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Commons Chamber

Volume 897: debated on Monday 4 August 1975

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House Of Commons

Monday 4th August 1975

The House met at half-past Two o'clock

Prayers

[Mr. Speaker in the Chair]

Private Business

GREATER LONDON COUNCIL (MONEY) BILL

BRITISH RAILWAYS (NO. 2) BILL

MILFORD HAVEN CONSERVANCY BILL

GREATER LONDON COUNCIL (GENERAL POWERS) BILL

Lords Amendments considered and agreed to.

Oral Answers To Questions

Energy

National Nuclear Corporation

1.

asked the Secretary of State for Energy if he will make a statement on the signing of the agreement for shareholding in the National Nuclear Corporation, giving the proportion of shares to be held by both public and private interests.

Discussions for the restructuring of the shareholding of the National Nuclear Corporation are still in progress. I am therefore not yet ready to make a statement.

Does my right hon. Friend agree that this is a matter of the utmost national importance? Will he give an assurance that there will be no automatic General Electric Company monopoly and that details of any agreement reached will be made known in full to the House of Commons?

I recognise the importance of the point. The GEC has a supervisory contract. When I am in a position to make a statement I shall do so.

As the pressure tube reactor programme has now slipped a full year since the Minister's predecessor announced the Government's decision last year, is it not becoming a matter of great urgency that the structure of the National Nuclear Corporation should be sorted out so that Dr. Ned Franklin, managing director of NPC, should be given clear and firm terms of reference to get on with what is, in the view of the right hon. Gentleman, an essential part of the Government's energy strategy?

Gas Supply (Rural Areas)

2.

asked the Secretary of State for Energy whether he will give a general direction to the British Gas Corporation to expand the network of gas supply mains in rural areas.

No, Sir. The statute imposes a duty to satisfy all reasonable demands for gas only so far as it is economical for the corporation to do so, a matter of which it is the proper judge.

Is it not in the national interest that all energy consumers should have the widest possible choice of fuel, especially in the rural areas, and that gas should be more widely available as an alternative to oil for central heating purposes?

This involves the commercial judgment of the British Gas Corporation, which looks at each proposition on its merits. If my hon. Friend has any case or area in mind, perhaps he will get in touch with me, after which I shall communicate the details to the British Gas Corporation.

Oil (Self-Sufficiency)

3.

asked the Secretary of State for Energy whether he is satisfied with progress in the North Sea towards achieving self-sufficiency in oil.

Will the Secretary of State say how long he thinks that self-sufficiency will last? Will he give a guarantee to the nation of non-interference by himself so that this vital self-sufficiency will not be put at risk by his blunders?

The hon. Gentleman asks me about progress towards achieving self-sufficiency. He is now inviting me to look forward into the future to see how long the oil under the North Sea will last after it has been discovered. I think that on reflection he will agree that that was not an easy question to answer. I cannot answer it.

Does the Secretary of State accept that Scotland could be self-sufficient in oil within a matter of months and that it could remain self-sufficient in oil for much longer than could Britain, if we are considering merely North Sea oil? Will he make a comment on the importance of the relationship between the Scottish Assembly, which will govern a country rich in oil resources, and England, which will be importing oil?

Although I understand the hon. Lady's interest, I think that she has somewhat oversimplified these problems. She will recognise that until we are able to accomplish participation, and indeed a new framework, the oil, or any part of it, will in no sense belong to the people of this country.

Coal Industry (Finance)

4.

asked the Secretary of State for Energy what percentage increase in the price of coal would be necessary—taking no account of the elasticity of demand—for the National Coal Board to cover its costs including interest on capital.

The board aims to break even in the current financial year after covering its costs, including interest on capital.

I am glad to hear that. Is there any chance of recouping some of the enormous amount of capital we have written off for the National Coal Board in past years? Does the Minister agree with Mr. Arthur Hawkins that there is now no scope for increasing the price of coal without making it un-competitive against the price of oil?

I think that the hon. Gentleman is on another tack and is hiding his chagrin at the substantial progress that is being made by the coal industry. Mr. Arthur Hawkins must be responsible for his own statements. We live in a world in which energy must become more and more expensive.

Does the Minister agree that one of the best ways of improving the National Coal Board's finances would be to increase productivity? Will he explain to the House why productivity has been falling since March although recruitment has been increasing?

The hon. Gentleman is correct. In two months—I think in May and June—to some extent productivity fell. The hon. Gentleman will probably have read in the Press that the unions and the National Coal Board are to cooperate and hold meetings to discuss the reasons for this fall. One reason is the training problem with new entrants to the industry. As the hon. Gentleman is well aware, there are also serious geological problems.

Does the Minister agree that if we could get our productivity even within striking distance of the productivity achieved in Germany, Luxembourg and France, it would have a dramatic effect on prices and the general cost of coal in this country would go down very sharply?

I do not agree with the hon. Gentleman's precise analogies. I have been to Western Germany and seen how coal is produced there and some of the technological progress which has been made. Although Germany has made technical progress, I think the hon. Gentleman will like to know that we in this country have nothing to be ashamed of in our technological progress. I have already said that the men, management and unions are seized of the problem of trying to increase productivity. They have substantially increased productivity over a period.

Nationalised Industry Chairmen

5.

asked the Secretary of State for Energy when he next expects to meet the chairmen of the nationalised energy industries.

I meet the chairmen regularly, but a collective meeting is now unlikely before the early autumn.

Does the Minister agree that he is in duty bound to convene a meeting at an early date so that he can explain to the chairmen collectively what measures he proposes to take to regain their confidence, which has been wholly shattered after the revelations about Court Line and the right hon. Gentleman's failures and to some extent by the steel review? Does not the right hon. Gentleman think that his own fallibility in taking top-level decisions is in question? What does he propose to do about trying to regain the confidence of the chairmen?

Last month I organised a collective meeting with the chairmen which had to be deferred because the Petroleum and Submarine Pipe-lines Bill came forward at rather short notice. I share the view that relations between Ministers and chairmen of nationalised industries are important but I have always taken the view that Ministers, being accountable to the House, have concerns that they have to safeguard. I have sought to do that and I intend to do so in the future.

Will the Minister discuss with the chairmen the ludicrous position that calls in the Press and on television day in, day out for the conservation of energy are followed by advertisements telling people to go to this or that electricity showroom or gas showroom to buy new equipment? Should there not be one showroom for gas and electricity and one meter reader to read both gas and electricity meters? Should there not be co-ordination to cut down expenses and possibly to reduce the number of chairmen and so that one chairman runs the two boards?

My hon. Friend will know that the possible combination of showrooms is under discussion. I have written to the consultative committees about it. I hope my hon. Friend will also recognise that some of the most wasteful appliances that are in use are old appliances, and if they were replaced by new ones energy would be conserved. [Interruption.] If my hon. Friend puts a supplementary question to me he must let me reply. There are many modern appliances that produce great economies, not only to the householder—

If my hon. Friend will rise to his feet I will allow him to ask endless supplementary questions. New appliances can save energy, and one would expect that information about them should be made available to customers.

North Sea Oil (Nationalisation)

6.

asked the Secretary of State for Energy what is his up-to-date estimate of the capital cost of his proposed nationalisation of oil interests in the North Sea.

I have nothing to add to the answer which my right hon. Friend gave to the hon. Member for Mid-Sussex (Mr. Renton) on 30th June.—[Vol. 894, c. 304.]

Is the Minister aware that the pound fell by as much as one cent. this morning and that sterling will continue to fall as long as he and his right hon. and hon. Friends continue to confirm that the Government are spending thousands of millions of pounds on projects such as the nationalisation of North Sea oil?

I think that on reflection the hon. Gentleman will realise that that is wild exaggeration. He should be aware that the cost of participation after a time will be self-financing.

Power Stations (Coal Stocks)

7.

asked the Secretary of State for Energy if he is satisfied that the level of coal stocks held at power stations is adequate.

Is the Minister aware of the widespread concern at the level of coal stocks held at a number of power stations throughout the country? Will he bear in mind the statement made by leaders of the National Union of Mine-workers never again to allow large stocks of coal to be held at power stations? Will he assure the House that steps will be taken before the onset of winter to repair the present situation?

I can only give the hon. Gentleman the facts. The stocks at the moment are about 17½ million tons compared with 11·8 million tons at the same time in 1974 and 19 million tons in 1973. I think the hon. Gentleman will agree that the stocking position has substantially improved.

North Sea Oil (European Community Proposals)

8.

asked the Secretary of State for Energy what recent proposals have been made within the EEC regarding the availability within the Community of North Sea oil.

There are no specific proposals. However, the EEC Council of Ministers resolved on 17th December 1974 to pursue a target of a Community oil production—both onshore and offshore—of at least 180 million tons per annum by 1985. This target does not bind individual member States.

Is the Under-Secretary aware that Mr. Simonet said that Britain would hog its oil? As we shall be the only large producers in Europe by 1980 or 1985, should not the Government make up their mind what to do with the oil? Is it to be made available to Europe at world prices? What is the Government's depletion policy?

As the hon. Gentleman knows, the Government repaired a deficiency in the statutory powers available to them by introducing proper depletion controls for the first time in the Petroleum and Submarine Pipe-lines Bill. The question of the extent to which we should deplete our oil resources is a difficult problem to resolve, involving consideration of the amount of oil in our sector. The tone and manner in which Mr. Simonet speaks to the European Parliament is, thankfully, not a matter of ministerial responsibility.

Will my hon. Friend confirm that, unlike the Common Market food surpluses, we shall not sell our oil surpluses to the Russians?

My hon. Friend is, I am sure, aware that we have no obligation to export to the EEC, although no doubt we shall consider it to be a natural market for some of the oil we produce.

As the figure of anticipated British production which was given to the Community was 180 million tons by 1985, how comes it that the British Government do not consider themselves bound by it?

The right hon. Gentleman is quite wrong on that. The figure is for the whole Community production and includes present Community oil production of 10 million tons. I understand that the EEC took the figures in the Brown Book issued by the British Government as the basis for the British component of the European total, but it is a European total. In future one will have to take into account within that 180 million tons oil acquired from La Mer d'Iroise in the French sector, the Greenland concessions which for this purpose are part of the EEC and also the Irish sector. It will be readily seen that much more than British resources are involved in the 180 million tons.

As the answer to my Question is totally unsatisfactory, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

Waste Heat Recovery

9.

asked the Secretary of State for Energy what measures he is taking to encourage British industry to harness the wasted heat from factory chimneys.

Recovery of waste heat is a technique already widely practised in industry, but there is scope for its further extension. The Government's energy conservation campaign seeks to encourage industry to review critically all aspects of its use of energy.

I thank my hon. Friend for that reply. Is he aware, however, that a firm called Peter Brotherhood, of Peterborough, has apparently made a breakthrough in the technology of this subject but that successive British Governments have failed to make use of the technique, although American firms have seen its value and have signed large contracts? Will he have an investigation made as a matter of urgency into this apparent technological breakthrough?

Since this is another demonstration of the Government's lack of sense of urgency about energy conservation, should not more funds be made available for this purpose rather than for nationalisation?

The hon. Gentleman knows that what he has said is not true. He knows very well that the Department's chief scientist has been examining this whole question. In the "Save It" campaign there will be publications and publicity to assist towards conserving heat.

I welcome my hon. Friend's undertaking to look at the Peterborough invention, but will he also look at the steps which could be taken greatly to improve the efficiency in energy consumption of Battersea power station, in particular through the use of pulverised domestic refuse taken from Cringle Dock, which I believe the GLC is anxious to develop with the Central Electricity Generating Board, which apparently is being rather slow in coming to a decision?

My right hon. Friend the former Secretary of State for Energy said that the Government were not proud in issues of conservation. We will examine any proposition put to us from either side of the House.

Summer Time

10.

asked the Secretary of State for Energy what further discussions he has had with interested parties in the United Kingdom concerning EEC proposals that summer time should be restricted in order to promote energy conservation; and if he will make a statement.

The Commission's proposal is not that summer time should be restricted but that it should be introduced in those member States which do not have it, and that the dates of summer time should be harmonised by mutual agreement. Primary responsibility for a summer-time arrangement in the United Kingdom rests with my right hon. Friend the Secretary of State for the Home Department, who will be considering, with others concerned, whether the EEC discussions give rise to a need for consultations.

Is the hon. Gentleman aware that any tampering with our present summer-time arrangements would give rise to widespread resentment? Can he therefore indicate whether, in his judgment, there is very much substance in the argument that an alteration in any way of the summer-time arrangements could conserve energy?

I have pointed out that we shall be talking about mutual arrangements. Clearly the experience of the United Kingdom would come into any negotiations or discussions on the matter. Other aspects, such as those involving transport, are matters for the Ministers concerned.

Will my hon. Friend inform the Secretary of State that we have had enough of this mucking about with our summer time? We had the experience under the last Labour Government when someone took a Bill out of a pigeon hole and a new arrangement for summer time was foisted on us. Do not let us have any such nonsense again. Let us remain precisely where we are.

I am aware of my hon. Friend's views. No doubt he is referring to the use of British Standard Time. I think the whole House agrees that the disadvantages were found to be greater than the advantages.

North Sea Oil (Landing)

11.

asked the Secretary of State for Energy when he expects the first consignment of North Sea oil to land at Grangemouth.

British Petroleum is in close touch with my Department and keeps us fully informed of progress. It is not practicable to state a precise date, but BP advises me that it expects the first oil to arrive about the end of October at Grangemouth. Production at the wellhead will have started some weeks before then and the interval is required to fill up the long pipelines under sea and on land.

In order properly to celebrate this auspicious occasion, will my hon. Friend organise a reception, to which would be invited representatives of BP, the Scottish TUC, local Labour councillors, Members of Parliament and his own good self, all of whom are working hard to provide more jobs for Scottish workers in the oil idustry? Will he also confirm that virtually every drop of oil from the Forties field will be piped to Grangemouth? Does he agree that certain remarks made a few weeks ago when the first batch of North Sea oil was landed in the Thames Estuary were merely typical of the churlish chauvinism of the Scottish National Party?

My hon. Friend has interesting ideas on the question which no doubt BP will note. I agree that this is a very important occasion and one worthy of widespread celebration. In relation to the comparison with the Argyll field, I am glad to note that my hon. Friend is seized of the point. What is ridiculous in certain comments about the Argyll field situation is that on any median line basis it would fall in the English sector and that for others to claim it is simply economic nationalism or imperialism on their part.

When the oil flows freely to Grangemouth, will the hon. Gentleman indicate whether the Government are of opinion that the present refining capacity is sufficient to cope with it or whether it is likely that further refineries will be required? Will he make a statement on that subject to an early date?

My right hon. Friend the former Secretary of State for Energy made an extremely important statement on refining policy on 6th December, and that remains the general view of the Government. The main problem in relation to North Sea oil is changing the type of refining capacity so that it can take North Sea oil instead of the crude oil from the Middle East which has been the traditional source of supply.

Winter Supplies

12.

asked the Secretary of State for Energy what measures he is planning to secure adequate energy supplies and savings for the coming winter.

I am currently advised that stocks and supplies should be adequate to see us through the winter. Contingency plans are available should they be needed. I shall continue to develop measures to achieve savings, including the current publicity campaign.

Is my right hon. Friend satisfied that the Department's contingency plans cover the worst that could happen this coming winter, such as severe weather after four mild winters and also a substantial increase in the cost of Middle East crude? Both these factors are possible.

I am grateful for what my hon. Friend has said. Any Secretary of State for Energy may run the risk in the winter of having to look back on an overoptimistic forecast made on a hot summer day. I underline what my hon. Friend has said. The House and the country should know that in winter there are risks from weather and of other interruptions and dislocations, so we have to be careful. Contingency plans have been prepared with that in mind.

What has been the expenditure of the Government on the conservation advertising programme carried out so far? What is to be the budgeted figure for the remainder of the year?

That is another question, but I will furnish the hon. Gentleman with the precise figures.

Should it not be a matter of concern to my right hon. Friend that the consumption of electricity is actually down on what it was three years ago, and that this is the first time there has been such a situation in the history of our electricity supply industry? Consumption has been dropping over the past two years. Does not this situation reflect the low level of industrial productivity? Should not this be a matter of grave concern to the Government?

Yes, Sir. My hon. Friend has an unrivalled knowledge of the industry and is quite right in what he has said. As a result of the recession, the consumption of electricity is well below what it has been and could be. That gives us some margin, but no satisfaction should flow from that margin because it still leaves the hazards of the winter in the electricity supply and other fuel industries.

Even on a hot summer's day, can the right hon. Gentleman say what research his Department or any other agency is conducting into solar heating, domestically or industrially? If so, what results, if any, have there been?

There is, of course, as the hon. Gentleman will know, the Energy Technology Support Unit at Harwell. There are a number of national and international programmes, including the topic of solar energy, although our normal weather conditions do not make solar energy top priority in the United Kingdom. However, there are other forms of non-conventional energy consumption which are being vigorously explored.

Production Targets

13.

asked the Secretary of State for Energy what are the Government's targets for the production of coal and North Sea oil and gas in tons of coal equivalent for the present year, and for the years 1976, 1977, 1978, 1979 and 1980, respectively.

The Government do not set targets for the production of coal, North Sea oil and gas.

Does my right hon. Friend realise that some people will regard his reply with doubt in terms of the Government's efficiency in looking at future energy supplies? Is he aware that the cost of the oil from the North Sea could be so high that the oil supplied from the OPEC countries could undersell it at any given time? Therefore, will my right hon. Friend give further consideration to our having a national fuel policy, taking into account greater investment required in coal mining so that we can make it more attractive and recruit more men and youths into the industry?

I appreciate what my hon. Friend has in mind, but he will recall that the forecasts contained in the 1967 White Paper were considered unwise. Therefore, such forecasts are not in my mind. He will also know that a number of major statements on fuel policy have been made by the Government since we came into office, including a tripartite coal examination with its long forward planning in respect of investment in coal. He will appreciate that the present Government are seeking to give coal its proper place in the development of our indigenous resources.

Will the right hon. Gentleman forecast how many years he thinks it will take for BNOC to equal the skill of operation and efficiency of the major oil companies operating in the North Sea?

Does my right hon. Friend agree that to some extent his reply to my hon. Friend the Member for Dearne Valley (Mr. Wainwright) was disgraceful? Since we are estimated to have a reserve of over 800,000 million tons of coal in this country as distinct from an unknown quantity of oil under the North Sea, is it not more realistic that my right hon. Friend and his Department should set a target for the coal mining industry as something at which to aim?

My hon. Friend, who knows the coal industry very well, will appreciate that in the tripartite coal examination report—of which there was published last year both an interim and a final version—the Government committed themselves to a substantial increase in investment. They endorsed plans to stabilise deep mine production at 120 million tons a year until 1985. They also accepted a capital programme aimed at increasing opencast production to 15 million tons a year. We have no fixed upper limit of coal use, and the Government have done all they possibly can to encourage the mining industry, in which they very much believe.

Since the question concerns gas, will the right hon. Gentleman now apologise to his hon. Friend the Member for Dearne Valley (Mr. Wainwright) for misleading him last week over the ICI gas contract? Does he not realise that to brandish "phoney" figures of that kind demonstrates yet another example of the Secretary of State's capacity to mislead with his foetid imagination?

The right hon. Gentleman is totally wrong again, as on so many other occasions in the past. I was asked a question, without prior notice, in the Select Committee about a matter into which I had inquired. I gave the information which was available to me and wrote to the Chairman of the Committee publishing the comments made by the Chairman of the British Gas Corporation.

Scotland (Secretary Of State's Visit)

14.

asked the Secretary of State for Energy if he will make a statement on his official visit to Scotland.

I had a series of meetings with regional authorities, oil companies and unions, including the STUC, and with the Offshore Supplies Office staff. I also had the opportunity to see at first hand some of the activities on one of the offshore oil production platforms in the Forties field.

I was most impressed with the scale of the operations and stressed the need for a greater share of equipment orders to come to home suppliers, and the desirability of facilitating the work of the trade unions.

Did my right hon. Friend learn anything about the need for greater safety in North Sea diving?

Yes, Sir. Efforts are being made to deal with the hazardous problem facing divers, and I am sure that trade union involvement will be beneficial on the safety side.

Is my right hon. Friend aware that we are not prepared to tolerate the number of deaths and accidents which occurred last winter? Will he take steps to bring in an order under the safety health legislation to remove the exemption of North Sea industry and to ensure that we have legislation to cover safety committees and trade organisations on rigs?

I had the opportunity when in Aberdeen of meeting the inter-union off-shore committee. That committee raised with me the problems of access to rigs by trade union officials and also other matters, because it was felt that the trade union representatives were not as involved as they should have been. I echo my hon. Friend's concern about safety matters. I have asked whether those concerned will prepare for consideration a charter in this respect which I intend to discuss with the four major unions, the T&GWU, the AUEW, the Boilermakers and my hon. Friend's union, the National Union of Seamen. I shall be in touch with the oil companies on this matter because I regard safety and trade union representation as going side by side in this respect.

Conservation

15.

asked the Secretary of State for Energy if he will make a statement on the progress of the Government's energy conservation programme.

The Government's energy conservation programme continues to progress and the figures for energy consumption this year provide grounds for encouragement. The publicity campaign is continuing with increasing emphasis on advice to industry for which a pamphlet will shortly be published.

My right hon. Friend will now be taking into account the recommendations he has received from his Advisory Council on Energy Conservation and looks forward to reading the report of the Select Committee on Science and Technology.

When will the Government stop tinkering with energy conservation matters and give them a higher priority? If the Government can find £1 billion to nationalise North Sea oil and can find a further £1 billion to set up the BNOC, why cannot they find relatively small sums to indulge in constructive capital investment in fuels which will produce a more rational energy use and bring a positive return to the national economy?

If the hon. Gentleman will not believe the Government's reply on this subject, perhaps he will believe the evidence in the large industries concerned which have made substantial savings in energy conservation. That is the important fact, and the evidence can be examined. The hon. Gentleman will know that there is a scheme covering grants and loans which is of assistance to industry. Nevertheless having heard the hon. Gentleman's supplementary question, and remembering that he fought the last election on a freedom platform, I am beginning to conclude that he sees the conservation campaign being achieved only by the introduction of the most Draconian measures.

Will the Minister confirm that among the energy conservation measures which should commend themselves to the House are long-term contracts such as those between the British Gas Corporation and ICI? Will he take the opportunity, since the Secretary of State for Energy would not do so, to apologise to, in addition to the hon. Member for Dearne Valley (Mr. Wainwright), the Chairman of the British Gas Corporation for the partial, selective and misleading information he gave to the Select Committee on Nationalised Industries? Will he tell the House whether he agrees that his right hon. Friend the Secretary of State is slipping badly even in his new job?

I do not know whether my right hon. Friend is "slipping badly" but certainly the hon. Member for Arundel (Mr. Marshall) must have defective hearing. His supplementary question was answered previously by my right hon. Friend. I do not know why the hon. Gentleman has to pose a point which has already been answered.

Pneumoconiosis Compensation Scheme

16.

asked the Secretary of State for Energy what recent representations he has received from the unions and the National Coal Board on the need for further Government financial support for the pneumoconiosis compensation scheme.

The National Union of Mineworkers raised the matter during my right hon. Friend's meeting with it on 23rd June and mentioned it again in a letter dated 4th July.

Will my hon. Friend accept that whereas the new scheme is widely welcomed in the mining communities, there is a gap in the scheme's existing arrangements in respect of widows and commuted cases? Does he agree that if the Government were prepared to find a few additional million pounds for the scheme these cases will be brought into its ambit?

I am obliged to my hon. Friend for mentioning that the pneumoconiosis scheme is of great benefit to thousands of people. The fact that the Government made a £100 million contribution has gone some way to assist the situation. I should like to make it clear to my hon. Friend that although we are talking in terms of sums of money there is no danger of any legitimate claims not being met. The scheme was drawn up between the National Coal Board and the NUM. It is for those parties to discuss any amendments to the scheme such as those my hon. Friend has outlined to the House.

Is my hon. Friend aware that the present situation as a result of the scheme seems to indicate that a proper actuarial assessment was not made of the amount of money required to do justice to all the people who have been referred to by my hon. Friend? Is he aware that there are people who have settled out of court for minimal sums although they suffer from a high degree of disability? There are the widows who lost their husbands in the same circumstances as widows who lost their husbands after the specified date, but they receive only a miserable sum. Should there not be a proper actuarial assessment of the money required?

My hon. Friend has drawn the attention of the House to the anomalies that exist in the scheme concerning commuted cases and the question of widows. I must remind him that the scheme was drawn up between the National Coal Board and the NUM. It is not a departmental scheme. It was not calculated actuarially as such by the Department but was discussed and agreed by the NUM and the National Coal Board. I hope my hon. Friend will agree that the starting of the scheme with £100 million has made a substantial contribution towards the scheme which has been beneficial to so many people.

North Sea Oil (Extraction)

17.

asked the Secretary of State for Energy whether he will make a statement about the progress which is being made in the extraction of oil from the North Sea.

I would refer the hon. Member to the answer given on 30th June by my right hon. Friend to the hon. Member for Glasgow, Cathcart (Mr. Taylor).—[Vol. 894, c. 303–4.]

What special contribution does the Minister hope will be made by BNOC to the speedy and efficient extraction of oil from the North Sea? What lessons will he learn from the history of other nationally-owned corporations which should be applied in the case of BNOC?

I am confident that BNOC will make a constructive contribution to the exploitation of our Continental Shelf resources. It will also secure for this country adequate control and a proper return on what is a very important national asset.

Will my hon. Friend inform the official Opposition that their continued sniping at old-established nationalised industries is all to no avail when we are discussing the coal industry? After all, we have spent millions of pounds to restore years and years of Conservative neglect of the coal industry, whereas oil is a virgin area and we are dealing with it in the right way by taking public control.

I agree with my hon. Friend that the Opposition are behaving true to form.

Gas And Electricity Disconnections

18.

asked the Secretary of State for Energy how many households have had gas and electricity supplies, respectively, cut off because of the non-payment of accounts in the most recent annual period for which figures are available; and by what percentage these figures have increased or fallen compared with five years previously.

As the detailed information requested is not readily available, I will ask the chairmen of the industries to write to the hon. Member. I am sure my right hon. Friend will be glad to take similar action in relation to the electricity industry in Scotland.

Is not the Minister aware that this information is available in Scotland and that I have obtained it? Is it not outrageous for the right hon. Gentleman, when he is increasing electricity prices by such a substantial amount, not to have information about the number of people whose supplies of electricity and gas are cut off because they are unable to pay their bills? Is this not a major and frightening problem in Britain? Should not the electricity boards be instructed by the Minister, as are the gas boards, to ensure that every possible way of making the payment of bills easier should be investigated, and in particular the direct payment of bills of people on long-term benefit by the Supplementary Benefit Commission?

The hon. Gentleman must know that I am not the Minister responsible for the South of Scotland Electricity Board. I can give him only the England and Wales figures. In terms of electricity, the number of domestic and commercial consumers disconnected was 120,000—that is, 0·7 per cent. of the total number. The figure for gas is about 34,000 cut-offs, or 0·36 per cent. of credit customers. I share the hon. Gentleman's concern. I am very anxious about the winter with substantially higher bills for gas and electricity consumers coming at a time when there will be a number of people unemployed, others on short time and others facing various difficulties. I have, as I promised the House, seen the Chairman of the Electricity Council about the matter. I am writing to him as well as to Members of Parliament about the position, because it is of great concern to the whole community that a general desire to bring the nationalised industries into balance should not be followed by disconnections of a kind that would create serious hardship for many families.

Overseas Development

Mozambique

30.

asked the Minister for Overseas Development whether he has now had discussions with the Government of Mozambique about aid to that country; and if he will make a statement.

No discussions have taken place since my predecessor met with President Samora Machel in Dar es Salaam earlier in the year. The new Mozambique Government will obviously need time to take stock of the country's economic situation, but I hope that they will be in a position to begin detailed negotiations in the near future.

Does the right hon. Gentleman agree that there are two questions concerning this matter? The first is the question of any bilateral aid we may give and the second is the question of any aid that may be given in the context of the imposition of sanctions. Will he give the House an assurance that if we give aid in the latter context it will be only as part of a general arrangement involving other countries and under the United Nations?

Certainly there are two aspects to this matter. On sanctions, Mozambique as a member of the United Nations will, we assume, carry out United Nations policy in this respect. Any aid that we give would not, of course, be conditional upon that but would be in support of Mozambique in its problems as a country applying sanctions along the lines which were described, for instance, in the communiqué on the Commonwealth Prime Ministers' conference at Kingston. We hope that other donor countries in the United Nations will also provide aid.

Is not the Mozambique economy deeply dependent upon port and rail traffic with and miners' remittances from Malawi, Swaziland, Rhodesia and South Africa? As the Government are rightly anxious to help the development of this territory, should they not do everything to encourage co-operation and conciliation—not confrontation—between the different parts of Southern Africa?

Of course we would encourage co-operation in general terms, but in the case of Rhodesia it is our policy and United Nations policy that sanctions should be applied.

World Food Council

31.

asked the Minister for Overseas Development if he will publish a White Paper on the recent proceedings of the World Food Council.

No, Sir. The first session of the World Food Council was of short duration and mostly concerned with work of a preparatory and organisational nature. The Written Answer which my hon. Friend the Parliamentary Secretary gave to a Question from the hon. Member for Rochdale (Mr. Smith) on 3rd July—[Vol. 894, c. 531.]—gives a brief account of the results of the first session.

Is my right hon. Friend aware that the British decision to contribute 100,000 tons of fertilisers at that meeting at a cost of £15 million is very welcome? Can he now take an initiative in the World Food Council to consider the consequences on world food supplies of the very large-scale purchases by the Soviet Union in the world grain market, which could produce a situation similar to that which occurred a year or two ago which disrupted the whole pattern of grain supplies throughout the world, especially to the developing countries?

On the first point, I thank my hon. Friend for his remarks. On the second point I should like notice, but I shall certainly consider what my hon. Friend has said.

Will the right hon. Gentleman confirm that it is the Government's policy to concentrate their aid overseas on helping countries to grow their own food and that they will concentrate on rural development schemes because that is the real long-term answer to helping the less-developed countries?

Yes, Sir. It is our policy to concentrate more of our aid on agriculture and, indeed, on rural development generally. I hope to present shortly a White Paper which will spell out our policy in more detail.

Aid Policy

32.

asked the Minister for Overseas Development whether he intends any adjustment of the policies of his Department, in view of Her Majesty's Government's anti-inflationary policy as outlined in the White Paper "The Attack on Inflation", Cmnd. 6151.

Bearing in mind that it is usually the poorest countries which suffer most from the effect of world inflation and that it is the philosophy of the Labour Party to give most help to those who are most in need, will my right hon. Friend enlarge on his answer and state clearly and categorically that, despite the savage cuts in public expenditure outlined in the White Paper, there is no intention on the part of the Government of further decreasing the percentage of our gross national product which we spend on overseas aid?

A reduction was announced in April of £10 million in what would have been the programme for 1975–76 and for 1976–77. Beyond that, public expenditure in general is under review and I cannot anticipate the result.

It is our stated intention as a Government to move as quickly as we can to the fulfilment of the United Nations target of 0·7 per cent. of gross national product. Meanwhile, within our aid programme we shall give greater priority than hitherto to the very poorest countries—those with a per capita income of $200 per year or less—and to the poorest groups within developing countries.

Does not the right hon. Gentleman agree that some adjustment is necessary in the case of India, which has been able to construct and explode a nuclear bomb? If the Indians can divert resources of that kind to such activities, surely India should not get any hand-out from the United Kingdom in present circumstances.

I do not think that Member of the House should describe development aid programmes as hand-outs. They are a contribution which the more affluent countries make and should make to the development plans of the developing countries. India is the biggest single aid recipient from this country, but in view of her size she is certainly not treated over-generously. Indeed, she gets a great deal less per capita than many other countries and has used that development aid very intelligently and very successfully over the years.

Does the Minister agree that although overseas aid can play a vital and indispensable rôle in the development of poorer countries, some of the poorer countries have far greater inequalities of wealth than are to be found in the aid-giving countries and that the time has come when the countries which give generously should make clear to some of the recipient countries that they should bring about such changes in the structure of their own society and government as would enable development to take place rather faster than has been the case hitherto?

I would go part of the way with that, but not all the way. We are dealing with independent countries. We are not in a paternalistic situation where we can dictate to them the political and social policies they should follow. One of the considerations that we have to bear carefully in mind is that where we are providing aid it will be used effectively. We have to judge the ability of a country to make effective use of our aid as well as judging its need for it.

Aid Programme

33.

asked the Minister for Overseas Development by what percentage his overseas aid programme in the current year and in 1976–77, respectively, is greater or less in real terms than the programme for 1974–75.

The net aid programme in 1975–76 expressed in 1974 constant prices is lower by 1·3 per cent. than in 1974–75. In cash terms, however, it shows an increase of some £100 million. The net aid programme for 1976–77 is 1·1 per cent. higher than for 1974–75.

In view of those disappointing figures and of the many demands on very limited resources, will the Minister consider whether it is wise to continue giving aid to India in view of the recent political developments there? Is it fair to ask British taxpayers to give a great deal of money to help to finance the programmes of a country which is at present destroying democracy and freedom and making nonsense of the rule of law?

In a sense I answered that when I replied on the previous Question. I want to repeat from this Dispatch Box that it is not my business or that of Her Majesty's Government to determine the policy of other independent countries. There are within the world about 100 countries that receive aid from a number of sources, not only from Britain but from other aid donor countries and from international agencies. Many are not democracies. Some have internal practices of which we might disapprove. We have to ask two basic questions: do they need assistance, and can they make effective use of that assistance?

Although it would not be right or practical to investigate the political purity of all the countries which are aid recipients, and although many of us who are anti-Common Market regarded the Lomé Agreement as wholly inadequate because it did not provide for the poorest nations of South-East Asia, is my right hon. Friend nevertheless aware that some of us have misgivings about what is happening in India and are bound to share in some measure the sentiments expressed rather surprisingly from the other side of the House?

I appreciate that my hon. Friend has reservations about what is happening in India. However, I hope he will not suggest that we should cut off aid to India or to other countries which may be pursuing policies of which hon. Members may not approve.

As for the extension of the Lomé Agreement, it is the policy of the Government to see the aid programme of the Community extended to non-associates. We shall be arguing for that policy within all the machinery of the Community.

The right hon. Gentleman has twice sought refuge in the word "effectively" or "effective use". As that word is, on the face of it, imprecise since any expenditure is bound to produce some effect and to that extent be effective, will he essay a more precise definition and in particular say whether any qualitative criterion is involved?

No; without giving a very long lecture I will not attempt it. I suggest to the House that a study both of the British aid programme and of the aid programmes of other donors, of the United Nations agencies, of the World Bank and other similar bodies, shows that over the years we have become very much more expert in assessing development projects. So also have the developing countries themselves in many cases become much more effective in their development projects and avoided earlier mistakes. On the whole, the experience of recent years has been more successful than was the experience 15 to 20 years ago.

English Language Teaching

34.

asked the Minister for Overseas Development whether the Government are making any contribution towards the teaching of the English language in the Third World.

Yes, Sir. We attach great importance to this. In collaboration with the British Council, my Department supports the provision of skilled manpower from this country to fill teaching, advisory and other specialist posts; arranges training for teachers and teacher trainees; and supplies books and other equipment for educational and training institutions in developing countries.

As about one-third of the world can neither read nor write, and as English is a second language in so many underdeveloped countries, does not the Minister agree that it is a British interest to promote the teaching of English in the Third World? Therefore, will he do his best to encourage English teachers, or teachers of English, to go out to the Third World and work there, particularly at a time when there is growing unemployment in this country?

Yes. My original reply indicated that my predecessors have been giving priority to our programmes. I wish to continue it. The House may like to know that there are at present about 800 English teachers in specialised posts abroad involved in the teaching of English.

Is my right hon. Friend aware that despite his encouraging reply the comparative figures for France indicate that we are not doing nearly as well as we should be and that in the year for which I have been able to obtain figures—incidentally, not from his Department—the French had over 7,300 people abroad teaching French and the comparative figure obtained from the British Council for the same year was 506 posts for the teaching of English?

In the light of those comparative figures, will my right hon. Friend undertake a thorough review of his Department's programme for teaching English abroad and undertake to devote to this purpose a higher proportion of his admittedly limited funds?

I will certainly study that comparison. The House will know that there are other aid donors which provide English teachers abroad. The United States, Australia, and New Zealand all have aid programmes which involve people going abroad to teach English. This is in addition to the British programme to which I referred.

Food Surpluses (Disposal)

35.

asked the Minister for Overseas Development what recent discussions he has had with the EEC Commission on the disposal of surplus food to the underdeveloped and undernourished nations of the world.

I have had no such discussions but my right hon. Friend the Minister of Agriculture, Fisheries and Food informed the House on 24th July—[Vol. 896, c. 793.]—of the revised arrangements for the sale of EEC skimmed milk powder to developing countries. The selling price is being reduced to about half the current commercial price and the scheme has been extended to include direct sales to the Governments of developing countries. Apart from such specific measures to dispose of surplus food, the EEC is also providing substantial quantities of food aid to the developing countries.

In thanking my right hon. Friend, may I ask him to go a little further and make representations himself within the Community to make sure that these surpluses, if they are to be produced—they are indefensible in any event—will be allocated by the EEC to those who need them most? Will he take it upon himself to ensure that they go to the undernourished world rather than leave this task to his right hon. Friend the Minister of Agriculture?

The subject matter overlaps the food aid question. Inasmuch as we are concerned with the disposal of agricultural surpluses and the interests of the farming community in Europe, it is a matter for my right hon. Friend. To the extent that we are concerned with food aid, it is clearly a matter for me. Certainly the Government have indicated that we support the proposals of the EEC for a larger food aid programme from the Community to the developing world.

Does not the Minister agree that it would be a good idea if Her Majesty's Government took steps to try to bring about a co-ordinated food aid programme between the European Economic Community and the food-producing parts of the Commonwealth, such as Canada, Australia and New Zealand, which have food surpluses?

These matters are discussed between Governments. The Development Assistance Committee of the OECD is a forum in which donors from the non-Communist world generally come together, compare notes and exchange information on matters of this kind. I am not sure that a joint programme under a separate organisation would necessarily be helpful in this respect.

Concerning the skimmed milk aspect of food aid, to which my right hon. Friend referred, is he now satisfied with the arrangements made in the EEC in regard to the commercial sale of these foods, particularly for commercial baby food?

My hon. Friend has asked a supplementary question which touches on the subject matter of Question No. 36, which has not been reached. This matter has been followed up since he received an answer on 16th May from my right hon. Friend who preceded me in this office. The position is that it has not been found necessary to produce a standard form of guarantee, but in the few cases where guarantees are needed against unreasonable commercial exploitation this is discussed with the recipient countries and guarantees are obtained against the sort of thing my hon. Friend has in mind.

Devolution

I ask for the forbearance of the House on a busy day in asking leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"what purports to be the revelation to the Scottish Press of the blueprint of the Government's White Paper on Devolution."
In one of the longest Consolidated Fund Bill debates on a single subject since the war, this House, to the irritation of many of those who had subjects lower down the list of subjects for debate, discussed devolution for seven solid hours on Thursday evening and Friday morning, ending at 4.13 a.m. with an understandably careful winding-up speech by my hon. Friend the Minister of State.

At precisely that time, and unknown to us, the printing presses of the Daily Record were churning out the details of plans, alleged to have been developed in the Cabinet Office, purporting to come from Government sources, for, among other things, a Scottish Cabinet system, for a Scottish Prime Minister, for so-called US-style decision-making congressional committees, and for an Assembly in Edinburgh, with powers of direct or indirect taxation, not to mention the assertion that the Scottish Assembly would have powers over the Scottish Development Agency and trade and industry in a year's time.

The issue is important, as described in the Daily Record, in that, if such plans were to go ahead, we should be on the road which leads inevitably to the break-up of the United Kingdom.

The issue is urgent, in that once such ideas become embodied in White Papers and Queen's Speeches, it is more difficult for Governments to drop them without becoming involved in the kind of morass that we had during the passage of the Parliament (No. 2) Bill on reform of the House of Lords.

The issue is definite, in that a Government whose Attorney-General takes out an injunction, rightly or wrongly, against The Times Newspapers, against Mrs. Crossman and Jonathan Cape Limited, concerning Cabinet events of 10 long years ago, has an obligation to do something about what appears to be a massive leak, thought out and designed to achieve certain political purposes, on a delicate issue which is both topical and controversial.

If a positive Government denial is not forthcoming—and I very much hope that it will be, although I understand the nature of the business in the next three days—I ask, Mr. Speaker, that some of your own time, available on Thursday might be allowed for a return to the devolution issue, in the light of the new circumstances.

Commenting on what my hon. Friend the Member for West Lothian (Mr. Dalyell) has said about what he read in a certain newspaper—apparently taking it for gospel that it must be true—it might be helpful if I observe that I will undertake to ensure that my right hon. Friend the Leader of the House will make a statement tomorrow.

I am grateful to the right hon. Gentleman. I am not quite certain whether his statement pre-empts my decision. The hon. Gentleman gave me appropriate notice and he put his points clearly, as usual. They are important points. It is not for me to pronounce on the merits. No doubt the matter will be pursued in other ways—there are a number of ways open—at some time. I am afraid that the answer under Standing Order No. 9 is "No".

Later—

On a point of order, Mr. Speaker. With reference to the remarks made just now by the hon. Member for West Lothian (Mr. Dalyell) about the Consolidated Fund Bill debate on devolution which pre-empted certain other debates, may I point out that none of my hon. Friends spoke for anything like the length of time for which the hon. Member himself spoke—or, for that matter, for the length of time for which the hon. Member for Fife, Central (Mr. Hamilton) spoke?

Right Hon Member For Walsall, North

On a point of order, Mr. Speaker. After the Leader of the House had received on Thursday night an application from the right hon. Member for Walsall, North (Mr. Stonehouse) to appear at this House to give a personal explanation, I asked you, Mr. Speaker, on Friday morning, whether the Leader of the House had given you any intimation that he wished to make a statement about allowing me to move the motion or move it himself. Your answer, Mr. Speaker, was:

"No, I have had no such request, nor do I think that the Leader of House has had time to consider the letter. Now that I have informed the House of the letter, the matter will be considered."
Now that the Leader of the House has had the weekend in which to consider it, may I ask you whether he has given you, Mr. Speaker, any intimation that he wishes to make a statement to the House or to allow me to move that motion?

Further to that point of order, Mr. Speaker. In the absence of my right hon. Friend the Leader of the House I have been asked to reply. As you, Mr. Speaker, explained last Monday, it would in present circumstances require an order of the House to secure the attendance of the right hon. Member for Walsall, North. I think it is unlikely that time can be found before the recess to debate the necessary motion, and it may be better in any event to review the matter when the House resumes.

Further to that point of order, Mr. Speaker. This is a great pity, because the right hon. Gentleman the Member for Walsall, North cannot now make his statement for two or three months. Is it possible for my right hon. Friend the Patronage Secretary to give an assurance that a statement will be made as soon as the House resumes?

Order. This has nothing to do with the Chair. The right hon. Gentleman has said something. I really cannot permit the matter to be debated now. The Chair has no power of initiative in the matter; therefore, it is not a matter for the Chair. The hon. Member must pursue the matter with his right hon. Friend in other ways.

Could it be made quite clear that if a statement by the right hon. Gentleman the Member for Walsall, North is to be allowed, it will have to be submitted to you first, Mr. Speaker, for your approval, and that the right hon. Gentleman cannot say whatever he likes? It is very important to get this on record, because the debate on this matter was prevented in this House on the ground that it would be prejudging court proceedings. If a statement were to be allowed, unabridged, before you saw it, Mr. Speaker, that too, presumably, would be prejudging court proceedings, so it is very important to establish that before any such statement is made it is seen by you.

The hon. Member for Fife, Central (Mr. Hamilton), a very experienced parliamentarian, is now asking me to rule on a hypothetical matter. If the House decides to allow the right hon. Gentleman the Member for Walsall, North to make a statement, I shall have to consider my position in regard to the nature of the statement. I shall wait until the House has passed the resolution before I go any further into that matter. There are difficulties, but I have been giving it some consideration.

On a point of order, Mr. Speaker. As I understand it, there is nothing to stop a motion being moved forthwith that the right hon. Member for Walsall, North (Mr. Stonehouse) do attend the House. I propose to move that.

I think that it will be for me to say whether I can accept such a motion. Objection has been taken and I must tell the hon. Member for Birmingham, Handsworth (Mr. Lee) that I cannot accept it.

On a point of order, Mr. Speaker. As various statements have been made about the rights of the right hon. Member for Walsall, North (Mr. Stonehouse), is it not the case that if the right hon. Gentleman so desires he can now issue a written statement to every right hon. and hon. Member of this House—and, indeed, could have done so at any time during the past six months? The right hon. Gentleman could spend his time doing it now, and any right hon. or hon. Member who wished to read it could do so.

After that useful intervention, the Clerk will now proceed to read the Orders of the Day.

Orders Of The Day

Social Security Pensions Bill

Lords amendments considered.

Clause 14

Rate Of Invalidity Pension For Persons Under Pensionable Age

Lords amendment: No. 1, in page 7, line 28, after "shall" insert

"for any period of interruption of employment".

3.41 p.m.

The Minister of State, Department of Health and Social Security
(Mr. Brian O'Malley)

I beg to move, That this House doth agree with the Lords in the said amendment.

With this, it will be convenient to discuss Lords amendment No. 2, in page 7, line 32, leave out from "year" to end of line and insert

"which includes or included the first day of entitlement to the pension in that period".

These are technical Government amendments to make it clear how invalidity pension is to be calculated.

Question put and agreed to.

Further Lords amendment agreed to.

Lords amendment: No. 3, in page 7, line 32, at end insert—

"(2) Regulations may—
  • (a) provide for an invalidity pension to be payable to a pensioner who, whilst continuing to be incapacitated for normal full-time work, becomes capable of undertaking light work in circumstances which satisfy prescribed conditions;
  • (b) prescribe the amount such a pensioner may earn before his pension is affected in any way; and
  • (c) prescribe the effect any earnings additional to the amount referred to in paragraph (b) above will have on a pensioner's entitlement to invalidity pension."
  • I beg to move, That this House doth disagree with the Lords in the said amendment.

    The amendment which was moved successfully in another place was intended to enable regulations to be made allowing invalidity benefit to be paid in addition to the earnings of those performing light work, whether full time or part time. At the time that the amendment was moved, it was said to have the considerable advantage that the change mooted was consistent with modern ideas of work and rehabilitation, that it was non-controversial in that it was eminently reasonable, and that it had no implications for public expenditure and therefore in no way threatened the prerogatives of this House, unlike the purpose of a previous amendment.

    If those arguments were true, I freely admit that there would be a great deal to be said for the amendment. However, I hope to be able to persuade the House that they are not.

    It would, of course, be open to the Government, as a rather simpler way round the moving of the Government's amendment, to leave this Lords amendment on the statute book and simply not use the regulating-making power that it contains or, alternatively, the regulation-making power could have been construed in such a restrictive way as to prevent the implementation of the purpose of the amendment. I hope that it will be accepted that the Government have been right to choose the rather more difficult route, which is to seek to persuade the House of the undesirability of this amendment by discussing the principle of it.

    I begin by making it clear that, although there are certain technicalities involved, the very simple principle that leads the Government to reject this amendment is that invalidity pension is dependent on the qualifying condition that the claimant is incapable of work and that to annex this to the situation that the claimant is capable of light work is to put together incompatible and mutually exclusive conditions. It is simply that basic principle which is the reason why we believe that this amendment should not be accepted.

    I am aware that the analogy was drawn in another place with the retirement pension and the earnings rule which, of course, allows someone who is in receipt of a pension also to obtain earnings to a certain level at the same time. One of the difficulties is that we speak about an invalidity pension which appears to give a superficial analogy with the retirement pension. However, the invalidity pension would be better termed "long-term sickness benefit". That would make it clear that it is not correct to seek an analogy with retirement pension because long-term sickness benefit is incompatible with the capacity for light work.

    But, whatever view we may take about paying the old-age pension to people above a certain age, which is the effective result of abolishing the earnings rule, the payment of an automatic pension to everyone below a certain age has never been strongly advocated. Therefore, unless that view is taken, we need for people who are below pension age some means of deciding who gets the benefit and who does not. That simply is the basis of the criterion of incapacity for work.

    As the result of having such a test, if the logic of the argument is accepted, I do not think that we should make it inoperable by making modifications which are totally inconsistent with it. That is the principle on which we base the rejection of this amendment.

    However, there are one or two other relevant matters. First, it is a question of cost. It was said that this had no implications for public expenditure. This is not the case. If we take only those who are in sheltered employment and a very small proportion of those who are in open employment, it may be estimated that there are at least 20,000 disabled people who would fit into any reasonable definition of fitness only for light work. If we make the rather unrealistic assumption that each of these has only the current single person's rate of invalidity pension in addition to his earnings, the cost would be about £12 million in invalidity benefit for new beneficiaries. In Government social security terms £12 million is not an enormous sum, but it is an enormous sum in terms of the new constraints on public expenditure.

    But even that probably underestimates what are likely to be the financial consequences if we accept this amendment. If an invalidity pensioner, who now gets as a married man with a wife and two children up to £30·70 a week and who from November will get £35·50 a week, were allowed to get in addition earnings from full-time work, it is reasonable to suppose that the man working full time in sheltered employment and getting, say, £35 a week would also expect to have invalidity benefit in addition to his earnings from light work. Therefore, there is bound to be consequential further expenditure of a not insubstantial kind. But that breaches the simple principle that only individuals incapable of work should receive invalidity pension. The man working full time in sheltered employment cannot be considered incapable of work.

    There is a third point of difficulty. I put the least emphasis on it, but it needs to be taken into account by the House. I refer to the problem of operating the benefit if the amendment were accepted. The basic evidence for invalidity benefit is the same basic evidence as is required for sickness benefit, which is a short-term counterpart of invalidity benefit, and that is a simple medical certificate from the general practitioner who has responsibility for the patient.

    I am advised that those countries which pay to sick and disabled people benefits which are designed to co-exist with their earnings almost always require four to six, or more, foolscap pages of evidence. Therefore, there can be no doubt, though I do not regard this as a decisive consideration, that if we were to change the whole character of the benefit in the way suggested by the amendment it would have a considerable impact on the administrative system, and lead to considerable extra financial costs for administrative reasons.

    So far I have been rather negative, but frank, in saying why we believe that the amendment should not be accepted. Turning to the aim of the amendment, I shall indicate the ways in which the Government believe that to a large degree we are already meeting it. I readily admit that the therapeutic earnings limit goes to only a small number of persons in specialised circumstances, but it has been extended outside the hospital system where it can be shown that the person has good cause, which normally means doctors' approval. It was raised as recently as April from £4·50 a week to £7. I accept that it is a strictly limited concept, and that the earnings figure is only one aspect, and not the most important, of measuring incapacity for work. It is not necessarily the sort of figure that should go up at each uprating, but there can be difficulties if over a time it begins significantly to lose value. Therefore, I undertake—although without commitment as to the outcome—that we shall reconsider it before long and see whether a further increase would be appropriate.

    Secondly, our House of Commons Paper last September on "Social Security Provision for Chronically Sick and Disabled People" promised consultations about the whole range of questions affecting the finances of the disabled earner. I am hopeful that we shall be able to announce a new initiative in this direction before long, designed, perhaps inevitably in present circumstances, primarily to explore how best to use existing resources. We are very much aware of the difficulties of the disabled earner, and are looking for new initiatives.

    Thirdly, we are exploring the possibility of a small study of the effects of the present therapeutic earnings limit, This is a difficult area for research, but we believe that useful work on a limited scale may be possible.

    To sum up, we disagree with the Lords amendment because it envisages radical changes which could not be adopted without a great deal more thought and examination of complex conditions. Those changes would bring into invalidity benefit many people not now entitled to it, and add several millions of pounds to present costs, without any rehabilitation gain. They would involve a substantial administrative task. But the basic reason is that the amendment would completely change the whole principle of invalidity pensions, by giving it to persons who are not incapable of work, in as much as the criterion that they are capable of light work at present precisely excludes, contrary to what was said in another place, their entitlement to invalidity benefit.

    This is not the first time we have debated the rule in question. The Minister has largely repeated what the noble Lord, Lord Wells-Pestell, said in the other place when the amendment was debated and agreed to by the Lords. It has caused concern both in this House and in the Lords, and most of all among the organisations representing the interests of disabled people, such as the Disablement Income Group, which has written to many hon. Members about the matter.

    We are basically concerned here with the position of the invalidity pensioner, the man or woman not of retirement age who, because of some form of incapacity, is defined as incapable of work. Many such people will not be able to work at all, but some may, and for those who struggle to do something there is the therapeutic allowance, an amount which they can earn without losing their pensions.

    There are two points to be made about the question. The first concerns the amount of the therapeutic allowance. In 1972 it was £4·50 a week. In April this year it was raised to £7. We have noted what the hon. Gentleman said about it, although, as a pledge of future action, it seemed to me to be somewhat short of a promise to do anything. Let us remember that the increase to £7 followed a Government defeat in the Lords, who voted for £13. The Government compromised with £7, and that is now the figure.

    Secondly, if the pensioner earns 1p more than his £7 he loses the entire pension. There is no tapering arrangement. The man who earns £6 a week keeps his entire invalidity pension, while the man who earns £8 loses the entire pension. This position is therefore fundamentally different from that of the pensioner who can earn £20 a week without losing anything from his pension. It is also fundamentally different from the position of the man on supplementary benefit, who at least loses on a pound-for-pound basis. We are dealing not with an earnings rule but with an earnings stop.

    That being so, in the case of the therapeutic allowance the Lords have performed another useful service. They have forced us to think again about the basis of the earnings stop rule. It is here that I find the views of the Disablement Income Group, and Peter Large in particular, crucially important. The group considers that there are two major situations in which the rule militates against the interests of the disabled. First, there is the situation of the man struck down by disability who, after a period, may be able to take up work again. It is likely that it will be a slow process, a process of rehabilitation which it is in the interest of the man and the country should be successful. It is often not possible to jump from the definition "incapable of work" to the definition "fit for work". An employer may require that the man does only part-time work, in which the employer can develop confidence in the man and, perhaps more important, the disabled person can develop confidence in his own ability. In that kind of proposition the present rule acts as a disincentive and a discouragement to rehabilitation.

    4.0 p.m.

    The other side of the coin is the case of a person in a deteriorating condition, such as multiple sclerosis, who may struggle on and work after the point has come when he should have slowed down. This point is put forcefully by the Disablement Income Group. If there were an earnings rule it is argued that he might be encouraged to slow up sooner and it would be in his own interests to do so.

    From both points of view there is a strong case in favour of the Lords amendment. From the Government point of view it is of some relevance that this amendment does not place them under an obligation to spend extra money as at this moment. It is not obligatory upon them to take action at this point in time. In our social security debates we are coming to know it as a piece of structure legislation. It can have no effect until the Government activate it, and that will probably not be at once.

    The Government cannot object to structure legislation because they are passing and introducing in this House a large amount of structure legislation. Therefore, if the Government want to oppose this measure, so be it. What they are opposing is the principle. What we are supporting is a measure that will act in the interests of disabled people. It is supported by powerful and strong voices, such as those of the Disablement Group. We shall support the Lords amendment.

    I do not wish to detain the House for more than two minutes but this is an important point. I had a great deal of sympathy with the Under-Secretary when he explained the nature of the invalidity benefit. I disagree with him on the definition of "incapacity for work". It is around this phrase that the whole argument, following through all its stages, has flowed.

    No one who supports their Lordships' amendment would disagree with the Under-Secretary when he said that one must define fairly precisely what one means by "incapacity for work". The amendment uses the words "incapacity for normal full-time work". We would all agree that we would not wish to extend invalidity benefit, even to people who are in many cases apparently severely incapacitated. We ask the Under-Secretary to look at the situation, as my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) pointed out, from the point of view of the person who is heavily incapacitated but who has a certain propensity to do some work.

    This is recognised in what the Under-Secretary has called the "therapeutic earnings allowance". It is not only therapeutic. Infinitely more important is the social integration aspect. Throughout the many debates we have had in this House and in Committee on how modern society should cope with our incapacitated colleagues we have decided that increasingly the aim should be to integrate them into society and that the cash, the aid and the care of society should not be to give them a comfortable existence in institutions and in disabled ghettos but to integrate them into the hurly-burly of ordinary life. In inviting the House to reject their Lordships' amendment, I do not believe that the Under-Secretary has addressed himself to this aspect. If we were to accept their Lordships' amendment, he would give recognition to this aspect without selling the Treasury brief.

    Anyone who has been a Minister in a spending Department knows how severe at any moment in time Treasury instructions are to Ministers not to give any public money away. I sympathise with the Under-Secretary. However, if he accepts this amendment he need not, as of today, increase public expenditure by one penny. I am sure that the right hon. Gentleman the Minister of State and architect of the Bill will recognise that much of it is for 20 years hence and that it is right that we should pass legislation that is structurally correct even if, on the phasing of it, for economic reasons we have to be greatly restrained in how quickly it can be implemented. I do not believe that the hon. Gentleman gives anything away in terms of public expenditure.

    In summing up he made cooing noises that he was sympathetic to the £7 limit. He raised it from £4·50 to £7. Let us put the £7 into its current context. That amount of £7 is only £1 more than the basic wage increase that the Government, in their White Paper, are allowing in these counter-inflationary days for one year for the mass of the community.

    I beg the Under-Secretary to realise that those of us who believe that their Lordships are right do not expect the Government immediately to raise these allowances to large proportions. Nor do I accept the figures that he gave the House. I do not want to be unfair to him but I should like to see them written up. Possibly he would be kind enough to send me a note—I shall not press him to reply now—to explain how they are made up because, without detaining the House, I am sceptical about the assumptions on which they are based. It is not necessary to accept the view that there should be an open cheque for all handicapped workers in every sheltered employment in order to support their Lordships. The Under-Secretary was arguing as if that were the implication of their Lordships' amendment. I do not believe that it is.

    The House, in the spirit of the Government in moving the Second Reading of the Bill—that it is a structural Bill preparing for the future—would be wise to support their Lordships.

    I should like to support my hon. Friend the Member for Eastleigh (Mr. Price) and my hon. Friend the Member for Sutton Cold-field (Mr. Fowler) in asking the House to retain the Lords amendment. I have the feeling that the Under-Secretary was a little hesitant in giving his support to his brief. From reading the Lords amendment we can see that all the powers are given to the Government to control, to any extent they wish, the degree of expenditure which the Government may wish to make.

    In the debate on 12th March on the Social Security Benefits Bill, I and other hon. Members endeavoured to move an amendment to relieve disabled people of this harsh wages stop. We had a limit then of £4·50 for therapeutic earnings, and this was raised, during that debate, to £7 a week. We would all welcome a hint that this might be raised again some time in the future. In that event, the Government would not accept the principle that a definition of light work could be arrived at so as to allow invalids who are incapable of normal full-time work but can perform light duties on one or two days a week to receive their invalidity pension at a reduced level. We suggested then that an earnings rule be applied in stages from £13 to £17 with a ceiling of the amount that could be deducted from the pension. The powers to propose that ceiling are in this Lords amendment. We ask that this should be introduced rather than having a 100 per cent. cut-off, which would occur if a disabled person earned even 1p or 2p more than £7 a week.

    During that debate on 12th March 1 and other hon. Members presented several cases of people who were suffering from multiple sclerosis and other disabilities who had performed light secretarial or research work for a few hours and found themselves losing their entire invalidity allowance of £27 or £30 a week purely because their earnings had totalled £8 a week over that period. I can understand the Government's fears that there would be a breach of their rather precious definition of "total incapacity for work". However, the Lords amendment clearly gives the power to the Government to regulate and prescribe the limit of earnings and the amount of invalidity pension which would be affected.

    I hope that we can all agree that the time has come for some intermediate definition of "partial" incapacity, just as is provided in the constant attendance allowance, which allows for attendance by "day or night" to be a qualification for the allowance. There can be no doubt that this rule is working very harshly. It affects those whom we would like to see brought back into some degree of integration with a normal working life and who would like to relieve the State of financial responsibility which they are placing upon the State.

    It was stated in another place by Lord Crawshaw, who moved the amendment there, that if we were to help disabled people to get back into normal employment we would be saving the Exchequer money by ending supplementary benefit payments and by taking these people from the top rates of pensions. Apparently Lord Wells-Pestell, the Minister, had informed Lord Crawshaw by letter that the Government would prefer to handle this problem by the use of regulations. This is just what the amendment seeks to do. There is no charge on the hard-pressed Treasury unless the Government introduce such a charge. Everything is left in the Minister's hands as to what improvements can be prescribed by these regulations, and when. Surely if workers at Jaguar can work four days a week and draw unemployment benefit on the fifth day, there is an indefensible case for a disabled person to work one day a week without losing his pension.

    Speaking as secretary of the all-party Diseablement Group and as a member of DIG, I regret that the Secretary of State has asked the House to reject the amendment. I hope the House will show some regard for the desires of chronically disabled people to integrate more fully into normal life, and I hope that the Government recognise that in this amendment they have power to prescribe by regulations the amount to be allowed.

    I wish to express my disappointment at the Government's failure to accept the Lords amendment. I believe it is as widely and as flexibly drawn as it possibly can be, to enable the Government to bring in the proper regulations to suit the situation.

    In an earlier stage of the Bill I said that the Government should find a way of mitigating the effect of the earnings stop. It does not affect many people. The Under-Secretary of State said that it affected only a very small number of people, and I think that, although the number is small, this stop is a very important factor in their lives. Having experienced some of the effects of trying to get back to work after disablement, I know the effort and the strength of character required in order to do so.

    I am therefore disappointed that, although the Government appear to have accepted the general principle behind the amendment, they are not prepared to do anything about it at this stage. I cannot understand why they have not studied the effects of the therapeutic earnings limit. This matter has been bandied about for some time. We have discussed it and we have expressed our strong feelings about it. The Department ought to study it and let us have more information about the effect of the therapeutic earnings limit as soon as possible.

    If there is a Division, I shall support my hon. Friends, because I am fed up about the whole matter.

    4.15 p.m.

    I rise not as a frequent contributor to social security debates but as a fairly regular contributor to financial debates and frequently on the subject of assistance to the disabled and other similar matters.

    I support the amendment and what my hon. Friends have said, not least because, having listened to the Under-Secretary, I was not at all sure whether he himself was convinced by his own argument. If he was, I can only say that he did not succeed in convincing me, and, indeed, I hope he has not succeeded in convincing himself either.

    The Under-Secretary touched on an administrative argument, and I say this to him as fairly as I can. He touched on the argument lightly, so much so that it did not seem to me to be worth putting. He referred to the number of sheets of paper which might have to be filled in. There are many problems which have to be dealt with by filling in sheets of paper, for instance in connection with our complicated tax and social security system. If that argument had any real force we would have to sweep away a large part of our administrative system and throw it out of the window.

    As to the question of cost, my hon. Friends have disposed of that with some ease. The amendment does not automatically involve any extra cost. It is clear from the amount of scope involved in regulation making in the amendment that the cost could be determined largely by the Government. In addition, we are all entitled to be very wary of figures for costs which are given in this kind of argument because so often when they are investigated we find that they have been worked out on a simplistic basis and that no account has been taken of the gain which would accrue to the gross domestic product as a result of the extra employment created or the extra tax revenue.

    I am sorry that the Chancellor popped into the Chamber as though he were about to announce some great concession, and then popped out again. I should have liked to say this to him. It is high time that the Department of Health and Social Security and the Treasury got together on some of these matters. Half the time their figures do not add up, and there is every sign that the people in one Department have not talked to people in the other Department. They come along with crude figures relating to the social security system, and we never get a proper sophisticated analysis of the effect of the measure. We do not need to take seriously the argument about the cost of this amendment.

    Then we come to the ground on which the Minister based most of his case, the ground of principle. This ground disappears as soon as one contemplates the existence of the therapeutic earnings allowance. Either there is a principle that this is not paid to anybody who works at all, or there is not. By any dictionary definition of the word "principle", that argument falls straight away. Even if we accepted that there was a principle which the Minister was entitled to defend, I would say that I do not agree with a principle whereby a person who works at all loses the whole of the benefit.

    The social effect of this situation, as was pointed out by my hon. Friend the Member for Eastleigh (Mr. Price), can be very damaging indeed. I could hardly believe my ears when I thought I heard the Minister say that if the amendment were accepted, these rather theoretical costs that would arise would have no rehabilitative gain. I think I have got his words right—"no rehabilitative gain". One has only to talk to people in the Disablement Income Group or to read some of the things written by people concerned with these problems to know that their considered view is that this rule is actively preventing people from going back to work who would otherwise do so. It is causing them to become totally dependent and to make no real effort to get back into an ordinary working life. If we can do anything to mitigate that effect, it seems to me, contrary to what the Minister said, that there is a clear rehabilitative gain.

    No doubt other hon. Members have also received comments from Mr. Peter Large, who has passed on a letter from Miss Diana Irish, the General Secretary of the Spinal Injuries Association. Mr. Large points out that a disabled man with a wife and two small children could be receiving an invalidity pension and allowance totalling £30·70 a week—quite a substantial sum. If that man earns more than £7 a week he loses it all. To earn £8 a week he has to sacrifice £30·70.

    Who in his right mind, when he becomes capable of earning £7 a week but not a great deal more, would bother to do so? The very altruistic might, and so might those who are very keen to get back to work. But if a person was only marginally interested or was in a "don't care" frame of mind, which is quite possible in these difficult circumstances, why should he bother to earn £12 or £15 a week if he will lose £30 a week? It is simple, straightforward madness that we should have a system that imposes this choice on him.

    Diane Irish says in her letter that it is quite apparent that the current system,
    "does take away from many disabled men and women any incentive to find any form of work".
    She particularly expresses her concern at the fact that younger disabled people, in their late teens for example, could quickly become accustomed to living on a fairly substantial sum of public money. There is little point in them making an effort to earn and to become independent because the system encourages them to turn in on themselves and not to seek ways of overcoming their difficulty and disability in order to play a part in society, as many, if they were given some slight encouragement, would wish to do.

    These are important points that cannot be dismissed. One can see these situations occurring in families. They can sink into a closed, sheltered, cloistered life. There is no great purpose in trying to take part as much as possible in normal life because of these grave financial disincentives.

    The Minister said the Government were looking for new initiatives to help the disabled, but he is now rejecting a new initiative. Why not accept it and see what he can do to make it work? I accept that this is a difficult problem, but if the Government accepted the amendment, they would not have to do anything. It would act as a prod and an embarrassment to them on the statute book and would be a constant reminder to get on with the initiatives the Minister was talking about as a matter of urgency. I can see every argument for the amendment and I cannot see the harm which the Minister suggested it would cause. It would at least be a step in the direction of pressing the Minister and the Department to get on with the job of doing something about this difficult problem on which action is necessary.

    One of the factors in the debate has been that it would be perfectly harmless—this was referred to by the hon. Member for Braintree (Mr. Newton)—if the Government accepted the regulation-making powers in the amendment because they would not involve any immediate cost implications. To accept any Lords amendment purely because it was permissive when there was no intention by the Government to activate it, for the reasons of principle I have given, would be deceptive and very far from the honourable course. I dismiss the argument that we should accept the amendment because it has no immediate implications. We have to consider the issue of principle and whether it is appropriate that we should proceed in this way.

    I assume the Minister would not disagree that every week his Department is passing structure legislation, which will not come into effect for some years. How does he distinguish between this legislation and the matter we are now discussing?

    Very simply. The structure legislation we pass is legislation with a structure that is appropriate, whereas this structure legislation, if it can be called that, is not appropriate for the reasons of principle I have already given.

    I accept that there are issues about how we can provide further assistance, particularly for the long-term disabled, but this amendment is concerned with whether they should receive an invalidity pension on top of their earnings. An invalidity pension is given because a person is incapable of working, and it would be inappropriate for it to be added on top of earnings.

    The hon. Member for Sutton Coldfield (Mr. Fowler) put two arguments to which I should reply. He said that if we accepted the amendment it would help the person who was slowly working his way back and that it was not possible to move quickly from long-term sickness to full employment. I accept that there is a period in which a person might be moving from one state to another, but the logic of the hon. Member's argument would presumably mean that if an able-bodied man was off work sick and gradually recovering, he would be entitled to some sickness benefit while performing certain light work before taking up his normal work again. That is a reductio ad absurdum, but we do not provide any such transitional benefit and it would be inappropriate to extend that concept into long-term benefits. They are basically the same kind of benefit.

    The hon. Member's other argument concerned a person who might, for example, be suffering from disseminated sclerosis and might be able to retire from work more gradually. I accept that there is an issue here, and it is a matter on which such a person needs to be assisted. But if we accept the amendment, the hon. Gentleman has not answered the problem that it could apply to very many more people than those he is rightly trying to help. It would, for example, lead to pressure, which would be very difficult to resist, in the case of those people in full-time sheltered employment who are capable of only light work, but who in no sense could be construed as being in the same category as the long-term disabled. It would be very difficult to exclude them.

    I have made clear that the Government intend to do more. The hon. Member for Sutton Coldfield made fun of my remarks, suggesting that they did not sound as if we were going to do anything, but that is a little rum coming from him. His party is pursuing an economic policy whose object, as far as we can see, is to cut public expenditure very much more than even this Government are considering. It ill becomes him to suggest that we are not considering ways, within very tight financial constraints, of moving forward. I did not want to mention this, but the hon. Gentleman tempted me. Since we came to office we have spent an extra £1,000 million in real benefits. It is unfair to say that we are not looking for ways in which we can assist these people within our very tight financial constraints.

    4.30 p.m.

    Yes. I mentioned three initiatives which we were prepared to consider. The first was whether the therapeutic earnings limit, which was raised as recently as April from £4·50 to £7, should be further increased. I am not making a commitment; I am merely saying that my right hon. Friend will consider this as a priority. However, I believe that this is an important area in which we can perhaps increasingly help the long-term disabled.

    One of the difficulties with the therapeutic earnings limit is that there is a straight cut-off; there is no taper. It is appropriate to consider without commitment whether there should be a taper. There are difficulties about administrative rules because some people are always on the wrong side of them. It would be proper to consider whether there should be a phased decrease in the benefit.

    The disabled do not fall into clear categories and, therefore, we can all agree on the principle of a taper. We have it in the earnings rule for the old. Why not have it for the disabled?

    I am trying to make it clear, although plainly I am having difficulty in doing so, that there is an in-between state. Some people clearly are much less disabled than others and they may be capable of light work. I accept that such people need to be assisted. Invalidity benefit is conceptually not the most appropriate benefit with which to operate. I am saying no more than that. However, I have to rely on the belief of hon. Members opposite in my sincerity when I say that we shall consider other means of positively meeting the point.

    The hon. Member for Eastleigh (Mr. Price) spoke in terms of social integration. That is a principle which we and the Opposition entirely support. We want to bring the disabled much more closely into the mainstream of society. But turning invalidity benefit upside down is not the way to integrate the disabled into society—by, for example, comparing people on that benefit with £35·50 a week after November with people in sheltered employment. That is not the proper way to proceed.

    The hon. Gentleman indicated that he believed that what is in the amendment is structurally correct. I have indicated that in our view it is not. It is far more appropriate to consider other ways of solving the problem, particularly that with regard to the therapeutic earnings limit. The hon. Gentleman challenged me on the figures. I am prepared to write to him if he is still mystified after hearing what I have to say.

    There is a substantial number of disabled people who are capable of light work. They are in sheltered employment, or in open employment or, in some cases, are receiving the social security benefits which are paid to people who are unemployed. The number depends on the precision of the definition, but there are well over 13,000 disabled people in sheltered employment, 60,000 unemployed registered disabled people and ½ million to 1 million disabled people in open employment. I have therefore very modestly taken only those in sheltered employment and only a small proportion of those in open employment in suggesting that the number involved is 20,000. On the assumption that they were merely receiving a current single person's invalidity pension on top of earnings—and that is bound to be an underestimate in many cases- the cost of the amendment would be £12 million.

    The hon. Member for Braintree and others who have pooh-poohed the public expenditure implications are quite wrong. Clearly there are public expenditure implications. They may not be overriding implications, but they cannot be ignored.

    The hon. Member for Exeter (Mr. Hannam) referred to a saving of public expenditure. There may be savings in supplementary benefits in some cases, but there are many people in receipt of invalidity pension at a level which will not lead to savings in supplementary benefits. As against his contention, one has to take into account what I would

    Division No. 317.]

    AYES

    [4.38 p.m.

    Allaun, FrankBenn, Rt Hon Anthony WedgwoodBrown, Hugh D. (Provan)
    Anderson, DonaldBennett, Andrew (Stockport N)Buchan, Norman
    Archer, PeterBidwell, SydneyBuchanan, Richard
    Armstrong, ErnestBishop, E. S.Callaghan, Jim (Middleton & P)
    Atkins, Ronald (Preston N)Blenkinsop, ArthurCampbell, Ian
    Atkinson, NormanBooth, AlbertCanavan, Dennis
    Bagier, Gordon A. T.Boothroyd, Miss BettyCant, R. B.
    Barnett, Guy (Greenwich)Bottomley, Rt Hon ArthurCarmichael, Neil
    Barnett, Rt Hon Joel (Heywood)Boyden, James (Bish Auck)Cartwright, John
    Bates, AltBradley, TomCastle, Rt Hon Barbara

    regard as the minimum implications of public expenditure which I have mentioned.

    We are not unmindful of the needs of this group of people, but because invalidity benefit is not the most appropriate benefit by which to proceed, I hope that on consideration the Opposition will not press the amendment to a Division. The amendment would totally breach the principle of invalidity benefit whereby we would be forced, or the Opposition would be forced if they were to succeed us, to provide substantial sums of public expenditure for groups which are not the main object of the amendment but would be bound to be included in it.

    That is not the best way for social policy to proceed. I hope that hon. Members opposite will accept my statement that we intend positively, and I hope soon, to come forward with further initiatives which will be relevant to the group of people we are discussing.

    The more I listened to the argument of the Under-Secretary of State, the more I found it difficult to understand. He has said that the Government are considering raising the therapeutic allowance and that they are considering the introduction of a tapering arrangement. Therefore, I do not understand why he cannot accept the amendment. I am unconvinced by the hon. Gentleman's speech. It is significant that he has not been supported by one hon. Member. Not one voice, apart from his own, has been raised in favour of the case he has put forward. Therefore, we shall press the matter to a vote.

    Question put, That this House doth disagree with the Lords in the said amendment:—

    The House divided: Ayes 247, Noes 222.

    Clemitson, IvorHunter, AdamPrescott, John
    Cocks, Michael (Bristol S)Irvine, Rt Hon Sir A. (Edge Hill)Price, C. (Lewisham W)
    Cohen, StanleyIrving, Rt Hon S. (Dartford)Price, William (Rugby)
    Coleman, DonaldJackson, Colin (Brighouse)Radice, Giles
    Colquhoun, Mrs MaureenJackson, Miss Margaret (Lincoln)Richardson, Miss Jo
    Concannon, J. D.Janner, GrevilleRoberts, Albert (Normanton)
    Conlan, BernardJay, Rt Hon DouglasRoberts, Gwilym (Cannock)
    Cook, Robin F. (Edin C)Jenkins, Hugh (Putney)Robertson, John (Paisley)
    Corbett, RobinJohnson, James (Hull West)Rodgers, George (Chorley)
    Cox, Thomas (Tooting)Johnson, Walter (Derby S)Rooker, J. W.
    Craigen, J. M. (Maryhill)Jones, Dan (Burnley)Roper, John
    Crawshaw, RichardJudd, FrankSandelson, Neville
    Crosland, Rt Hon AnthonyKaufman, GeraldSelby, Harry
    Cunningham, G. (Islington S)Kelley, RichardShaw, Arnold (Ilford South)
    Cunningham, Dr J. (Whiteh)Kerr, RussellSheldon, Robert (Ashton-u-Lyne)
    Dalyell, TamKilroy-Silk, RobertShore, Rt Hon Peter
    Davidson, ArthurLamborn, HarryShort, Rt Hon E. (Newcastle C)
    Davies, Bryan (Enfield N)Lamond, JamesShort, Mrs Renée (Wolv NE)
    Davies, Denzil (Llanelli)Latham, Arthur (Paddington)Silkin, Rt Hon John (Deptford)
    Davis, Clinton (Hackney C)Lee, JohnSilkin, Rt Hon S. C. (Dulwich)
    Deakins, EricLestor, Miss Joan (Eton & Slough)Sillars, James
    Dean, Joseph (Leeds West)Lever, Rt Hon HaroldSilverman, Julius
    Delargy, HughLewis, Arthur (Newham N)Skinner, Dennis
    Dell, Rt Hon EdmundLewis, Ron (Carlisle)Small, William
    Dempsey, JamesLipton, MarcusSmith, John (N Lanarkshire)
    Dormand, J. D.Loyden, EddieSnape, Peter
    Douglas-Mann, BruceLuard, EvanSpearing, Nigel
    Duffy, A. E. P.Lyon, Alexander (York)Spriggs, Leslie
    Dunn, James A.Lyons, Edward (Bradford W)Stallard, A. W.
    Dunwoody, Mrs GwynethMcCartney, HughStewart, Rt Hon M. (Fulham)
    Eadie, AlexMacFarquhar, RoderickStoddart, David
    Edge, GeoffMackenzie, GregorStott, Roger
    Edwards, Robert (Wolv SE)Maclennan, RobertStrang, Gavin
    Ellis, Tom (Wrexham)McMillan, Tom (Glasgow C)Strauss, Rt Hon G. R.
    English, MichaelMadden, MaxSummerskill, Hon Dr Shirley
    Ennals, DavidMagee, BryanSwain, Thomas
    Evans, Fred (Caerphilly)Mahon SimonTaylor, Mrs Ann (Bolton W)
    Evans, Ioan (Aberdare)Mallalieu J. P. W.Thomas, Ron (Bristol NW)
    Evans, John (Newton)Marks, KennethTinn, James
    Ewing, Harry (Stirling)Marquand DavidTomlinson, John
    Faulds, AndrewMarshall, Dr Edmund (Goole)Tomney, Frank
    Fitch, Alan (Wigan)Mason, Rt Hon RoyTorney, Tom
    Flannery, MartinMaynard, Miss JoanTuck, Raphael
    Fletcher, Ted (Darlington)Meacher, MichaelUrwin, T. W.
    Foot, Rt Hon MichaelMellish, Rt Hon RobertVarley, Rt Hon Eric G.
    Forrester, JohnMendelson, JohnWainwright, Edwin (Dearne V)
    Fowler, Gerald (The Wrekin)Mikardo, IanWalden, Brian (B'ham, L'dyw'd)
    Fraser, John (Lambeth, N'w'd)Millan, BruceWalker, Harold (Doncaster)
    Garrett, John (Norwich S)Miller, Dr M. S. (E Kilbride)Walker, Terry (Kingswood)
    George, BruceMiller, Mrs Millie (Ilford N)Ward, Michael
    Gilbert, Dr JohnMitchell, R. C. (Soton, lichen)Watkins, David
    Ginsburg, DavidMolloy, WilliamWatkinson, John
    Gould, BryanMoonman, EricWeitzman, David
    Gourlay, HarryMorris, Charles R. (Openshaw)Wellbeloved, James
    Graham, TedMoyle, RolandWhite, Frank R. (Bury)
    Grant, George (Morpeth)Mulley, Rt Hon FrederickWhite, James (Pollok)
    Grocott, BruceMurray, Rt Hon Ronald KingWhitehead, Phillip
    Hamilton, W. W. (Central Fife)Newens StanleyWhitlock, William
    Hardy, PeterOgden, EricWilley, Rt Hon Frederick
    Harper, JosephO'Halloran, MichaelWilliams, Alan (Swansea W)
    Harrison, Walter (Wakefield)O'Malley, Rt Hon BrianWilliams, Alan Lee (Hornch'ch)
    Hatton, FrankOrbach, MauriceWilliams, Rt Hon Shirley (Hertford)
    Hayman, Mrs HeleneOrme Rt Hon StanleyWilliams, W. T. (Warrington)
    Healey, Rt Hon DenisOvenden, JohnWilson, Alexander (Hamilton)
    Heffer, Eric S.Owen, Dr DavidWilson, William (Coventry SE)
    Hooley, FrankPadley, WalterWise, Mrs Audrey
    Horam, JohnPalmer, ArthurWoodall, Alec
    Howell, Dennis (B'ham, Sm H)Park, GeorgeWrigglesworth, Ian
    Hoyle, Doug (Nelson)Parry, RobertYoung, David (Bolton E)
    Huckfield, LesPavitt, Laurie
    Hughes, Rt Hon C. (Anglesey)Peart, Rt Hon FredTELLERS FOR THE AYES:
    Hughes, Mark (Durham)Pendry, TomMr. John Ellis and
    Hughes, Robert (Aberdeen N)Perry, ErnestMr. James Hamilton.
    Hughes, Roy (Newport)Phipps, Dr Colin

    NOES

    Adley, RobertBerry, Hon AnthonyBowden, A. (Brighton, Kemptown)
    Aitken, JonathanBiffen, JohnBoyson, Dr Rhodes (Brent)
    Arnold, TomBiggs-Davison, JohnBraine, Sir Bernard
    Atkins, Rt Hon H. (Spelthorne)Blaker, PeterBrittan, Leon
    Bain, Mrs MargaretBody, RichardBrotherton, Michael
    Banks, RobertBoscawen, Hon RobertBrown, Sir Edward (Bath)
    Bell, RonaldBottomley, PeterBuchanan-Smith, Alick

    Buck, AntonyJames, DavidRathbone, Tim
    Budgen, NickJenkin, Rt Hon P. (Wanst'd & W'df'd)Rees, Peter (Dover & Deal)
    Bulmer, EsmondJessel, TobyRees-Davies, W. R.
    Carlisle, MarkJohnson Smith, G. (E Grinstead)Renton, Rt Hon Sir D. (Hunts)
    Carr, Rt Hon RobertJohnston, Russell (Inverness)Renton, Tim (Mid-Sussex)
    Carson, JohnJones, Arthur (Daventry)Rhys Williams, Sir Brandon
    Chalker, Mrs LyndaJopling, MichaelRidley, Hon Nicholas
    Channon, PaulKimball, MarcusRidsdale, Julian
    Clark, Alan (Plymouth, Sutton)King, Evelyn (South Dorset)Rifkind, Malcolm
    Clark, William (Croydon S)King, Tom (Bridgwater)Rippon, Rt Hon Geoffrey
    Cockcroft, JohnKirk, PeterRoberts, Wyn (Conway)
    Cooke, Robert (Bristol W)Knight, Mrs JillRodgers, Sir John (Sevenoaks)
    Cope, JohnKnox, DavidRossi, Hugh (Hornsey)
    Corrie, JohnLamont, NormanRost, Peter (SE Derbyshire)
    Costain, A. P.Lane, DavidRoyle, Sir Anthony
    Critchley, JulianLangford-Holt, Sir JohnSainsbury, Tim
    Davies, Rt Hon J. (Knutsford)Lawrence, IvanSt. John-Stevas, Norman
    Dean, Paul (N. Somerset)Lawson, NigelScott, Nicholas
    Douglas-Hamilton, Lord JamesLester, Jim (Beeston)Shaw, Giles (Pudsey)
    Drayson, BurnabyLewis, Kenneth (Rutland)Shaw, Michael (Scarborough)
    Durant, TonyLuce, RichardShelton, William (Streatham)
    Dykes, HughMcAdden, Sir StephenShepherd, Colin
    Eden, Rt Hon Sir JohnMcCrindle, RobertSilvester, Fred
    Edwards, Nicholas (Pembroke)Macfarlane, NeilSims, Roger
    Eyre, ReginaldMacGregor, JohnSinclair, Sir George
    Fairbairn, NicholasMcNair-Wilson, M. (Newbury)Skeet, T. H. H.
    Fairgrieve, RussellMcNair-Wilson, P. (New Forest)Smith, Cyril (Rochdale)
    Finsberg, GeoffreyMadel, DavidSmith, Dudley (Warwick)
    Fletcher, Alex (Edinburgh N)Marten, NeilSpeed, Keith
    Fletcher-Cooke, CharlesMates, MichaelSpence, John
    Fookes, Miss JanetMather, CarolSpicer, Michael (S Worcester)
    Fowler, Norman (Sutton C'f'd)Maude, AngusSproat, Iain
    Fox, MarcusMaudling, Rt Hon ReginaldStainton, Keith
    Fry, PeterMawby, RayStanbrook, Ivor
    Gardiner, George (Reigate)Maxwell-Hyslop, RobinStanley, John
    Gilmour, Rt Hon Ian (Chesham)Mayhew, PatrickSteel, David (Roxburgh)
    Gilmour, Sir John (East Fife)Meyer, Sir AnthonySteen, Anthony (Wavertree)
    Godber, Rt Hon JosephMiller, Hal (Bromsgrove)Stewart, Donald (Western Isles)
    Goodhew, VictorMills peterStokes, John
    Goodlad, AlastairMiscampbell, NormanStradling Thomas, J.
    Gorst, JohnMitchell David (Basingstoke)Taylor, R. (Croydon NW)
    Gow, Ian (Eastbourne)Moate RogerTaylor, Teddy (Cathcart)
    Gower, Sir Raymond (Barry)Monro, HectorTebbit, Norman
    Grant, Anthony (Harrow C)Montgomery, FergusTemple-Morris, Peter
    Gray, HamishMoore, John (Croydon C)Thatcher, Rt Hon Margaret
    Grist, IanMorris, Michael (Northampton S)Thomas, Rt Hon p. (Hendon S)
    Grylls, MichaelMorrison, Charles (Devizes)Thorpe, Rt Hon Jeremy (N Devon)
    Hall, Sir JohnMorrison, Hon Peter (Chester)Townsend, Cyril D.
    Hall-Davis, A. G. F.Mudd, DavidTugendhat, Christopher
    Hamilton, Michael (Salisbury)Neave, Aireyvan Straubenzee, W. R.
    Hampson, Dr KeithNelson, AnthonyViggers, Peter
    Hannam, JohnNeubert, MichaelWainwright, Richard (Colne V)
    Harrison, Col Sir Harwood (Eye)Newton, TonyWakeham, John
    Hastings, StephenNormanton, TomWalker-Smith, Rt Hon Sir Derek
    Havers, Sir MichaelNott, JohnWall, Patrick
    Hawkins, PaulOppenheim, Mrs SallyWarren, Kenneth
    Hayhoe, BarneyPage, John (Harrow West)Weatherill, Bernard
    Heseltine, MichaelPage, Rt Hon P. Graham (Crosby)Wells, John
    Holland, PhilipPaisley, Rev IanWelsh, Andrew
    Hordern, PeterParkinson, CecilWhitelaw, Rt Hon William
    Howe, Rt Hon Sir GeoffreyPattie, GeoffreyWiggin, Jerry
    Howell, David (Guildford)Penhaligon, DavidWinterton, Nicholas
    Howell, Ralph (North Norfolk)Percival, IanWood, Rt Hon Richard
    Hunt, JohnPeyton, Rt Hon JohnYoung, Sir G. (Ealing, Acton)
    Hurd, DouglasPink, R. Bonner
    Hutchison, Michael ClarkPrice, David (Eastleigh)TELLERS FOR THE NOES:
    Irvine, Bryant Godman (Rye)Prior, Rt Hon JamesMr. Michael Roberts and
    Irving, Charles (Cheltenham)Pym, Rt Hon FrancisMr. W. Benyon.
    Raison, Timothy

    Question accordingly agreed to.

    Clause 22

    Mobility Allowance

    Lords amendment: No. 4, in page 14, line 3, at end insert

    "being such an appliance as is primarily designed to afford a means of personal and independent locomotion out of doors."

    I beg to move, That this House doth agree with the Lords in the said amendment.

    I take it that the amendment will be entirely non-controversial and I shall, therefore, be brief. It concerns Section 37A(5)(b), which was introduced into the Social Security Act 1975 by Clause 22. It enables regulations to be made prescribing cases in which the mobility allowance is not to be payable, or is to be payable at a reduced rate, while the person has the use:
    "of any prescribed description of appliance supplied under enactments relating to the National Health Service".
    The Government had given assurances that there was no intention of using this power at present and that it was required only as a reserve power in case an expensive outdoor mobility appliance became available for use in the future. The Government had in mind the possible future issue of a suitable occupant-controlled electrically-propelled outdoor vehicle. Fears were expressed that the power was so wide that virtually any appliance such as a walking frame, crutches or even a Possum typewriter would be covered and that a future Government would have to reduce the mobility allowance for any of those items.

    An amendment tabled on Report in another place was accepted by the Government to make clear that the reduction of the mobility allowance can be applied only if the appliance concerned is designed primarily for use out of doors and is an aid to personal and independent locomotion. That is accepted by the Government, and I hope that it will be acceptable to the House.

    Question put and agreed to.

    Clause 24

    Power To Modify Provisions About Graduated Retirement Benefit

    Lords amendment: No. 5, in page 16, line 10, leave out

    "Schedule 26 to the Social Security Act 1973 or"

    I beg to move, That this House doth agree with the Lords in the said amendment.

    With this we are taking Lords amendments Nos. 39, 41, 62, 63, 67, 68, 70, 71, 72 and 73. I draw attention to the fact that privilege is involved in Amendment No. 71.

    The amendments are all technical amendments to put right omissions and correct references in the Bill.

    We have no objection to all the amendments being taken together. It appears that the Minister is on fairly good ground in saying that they are all technical amendments for clarification.

    Question put and agreed to.

    Clause 28

    Review And Alteration Of Contracted-Out Rates Of Class 1 Contributions

    Lords amendment: No. 6, in page 18, line 44, leave out "fourth" and insert "third".

    I beg to move, That this House doth agree with the Lords in the said amendment.

    The amendments were introduced to fulfil an undertaking given by the Government on Report in this House to afford at least 12 months' notice of any changes in the contribution percentages. In practice it is envisaged that there will be about 18 months' notice, and the first report will be made as soon as may be after the third anniversary of the clause's coming into effect instead of after the fourth anniversary, to allow for the longer period of notice.

    Question put and agreed to.

    Subsequent Lords amendments agreed to.

    Clause 31

    Contracting-Out Certificates

    Lords amendment: No. 9, in page 21, line 35, leave out "for negotiating purposes" and insert:

    "to any extent for the purpose of collective bargaining".

    I beg to move, That this House doth agree with the Lords in the said amendment.

    This is a purely technical amendment which the Government have introduced to bring the wording of the clause into line with the Employment Protection Bill as it has been amended.

    Question put and agreed to.

    Clause 33

    Requisite Benefit For Earner

    Lords amendment: No. 10, in page 24, line 9, leave out subsection (5) and insert:

    "(5) Equivalent pension benefits for the purposes of the former legislation are not to be regarded as constituting any part of the earner's guaranteed minimum pension.
    (6) The benefits referred to in subsection (5) above are any to which the earner may be immediately or prospectively entitled in respect of a period of employment which—
  • (a) was for him non-participating employment under that legislation; and
  • (b) was not on its termination the subject of any payment in lieu of contributions;
  • but subsection (5) excludes so much only of those benefits as (and no more than) had to be provided in order that the employment should for that period be treated as non-participating.
    (7) In this section "the former legislation" means Part III of the National Insurance Act 1965 and the previous corresponding enactments."

    I beg to move, That this House doth agree with the Lords in the said amendment.

    The Government introduced these technical amendments in another place to make clear that equivalent pension benefits constituted only the minimum benefits which had to be provided for contracting out under the National Insurance Act 1965.

    Question put and agreed to.

    Clause 34

    Annual Rate Of Earner's Pension

    Lords amendment: No. 11, in page 24, line 30, at end insert:

    "(3A) The earner's pension need not be in accordance with subsection (2) above in case of his service in the relevant employment being terminated before he attains the scheme's normal pension age and when—
  • (a) he has completed in that employment less than five years' qualifying service for the purposes of Schedule 16 to the Social Security Act 1973 (preservation); or
  • (b) he is under the age of 26 on termination of that employment"
  • I beg to move, That this House doth agree with the Lords in the said amendment.

    This is a clarifying amendment introduced to make clear that, apart from the guaranteed minimum pension, a pension under the Bill needs to be preserved only if there is an entitlement to short service benefits under the preservation requirements of the 1973 Act.

    Question put and agreed to.

    Clause 35

    Earner's Guaranteed Minimum

    Lords amendment: No. 12, in page 27, line 9, at end insert:

    "In this subsection "week" means any period of seven consecutive days."

    I beg to move, That this House doth agree with the Lords in the said amendment.

    The amendments were introduced to define "week" in Clause 35(6) as any period of seven consecutive days and to make clear that it is not covered by the definition of "week" in Schedule 20 of the Social Security Act 1975. The purpose is purely beneficial, to ensure that in whatever period of the week a person retires he will be able immediately to receive increments. I hope that it will be acceptable.

    Of course we must agree with the Lords in the amendment, and I go along entirely with what the Minister said. In any other assembly than the House of Commons to say that a week means any period of seven consecutive days would presumably be unnecessary.

    Question put and agreed to.

    Lords amendment: No. 13, in page 27, line 25, at end insert—

    " or
    (c) such fixed compound rate for each relevant year after that year as may be in force at the time when contracted-out service is terminated and which is, in the opinion of the Government actuary,—
  • (i) equal in value to an increase of 5 per cent. plus the further increase secured by the premium calculated in accordance with section 43; and
  • (ii) consistent with other assumptions made as to increases in earnings."
  • 5.0 p.m.

    I beg to move, That this House doth disagree with the Lords in the said amendment.

    With this we are to take the following proposed amendments to the Bill in lieu of the said amendment: in Clause 44, page 36, line 26, after "unless", insert "either—(a)".

    In page 36, line 28, after "above", insert
    " or (b) those provisions conform with such additional requirements as may be prescribed".
    both standing in the name of the hon. Member for Somerset, North (Mr. Dean).

    Perhaps I may briefly explain what these amendments mean, because our procedure for dealing with Lords amendments is somewhat mysterious in this House let alone outside it. I hope, in fact, that the Government will accept Lords amendment No. 13, which is my first choice, but if they do not I hope that they will accept my amendments, which I regard as second best. I put my amendments down, having read the debate in another place and the Government's response to it, as a fall-back position because, as this is the last stage of the Bill when amendments can be considered, I did not want to risk both losing Lords amendment No. 13 and having nothing on the Order Paper to fall back on in its place.

    I again declare my interest in pensions. This is not an occasion for a long speech or for going over all the detailed arguments which have been deployed so often on the question of early leavers. It is an occasion more to remind the House of the background to the amendments and why I think they are of great importance.

    The Bill has a fairly long pedigree, and one of its encouraging features is that there has been broad agreement in Parliament about it. The Opposition recognised in the very early days the need to try to get some political stability into pensions, and the Government, to their credit, responded to that view and have done their utmost not only to listen carefully to what has been said by the interests outside but also to try to respond to amendments put forward by the Opposition. There has been give and take; there has been compromise, and I believe that, as a result, we are going to get a great prize for pensioners—some political stability at long last in pension planning. So it would be a pity if at the very end we were in disagreement on this important matter.

    The Bill, as the Government have said all along, is based on partnership between the State scheme and the occupational—between the State and the private sector, or, to put it another way, between the "pay as you go" arrangement, with all the dangers involved in that, with a blank cheque written for the future, and the funded occupational pension schemes. I believe that this partnership can work, but there are some important provisos. Some important things are threatening to undermine the partnership and make the Bill null and void.

    The first and most obvious of these factors is the ugly spectre of inflation. With inflation running at its present rate, it is in logic nonsense to save because the concept of the negative return means that anybody who puts money aside today is likely to find that that money will be worth less in 12 months' time. Fortunately, human beings are not entirely logical. We are to some extent like the squirrel, who realises come the autumn that unless he gathers some nuts and puts them away for the winter he will be hungry before the spring. He does this in the knowledge that some of the nuts will be eaten by worms or he will lose the place in which he has put them. Human beings are the same. We still put money on one side despite logical considerations which may appear to be against it.

    One of the best and most secure ways in which to put money on one side is in occupational pension schemes. But we have to realise the fears of inflation are spilling over into this Bill, although the Bill of itself clearly cannot provide the cure for inflation.

    Another factor, unhappily, which has been working against the success of this partnership is the pay limits which the Government have recently imposed and the way in which they have to some extent included improvements in pension arrangements within them. I regret that the Government were not able fully to meet the plea put forward by a number of us that pension rights should be completely excluded from the pay limits, as they were in all previous pay policies. However, we have at least got an arrangement which is better than nothing. But I fear that there is another element of uncertainty now and the danger of loss of momentum.

    It is such factors which largely explain the growing unease of employers and the pensions industry about the Bill and the contribution that funded occupational pension schemes can make under it. This unease was well expressed in a letter to the Financial Times a few days ago. It was written by the Chairmen of the National Association of Consulting Actuaries, the National Assocation of Pension Funds and the CIB Society of Pension Consultants. It referred to the early hopes which existed for an agreed and, therefore, enduring pension scheme, and went on:
    "Regrettably, these hopes have suffered serious setbacks in the discussions which have taken place on amendments suggested by the pensions industry, although we recognise that some of the proposed amendments have been, at least in part, accepted by the Government. Of course the acceleration in recent months of an already alarming rate of inflation has had much to do with the erosion of confidence. But this makes all the more important modification of features of the scheme which must constitute a major disincentive to employers to contract out."
    I understand that the other pensions organisations feel very much the same as the three signatories of that letter.

    But, of course, the biggest single worry is the obligation for early leavers. We all recognise that there must be a potential clash between what an employer does for the leavers and for the stayers. This is one of the inevitable factors. We have to take into account that the normal human reaction on the part of an employer will be to do more for those who stay with him than for those who leave. We also have to take into account the preservation requirements of the 1973 Act which have recently put additional obligations on employers.

    That is the background to what is a very technical matter, and I fully concede that very few people will understand what it is really about. I also concede to the right hon. Gentleman that I think that the pensions industry—quite understandably, however—does tend perhaps to over-emphasise the extent to which employers will be influenced by highly technical arguments when deciding whether to contract out or what to do about their schemes. They will be influenced very largely by broad considerations and only secondarily by technical matters. I do not wish to over-emphasise the amendment as a technical point, but I wish to return to the most important aspect of the broad context against which this matter should be considered.

    I turn to the details of the arrangements. I have never liked the concept of a premium, although I recognise that the concept first arose because the Government—and I give them credit for it—responded to the criticisms made of the arrangements which appeared in the first White Paper. I know that the Minister of State is fond of saying, and will probably say again, that the idea of a premium was conceived by the pensions industry. But it is true to say that there are few friends of the premium left in the industry today, and, indeed, most people would deny paternity for the proposal. We are dealing here essentially with an open-ended commitment which still to some extent exists, despite the modifications which have been made. That is the kernel of the argument against the premium and for the amendment which was successfully moved in the other place by Lord Byers.

    Apart from the open-ended commitment of the matter, I should like briefly to rehearse the arguments against the premium. Again I can do no better than to quote from the letter from the three chairmen of the main pensions organisations. The argument which they used against the premium was as follows:
    "It partially defeats the object of contracting out by channelling money back into the State scheme, where it will be spent, instead of allowing it to remain in the occupational pension fund, where it becomes a productive investment; and it creates a psychological disincentive to contracting out at all by requiring an employer, whenever employees have left his service, to make payments to the State out of the fund, and that just at a time when his business may be contracting and his financial position difficult."
    That summarises the arguments.

    Amendment No. 13 tries to meet these criticisms. It does away with the premium and also takes into account the objections put forward by the Government to a straight 8 per cent. per annum without a premium. Therefore, I hope that, having reflected on the arguments used, the Minister will accept Lords amendment No. 13. However, if that is not the case, I hope that the Government will agree to accept my proposed amendment which provides for power to deal with the problem by regulation.

    We are always careful when we seek to give Governments regulation-making powers. We have all argued against them on many occasions, but in this case the argument for such powers is very powerful. It can provide flexibility to deal with detained points which are better dealt with by regulation than as part of the main Bill. Secondly, it can provide time to enable the dialogue to continue so that the search for an acceptable solution to the problem can go on. That is the main reason behind my proposed amendment.

    My amendment asks the Government for action. It is no good having regulation-making powers which lie on the statute book unused. It provides an opportunity for continuing discussion and negotiation in seeking a solution to the problem. I do not ask the Minister of State tonight to prejudge the outcome of any discussions that may take place if he feels able to accept the amendment, but I would ask him for an assurance that he will discuss the matter with the CBI, the TUC and the pensions industry to see how the regulation-making power can best be used. I hope that he will make a genuine effort to obtain an agreed solution through the regulation-making power provided by the amendment.

    5.15 p.m.

    I begin on a somewhat flippant note by hoping that the "nuts" of the pensions industry were listening carefully to what was said by my hon. Friend the Member for Somerset, North (Mr. Dean) about squirrels gathering nuts for the future. However, that is the only piece of levity I shall permit myself, because we are dealing with an important and serious matter.

    I agree with my hon. Friend that, ideally, the Government would accept the Lord's amendment. However, if we are to be told, as I suspect, that such a course is not possible for the Government, we shall move into a fall-back position. In our proposals we are animated by a genuine desire for some give and take between the State scheme and the private pensions industry. That probably means that we must be prepared to accept compromise solutions. It means that on both sides we must do our best to restore and maintain the stability of the pensions industry—an industry which has been under attack in recent months largely because of the sheer uncertainty of the prevailing situation.

    Partnership between the Government and the pensions industry cannot be overemphasised. All the time spent on this Bill in both Houses will have been wasted if the basic aim of the legislation—namely, to take pension provision out of the political arena and to emphasise the need for partnership—is lost. There is a genuine fear among employers and in the pensions industry as they view the difficulties which have been developing in the past few months in regard to inflation.

    It is significant that as we come to the end of this long parliamentary examination of the Bill, the point that continues to exercise our minds is what has been called the open-ended liability. A major purpose of the Bill is to encourage the development of good occupational pension schemes in partnership with the Government. That means encouraging employers to contract out of the State scheme, with all the responsibility which that entails for the employers. The task has been made no easier during the passage of this measure through Parliament by repeated reports that large amounts of money have had to be transferred by employers to their pension schemes to keep them afloat in this excessively inflationary period. Let us imagine the feelings of the good employer who wants a scheme to cover his employees but is becoming more and more alarmed that he is taking on an unknown commitment—in other words, that he is entering a dark tunnel with not the slightest indication of what lies ahead.

    To try to assuage the fears to which I have made reference, the Opposition have pressed upon the Government, during the passage of the Bill, that they must limit the liability and, as far as possible, make clear to an employer the very worst that could happen if he embarked upon an occupational scheme. It would be churlish for me not to concede that the Government have certainly appreciated that point during the parliamentary progress of the Bill and have made several changes from the original Bill to try to specify the commitment. No one underrates the difficulties of being exact or of finding exactly the right formula which takes account, on the one hand, of the loss to the State of contracted-out contributions—a point to which the Government must pay attention—against, on the other hand, the need, in certain circumstances, for the State to bolster-up a private pensions entitlement in the interests of the contributor.

    It was against that background that Lords amendment No. 13 was carried. One of the difficulties facing employers and the pensions industry has been to try to establish what liability arises if a member leaves the scheme before retirement date, remembering the highly inflationary times in which we live. The amendment seeks to provide a third option, to those already written into the Bill, in the case of early leavers. In so doing it has sought to make the position of the scheme even more watertight, and the maximum liability in the circumstances I have described even more specific. Yet, in saying that perhaps I can now begin to question whether that is not in itself the undoing of the amendment.

    I hope that Lord Byers, who has been so prominent in trying to improve the scheme, will not take it amiss if I ask aloud whether what the amendment does is not to be more specific but perhaps in a way to be too specific.

    Many of the fears expressed in this matter relate to the impact of inflation. If it were to be controlled, as all hon. Members must hope that it will, many of the fears to which I and other hon. Members have spoken today would begin to fall away. Remembering that the Bill will be the basis of pension arrangements for many years to come, it would perhaps be unwise to be too inflexible, and to some degree I believe that that is what might be said of Lords amendment No. 13.

    Under the present provisions of the Bill when an employee leaves having qualified for a reserve pension, the employer has the choice of revaluing the pension either in full or at a fixed 5 per cent. per annum and, in addition, paying a premium to the State. Lords amendment No. 13 would allow the employer to pay no premium and to revalue the pension at the fixed rate assumed for the purpose of calculating the premium that he would have had to pay if he had chosen the second existing alternative.

    I apologise to the House for what may seem to many a rather obscure quotation, but, unfortunately, as we move forward in social security matters it becomes increasingly difficult to simplify the position.

    At this stage it would perhaps be wrong to suggest that the additional option that Lords amendment No. 13 would provide is likely to affect materially the situation whether an employer embarks upon an occupational pension scheme to any major degree. It is clear from what I deduce that the Government are unhappy about accepting it.

    In those circumstances, I turn to my hon. Friend's amendment, because I believe that both the Lords amendment and the amendment moved by my hon. Friend the Member for Somerset, North represent an understanding of the difficulty, the need for reassurance and the desirability—if it can be achieved—of moving forward without too much controversy, at the end of our deliberations, between the Government and the Opposition.

    My hon. Friend's amendment can be described as keeping the options open while making very clear the continuing alarm and concern which exist. It accepts that we cannot tell what the future holds, especially concerning inflation, and that if employers were to be seen—I hope that the Minister will take note of this—in the comparatively early stages of the working of the Bill to be holding back for fear of commitments, the Government would have to take specific and, it is hoped, perhaps less complicated action than is at present recommended in the Lords amendment.

    Therefore, perhaps it is more important to obtain agreement across the Floor of the House between the Government and the pensions industry than it is to be specific and to provide a third option. I believe that in some ways my hon. Friend has had the better approach, and, provided that the Minister can tell me that the Government will provide specific proposals if it became evident that they were necessary, the House would be wise to support my hon. Friend and keep its options open.

    I should like to refer to two quotations. The first is a letter which I received from the Life Offices Association, which, as hon. Members will know, is among the leading interests in the pensions industry. When referring to the amendment put forward by my hon. Friend it says:
    "I should like you to know that the Life Offices Association support fully the amendment, in the hope that it will lead to a genuine attempt by all concerned to find an acceptable solution to a problem which, if unresolved, will militate against contracting-out when the State scheme is introduced in 1977 or 1978."
    In other words, the Life Offices Association, which is one of the principal providers of pensions, is saying, in effect, that my hon. Friend's approach, accompanied, one hopes, by an undertaking from the Minister that a continuing understanding of the problem is present in the Department, would perhaps be the best one.

    I refer to the letter which my hon. Friend quoted on two occasions during his speech. The letter is from three leading people in the pensions industry. In the last paragraph, referring to Lords amendment No. 13, they say:
    "It is therefore our most earnest hope that something on the lines of the amendment agreed to in the Lords on Wednesday will be retained in the Bill when it returns to the Commons today."
    I believe that my hon. Friend is giving the House and the Government an opportunity to introduce something on the lines of the amendment by Lord Byers. To that extent I commend my hon. Friend's approach, and I hope that the Government will be able to accept his amendment.

    This is, perhaps, almost the last debate on a substantial point which we shall have during the proceedings in this House, or, indeed, in Parliament, on the Bill.

    We are dealing with a matter of some concern and worry to the pensions industry. I hope that the House will accept what I have to say on both the amendment from the noble Lords and the counter-amendment, or the alternative proposition, which the hon. Member for Somerset, North (Mr. Dean) has explained. I believe that the House understands that throughout the whole of the proceedings on the Bill there has been a willingness, certainly on the part of the Government and I should like also to say certainly on the part of the Opposition in this House, to bring to an end 15 years of disagreement about pension provision. We have tried jointly and collectively in the House to achieve a legislative structure in which we can have a viable and thriving partnership between occupational pension provision, on the one hand—whether in the public sector or in the private sector—and the national insurance scheme arrangements, on the other hand.

    5.30 p.m.

    The House will recognise that the Government have already moved substantially on the question of preservation. It should be pointed out that when the White Paper was published it was proposed that the whole of pre-award dynamism in respect of early leavers was and should be the responsibility of the employer in occupational pension schemes. Proposals were made to the Government from a number of major and important sectors of the pension industry. As the hon. Member for Somerset, North said, one important sector of the industry suggested that as an alternative to the proposals put forward in the White Paper we should place a limited obligation upon employers and upon the fund and that the remainder of any obligation should immediately be bought out by the payment of a premium at the time when the employee left his employer after working for him for a period of more than five years.

    The Government had hoped at that time that, whatever other discussions and divisions there might be on the Bill, agreement had been reached on the situation of the early leaver. One thing that we were determined to achieve and determined to maintain whatever changes were made in the structure of the Bill, was that when men and women change their employment, rather than having one employment during the whole of a 40–year working life, they should not lose inflation proofing as a result of this change, because he is an exceptional man and she is an exceptional woman who stays in one employment in the kind of industrial and economic background that we have for the whole of his or her working life.

    Nevertheless, it was the case that other sections of the pension industry objected from the outset to any idea of a premium. The representative organisation which came forward with the concept of the premium has now changed its mind and said that it would prefer an alternative arrangement. I do not condemn the organisation for that. It is not uncommon in the conduct of human affairs for individuals or groups of individuals to change their minds.

    I regard this not as an issue of principle but as a technical issue which we should do our best to solve. Even after the publication of the Bill with the premium system, I introduced a number of substantial easements which I thought would reassure the pension industry on the problem of the open-ended commitment. I need not recount to the House what those attempts were to close what became known as the open-ended commitment.

    I have now been pressed by the industry and in this House, as was my hon. Friend in another place, to have alternative arrangements, because it is being suggested that to leave the arrangements as they are could act as a substantial barrier, albeit a psychological rather than a financial barrier, to employers who were considering contracting out.

    I have nothing to add to the comments which were made in another place when the amendment of Lord Byers was resisted. I would merely say briefly that that amendment was at that time unacceptable to the Government and remains unacceptable, for a number of reasons, including complexity, uncertainty for all those concerned, and potential cost on the national insurance fund.

    Therefore, I certainly support the motion—I recognise the technical problems in which the hon. Member for Somerset, North would have been involved in tabling his amendment—which asks the House to disagree with the amendment which has been brought from another place.

    Having said that, I must go on to say that I am still not convinced that it is necessary to put any substantive provisions in the place of that amendment. However, I recognise that there are still some genuine apprehensions in the pension movement about the effect of the early leaver provisions and the volume of contracting out. I am prepared, as I have been requested to do this afternoon by the hon. Members for Somerset, North and for Brentwood and Ongar (Mr. McCrindle), to go on talking about those apprehensions with the pension industry. Indeed, the House will wish to know that only on Wednesday of last week I met the representatives of a number of organisations in the pension industry.

    Very difficult technical problems are involved. I have said that I do not think that there is a matter of principle involved, but if we are to have other options—other alternatives—rather than the 5 per cent. plus the premium, or the employer taking on the whole of the pre-award dynamism in respect of the early leavers, first, under any such option the individual himself or herself must not be adversely affected and, secondly, we must pay regard to administrative complexity.

    However, I am prepared, if it is the wish of the pension industry, to add some complexity to the Bill, because any other option would cause more complexity, if we can reach an agreed solution on this part of the structure of the Bill.

    The third factor must clearly be that any other options must not involve the national insurance fund in any additional burdens.

    Therefore, I am prepared to accept the amendment in the name of the hon. Member for Somerset, North, but I make it clear to him and to the House that I am not at this time entering into a commitment of any kind. I can give no positive undertaking that the Government will use the power in any particular way or, indeed, at all. If the Government were to use this power, our aim would be to be fair as between