moved Amendment No. 21:

I was very pleased to learn that the Government had accepted in principle at least that the basic state pension should be linked to the wages index, as I think we all were. It will be recalled that Lady Castle, with my support, repeatedly sought to persuade the Government of the necessity to do that, but it was always opposed on the basis that it would mean increases for people who did not really need it. It has been the view of many of us, including the TUC, that the basic state pension should be increased and then linked to the wages index, which would have meant that far fewer people would have to rely on means-tested benefits, which are expensive to administer, often do not reach those who are entitled to them and are regarded as humiliating for many who need to claim them.

The Bill envisages linking the BSP to the wages index, but not until a date some time in the future. The National Pensioners Convention believes that about 3 million present pensioners may not be alive by then to benefit from it. Baroness Castle would, I am sure, have been pleased at the Government’s change of heart about the wages index link, but she would have been less than happy about the delay in its introduction so that many will not benefit. Moreover, it looks as though the Government are intent on providing themselves with a get-out clause if it is not felt to be affordable at that time. That is not satisfactory; it should be introduced as soon as possible after the Bill becomes law.

If it is claimed that many will benefit who do not need it, the answer is simple; the better off will simply pay more tax. It will be of enormous assistance to many. I hope the Government will see the justice of this. It was originally intended that BSP should be linked to the wages index, but that was changed by subsequent Governments. I understand that, had it been in operation all these years, the BSP would now be worth about £142 a week, enough to lift many out of the need to claim means-tested benefits. Although the pension credit has assisted many pensioners, as we all agree, it has not helped everyone, and I urge the Government to arrange for the wages index link to operate earlier than has hitherto been indicated. I support the amendment.

I have an amendment in this group. Perhaps I may ask, like St Thomas Aquinas, “When, dear Lord, when?”. That is exactly the point behind—

He then said, “But not just yet”.

Indeed, but it does not suit my case to carry on. The Government’s position appears to be rather mixed on this, because they seem to be insisting that the link will partly be paid for by the rise in state pension age and partly by new money, and that the Bill is affordable, with clear funding structures behind it. In the next moment, almost in the next breath, the Government claim that further flexibility is necessary on the timing to ensure that the promise that the Bill makes to pensioners is affordable. For goodness’ sake, which is it?

I very much support the amendments of the noble Lords, Lord Oakeshott and Lord Kirkwood, and support what the noble Baroness, Lady Turner, said. I welcome the plan to link the pension with earnings, and noble Lords across the Committee feel strongly about that. I hope that the amendment of the noble Lord, Lord Oakeshott, will be carried. In the event that it is not, can the Minister at least consider those who are 80 and above, because, making them wait until 2013 takes a risk that they will not be here? It would seem cruel to say to them, “It’s going to happen, but you will probably not be around to benefit from it”. In the event that the Minister feels that he cannot support the much better amendment that has been proposed, will he at least consider the over-80s?

I thank the noble Lords, Lord Oakeshott, Lord Kirkwood and Lord Skelmersdale, for their amendments and for providing a chance for us to debate the restoration of the earnings link to the basic state pension. The Pensions Commission made it clear that there was no crisis for today’s pensioners, but there would be for future pensioners unless reforms were made to address the issues that they faced. We are following the thrust of the Pensions Commission’s proposals by developing solutions for the future. Uprating the basic state pension in line with earnings is one of those solutions. I start by confirming the Government’s commitments on earnings uprating.

First, we will continue to uprate the pension credit standard minimum guarantee in line with earnings beyond 2008 and over the long term. At present, there is no legal obligation to do this. This Bill puts that commitment in primary legislation to provide certainty on that point. Secondly, during the next Parliament, we will link the uprating of the basic state pension with average earnings over the long term. Our objective, subject to affordability and the fiscal position, is to do that in 2012, or by the end of the next Parliament at the latest.

That commitment was set out in the Government’s pensions White Paper of May 2006, and Clause 5 legislates for it. We will make an announcement at the beginning of the next Parliament specifying the date for introducing the earnings link for the basic state pension. This group of amendments seeks to bring forward either the date from which the earnings link is restored or when and how that date should be announced.

The noble Lords, Lord Oakeshott and Lord Kirkwood, tabled an amendment that seeks to bring forward the date for introducing the earnings link for the basic state pension so that earnings uprating takes effect from the tax year 2008-09. Some noble Lords have expressed disappointment that we are not promising to restore the earnings link earlier than 2012, but the costs arising from introducing it earlier are considerable. Introducing the earnings link from 2008-09 would cost an extra £2.2 billion in 2012 alone. Costs would continue to rise over time to about £6.5 billion a year in 2050. Those costs might be affordable if we were restoring the earnings link only in the short term or in isolation from other changes, but not if we want to link pensions with earnings over the long term as part of our wider reforms. Earnings uprating is part of a package of complementary reforms, and trying to unpick the timing of this element of those reforms fundamentally changes that package.

I am confused. I shall read Hansard extremely carefully to see what the Minister has said, but I understood him to say that 2012 would be the date; then he said that 2012 is the intention; and then he said we must have flexibility. To leave such a large window of time is totally unacceptable. Primary legislation should be enacted, not put on the shelf somewhere until the Secretary of State judges that the time is right to make some positive headlines. The Government, having made this brave decision, owe it to pensioners to tell them in a reasonable time when it will happen.

We intend to tell people in a reasonable time when it will happen. We have made a commitment to make an announcement early in the next Parliament. There is a commitment to lay an order before 1 April 2011. As I made clear, our objective is to do it by 2012, subject to affordability and the fiscal position. There is bound to be a need for a degree of flexibility. Notwithstanding that, a clear commitment that it will happen by the end of the next Parliament at the latest is enshrined in legislation. It seems to me that that is very clear and binds the Government within fairly tight parameters.

That could be eight years.

The Minister mentioned a very large figure, saying it would cost several million—£2 billion. Are there any costs to offset against that? Surely there could be some savings. First, a number of better-off pensioners would pay more tax and, secondly, there would be less expenditure on means-tested benefits which otherwise would be payable but which people would not need to claim because they were receiving increased pensions.

My noble friend is correct. I believe that figure is a net figure. If it is not, I shall certainly write to my noble friend and ensure that she has the net figure.

The more I listen to the debate, the more I realise that a period in a Parliament is a nonsense. Why should pensioners have to wait longer if it happens to suit Gordon Brown to run right up to 2010 rather than call an election next year? It seems to me that, in principle, there should be a date. I feel like offering the Minister a deal; that we will drop all our suggestions of raising the basic state pension and that we shall even drop our support for citizens’ pensions if he will promise that the basic state pension is put up by £1 a week every time the word “flexibility” is used in our debates.

More seriously, I thank the noble Baronesses, Lady Turner and Lady Greengross, for their support—I could call them the usual suspects. The point is well made by Age Concern and Help the Aged that without the restoration of the link with earnings, the real value of the basic state pension in today's earnings terms will fall to £79 by 2012. Pensioners are seeing the value of their pensions decrease steadily in relation to average earnings. They have waited long enough. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 22 to 24 not moved.]

Clause 5 agreed to.

[Amendment No. 25 not moved.]

Clause 6 agreed to.

Clause 7 [Removal of link between lower earnings limit and basic pension]:

moved Amendment No. 26:

26: Clause 7, page 8, line 35, leave out “This section has” and insert “Subsections (2) and (3) have”

The noble Lord said: I shall speak also to Amendments Nos. 27, 28 and 29. These amendments make changes to Clauses 7 and 8 as a result of recommendations made by the Delegated Powers and Regulatory Reform Committee in its ninth report. Clauses 7 and 8 deal with the removal of the link between the lower earnings limit and the rate of the basic state pension. Because of that link, the level of the lower earnings limit currently increases in line with prices. However, the link means that without the changes made by Clauses 7 and 8, the lower earnings limit would increase in line with earnings once the earnings link is restored because it is connected to the rate of the basic state pension through legislation.

Our view is that the lower earnings limit should not automatically increase in line with earnings simply as an unintended consequence of restoring the link between earnings and the basic state pension. Therefore, Clause 7 amends the existing delegated power contained in Section 5 of the Social Security Contributions and Benefits Act 1992 so that where regulations prescribe the level of the lower earnings limit, the level will no longer be linked to the weekly rate of the basic state pension. Clause 8 amends corresponding provisions in the Social Security Contributions and Benefits (Northern Ireland) Act 1992, as national insurance falls to be legislated for in respect of the whole of the UK.

We believe that the provisions that govern the setting of the lower earnings limit should allow for flexibility, which is what Clauses 7 and 8 achieve by providing the Treasury with the discretion to set the amount of the lower earnings limit. The Treasury will separately consider the appropriate uprating of the lower earnings limit once the link with the basic state pension is broken.

However, the Delegated Powers and Regulatory Reform Committee, in its ninth report, highlighted the significance of the lower earnings limit as the entry point to contributory benefit entitlement. In light of that, it considered that once the link between the lower earnings limit and the rate of the basic state pension is broken, regulations that set the rate of the lower earnings limit should no longer be subject to the negative procedure, but rather to the affirmative procedure. It also recommended a parallel change in Clause 8 which makes provision for Northern Ireland. I am pleased to say that we unreservedly accept the committee’s recommendations. We therefore tabled Amendments Nos. 27 and 29, which ensure that those recommendations are fulfilled. A couple of small tidying up amendments—Amendments Nos. 26 and 28—are necessary as a result. I beg to move.

Having been rather intemperate on my last intervention—unnaturally intemperate, I hope—I congratulate the Government on acceding to the suggestions of the Delegated Powers and Regulatory Reform committee. I have no complaint about the rationale behind Clauses 7 and 8, and I agree with the committee and the Government that the regulations should be by affirmative instrument, not by negative resolution.

We on these Benches agree. We congratulate the Government and we also congratulate the Regulatory Reform Committee, under the chairmanship of one of my predecessors in this job, my noble friend Lord Goodhart, on doing its job well and keeping the Government honest.

On Question, amendment agreed to.

moved Amendment No. 27:

27: Clause 7, page 8, line 36, at end insert—

“( ) In section 176(1) of the SSCBA (instruments subject to affirmative procedure), before paragraph (a) insert—

“(za) regulations under section 5 specifying the lower earnings limit for the tax year following the designated tax year (see section 5(4) of the Pensions Act 2007) or any subsequent tax year;”.”

On Question, amendment agreed to.

Clause 7, as amended, agreed to.

Clause 8 [Removal of link between lower earnings limit and basic pension: Northern Ireland]:

moved Amendments Nos. 28 and 29:

28: Clause 8, page 9, line 3, leave out “This section has” and insert “Subsections (2) and (3) have”

29: Clause 8, page 9, line 4, at end insert—

“( ) In section 172 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Assembly, etc. control of regulations and orders)—

(a) in subsection (9) for “(11), (11A) and” substitute “(11) to”; and

(b) after subsection (11) insert—

“(11ZA) A statutory instrument containing (whether alone or with other provisions) regulations under section 5 specifying the lower earnings limit for—

(a) the tax year following the designated tax year (see section 5(4) of the Pensions Act 2007), or

(b) any subsequent tax year,

shall not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.””

On Question, amendments agreed to.

Clause 8, as amended, agreed to.

Clauses 9 to 11 agreed to.

Schedule 2 agreed to.

Clause 12 agreed to.

moved Amendment No. 30:

30: Clause 13, page 14, line 25, at end insert—

“( ) Following the period in subsection (1), the Secretary of State may by order vary the pensionable age for men and women in specific employments.”

The noble Baroness said: At Second Reading, I referred to the provisions in the Bill relating to the age of retirement. It is understandable that the Government should seek to deal with the projection that we are all likely to live very much longer. Therefore, pension provision on the present basis needs to be revised—the pension provision has of course to last that much longer. On the other hand, to increase the age at which retirement takes place for everyone is wrong.

The TUC has already expressed concerns about that. I notice that it was raised in debate in the other place by MPs concerned about constituents working in physically demanding jobs. I referred to people working in the construction industry. MPs referred to employees in the fishing industry, again, a sometimes dangerous and physically demanding job where fitness may mean safety and where its absence could lead to danger and even death, not just to the employee concerned but to the others working with him. I hesitate to think of individuals in their mid-sixties working on scaffolding.

I am aware that my amendment is not particularly well crafted, but I wanted to have some wording in the Bill which would enable exceptions to be made in certain industries. This relates not only to male employment, as many physically demanding jobs are undertaken by women which are much better done by those who are younger and more fit to do them—nursing disabled or elderly people is an occupation that comes to mind. I hope therefore that the Government will consider seriously what I am saying and perhaps will bring back another form of wording on this issue if mine is felt to be unsuitable. I beg to move.

I support the amendment of my noble friend Lady Turner. I support fully the proposal to raise the retirement age. The period over which it will take place is very fair: it will not be a shock to anyone.

The more I have looked at this issue, the more I have reached the view that it would not be an equitable way forward to make it mandatory for people working in some of the occupations that we know involve heavy lifting, are dangerous and have high accident rates to wait until the age of 68. People in such occupations are generally those who were not in education until their early 20s, but who probably left school at 16. So you are talking about 52 years of continual week-in, week-out work in heavy industry which in many instances has a high accident rate.

I greatly welcome the amendment and I hope that the Minister will consider it seriously. I know that it is difficult and that we do not have exceptions at the moment, but the provision is not mandatory. It says that,

“the Secretary of State may by order vary the pensionable age for men and women in specific employments”.

Clearly those specific employments would have to be considered and proven. Otherwise, we would have all kinds of exceptions under the legislation. Against the background in which we saw the retirement age for women rise from 60 to 65, a Bill that raises it from 65 to 68 in our own lifetimes needs to be considered. I would hope that the Minister will give the amendment serious consideration. If it is unacceptable, I should like to know why. Fifty-two years is really more like being chained to a life of hard work which I do not think any of us would envy.

I agree with the noble Baronesses that there will be many people working in particularly arduous or dangerous jobs who find themselves physically or mentally unable to continue until the state pension age, be it 65 as it is now or 68 as it will become. However, I do not believe that they are best served by writing them off as not fit for useful employment, at an age when their peers continue to engage fully in the workplace, not least because I noticed no dissent from either noble Baroness when we discussed the Welfare Reform Act as recently as this Session. The whole point of that legislation is to encourage people whose disability does not allow them to continue in their current employment to seek, if not to secure, alternative employment. Instead of putting these people on the employment scrapheap, I would like to see more opportunities for these and other older workers to transfer to other careers. Indeed, I tabled Amendment No. 34 to cover the point—an amendment that, given this discussion, I do not intend to move.

It will be rare in the future that any person will stay in one job for the whole of their lives. Men and women who wish to leave a physically difficult job still have a great deal to offer society, and should be encouraged to explore other skills that they may have before being forced to retire. As a result, I am afraid that I cannot support the amendment.

I apologise for springing this on the Minister, but I draw his attention to the table in paragraph 289 on page 49 of the regulatory impact assessment; I bet he has it with him. I am sorry; I should have given him notice of this. The table confirms the point that my noble friends Lady Dean and Lady Turner are making. Interestingly, it may foreshadow some of our discussion on Amendment No. 81 in the name of the noble Baroness, Lady Howe, in that it gives figures for longevity. We know from the Turner report and since Black and the discussion about health inequalities that everyone’s life expectancy has improved. Turner showed that longevity is increasing on average by about one year for every five years, compared with one year for every 10 years; so the speed at which longevity is improving is increasing. In particular, the gap between men and women is narrowing as a result. As I say, that may relate to the debate on new sex-based annuities.

Turner developed the Black figures on health inequalities to show—this is confirmed in the regulatory impact assessment—that the growth in longevity is uneven and that, for the poorest social classes—social classes 4 and 5—longevity has improved much less in the past 20 years than it has for social classes 1, 2 and 3. In other words, although everyone is living longer, the better off are living much longer, so inequalities are widening for the poorest. There is no tidy overlap between a construction worker or a fisherman in social classes 4 and 5, but I remember from my days in local government that refuse collectors who retired at 65 were not expected still to be with us two years later. There is obviously an interlocking between longevity and lifestyle, smoking and all the rest of it, but it is clear that health inequalities are continuing to widen according to social class, and occupation is to some extent a proxy for that. There is therefore real substance behind this. Gender inequalities are narrowing, which takes us back to the new sex-based annuities, but health inequalities are widening according to social class. That is the point that the amendment in the names of my noble friends is addressing.

I have been trying to locate the quotation but cannot find it. I have had too much paper, I suppose. I do not know whether it is in the regulatory impact assessment or in the latest 25-page amendment to that assessment from the Minister for Pensions Reform, which was very helpful. It says somewhere that no decision has been made, nor will be made until, say, the 2020s, on what age at which one can draw a pension credit guarantee. In other words, although the state pension age is deemed to be rising—I do not disagree with that at all; that is how we make pensions affordable, given longevity—there is a commitment to reviewing whether the pension credit guarantee should rise at the same time and in the same way. If that is right—perhaps my noble friend could write to me because I am probably catching him on the hop on this—it would put in an underpin for those people whose health is impaired from, say, heavy industry and so on. As much as we would like, people cannot necessarily at the age of 63 or 64 be retrained from being a building worker, and they may have a fairly low functional literacy still. That may be the sort of safety net which would allow people to retire earlier on an adequate income than others.

Perhaps my noble friend will help me, first, on the widening of health inequalities and the implications that that would have on my noble friend’s amendment and, secondly—if my noble friend has it to hand that would be terrific but, if not, he could write to us or tell us at a later stage—the implications for the separation of eligibility age for pension credit guarantee from that of the basic state pension. That may be a way forward.

The noble Baroness, Lady Hollis, is right that longevity has increased faster among the best-off in our society. None the less, longevity has improved substantially among all classes in all areas over the past 20 or 30 years, so it is reasonable overall that the pension age should go up. I do not believe that the right way to deal with widening inequalities in our society is to fiddle about with differential pension retirement ages. The right way to do it is by effective tax and economic and social policies to help poorer people and to narrow the inequalities. I am sorry to have to say to the noble Baronesses, Lady Turner and Lady Dean, with whom I agree on many things, that in practice there could not be a differential retirement age for people in just the building trade. Obviously, there would be all sorts of people not doing manual jobs, so it would have to be for bricklayers and not for others. I am afraid that the problems of inequality and longevity in our society need to be addressed at the core, not by fiddling around with pension retirement ages.

I am deeply disappointed because I was going to compliment my noble friend Lord Skelmersdale on the wisdom of and his skill in putting down Amendment No. 34, and he tells me that he is not going to move it.

Do not let that stop you.

It will not stop me, as the noble Baroness says. My noble friend is correct. One can relate Amendment No. 34 to the amendment proposed by the noble Baroness. For very much the same reasons that the noble Lord, Lord Oakeshott, has put forward, I do not support it because it would be wrong to vary the age of retirement. I am in favour of increasing the retirement age. In an ideal world, I would like a flexible age of retirement between 60 and 70, which is exactly what I proposed 20 years ago. It would be extraordinarily difficult to vary the age of retirement. Rather than having an inflexible league table of professions and jobs, it would be much better to concentrate on providing opportunities for older workers. That is the challenge, which I am not sure the Government or any of the commentators have yet taken on board.

If we are to have a retirement age of 68, there has to be assurance and reasonable hope that people will have the opportunity of sensible work at that age. One does not want people retiring at 60 and having a twilight of eight years working in jobs which are second-rate as far as they are concerned. That is the challenge for the Government. I am not sure that the implications of that challenge have yet been addressed or worked out.

We have to provide opportunities. When one looks at public appointments, I wonder how many public appointments are made of people over the age of 65. How many appointments are made in the Department for Work and Pensions of those over the age of 65? I suspect that it is not many. If there is to be a revolution in the increase of pension age, we must think constructively about the issues.

I think we are mad in this country. Of course it is easy for me to say, but we put far too high a premium on younger people and not enough on experience. Not all experience counts—the noble Lord, Lord Oakeshott, has a lot of experience but you would not appoint him to anything—but in many cases it does count. If I am to be serious, this issue has to be addressed. The Government have to look at the work opportunities available to older people and come up with constructive ways forward, not only in training but also in opportunities to work. Unless we do that, we will not meet the challenge set out by the noble Baroness in her amendment.

I agree with much of what has been said by the noble Lord, Lord Fowler. For those who may not have studied his work, Professor Sir Michael Marmot has done a huge amount of work on the socio-economic determinants of health and longevity. It is the case that huge differences are seen depending on the type of job someone has. Further, longevity is reflected in people’s status and the amount of autonomy they have in their work. We have a long way to go in this country because we do not retrain or reskill people after a certain age. Across Europe, if one talks about lifelong learning, it usually means up to the age of about 30 and not beyond. We have to change our attitudes if a lot of what we are talking about this evening is to mean lifelong work, and older people being retrained and in work.

Regardless of the work they do, we can make changes in the workplace by giving people increased responsibilities and a higher status. Even a menial job can enjoy different levels of status so that people have the ambition to achieve. That makes such a difference to longevity and health and is something we need to pursue. I hope that, as a country, we can do this.

I am sure we will return to this issue when we reach my amendment on annuities. Having said that, this amendment raises some interesting questions. As we have heard, those lucky enough to be born into the higher socio-economic groups or to have been to university enjoy measurable advantages, but we forget at our peril that the European Union has just passed an age discrimination law which we have adopted in this country. That should prompt us to consider exactly what restrictions, if any, should be placed on some professions. Of course one needs to be jolly careful that those who want to stay in dangerous jobs, quite apart from those who have reached a certain age, are capable of doing so. That is an important test. But that aside, not to allow the individual to have any choice is worrying and antithetical to the ideas being put forward, not least to the European age discrimination legislation.

The issue of training is important. If there is to be a pension credit guarantee, the noble Baroness, Lady Hollis, said that no one should miss out on their proper pension by having to retire early, no matter what is decided about the final retirement age. Having said that, there can be danger in certain jobs. For instance, if you were a surgeon and developed a shake in your hand it might be desirable that you did not operate any more. In such circumstances, presumably you would rely on your peers in the group to give you advice. Perhaps it ought to be built into the scheme that after a certain age a review should take place every two years or so. But I would hate to see the individual’s choice in these matters completely removed just because they were in a specific job.

We all know that we age differently, both physically and mentally, and perhaps we have not quite thought this through. But the one thing we want to be certain about is that the Bill will not disadvantage either males or females in this respect as long as they want to work. Certainly there should be plenty of retraining available. Older people can bring a great deal of wisdom to debates. Often they have knowledge of what went on in the past which the younger generation have forgotten, even if they were ever taught it. Even if it has not yet become history, it can stop you going down paths which have been trodden often and found not to work.

I am ambivalent about the amendment, but I would not want to see anything too rigid put in place.

I thank my noble friends Lady Turner and Lady Dean for precipitating the debate. They have set us a challenge. The issues that have come out during the passage of the Bill are extremely important. Your Lordships’ House is hugely symbolic of the value of older people and the contribution they have to make to society. We are all very much walking the walk.

I particularly emphasise the importance of the debate around health inequalities. We do not know exactly how health inequalities will precipitate changes in life expectancy in the future, particularly when having regard to childhood obesity and the effect of exercise, so it is extremely important that we have these discussions.

Before I address the specific point with which the amendment is concerned, I should like to say a few words to remind the Committee why Clause 13 and Schedule 3 are essential to the Bill. It is common ground that, in common with many industrialised countries, we have seen dramatic increases in longevity during the past half century and a declining birth rate. Even though the rate of mortality improvement is expected to slow down somewhat in the coming decades, none the less the projections all point to further gains in life expectancy. We are not proposing to erode the gains that have already been made; rather, we are proposing simply to check the ever increasing length of time people can draw their state pension for, by increasing the state pension age broadly in line with the projected increases in average life expectancy.

These improvements in longevity have not been confined to those in non-manual occupations. The ONS longitudinal study indicates that the average life expectancy for a male manual worker who reaches 65 increased by more than two years over two decades ending in 2001, up from 12.3 years in 1977 to 1981 to 14.7 years in 1997 to 2001. At the same time, the proportion of male manual workers who are projected to survive to 65 is also improving, up from 71 per cent for those born in 1981 to 80 per cent for those born in 2001. That indicates that on the basis of past trends, the proposed increase in the state pension age should not result in a decline in either the proportion of those surviving to the new state pension age or in the number of years spent in receipt of state pensions. The proposed increases in the state pension age are an indispensable part of the pension reform package, because they are needed to ensure that the pension settlement will remain affordable in the long term—or, to put it another way, they ensure that the extra costs associated with a more generous state pension will be shared fairly between the generations.

At the heart of my noble friend’s proposal in her amendment is the proposition that increasing the state pension age will disadvantage those who are unable to continue in physically demanding work beyond a certain age. At Second Reading she spoke about the important issue of ageing workers and heavy industry, as she has done again today. She also made the valid point, using the scaffolding industry as an example, that we should not just be concerned about the specific employee but also about the effect of others working with him or her. I am entirely in agreement with her that people undertaking that kind of work should not be forced to continue in it beyond the limits of their physical capability. I also accept the point that many people leave such employment before the current state age.

Where I am afraid I must take issue with my noble friend, however, is her conclusion that the solution must be to provide different state pension ages according to the type of employment, although I fully support her motives behind bringing the amendment forward and having this debate. Others around the Chamber have pointed to a number of practical difficulties with her proposal, not least in determining how long a person needed to be employed in a designated occupation to qualify and establishing over a person’s lifetime what periods of qualifying employment they had been engaged in. Added to that, I am sure there would be much more debate and argument over which specific employments would have a different state pension age and which would not. For example, who is to say that a construction worker working in a hard physical job should be considered different from someone who is not doing a physical job but none the less one that is very stressful? Decisions on these issues could have a perverse effect on people’s career choices, potentially incentivising them to remain in physically demanding jobs for longer than might be appropriate for them.

As we know, the state pension was founded as a universal scheme. Successive Governments over the years have sought to build on it—and, dare I say, improve it—but we have not deviated from the idea of a common minimum age at which men and women may start to draw it. By 2020 that minimum age will be 65 for both sexes. As I have already said, our proposals for increasing the state pension age from 2024 are in line with projected increases in life expectancy. Thus, by the time we get to the first such increase, there will already have been further gains. It is fair to argue that a man of 66 in 2026 will be in the same position as, if not a better one than, a man of 65 today. I submit again, therefore, that we are not making the present position any worse with these proposals.

No one is suggesting that people in their 60s should have to continue in heavy, demanding jobs. However, the issues around ageing workers and whether they are able to continue in the same employment throughout their working lives need to be addressed—a challenge indeed—by overcoming the barriers that older workers face when they seek to enter employment or refrain and learn new skills. That is something we are hugely committed to as a Government, and we are already starting work on it. For example, our Age Positive initiative encourages and engages with employers over issues of age diversity and a mixed-age workforce, and Jobcentre Plus provides tailored support for older workers through the New Deal 50 Plus.

I am convinced that it would be of enormous benefit for us to invest more time in debating this issue, and I would value the opportunity to go on. We take it extremely seriously. As the noble Lord, Lord Fowler, said, it is a challenge, and the Government have committed to making significant increases in the number of older people who are working and gaining access to new skills as they get older. This is an issue not just for the DWP but across the whole Government.

I am sorry to intervene, but the point that I was trying to make was about government example. The latest figures appear to show that in April 2005, of the people employed in the Civil Service—in government departments and agencies—only 585 were aged 65 or over. That is about 0.1 per cent of the total. Do I take it that the Government intend to improve on those figures? If so, how do they intend to do it?

I do not have the most up-to-date figures, but I assert that the Government intend to improve the number of older people in employment. The noble Lord asked about the department’s position on public appointments. The DWP has abolished its bar on those over 65 taking public appointments.

When was that?

I do not know, but I can check. This is an extremely serious matter, which we do not take lightly. It is vital that the Government offer a role model for employers. The debate that my noble friends Lady Turner and Lady Dean have precipitated draws attention to the wider issue of how to encourage people in a changing working environment to have the opportunity of not just one career but a number. We make it possible for older people to access skills and training; we have a flexible working environment where they can make the most of their skills and experience to benefit themselves as well as the economy.

I thank my noble friend for that sympathetic response. There was an acceptance of the view that people working on physically exhausting, sometimes dangerous, work should not be expected to continue to work to a late age without some relief or provision made for them. There is a general acceptance from everybody that something should be done about the situation. I thank the noble Lord, Lord Fowler, who also made that point.

I also thank my noble friends who participated in the debate, particularly my noble friend Lady Hollis, who drew attention to the report on longevity. She simply confirmed what the TUC said in its briefing to me when it argued that,

“differences in life expectancy mean that an across-the-board increase in the pension age would affect the poor the most”.

We are talking about the poor; manual employment is not always poor employment or physically exhausting. The statistics that have been cited about manual employees and longevity are understandable. We are talking not about all manual employment, simply that which is exhausting and possibly dangerous.

I am very grateful for the assurances that have been given this evening. I accepted, when I moved the amendment, that its wording was not particularly good. I crafted it so that we could have a debate; I certainly was not wedded to the wording and hoped that if the idea behind it was accepted by Ministers, they might come back with their own. Instead I have had assurances that are acceptable and on that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

moved Amendment No. 31:

It is a wonderful idea, but just how is it going to be achieved? Who will do the aggregation? Who will be responsible for paying?

People in the situation which the noble Baroness described have the opportunity to pay voluntary, class 3 NICs, which may well be suitable for them, but even if they chose not to make voluntary contributions, they would not often find themselves missing out on a full state pension. Now that the Government have lowered the NICs requirement to only 30 years, and have extended NI credits, a person would by my calculation have to hold down two part-time jobs for in the region of 20 years, while never bringing up a child or undertaking significant caring responsibilities, not to qualify for a full pension. I do not know whether the Minister will agree with my mathematics, but I shall be very interested to find out.

I support the amendment. There is a problem. The Government have recognised that at least 15,000 women, on their calculations, will remain outside the contributory system because their hours of work are fragmented between different jobs. They might at one time run together several part-time jobs—in a newsagent, a pub and a drycleaner’s shop, for instance, or in a cleaning job or as a cinema usherette—and no single job takes them above the 16 hours even though their total week may be 40 hours or more.

Equally—this example is again from the West Norfolk Carer’s project—a woman may undertake a multiplicity of jobs in a rural area that never register on the state pension radar. The example given from the network is of a real life woman who had a cleaning job in coastal holiday cottages in the summer, followed by three months in the local agricultural research industry from late August at a basic rate, a stint in the mushroom factory and perhaps a few weeks picking fruit or berries with gangmasters or working on a conveyor belt in a canning factory in King’s Lynn or the Fens. The real life woman in the example still ended up with total earnings that did not count as a qualifying year for a basic state pension. I may sound like a worn-out gramophone record, but Amendment No. 4 would help to address this issue, because it would allow people to know whether they had gaps so that they could make them good.

The noble Lord, Lord Skelmersdale, says that he does not know how this can be done, but it is actually done now. I am sure that he is aware of this. If you are a lone parent, you seek tax credits and you have a multiplicity of jobs that together take you over the 16 hours, you can add them together and get your tax credits. You can already do that for a high-value addition. You can run jobs together if you seek tax credits as a lone parent to get you over the 16-hour hurdle. By going into a tax credit at 16 hours, you get an entitlement to a national insurance credit for the basic state pension. That is the rule now—so it can be done and is done.

The way forward may be the one suggested by the noble Baroness, Lady Thomas. I understand that there is a problem with divvying up national insurance between three or four employers at any one point in time. Of course, they would not want to do that, but the answer is surely to make it a credit and allow the employee to pay the contribution. That could be done under Amendment No. 4, if necessary.

I hope that the Government take this amendment seriously. I do not like it that we have itsy-bitsy amendments spread over this and that group, but we are having to do it because there is not enough flexibility in the system. Despite the hopeful response of the noble Lord, Lord Skelmersdale, the Government recognise that under their own estimates 15,000 women are likely to fall outside the system as well as perhaps 5,000 men—we do not know. We need to respond to their needs and one way to do that, if we do not go for the flexible method of allowing people to buy additional years at the end of a working life, is to go for an amendment such as this amendment. It is not the one that I would prefer, but if the Government will not move on mine perhaps we can encourage them to consider this other amendment.

I, too, support the amendment. The Minister may tell us that everything is already covered but it sounds from what the noble Baroness, Lady Hollis, has said that unless we insert something like Amendment No. 4 into the Bill there will be loopholes.

The Equal Opportunities Commission briefing says—as we would recognise from our experience—that something like 15,000 women and 5,000 men are likely to be in this dual situation. Therefore, yet again we see the unequal lives that women lead compared to men, with regard to caring and dependency ratios.

I would welcome the knowledge that this amendment is unnecessary, these matters are already catered for and none of these women will miss out, but at the moment the low earnings limit puts them at a disadvantage. I look forward to the Minister’s response.

I add my support to the amendment. I do not think that 15,000 women and 5,000 men is a big number to handle in the totality of the complex administration that we run at the moment, so any suggestion that there is a technical block to doing this is nonsense. However, portfolio ways of existence are likely to increase as our economy is increasingly being hollowed out in the middle. People who are not in a high-skilled organisation where they are likely to get training and other employment support, and particularly those coming out of welfare into work, often have to go through a period of portfolio employment to get that experience and training. It is actually not a bad thing and might be encouraged in some circumstances to get people out of the habit of benefit dependency.

The portfolio type of existence in the labour market will probably become more prevalent and we should take that into account. I do not think that the Government can with any justification say that it is too complicated to do that. I agree with the noble Baroness that the way of getting round the question of who should pay the employee’s contribution is to use a credit and let the employee pay the contribution, if that is the way to get them into the contributory system. I think that that would be beneficial to everyone. There is more to the amendment than can be dismissed simply by saying that it is too complicated or too technical.

I thank the noble Baroness, Lady Thomas, for giving us the chance to go over an old conundrum. I think that most speakers have anticipated the government response on this, particularly the noble Lord, Lord Skelmersdale, whose analysis I agreed with. This is about the aggregation of low earnings from multiple part-time jobs so that people earning below the lower earnings limit in each job can accrue state pension if their total earnings are above that level.

The Pensions Commission and the Government have both considered this, which in practice is an issue that largely impacts on women. There is no lack of will on the Government’s part to address the problem of unequal pension outcomes for women with our pension reforms. Many of the state pension measures in the Bill have been driven largely by the Government’s commitment to reshape state pensions for women, giving fairer outcomes especially for women who combine paid work with family and caring responsibilities.

On this issue, I believe that there are other solutions, both now and post reform, and the noble Baroness anticipated them. The new 30-year single contribution condition and credits for carers will by themselves change the face of the state pension landscape. The reforms in the Bill are a complete package to benefit people with broken national insurance records, including those who have spent a period with earnings below the lower earnings limit. Clearly there are times when some people, particularly women, combine two jobs, both below the lower earnings limit. However, that is often because of particular circumstances such as looking after young children or someone who is sick. We believe that people rarely do that for substantial portions of their working life. Our other reforms, especially the 30-year contribution test and carer’s credits, will in any case benefit many who have a particular need for these types of flexible work patterns.

People whose earnings are below the lower earnings limit do not necessarily fall through the system; they may be building a state pension from home responsibilities protection or national insurance credits, from carer’s credits or working tax credits. It is right to say that the analysis of the Labour Force Survey indicates that, at any one time, about 15,000 women are earning more than the lower earnings limit in total from two or more jobs which individually pay less than that amount and are not accruing a basic state pension. We do not believe that these people necessarily stay in those circumstances throughout their working life. I was interested in the example touched on by my noble friend Lady Hollis. If I understood it, she was talking about a number of jobs that were in sequence, not jobs that were combined at the same time. We believe that only one in 1,000 women of working age is in this group who are currently earning in total less than the lower earnings limit from two or more jobs.

The Pensions Commission concluded that it is difficult to fix the aggregation issue within the confines of the existing system or without significantly increasing costs for employers. We have looked closely at the issue of aggregation and we agree with the Pensions Commission. There is no straightforward mechanism to allow earnings from multiple employers to be aggregated. To do so would fail the tests of simplicity and affordability.

I know that supporters of the aggregation argument have drawn a comparison with arrangements for working tax credits—my noble friend did so a moment ago—where earnings from two or more low-paid part-time jobs are aggregated for tax credit purposes, but the two systems work in very different ways. Tax credits entitlement is calculated on an annual basis, initially on income in the last complete tax year before the claim, with the award being finalised after the end of the tax year in which the claim is made.

The national insurance contributions scheme, by contrast, works on a set of clearly defined rules with liability arising in each pay period rather than on an annual basis. This is very much a real time issue. If the scheme is amended to suit particular groups it would quickly become unworkable and extremely expensive to administer, failing the test of simplicity and affordability. We would not want a system to aggregate earnings for benefit purposes but which would exempt people from paying national insurance contributions on those aggregated earnings. This would clearly fail the test of fairness. One of the key principles of national insurance is that both the employee and their employer contribute towards the National Insurance Fund. If the employee alone were to contribute, then the amount of payment needed might be prohibitive. The employer contribution helps fund benefit entitlements in both the shorter and longer terms.

If earnings were aggregated, it is not immediately obvious how the employer’s contribution could be easily calculated. The employer’s contribution would be variable—a percentage, based on an employee’s earnings. Reporting, collecting and calculating it would impose significant administrative burdens on the employer and increase complexity within the system. These burdens would fall particularly hard on small employers.

I wonder whether my noble friend can help me. He is saying that whatever we do for employees must apply to employers as well, that we cannot separate the two and that we need both the contributions to run in parallel. How does he connect that to the previous argument we had on people working over the age of 60 where employers continue to pay national insurance but employees will not be allowed to pay national insurance contributions when they are past formal retirement age? We make a disjunction in that case, why can we not make a disjunction in this one?

That is a separate issue. We have debated how that works. We are dealing here with situations where people are in employment. The argument is about aggregating those employments so that people become eligible to get credits for the basic state pension and S2P. We must have fairness between people who have one job which is above the limit and those who have two jobs which together are above the limit. We believe that in each case the employer and the employee should be put in the same position.

These burdens might also make the cost of hiring someone uncertain. The employer would not necessarily know about other jobs the individual might have, and therefore whether they would need to pay some employer’s national insurance contributions. Some small employers, offering just a few hours work a week, might be reluctant to employ anyone who had another job, which would make it more difficult for people, particularly women, to find part-time jobs which would fit around their other commitments.

Were it to be possible to collect national insurance contributions on the aggregated earnings, some people could actually be worse off than they are now. We need to be mindful of that. More of the women who are earning more than the LEL in aggregate, but are not now paying contributions, are accruing state pension by other means than the 15,000 who are not. We believe that some 20,000 women are involved. It would not be possible to treat the two groups differently. All these women would have to pay contributions if they earned more than £100 a week, and 20,000 of them would already be accruing entitlement to the basic state pension.

It is right that we should try to understand who will be retiring without a full basic state pension, and what the circumstances are that have led to that situation before we bring forward proposals to solve a diminishing problem. That is exactly why we are undertaking research to establish more information about those who do not qualify for the full basic state pension. Indeed we are going further than that and are looking also at those who will retire in 2025. We hope to publish the results of this research in summer 2007.

It would not be appropriate for the Secretary of State to propose a solution on aggregation until we have the results of ongoing work to analyse the full non-accruals picture and the relationship between low earners and the tax and NICs systems. I therefore urge the noble Baroness to withdraw the amendment.

I thank everyone who has spoken in this debate. I had three on my side, and the Minister had just one on his.

Division!

The only reason we are moving these various amendments is that this problem is very high up on the agenda of the NGOs that write to us, which means that there is a real problem. The noble Baroness, Lady Hollis, gave us a real life example, and she said that various ways had been put forward today to try to help women with a jigsaw of employment. I am glad to hear about the research, which could be very useful. In the mean time, I shall read what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 32:

This is a good amendment, and we support it.

This is a good amendment, and I support it.

Noble Lords will be delighted to hear that I support the general principle of the amendment, which is that trends in longevity need to be kept under review.

We are not lacking in reports on longevity trends already. As the noble Lord is no doubt aware, the Government Actuary currently has a statutory responsibility to produce a report, every five years, on the long-term health of the National Insurance Fund. Demographic projections are the starting point of that report. The next quinquennial review is due by 2008. At the beginning of last year, the Office for National Statistics took over responsibility for producing national demographic projections from the GAD. The ONS regularly produces reports on longevity trends, not only at the national level but in relation to matters such as trends in healthy life expectancy, and life expectancy by different regions of the UK. I have no doubt that this work, which is of crucial importance not just for pensions policy but for a wide range of public provision, will continue under the auspices of the independent Statistics Board set up by virtue of the Statistics and Registration Service Bill, which is currently before this House.

I must question, therefore, why we need to place another statutory requirement on the Government Actuary to produce a report that will replicate much, if not all, of the material that is already in the public domain. The amendment would effectively require Parliament to consider the timetable for increasing the state pension age every five years in the light of such longevity data. As we all know, past projections on longevity have been shown to be fallible, as the noble Lord, Lord Skelmersdale, suggested. The trend in recent years has been for projections to be too pessimistic. But more recently, some commentators have questioned whether, in contrast, the current projections might be over-optimistic by not taking account of rising levels of conditions such as obesity. We recognise that the projections of life expectancy on which the timetable for increasing the state pension age is based may change in the future.

It is all very well having regular reports from the Government Actuary, but he has been no more infallible and no more perfect than any other actuary. If he had been, we would not have needed nine-tenths of the Pensions Commission of noble Lord, Lord Turner. I am afraid that I do not take the noble Baroness’s point to heart.

If I had not recognised the necessity for a long-term look, I would have put down an amendment stating “every year”. I do not wish to do that, because it would clearly be inappropriate. I will cogitate on what the noble Baroness has said and it may be that 10 years is a more appropriate period than five years; but a report on longevity that Parliament can discuss at stated intervals is vital. This is clearly not the moment to pursue that thought. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 33:

This is a very good amendment, which we strongly support. That is why I put my name to it. Probing amendments are often tabled, but this is different: it is an enabling amendment. In that sense, the noble Baroness has made the case for it very well. We on these Benches are officially in favour of a citizen’s pension. Who knows how the politics of this country will develop over the next few years? In recent years, as Secretaries of State for Work and Pensions went in and out of the rotating door, there was a period when the likelihood of a citizen’s pension was fairly close, even with this Government. Given how things can change, the amendment seems very sensible. There would be nil cost and it is a very obvious measure to pass. We support it very strongly indeed.

Amendment No. 33 proposes that we provide for a possible move to pay a basic state pension on the basis of residency at some time in the future, and Amendment No. 169 commences that provision once the Bill receives Royal Assent. I am not surprised to see these amendments tabled in the name of my noble friend Lady Hollis. She has been a tireless campaigner for the improvement of women’s pension outcomes, and I take this opportunity to thank her for her continuing involvement in the debate. She has made clear that she believes that a residency-based pension is the best way to ensure that women receive adequate state pension outcomes in the long term. Other noble Lords, including the noble Lord, Lord Oakeshott, in particular, have also expressed that view, so this amendment gives us a further opportunity to discuss the issue and, in doing so, to discuss how the Government’s reforms address that point.

I remind the Committee of the proposals made by the Pensions Commission, led by the noble Lord, Lord Turner, on the future of the basic state pension. The commission proposed that a residency-based pension should be introduced on a forward accruals basis from 2010. However, the Pensions Commission believed that it would be hard, if not impossible, to apply a residency approach retrospectively, so proposed the introduction of a residence test for new accruals only, which the amendment acknowledges. In making the case for replacing the contributory system with a universal pension payable to all individuals who meet a residency test, the commission also acknowledged that there are important arguments against taking that approach.

I start by making clear that the main objection to a residency approach is one of principle. The Government believe that pension entitlement should be a reward for a lifetime of paid work, parenting or caring—in short, providing something for something. Using residency as the basis of entitlement for a pension would provide the same reward regardless of the social or economic contribution made by an individual. Our reforms modernise the contributory principle so that it continues to be relevant, but it remains at the heart of this Government’s approach, and we believe that it strikes the right balance of rights and responsibilities between the individual and the state.

Nevertheless, reform in the state pension system so that women and carers receive fair outcomes has been a key objective of our pension reforms. A residency-based pension is often supported on the grounds of this objective, the argument being that entitlement built on residency would produce fairer outcomes than paid or unpaid contributions that women may find harder to build up than men. However, a comparison of the approaches suggested by the Pensions Commission and the Government shows that our reforms will deliver improved outcomes for women and carers faster than they would be delivered by the introduction of a residency-based pension for new accruals from 2012. Our reforms will see the proportion of women reaching state pension age in 2012 with entitlement to a full basic state pension rise significantly to around three-quarters, compared to around half without reform. Most commentators have acknowledged and welcomed the significantly improved outcomes that will be delivered faster by the Government’s reforms. However, supporters of residency still argue that it would be a fairer and more relevant way to determine state pension entitlement than a contributory system.

There are some further key objections to this approach. A residency-based pension would not necessarily be simpler to administer, nor would it necessarily provide a more universal pension. There is no unequivocal definition or single set of rules used to determine residency. Different social security benefits have different definitions and rules, and different government departments operate specific rules to determine residency for specific purposes—for example, HMRC for tax collection. Therefore, we would first have to agree on a workable and fair definition of residency before determining what information might be relevant and finding a way to obtain it. We do not hold records on residence beyond those existing under the current tax and benefit system. Furthermore, we know that there are gaps in the coverage of the existing information systems, so we would have to identify additional information to help confirm and record residency. The DWP could not do that on its own, but would need to work with other departments and organisations. There are no residency records in the UK to underpin the policy of a residency-based basic state pension. We do not believe that there is any effective proxy for residency information.

Arriving at a unified definition of residency and solving the problem of sharing information across these different rules and organisations would not be a simple matter. For example, would residency be based on physical presence? If so, what would be the position of individuals seconded to work abroad for their employer for a period? What about diplomats posted around the world, service personnel serving abroad for their country or individuals who wanted to work, say, in Africa under some voluntary service overseas? Would they have their pension restricted? What would be the circumstances of missionaries working abroad?

The amendment is obviously intended to allow time for the consideration of these issues in order to move to a residency approach at some future date. But time would not necessarily deliver a solution to the problem of finding a workable definition of residency that delivered outcomes comparable with those under the proposed reform system. If information is to be managed for this purpose, we would need to know what would be the definition of residency and what information would be required to support this. We would need to legislate for this information to be collected for the specific purpose of defining the entitlement to the basic state pension on the basis of residency.

The amendment would have no practical effect unless these provisions were decided. Ultimately, a residence-based approach to provide the state pension would require a new system or processes for collecting and recording information, yet we would still have to run the existing systems in parallel with any new system and continue to collect the information we already collect for current business requirements. A residency approach would not deliver a universal pension or something more closely resembling it than the system that would be delivered under our reforms. Such a residence-based system would still need a test for eligibility. Some people would fail this test. Too long a residency requirement could prove difficult for some to meet, while too short a test could compromise security and affordability.

My noble friend made reference to the electoral register as a means of recording data for a residency pension. The electoral register has been suggested for the purpose. There are currently no residency records to support such an approach and no effective proxy for residents’ information. It is not clear that the data from the electoral register would meet this requirement. A number of legal issues arise when considering using this or other data sources for this purpose. Personal information, such as that on the register, may be supplied only so far as the law allows it to be supplied. Similarly, the department’s ability to retain and use information it obtains is prescribed by law.

The amendment would require relevant data to be stored for the purpose of determining residency, but we would first need to have legislative gateways in place to collect this information for this specific use.

In the case of data from the electoral register, there is no central register. Each local authority holds its own individual register. If this information were to be used, the Secretary of State would require a power to receive information from all 408 registers, and to be informed of any changes in the information held.

Furthermore, the usefulness of this information is questionable in the case of the publicly available register because residents can opt out of providing their details, so it would not necessarily contain the details of everyone in the local area. The electoral register does not provide a unique identifier for individuals, so even if it could be matched against other data sources, it is not certain that the specific individual could be found and their identity and residence history confirmed. The register could contain the names of individuals, their gender and age, but only that.

The key thing to remember is that the electoral register provides evidence of a person’s eligibility to vote, not of residence. It may indicate that somebody lives at a particular address, but it cannot be used on its own to confirm this or to tell us how long that individual has lived there. Indeed, one could be on the register for a period when the register is drawn up and then go and live in Bermuda for 10 months of the year. It would still not provide an adequate proxy for residence information.

This debate will continue. I look forward to further opportunities to discuss the matter, but I do not believe that the amendment is the right way in which to go, and ask the noble Baroness to withdraw it.

The first half of the Minister’s speech was actually arguing against a different amendment from the one that I moved. It was as though I was suggesting that we establish a universal basic state pension. I happen to support that, but that is not what the amendment says. Indeed, I was at some pains to say that that was not what I was arguing for. I was arguing for an enabling amendment—to use the phrase of the noble Lord, Lord Oakeshott—to make use, by regulation, of existing databases, so that a future Government can, if they wish, explore the issues carefully and thoughtfully raised by my noble friend and decide whether they wish to go down that route. The point that I am making and that Turner made, which seems to be unanswerable, is that if you do not start, you can never do it. That is the point; we must try to ensure that we do not close down future options.

The Minister made much of the fact that he objects to the principle of residency as a basis but, as I said, that is not what the amendment seeks to do. It seeks merely to establish that a future Government of whatever party, or indeed a different Secretary of State who might have a very different view—I served under one who did—could make that choice if they so wished. I am not asking the Government to introduce residency; I am asking them to make it possible for a future Government to do so, if they so wished.

The Minister’s second argument—I absolutely respect the detailed points—was about simplicity. I listened carefully to him, and I will read Hansard very carefully, but I do not think that any of the points that he made were a roadblock, as the jargon goes in the Civil Service. I could suggest a way of addressing almost every one of them, although obviously one would need to push it forward. Now is clearly not the time to do so—we would need workable definitions and so on—but we have a database. We do not have to hold the database; local authorities do. The notion that the DWP cannot collect data from all 400 of them is unfounded; the Home Office does, as do the Environment Agency, the Financial Services Authority and the credit reference agencies. I cannot believe that the DWP, with its 130,000 civil servants, cannot do the same. That seems improbable.

The Minister talked about legal issues and how much the law allows. That is the point that I made. We would need a regulatory power, because the electoral register cannot be used following the Robinson judgment in the Wakefield case, except by specific regulation for non-electoral purposes, so having a regulatory power would be the only adjustment that would have to be made. I am afraid that I do not accept the Minister’s argument. He argues as though I am seeking to introduce this tomorrow or the day after, or a commitment to do so. I am not; I am trying simply to ensure that it could happen.

I accept that point, but unless one is clear about the rules for residency that one is going to apply, how can one know what data one is going to collect? That is why one needs to understand the system that one is suggesting could be introduced. Until one does that, one simply collects every piece of information in the world. One might want to use it at some stage in the future, but in any event the electoral register is not a test of residency.

If the House supported such an amendment, a regulation would follow in the course of next year, among the other regulations that we have, that would allow the electoral register to be used for this purpose. As the amendment makes clear, there is no reason why, if some of my noble friend’s concerns are found to be valid as we explore this in the next five, 10 or 15 years, we cannot cross-check with records of council tax payments and other forms of benefit entitlement of that sort. That can easily be done. All I am saying is that if we accept that a current electoral register with 15 years of records is a workable basis—97 to 98 per cent of working people over the age of 45 who are on the electoral register have not moved house—the only thing that is needed is an amendment to make that legal under the 2001 Act. A future Government may decide to do nothing beyond that in the future. That is up to them, but if we do not make such a move and protect the integrity of that information, no future Government will ever be able to do so. We will have this debate next year and in five, 10 and 15 years’ time, and someone will say, “Why don’t we clean this mess up? What a pity we do not have an information base on which to do it”. That could be the Government or the Opposition, but I am completely confident that that moment will come. My only question is—to paraphrase my noble friend—not when, but how, and not if, but when?

moved Amendment No. 36:

moved Amendment No. 37:

moved Amendment No. 38:

I thank the noble Baroness, Lady Noakes, for the series of amendments she has tabled. Perhaps I should say up front that given their source, we knew they would be probing but focused on technical matters. Although I believe that what is intended by all of them, apart from one, is covered by the legislation, it might be fruitful for us to organise a meeting between now and the Report stage, perhaps together with the Law Society of Scotland and officials, to go through the position in detail. I do not believe that these amendments are necessary and I hope that I can set the noble Baroness’s mind at rest as I address each in turn.

These two amendments specify that it is the GMP provision in respect of earners and survivors whose GMPs are being converted which may be omitted from the provisions of the scheme. However, I can assure the noble Baroness that this is already the effect of the clause. As it stands, it inserts a subsection into Sections 13 and 17 of the Pension Schemes Act disapplying them where GMP conversion has occurred. As Sections 13 and 17 apply to individuals rather than to schemes, it follows that the inserted sections on GMP conversion will equally apply to individuals only.

I hope that that shorthand response explains the situation, but, as I say, we ought to hold a meeting to go over the detail.

The Minister’s explanation sounds plausible and I shall await discussions with the Law Society of Scotland. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 39 not moved.]

moved Amendment No. 40:

As the noble Baroness has explained, this amendment is intended to address the concern that, as the definition of post-conversion benefits stands, it might not permit the accrual of money purchase benefits after the conversion had occurred. This would obviously not be an outcome which we intended. However, for the reasons I shall give, we do not believe that that is the effect of the current wording of the definition. This clause is about the conversion of the GMP into scheme benefits of the same actuarial value. The GMP accrued from 1978 to 1997 and therefore the proposed legislation cannot by definition have an impact on post-1997 accruals. By excluding money purchase benefits from the definition of “post-conversion benefits” and, indeed, from the definition of “pre-conversion benefits” as well, we are preventing a scheme from including any such benefits an individual accrued during the GMP period from the conversion calculations. We are not stopping anyone from accruing post-1997 rights in their scheme, of whatever type.

I trust that that is the reassurance the noble Baroness seeks.

That is indeed the reassurance we were seeking. We shall have to read Hansard carefully to ensure that what the Minister has said actually stacks up. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 41:

With respect to these two amendments, it is understandable that one might think that rights to GMPs in these occupational pension schemes derive from “pensionable” service and that this might be a more appropriate term to use in the legislation. However, we are dealing here, by definition, with contracted-out schemes. In these schemes, members derive rights from undertaking employment which is “contracted out” from the state second pension provisions.

Due to the nature of the legal status of this employment and to the link with lower-rate contracted-out national insurance contributions which are payable by both employer and employee, the contracting-out legislation uses the term “employment” rather than “pensionable service”. Similarly, the legislation refers to “earner” rather than “member”. Therefore, while understandable in their intention, the proposed amendments do not fit with the legislation already in existence.

Again I believe that we are at one in what we think should apply. I hope that explanation has given the noble Baroness some reassurance.

That has been very helpful. The debate reminds me of the time when I learnt accountancy and it was described as a hieratic language; a priestly language understood by very few. It appears that pension-speak is much the same. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 42 not moved.]

moved Amendment No. 43:

This is one of the amendments where we take a different view as to the role of the employer. The amendment seeks to make a significant change to the conditions under which a scheme may convert its GMP liabilities into normal scheme benefits. It would remove the requirement for trustees of the scheme to obtain the consent of the scheme’s sponsoring employer before proceeding with proposals for GMP conversion.

At first glance one might think that actuarial equivalence would produce a no-cost result and therefore the employer has no interest in the matter. However, it is important to recognise that GMP conversion will incur immediate administration costs and possibly some benefit costs as well, depending on how the scheme is restructured. We should also remember that the employer will have entered into sponsorship of a good-quality occupational scheme on an entirely voluntary basis. All costs of the scheme are ultimately brought to bear on the sponsoring employer, and we believe it is essential that GMP conversion should go ahead only where the employer is satisfied with the proposed arrangements. However, I am conscious that that reply deals only with part of the point that has been raised and does not specifically address the issue of schemes that are in wind-up. If I may, I will reflect on what the noble Baroness said and write specifically on that, because I realise that I have given her an incomplete answer.

I am grateful for the Minister’s response. I will consider what he has said today and look forward to his further written thoughts. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 44:

The amendment covers the issues of individual conversion on transfer. Noble Lords will be aware that the restrictions associated with GMPs mean that it can be difficult for a member to transfer his rights to a new scheme of his choice; for example, when starting work with a new employer. New Section 24F(3) provides a facility for a scheme to adjust a member’s guaranteed cash equivalent to a transfer value, with his consent, to remove the GMP and avoid these problems. That can apply even though the scheme is not undergoing GMP conversion for its membership generally. This is intended to be an easement providing greater flexibility and choice for individuals.

The amendment would deem a GMP conversion to have taken place where the provision under new Section 24F(3) is used. We believe that this is already implicit within the draft legislation. I hope that that reassurance will convince the noble Baroness that the amendment is therefore unnecessary. We believe that proper reading of the legislation would say that that is inevitably the position.

I am less clear that relying on something that is implicit is an adequate response to the point raised in the amendment, but I am happy to have discussions on that offline before Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 45:

The amendment is concerned to ensure that, after GMP conversion, schemes do not find themselves retaining a liability in respect of the GMP. Obviously such an outcome would be quite wrong, as each individual member would already have received full value for their pre-conversion rights, including the GMP, in the award of their post-conversion benefits. One might say that it would be a “double whammy” on the scheme. I am happy to say that the existing draft legislation will not and could not lead to that outcome. The GMP will be converted into ordinary scheme benefits, and the GMP will cease to exist after conversion, making the amendment unnecessary. I hope that is the reassurance the noble Baroness is looking for.

I think that that was a variant on “implicit”, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 46:

That was a most impressive performance and I think that it is time the Minister took his PUCODI home to bed with him.

On Question, amendment agreed to.

Clause 14, as amended, agreed to.

moved Amendment No. 47:

We support the amendment. The Government did not behave properly on the previous occasion that this happened. This is yet another example of a situation where it is not right to leave the Government with flexibility.

I am grateful to the noble Baroness, Lady Noakes, for the chance to address this important issue. The amendment would impose an additional and explicit requirement on the Government Actuary, which, if accepted, would shift much of the responsibility for recommending to Parliament the level of rebate rates for contracted out salary-related schemes from the Secretary of State to the Government Actuary. It may be helpful, therefore, if I explain a little about the legislative provisions that are in place to ensure that the level of rebate is reviewed and subjected to parliamentary scrutiny at least once every five years. These provisions include a requirement for the Secretary of State to lay before each House of Parliament a report which includes a statement about any changes to the existing rebate rates that he considers are needed. The report takes account of the accompanying Government Actuary’s report to Parliament, which sets out any changes in the various factors that affect the cost of providing benefits of a value that is broadly equivalent to those given up in the additional state pension. Put simply, the legislation requires that the Secretary of State recommend to each House of Parliament the changes to existing rebate rates that he considers are needed and that this recommendation give due consideration to the report of the Government Actuary.

This amendment would bind Ministers to accept the recommendation of the Government Actuary and in doing so extend the statutory responsibilities of the Government Actuary. These are currently to provide an independent report to Parliament on the assessment of the cost of providing benefits of an actuarial value equivalent to that of the state benefits forgone by those who are contracting out. As is appropriate to the Government Actuary’s role, the report is confined to actuarial matters. The actuary’s report is prepared after full public consultation and due consideration of the responses to that consultation. As with all advice from civil servants, Ministers are obliged to give fair consideration and due weight to this informed and impartial report to Parliament. However, as is rightly the case, it is for Ministers to take decisions on the level of rebate in the light of other relevant considerations and advice and it would therefore be inappropriate to fetter ministerial decision-making by removing Ministers’ ability to determine the level of the rebate in the light of the broader public policy context and having regard to the prevailing and anticipated fiscal situation. The Government Actuary could not be expected to take a view on such matters on behalf of the Government of the day and it would not be reasonable to expect him to.

I do not doubt that the noble Baroness is thoroughly convinced by that argument and will happily withdraw her amendment.

Let me be clear: the only reason why I shall withdraw the amendment is because it is 11 o’clock and time that we all went home to bed. The Minister will not expect me to say that I was convinced one jot by that explanation. I think that he can expect to revisit this at Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at 11.02 pm