hayman: My Lords, that makes me extremely nervous. The promise that has been given of government time and assistance for the legislation does not in any way pre-judge the outcome of the inquiry. The inquiry will look into the practical aspects of different types of hunting with dogs and the impact on the rural economy, agriculture and pest control; on

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the social and cultural life of the countryside; on the management and conservation of wildlife and on animal welfare in particular areas of England and Wales. The inquiry will also consider the consequences of any ban on hunting with dogs and how any ban might be implemented. It will take evidence from all interested parties. The noble Earl, like me, will have to await the inquiry's findings before deciding what any response will be. The inquiry is independent of government, and the promise of a Bill bears no relation to the work of the inquiry. It is for Parliament to decide whether hunting is right or wrong, but I am sure that the work done by the noble Lord's committee will help every Member of Parliament to make up their minds on this important issue.

Lord Beaumont of Whitley: My Lords, it is not for Parliament to decide whether hunting is right or wrong. It is for Parliament to decide whether hunting should be made illegal. That is very different.

Baroness Hayman: My Lords, that is what Members of Parliament will do in their function as legislators. I am happy to illustrate that. How we legislate, in the best of all possible worlds, reflects how we feel on issues with regard to whether certain things are right or wrong. That applies particularly to matters on which we have a free vote, like hunting. Perhaps the dichotomy is not as great as the noble Lord suggests, but he is right to be pedantic about the language. It is for Members of Parliament to legislate, not to go into areas of personal morality. I have spoken at some length and beyond my time.

Baroness Miller of Chilthorne Domer: My Lords, perhaps I pre-empt the Minister, but I raised specific questions on the hill farming allowance. I should be happy if the Minister could write to me with a reply.

Baroness Hayman: Yes, my Lords. The proposed hill farming allowance scheme will be operated on data we collect now, so it should not involve any additional bureaucracy. However, I shall write to the noble Baroness on the other point.

Earl Peel: My Lords, inevitably in a debate such as this, which has been wide ranging, the number of questions posed to the noble Baroness is great. She has done a remarkable job in attempting to answer them. However, inevitably she will not be able to answer them all, and some relate to other departments. I always thought it was a tradition of this House that where questions put specifically to the Minister were not answered at the Dispatch Box, she would arrange for letters to be written to the noble Lords concerned. Can she confirm that she will do that?

We had a wide-ranging debate when we discussed the gracious Speech but, unfortunately, environment and agriculture were rolled up with education. The noble Baroness, Lady Blackstone, was answering questions on matters with which she was unable to deal. However, none of us has ever had a response to the questions we posed in that debate. Perhaps the

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Government will keep to this tradition and ensure that we receive proper written responses to questions not answered at the Dispatch Box.

Baroness Hayman: My Lords, the noble Earl has saved me a minute of my speech. I was going to say that I would write to noble Lords whose points I have not been able to cover in my reply. I am sure that my noble friend Lady Blackstone equally intended to do the same. It sometimes takes rather longer than one would wish for the workings of government to grind on, particularly when it involves different departments. I am sure that points raised both in the debate on the gracious Speech and today, which neither my noble friend nor I have been able to cover, will be specifically dealt with by letter.

I am grossly out of time and I shall, therefore, end by thanking the noble Earl, Lord Ferrers, for giving me such a challenging task in winding up.

7.47 p.m.

Earl Ferrers: My Lords, as the noble Baroness discovered from the noise around the Chamber as she sat down, she has done a remarkably good job with great style, understanding and charm. It has not been an easy subject to cover; it has been wide and it is impossible to try to brief oneself for every eventuality. I add my thanks and congratulations to the noble Baroness on what she has done.

I also thank all noble Lords who have taken part in the debate. One point which came out clearly is that agriculture and the countryside are in a bad state, a state of depression and anxiety. It must be addressed. The noble Baroness understands the problem and I hope that she can get her colleagues in government to present themselves in such a manner that people in the countryside believe the Government do care. I do not like to say so, but at the moment people in the countryside do not believe that the Government understand or care. I hope that they will do their best to make their understanding come over better.

I was glad that the two right reverend Prelates took part in the debate. The right reverend Prelate the Bishop of Lichfield made a sensitive and human speech, saying that he had seen the anxieties of people faced with having to get rid of their homes and businesses and sometimes not being able to provide money for their pensions. The right reverend Prelate might meet those problems more than other people.

I am also grateful to the right reverend Prelate the Bishop of Durham for participating in the debate. I was sorry that he was bullied by the noble Lord, Lord Mackie of Benshie, who accused him of trying to leave early. It is true that there is a convention that one stays to the end. Equally, the noble Baroness, quite rightly, said she understood if, for various reasons, people had to leave. However, the poor right reverend Prelate is sitting here having missed his train with a task to undertake early tomorrow. It is all the fault of the Liberal Democrats.

I was glad to have the opportunity to hear three government Back-Benchers, the noble Lords, Lord Haskel, Lord Harrison and Lord Davies of

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Coity. They said that they had come from the towns. That is good because the countryside encompasses not just the countryside. People in the towns participate in the countryside and it is of importance to them. It is also important that we have a contribution from them. The only point I sought to make was that, since the Government intend to undertake some substantial measures in the country, whether it be fox-hunting, fur-farming or access to the countryside, I would have thought that we would have had contributions from some noble Lords on the government Back-Benches who live in the countryside, know about these matters and would back up the noble Baroness. As it was, she was left rather bereft of such assistance, albeit supported vigorously by her urban counterparts.

I am grateful to noble Lords for having taken part in the debate. It has given us the opportunity to discuss a wide section of an important part of the countryside, and I hope that the Government will take note of what has happened. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.

Personal Pensions

7.51 p.m.

Baroness Dean of Thornton-le-Fylde rose to ask Her Majesty's Government when they will take steps to end the present mandatory requirement on personal pension fund holders to purchase an annuity at the age of 75.

The noble Baroness said: My Lords, first I thank the small band of noble Lords who are to take part in this short debate tonight, particularly my noble friend the Minister. I am sure that at the end of the proceedings on the Welfare Reform and Pensions Bill my noble friend believed that he had seen the back of the issue of annuities for some time to come. I note that the noble Lord, Lord Higgins, has escaped tonight and that his place is taken by his noble friend Lord Astor of Hever. On 11th October the noble Lord, Lord Higgins, tabled an amendment to that part of the Bill concerned with stakeholder pensions. It called for the removal from the Bill of the requirement to buy an annuity related to a stakeholder pension. If noble Lords look at col. 65 of Hansard for that day, they will see that I went into the Division Lobby in opposition to that amendment.

It may assist if I make clear at the outset what my Question does not seek to do. I do not favour the abolition of the mandatory requirement to buy an annuity related to a pension; nor do I seek to increase the age at which a person is required to start taking income from a pension fund, which is 75. In the context of my Question I propose that the age be increased from 75. I did not specify an upper age, but I propose that it be 80. Therefore, at the age of 75 a person holding a pension fund would be required to start drawing down taxed income from the fund but would not be required to convert the fund into an annuity until the age of 80.

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I believe that it was in the 1950s that the age was increased to 75. In those days there were far fewer people covered by pension schemes. Certainly, no one was covered by some of the schemes that we have today. Most were covered by occupational schemes, although it was a smaller number than today. Most of those pensions would have been defined benefit schemes which, by and large, would not be caught by this provision.

The Association of Insurance Brokers tells us that this year about £10 billion will mature for draw-down or conversion to annuities. There is a view in the industry that in 10 years' time that figure will have risen to £50 billion. We are talking about the investment of a substantial amount of money in a way that does not deny to the Chancellor the right to income tax from the benefits but also allows for the investment for which the person has saved all his life to give a decent return. Herein lies the core of my concerns. Interest earned from annuities has halved in the past decade and that accounts for a considerable amount of money. That is because the returns from gilts have been reduced.

I do not believe that my Question this evening in any way runs counter to or dilutes the national policy of this Government, and previous ones, to try to encourage people to save for their retirement. Having benefited from tax allowances, at the time of their retirement they should not try to manipulate the money that is available in a way that takes unfair advantage of the tax breaks that they have received.

I have looked at the situation today. I do not know what the Minister will say this evening. It may be said that there are a variety of methods and that people do not have to choose simply a fixed term annuity. For example, there is the draw-down option introduced in 1995. There is also the possibility of going for a fixed annuity whereby there is a guarantee of up to 10 years from the date of purchase. There is a joint annuity for couples. Having taken out the annuity, it ceases only at the point when both partners pass on.

It may be argued that there is flexibility. However, I suggest that there is a big price to pay for that small degree of flexibility. In the case of a variable annuity, in every case the costs are higher and the returns lower and the people whom they hit are not the wealthy. People have said that this is about helping the wealthy; it is not. The people most affected by the current situation are those on low incomes who find it difficult to accumulate pension funds of any substantial size. Of the various options to try to protect pension funds, they are the people who pay the highest charges in proportion to their schemes.

It may be argued that to take an annuity is almost like trying to win the lottery. It depends on the day when one assesses the fund that is to give a return for the rest of one's life irrespective of the health of the market. The events of the past decade in relation to gilts are not new. Those of us who have been involved in occupational pension schemes over the years have seen schemes in which the majority of funds have moved from gilts to equities. That has been a painful

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process but as a result there are much healthier occupational pension schemes. However, this provision relating to annuities lags behind. Because those variable options cost more, the majority of people go for annuities only for themselves because they give the biggest return. If the individual passes on within a very short time of taking out the annuity, the consequence is that the whole fund reverts to the life company.

Pensions are complex and there are lots of anomalies, many of which cannot be resolved. Some argue that someone who smokes heavily and does not look after himself, and therefore has a shorter anticipated lifespan, under the current arrangements could take out an annuity and receive a better return than an individual who does not smoke and has looked after himself because he is assessed actuarially as having a longer life expectation. That seems crackers in anyone's book. Such anomalies are almost exaggerated by the straitjacket with regard to annuities.

I was shocked to learn that if, in a contractual annuity, the return exceeds the permitted maximum by more than 3 per cent, the Inland Revenue requires that the balance between the 3 per cent and whatever was achieved is reverted into the reserved with-profits funds of the life company. It is there to provide for under-performance. If there is no under-performance in the lifetime of the pension holder, the sum being held reverts to the life company as a windfall profit. I find that difficult to accept. That anomaly may be part of the fall-out from the requirements of the pensions legislation.

I tabled the Unstarred Question out of concern for low income people, and the increasing number who have personal pensions, as we have all been encouraged to do. The debate is not about the large funds of the wealthy. A large fund is not affected in the same way as is the present annuity system.

I support the principle of encouraging people to save for retirement. It is not a new interest; I have done so all my working life. There was a provision that if your company had an occupational scheme you were required under your contract of employment to join that scheme. I believe that the removal of that requirement was a retrograde step.

The Government have made progress in introducing stakeholder pensions. The concept is good. I am sure many people will join stakeholder pensions. However, there is a view--I support it--that without changes in the present annuity provision which allow greater flexibility, and allow the pension fundholder to be a customer in the truest sense of having choice, the take-up will not be as great as one might have expected.

I know enough about pensions to realise that every proposal for change presents a problem. There is perhaps difficulty about the funding. Nevertheless, a range of ideas should be considered. A range of ideas has been tried elsewhere. Some may choose Ireland as an example. I do not. It is too soon to use the scheme in Northern Ireland as an example. However, there are

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schemes in the United States. A scheme in South Africa has been running for some years and has proved effective.

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