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Lord Addington: My Lords, the DLA and other benefits are designed to deal with the extra costs that disability can involve. Would it not be more sensible to have a system without brackets, which cut people off and put them into new compartments when they hit a certain age? Most of the costs and conditions will run into each other, especially in a more flexible workplace.

Lord Hunt of Kings Heath: My Lords, I understand the noble Lord's point; I suppose that he is suggesting a wholesale redesign of the entire benefits system. Essentially, the issue about the difference between DLA and AA is also reflected in many other age-related benefit provisions. I am afraid that, at this stage, I cannot give him that undertaking.

Lord Morris of Manchester: My Lords, we often hear of cases of alleged abuse of the allowance. Can my noble friend say how much went unclaimed by entitled applicants in the past year?

Lord Hunt of Kings Heath: My Lords, I am afraid that it is not possible to answer that question; it is not possible to calculate take-up rates for DLA or AA because eligibility is not established until entitlement is tested. Since that assessment of eligibility is more complex than for other benefits, it is difficult for me to give a definitive answer to my noble friend.

Lord Skelmersdale: My Lords, is there not a problem at the other end of the age scale? Has the Minister had a recent report by the Family Fund drawn to his attention? It suggests that average expenditure of families with a
 
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severely disabled child is some £21,980 a year, yet average income is just £15,270—a shortfall of over £6,000. Are the Government doing anything to address that in the DLA?

Lord Hunt of Kings Heath: My Lords, there have been a number of reports recently which looked at the costs of disability to families, and not all of them agree. We keep them under review, but the Government have been providing substantial support and we will continue to do so. So far as the Family Fund is concerned, my understanding is that about £27 million a year is currently distributed to 40,000 children.

European Court of Justice

2.58 pm

Lord Wedderburn of Charlton asked Her Majesty's Government:

What is their policy in regard to the jurisdiction and composition of the European Court of Justice, in light of the recent Marks and Spencer judgment.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman): My Lords, the Government do not believe that the decision should give rise to any speculation about the jurisdiction or the composition of the European Court of Justice. The Government welcome the ECJ's judgment in the Marks and Spencer case, which confirmed that our group loss relief rules are in principle compatible with European Community laws except in some exceptional and very limited circumstances. The Government will continue to vigorously defend challenges to our national tax laws brought before the ECJ.

Lord Wedderburn of Charlton: My Lords, I thank my noble friend for that interesting Answer. I have the greatest respect for the European Court of Justice. However, does my noble friend agree that whereas the Marks and Spencer case confirms the Court's very wide jurisdiction over commercial and most tax matters, there has been a marked extension of that jurisdiction in recent years? It has now reached even the criminal law although we were assured in 1975 that that would never happen. Do the Government reflect a little on the structure of the Court in that regard, especially when having regard to the fact that of the 22 very distinguished and admirable people appointed as members of the Court since October 2000, a significant proportion of them—some 40 per cent—did not in their previous careers hold posts that led them into senior judicial national areas, regardless of whether you test the meaning of "senior judicial experience" by common law notions or by European civil law notions?

Lord Triesman: My Lords, we have not sought a review of the membership of the Court. As my noble friend has just said, we believe that it has been adequate for the purposes and very wise in many of its decisions. I understand that my noble friend's concern is with what
 
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might be an unwarranted extension of law and sanctions by the Commission and by the ECJ. Perhaps the ECJ judgments on criminal penalties are the key to this concern. However, we are clear that it remains the role of member states to determine whether criminal sanctions are necessary and proportionate to enforce a particular rule. In the event that we did not agree with a Commission proposal, we would resist it, and other member states would do the same. Making sure that there is not creep across our domestic law must remain a matter of real concern for all of us.

Lord Dykes: My Lords, did not the Minister himself confirm that the Court judgment was extremely helpful and useful in enhancing the single market and freedom of movement under Article 43? While the tax regimes of each national member state remain firmly in the hands of each ministry of finance—particularly in regard to corporation tax in this case—is there not now more scope for offsetting capacities between the various member states to give companies maximum scope to offset losses?

Lord Triesman: My Lords, whatever scope we decide that we should afford to companies for offsetting losses, it should be determined in the United Kingdom under United Kingdom tax law. I do not see grounds for ceding that to anyone. I accept and agree that the United Kingdom benefits from the fact that the Commission can on occasion propose sanctions under the treaty of the European Community but only where they are necessary and to ensure respect for Community rules. The example which has been cited as illustrating this to best effect is in the area of environmental pollution, where the existence of borders does absolutely nothing on occasions to protect one state from things which have happened in another.

Lord Renton: My Lords, when a country renounces membership of the European Union, as France has done, is that country still expected to produce a member of the Court of the European Union? Does that Court, in any event, any longer have jurisdiction over that country?

Lord Triesman: My Lords, I think the noble Lord will find that while there was an adverse vote—some people may think it a successful vote—against the constitutional treaty, France remains firmly a member of the European Union and is bound by the European Court of Justice just as the rest of us are.

Lord Stoddart of Swindon: My Lords—

Lord Pearson of Rannoch: My Lords, do the Government accept that the European Court—

Lord Stoddart of Swindon: My Lords, it is the turn of this side. However friendly the noble Lord, Lord Pearson, and I are on this subject, we must make sure that there is a fair hearing of both sides.

Is the Minister right in saying that the Marks and Spencer judgment does not erode the absolute right of the House of Commons to settle taxation matters and
 
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the regulation of taxation? If a British court decided against the Chancellor of the Exchequer, he could come to Parliament and put it right. But is it not the fact that we cannot do that when the European Court of Justice makes a decision against the Chancellor of the Exchequer and the British Parliament?

Lord Triesman: My Lords, I think that the control that the Chancellor of the Exchequer and Parliament have over the formation of our tax law is very close to absolute. We should see the case that has gone through in the proper context. It was decided that losses could be offset where it was impossible for a company to gain any redress in the country in which it had been trading, but only in very limited circumstances under group tax loss rules. It is easy to exaggerate the impact of the case, but I do not think that it will have any significant impact whatever on the rule-forming of our tax regime or on the Exchequer.

Lord Pearson of Rannoch: My Lords, do the Government accept that the European Court of Justice is not really a court of law as we understand that expression but rather the engine of the treaties, which require it to find in favour of the ever-closer union and integration of the peoples of Europe, and that furthermore there is no appeal against its judgments, however outrageous they may be?

Lord Triesman: No, my Lords, I do not think that that is the case at all. The Court has a very limited remit—which is, as I said, to determine matters where there are questions about the interpretation of rules that have been decided by political processes in Europe. I do not think that the Court can drive those political processes; it is clear to me that it responds to them.

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