asked Her Majesty's Government:

My Lords, the Government agree that rail passengers are experiencing far too many delays. Early and significant improvements are required. The rail strategic plan published on 14th February by the Strategic Rail Authority sets out short- and medium-term action to improve performance, as well as setting out the longer-term vision for Britain's railways. We welcome the steps that the SRA, under the chairmanship of Richard Bowker, is taking to improve performance across the industry.

My Lords, I thank the Minister for that reply. Today, we are experiencing yet another industrial dispute on South West Trains and there have been disputes in Leeds and in Scotland. Will the Minister consider amending industrial relations law so that an aggrieved party—that is, a commuter—may test in the courts whether a company or a trade union is behaving reasonably? Industrial relations law recognises only an employee and an employer. It does not recognise the position of commuters, who are suffering damage estimated at £20 million a day.

My Lords, I welcome the opportunity to re-emphasise the Government's view. In this day and age, disagreements over pay should not give rise to strikes, especially in vital public services. As the noble Lord says, the present strikes are causing great inconvenience to the travelling public and are doing nothing for the recovery of the railway industry. However, it is not for the Government to intervene directly and become a party to negotiations. We shall he active in expressing the anger and frustration of the travelling public, both to management and to unions, and calling on them to resolve the issue through negotiations and not through further strike action. We believe that both the operator and the trade union side should get back round the table as soon as possible to resolve any outstanding disputes.

I noted the noble Lord's interesting question about whether unreasonable behaviour could be made actionable. 1 do not wish to dispute the suggestion out of hand, but my initial reaction is that it would certainly generate substantial employment for my learned friends.

My Lords, the Secretary of State for Transport, Mr Byers, has reasonably said that if railway standards are not substantially improved he will fall on his sword. By what five economic tests is he to be judged?

My Lords, my response is: "Wait on". Clearly, without being naïve, the Government would want to set out very clearly what we expect to achieve. To some extent, this House has already seen that. The Strategic Rail Authority's plan has been published and was discussed in this House. For the first time for 50 years, it sets out a plan for a major expansion in the railway industry. However, I do not believe that my right honourable friend in another place will have to fall on his sword. The Government believe that the plan will deliver substantial improvements over the life of the plan, and that we shall begin to see some of those improvements by the time of the next general election. There are four reasons. The first is the massive commitment of the Government to do so. Secondly, we have trebled investment per annum compared to that during the last years of the previous government. Thirdly, there is a realistic plan to implement the strategy. Fourthly, there is strong leadership, through Richard Bowker, to take the plan into practice.

My Lords. does my noble friend recall that one of the unspoken purposes behind the privatisation of the railway and breaking it up into many parts was to break the power of the public sector trade unions in that industry? Does he accept that the effect of privatisation has been exactly the reverse? As the noble Lord, Lord Bradshaw, said, immediate industrial disputes are threatened in three companies, and over the next few weeks strike ballots will be held in regard to a further two. Is it not the case that companies are having to bid against each other, and the trade unions are realising that when that happens they are put in an incredibly powerful position? Is not the way out of this situation a return to a system of centralised bargaining and centralised negotiation?

My Lords, there is widespread recognition, both in this House and outside, that we need a much better way of resolving industrial relations issues in the railway industry. That is particularly so in regard to industrial action, when one of the main sufferers is not simply the employer but the general public, on the scale that we have seen. Such matters are for the companies and the trade unions to resolve, and we welcome positive suggestions. However, all systems of pay negotiation have their disadvantages as well as their advantages. It is not absolutely clear that full national pay bargaining is necessarily the way to go—but neither is the status quo.

My Lords, where is government policy coming from on this matter? Is it coming from the Strategic Rail Authority, from the Department for Transport, or from a department in the Treasury which is conducting a review? Or is it coming from the No. 10 Forward Strategy Unit, which I understand is now looking into transport policy? Or is it coming from the noble Lord, Lord Birt? From whom is the Minister receiving his briefing? When asked by the Select Committee about the role of the noble Lord, Lord Birt, the Secretary of State, Stephen Byers, said: "It keeps him occupied". Is the noble Lord aware that there are quite a few Members of this House, particularly on his side, who also need to be kept occupied occasionally? Can he tell them where they should apply for jobs?

My Lords, many of my noble friends would be extremely well qualified to apply for many jobs in both public and private sectors. As to the noble Viscount's question, apart from the bits that I make up myself as we go along I get my briefing from all parts of government, although I regret that I did not speak to the noble Lord, Lord Birt, in this case.

My Lords, should not the Government now invoke the assistance of the Advisory, Conciliation and Arbitration Service ACAS—to which previous Labour Governments have always paid great attention?

My Lords, I am reluctant to give advice in the middle of an industrial dispute. I understand that South West Trains has indicated its willingness to go to arbitration provided it is binding, but I gather that RMT will not accept binding arbitration. If I am wrong on that, I shall write to the noble Lord.

My Lords, is it not clear that the dispute is much more about union power than about union pay, no matter how much inconvenience may be caused to the public or how much embarrassment may be caused to the Government?

My Lords, in my experience industrial disputes are usually a complex of a whole variety of reasons. I read the papers as much as the noble Lord does and I have seen that allegation made about issues within RMT. However, it would not be helpful for me to speculate publicly about such issues from the Dispatch Box.

asked Her Majesty's Government:

My Lords, the review of decontamination of surgical instruments in the NHS in England was published on llth December 2001. Copies of the report were placed in the Library of the House and it is available on the department's website. All NHS hospitals in England have access to decontamination services of an acceptable standard.

My Lords, does the Minister recall that my Question on 11th December referred to a report that was suppressed because the Government disliked its findings? He said in his Answer that he was publishing the report that day. Is he aware that I asked the Printed Paper Office for it on that day, on the following day, on the following week and on a number of occasions since, but only late this morning, after exhaustive research by the excellent staff in that office, was it found on an obscure Internet site? Is he aware that neither of the two reports on the subject—only intermittently on the Internet—has an international standard book number and thus cannot be classified as publications? Is the Minister not aware of the importance of keeping a promise made from that Box in this House?

My Lords, I repeat what I said in my Answer. Copies of the report were placed in the Library of the House. The snapshot survey appears as an appendix to the survey report. In terms of the wider publication of the report, my understanding is that 1,000 copies have been distributed to the NHS. The picture tells a good story, which is that the problem of decontamination was considered, reviewed and dealt with.

My Lords, is the Minister aware that last year scientists at St Mary's Hospital Paddington estimated that half of all instruments used for tonsillectomies could be contaminated with new variant CJD? Is he therefore confident in the Department of Health's decision to abandon the use of single-use instruments because of increased morbidity and mortality associated with them? Does he feel that that is fully justified? How does he expect parents to make informed decisions for their children about whether to ask for single-use or multi-use instruments when he fails to make fully public reports such as the one just mentioned by the noble Baroness?

My Lords, the noble Baroness is wrong, because the full results were made available on 11th December. As far as the question of single-use instruments is concerned, the point that arose from that is that the Medical Devices Agency investigated a number of problems in relation to some tonsillectomy operations. Those investigations identified one of the likely causes of the problem as due to one piece of equipment used in the operation. That is why advice was issued to the health service around single-use instruments. Of course the department's role is to ensure that such advice is promulgated throughout the health service as quickly as possible. That is what happened in this case.

My Lords, in his reply to my noble friend's Question last December, the Minister said:

"the snapshot survey to which the noble Baroness referred is being published alongside the full survey that the Government are publishing today".—[Official Report, 11/12/01; col. 1232.]

Is he also aware that, despite several searches of the Department of Health's website yesterday, using "decontamination of surgical instruments" and similar useful words, I could find no trace of that survey? Will the Minister tell us the meaning of "published" or "published alongside" in this new world of spin?

My Lords, I have already stated that the report, including the snapshot survey, was placed in the Library. My understanding—and I have checked with my officials this morning is that the snapshot survey is part of the documentation which is available on the website. If the noble Baroness had contacted me at any time since 11th December to say that she was having difficulty finding the report, I would have ensured that she received it forthwith.

My Lords, is the Minister aware that it is often quite difficult to get publications of any sort that are put out by the Department of Health through the Printed Paper Office? The PPO says that those publications do not come there automatically and have to be specially requested.

My Lords, I made it clear that this would be available in the Library of the House. It seems to me that that is a perfectly appropriate way in which information can be obtained.

My Lords, the report was not available in the Library. I went immediately not only to the Printed Paper Office, but to the Library and asked for it.

My Lords, I am assured that a copy of the report was placed in the Library. I also say again to the noble Baroness that if she had contacted me at any time since 11th December, I would have ensured that she received a personal copy of the report. The information on the website contains 18 documents. It also provides access to a further 18. I would be delighted to ensure that the noble Baroness receives all 36 reports.

My Lords, is the Minister—

My Lords, perhaps I may—

My Lords, is the noble Lord—

My Lords, I think that it is fairer for noble Lords who have not had an opportunity to go first.

My Lords, the Minister has said a lot about reports, but are the instruments being decontaminated in the hospitals? Surely that is the most important thing of all.

My Lords, I could not agree more with the noble Baroness. The results of the survey, which were indeed made available on 11th December, show that no decontamination facility in the NHS was considered unsafe. We have a complete programme of action which has been going for more than two years to improve decontamination facilities. There is clearly no room for complacency, but a great improvement has now taken place.

My Lords—

Next Question!

My Lords, I think that we ought to move on because there is a very important Question.

asked Her Majesty's Government:

My Lords, the White Paper was called Completing the Reform following the language of the Labour manifesto of 2001. Your Lordships will recall that, in our previous debates, the removal of the rights of the hereditaries had been described as phase one and that phase two would follow. In our debate on 9th January, I was seeking to explain that the White Paper proposed a phase two which would constitute completion of the reform for the present. I added that, after a period of years, it would no doubt be correct to revisit the composition issue, so that what we were proposing was,

"a compromise for today, not a solution for all time".—[Official Report, 09/01/02; col. 565.]

Although 120 elected is the maximum possible at present if the rights of the existing 587 life Peers are to be respected, I was indicating that there could he greater flexibility over time. History never ends.

My Lords, in light of the very convincing evidence that my noble and learned friend gave last week to the Public Administration Committee in another place, is it not fair to say now on reflection that the White Paper title—Completing the Reform—was inappropriate and perhaps even unfortunate?

My Lords, from the reception of the White Paper, I am ready to agree that many people seem to have been misled by the title. As I said, however, we were signalling completing phase one and phase two for now, with the maximum number of elected being consistent with respecting the right of the existing life Peers. If revisiting the issue at some stage were to be called stage three by others, I would not be uncomfortable with such a description.

My Lords, does my noble and learned friend accept that the phasing of any reform—such as that proposed by the Leader of the Opposition, with the support of a few Conservative Peers, that 80 per cent of 300 Members be elected; regardless of the actual number and way in which it is arrived at—would count as the last stage of reform?

My Lords, it is a very far remove from any of our thinking on this subject that 80 per cent of the Members of this House should ever be elected. We believe that the pre-eminence of the House of Commons is essential to the stability that lies at the bedrock of our constitution. As your Lordships know perfectly well, and as your Lordships' two-day debate showed, the problem is that, on the issue of House of Lords reform, there are as many opinions as there are politicians to express them. So, yes, there is as yet no consensus around the White Paper proposals, but nor is there any consensus around any other set of proposals. I believe that the proposals of the Leader of the Opposition in the other place, to which reference has been made, would attract near unanimous rejection on the Conservative Benches in this House—that is, if the noble Lord, Lord Strathclyde, were to hold a free vote on them.

My Lords, as your Lordships' principal task is to invite the government of the day and the House of Commons to think again, would it not diminish the value of your Lordships' House if we found that, owing to excessive democratisation, we had a majority here that coincided with the majority in the other place?

My Lords, as I said, the bedrock of stability in our constitution is that the elected Chamber is pre-eminent, and is ultimately entitled to have its way when there is conflict with this House. It must be remembered that the conventions underpinning that are premised on this House being unelected and the other place elected. It really is not real-world politics to deny that, if the proportion of elected in this House became substantial, the dynamics of the relationship between both Houses would fundamentally change. It could even be argued that a substantially elected House of Lords had a superior legitimacy, on the basis that there are some who think that PR is more legitimate than first past the post. I emphasise, however, that the Government proposed 120 elected not on the basis that it would give this House greater legitimacy, but as a means of ensuring representation in this House of the nations and the regions.

My Lords, does the noble and learned Lord accept that reform of the upper House cannot be complete until we have considered the functions and powers as well as the composition of that House? Does he agree that the White Paper contains nothing of any significance whatever on that subject?

My Lords, we can of course talk about the parliamentary aspects of reform. However, I believe that most Members of this House believe that, broadly speaking, the functions and powers of this House are correct. They operate as a check and a balance on the House of Commons. In my own view, the starting point of any consideration of the issue is not some type of bidding process about how many elected there should be, but an examination of the purpose of this House, having regard to its powers and functions. We should then ask ourselves what that tells us about the composition issue.

My Lords, the noble and learned Lord has announced that there is to be a third stage of reform of this House. He has also said that the Labour Party will have a free vote, and that there are no politicians who can agree on this subject. Is not the greatest place of disagreement at the heart of the Government themselves, in the Cabinet, with a fundamental disagreement between the noble and learned Lord and the leader of another place, Mr Robin Cook? Therefore, is not the best possible way of seeking to resolve these differences between parties and within parties to establish with some haste a Joint Committee of both Houses to examine those issues?

My Lords, I fear that the noble Lord misheard me: no suggestion has come from me about a free vote, other than to invite him to conduct a free vote among his own Benches to confirm what we all know very well—the Leader of the Opposition's proposals in another place go down like a lead balloon on his own Benches. I have not announced that there will be a stage three; what I have said is that we shall be well able in time to revisit the issue of the number of elected Peers while at the same time protecting the preeminence of the House of Commons. If others—not the Government—were to call that stage three, that is a matter about which I am relaxed.

asked Her Majesty's Government:

My Lords, British officials have had access to three British detainees held by the United States authorities at Guantanamo Bay. The International Committee of the Red Cross now has a permanent presence at Guantanamo Bay and ICRC officials have access to the detainees held there at any time. They also have access to detainees in Afghanistan. I further understand that a British official has also seen one British detainee in Afghanistan.

My Lords, I thank the Minister for her reply. Can she say how many British persons are now held in Afghanistan and whether any of them are held in very bad conditions at Mazar-i Sharif? Can she also confirm that there will be no indefinite detention—that is to say. no hostage holding—and, finally, that those who may be charged with offences will be tried before British courts?

My Lords, we know of only two British detainees in Afghanistan. As I mentioned, one has been seen by an official. But there may, of course, be others of whom we are unaware at the moment. We shall continue to make inquiries to try to find out whether there are further British detainees held in Afghanistan. There is no evidence that the United States, or any other detaining authority, is trying to hold detainees indefinitely. Most detainees have been in custody for only a few weeks and, of course, the crucial issue is that their status has not as yet been determined. The noble Lord also asked about the issue of where a trial should be held. We should be happy for trials to be held in this country if—I stress the word "if"—that were the most effective way of pursuing a prosecution and if the United States authorities were happy to proceed on that basis.

My Lords, what right does the United States have to detain British citizens even for a matter of weeks on the territory of a third party state? Is not the best course of action, if it is said that these men have committed criminal offences, for the United Kingdom to request the US authorities to deliver the men up to us so that they can be tried in British courts?

My Lords, this really does beg difficult and, if I may say so, highly complex legal questions about the status of the detainees in the first place. The noble Lord will know that there has been a great deal of speculation in our own press and in the United States about the status of the detainees. The United States as the detaining authority still has not made a decision on that issue. I believe that I have made the British Government's position clear on the question of possible trials in Britain, but I repeat that we should be happy to do that if it were a sensible and effective way of pursuing justice arid, of course, if that were something to which the United States as the detaining authority was able to agree.

My Lords, can my noble friend say—

My Lords, I think that it is the turn of this side.

My Lords, is it?

My Lords, yes, it is. The noble Lord can speak in a minute. There is plenty of time. Is it not correct that the Foreign and Commonwealth Secretary has in fact called for the return to Britain of all British citizens arrested by the Americans and others in Afghanistan? On what grounds is he doing that? Would it not be wiser to focus just on those individuals against whom there are specific British charges or specific British evidence and for them to be returned to Britain and for the rest, who may well have committed terrible crimes against Americans or others, to he investigated and tried appropriately in the United States?

My Lords, I am afraid that the noble Lord is not quite correct to say that my right honourable friend has called for the return of British detainees to the United Kingdom. I think that the noble Lord may refer to something which I also heard on Radio 4 last week. However, I make clear to the noble Lord that what matters is where the prosecuting authorities would have an effective chance of pursuing justice—that has to be determined—and, of course, as these are almost unprecedented cases, we would wish to proceed on a basis that could be agreed with the United States.

Of course, these issues are being raised between Ministers. I have raised them myself with officials from the American Embassy in London and my right honourable friend will pursue these issues with Secretary of State Powell when he visits Washington again on Thursday. I agree with the noble Lord that these are potentially horrendous crimes. However, we must not judge what has happened. People must have a fair trial. That is absolutely fundamental to the points that are worrying the noble Lord, Lord. Hylton. MI may say so, the real issues here are that there should be humane treatment, whatever the status of these individuals, and, that if they face trial, such a trial should be a fair one.

My Lords, at a convenient moment after 4.30 p.m. my noble friend Lord Whitt) will, with the leave of the House, repeat as a Statement an Answer to a Private Notice Question which is being asked in another place on the report of the Commission on the Future of Farming and Food.

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill. Moved, That the House do now again resolve itself into Committee.—(Baroness Hollis of Heigham.)

I should say that if Amendment No. 48 is agreed to, I shall not be able to call Amendment No. 49 due to pre-emption.

moved Amendment No. 48:

I wish to speak to Amendment No. 49, which is grouped with Amendment No. 48. It concerns a slightly different subject and it is, in the nature of these things, a probing amendment. It deals with the question of separation. The purpose behind the amendment is to seek information from the Minister about the circumstances in which a couple separate and are determined to have separated. We know from our deliberations the other day that a couple comprises a household unit of a man and woman living together as a couple.

The amendment's wording is taken from the WFTC Bill. I seek to establish what will happen to the less-welloff member in a couple. I accept the relevant point made by the noble Baroness, Lady Noakes, that the man may be the lower earner. I seek to establish that in the complex workings of this Bill no pensioner will be left for a significant amount of time with less income than they would need simply through ceasing to live with the person with whom they were living when the calculation was made.

Amendments Nos. 48 and 49 concern issues affecting couples. We have touched on some of those issues previously in Committee. Amendment No. 48 considers how disagreements will be settled in cases where neither member can agree who should make the claim. Amendment No. 49 considers the meaning of "married" and "unmarried" couples in terms of pension credit. The argument of the noble Baroness, Lady Barker, was slightly different from the wording of Amendment No. 49, but I shall try to deal with her point. With the Committee's permission I shall deal with each amendment in turn.

Amendment No. 48 seems to do two things. First, it provides an alternative form of drafting to the current provisions in Clause 4(1) of the Bill, which ensures that only one member of a couple shall be entitled to pension credit. Secondly, the substantive part of the amendment seeks to specify in primary legislation the criteria to be followed in situations in which neither member of a couple can agree on who should make the claim. I believe that the approach we have adopted in the Bill is correct.

I start by pointing out that such cases are extremely rare. I have checked with officials who have worked in this area for more than 20 years and none has ever come across such a case. We are dealing with hypotheticals. That is not to say that there have not been cases, but on a quick check those officials had not come across any. In relation to the minimum income guarantee, such disputes, where they exist—hypothetically or otherwise—are settled by the Secretary of State, who is in effect the local decision maker, taking into account the individual circumstances of the case. Standing instructions say that in the first instance the responsibility for settling the dispute would be returned to the couple. As one would expect, the couple would be given every opportunity to resolve the problem themselves. For example, there may have been a mistake in filling in the forms.

Where a customer indicates on the claim form that their partner does not agree to their making the claim, a letter is sent to both members asking them to decide who should make the claim. Only where it is clear that they are unable to resolve the dispute or no reply to the letter has been received after 14 days would further steps be taken.

When deciding such a case, consideration would be given to a range of factors—for example, to who is normally responsible for paying the household bills. I do not believe that the noble Baroness's amendment would leave sufficient flexibility to allow the decision-maker to take account of the full range of sensitive issues that might arise in an individual case. That might involve asking detailed questions about the claimant's and the partner's incomes. For example, where income was derived from a joint bank account, it would mean making possibly arbitrary decisions on the apportionment of that income between the two partners.

We know from earlier discussions in your Lordships' House on the minimum income guarantee that customers may be reluctant to claim benefits that require excessive investigations into their financial circumstances. We seek to move away from such an approach. Given that we are dealing, so far as I can tell, with a hypothetical case, we shall lay down guidance but we hope that it will not need to be used. That will give sufficient flexibility to deal with the matter in a decent and sensitive way. I hope that the noble Baroness, Lady Noakes, will withdraw her amendment.

Amendment No. 49 is, as I would expect, a thoughtful amendment. We thought that we understood why the noble Baroness, Lady Barker. had tabled it but now I do not think that we did. It is still probably a thoughtful amendment but it involves a different thought for the day from that which we had anticipated.

For the purposes of the clause, the amendment would align the way a "married" or "unmarried" couple is defined in pension credit and make that more in line with the meaning for tax credits. If the noble Baroness wishes, I could explain why we chose one system rather than another. Basically, she was interested—perfectly rightly—in what counts as separation. For these purposes, a married couple are married to each other and are neither separated under a court order nor separated in circumstances in which the separation is likely to be permanent. In such cases, they would be treated as two single people. For the purposes of housing benefit, they would have different accommodation.

We have a choice in this regard about aligning the different definitions of a couple to either the social security system or the system for tax credits. We have gone for the social security system because, as Members of the Committee will appreciate, 1.7 million people will be transferring from the minimum income guarantee to pension credit, whereas only about 60,000 or 70,000 are simultaneously eligible for tax credits and pension credit. It makes better sense for us to follow the old DSS vocabularies, which are well established in law, and not to try to change all the legislation that feeds into that and then go for the tax system.

I have pressed my officials on this matter. I said, "Tell me in practical terms what the difference between the two definitions is. Can you put a piece of paper between them?" They said, "No, you cannot". The implications of preceding legislation suggest that it would be simpler to keep to the somewhat different definitions. In the light of that, I hope that the noble Baroness will feel able to withdraw the amendment.

I thank the Minister for that detailed explanation of the way in which these issues are handled in practice. My solution was perhaps much simpler and would save her officials having to ask all of those questions and make detailed decisions if there was a statutory rule. I beg leave to withdraw the amendment.

moved Amendment No. 50:

I have tabled Amendment No. 51, which is grouped with the amendments in the name of the noble Lord, Lord Higgins. As the noble Lord rightly said, Clause 4(3) provides that amounts of pension credit below a prescribed level will not be payable. I believe that the sum of 10p a week has been mentioned. The amendment seeks to make the credit payable annually; for example, 52 weeks at, say, 9p would amount to £4.68. Since entitlement to the credit will normally change only annually, such annual payments should cause no administrative difficulty. After all, £4.68 is £4.68. If people are owed a sum of money, why should they not have it paid annually, as suggested in the amendments under discussion?

I believe that Amendments Nos. 50 and 52, when considered together, propose a change to the meaning of Clause 4(3). Amendment No. 51 has the same effect as Amendments Nos. 50 and 52. Therefore, I propose to address these amendments at the same time.

Clause 4(3) provides that pension credit will not be payable if entitlement is under a prescribed amount. The intention here is not to pay pension credit if entitlement is under 10p a week unless payment of pension credit can be combined with payment of another benefit. In fact, this rule will affect very few people—probably no more than 500, even if there were to be a 100 per cent take-up of pension credit—as we anticipate that in the vast majority of cases we shall be able to combine payment of pension credit with another benefit.

The noble Lord asks why we have not conceded anything so far. I am deeply mortified as I gathered that all his previous amendments were probing amendments. I understood that the intention of probing amendments was not to push for concessions but to explore the Government's thinking on the matter. If he does not consider that I have made our thinking sufficiently clear, I shall of course be prepared to speak at even greater length. But I believe that, on reflection, he may wish to consider his remarks further.

There will be a small number of remaining cases—possibly 500 or so—where no other such benefit is in payment. Even though pension credit would not be paid in such cases, there is an underlying entitlement—this is the substantive point which has not been mentioned by Members of the Committee—which means that, for example, the claimant would be passported on to benefits, such as housing benefit, in the normal manner, even with a trigger of an amount such as 10p.

That is a well-established rule and we consider it right to include it in relation to pension credit. If the amendments were accepted, it would mean potentially paying tiny amounts of pension credit—perhaps a matter of pence—at yearly intervals. It has always been a pragmatic decision whether to make such payments. But under this amendment the payment of 52p a year would be a possibility, and it is likely that that would be criticised by claimants as derisory.

Members of the Committee may also be persuaded by the fact that, if the amendment were accepted, we would be paying out less than £2,000 a year in pension credit at an administrative cost of well over £4,000 a year, as our computer systems do not support annual payments. It cannot be right to spend £4,000 in paying out £2,000 when the sum in question is only 52p a year. That amounts to two postage stamps.

By prescribing in regulations the precise rules which will apply to such cases, the Secretary of State will have the flexibility to adjust the circumstances in line with general changes in the methods of paying benefits. In other words, if the noble Lord is suggesting that in future it will make good sense to pay the credit as an annual lump sum, then, when we have the necessary computer power, that may be an appropriate way forward. As a result of my explanation, I hope that the noble Lord will feel able to withdraw the amendment.

We are grateful for that explanation from the Minister. She said that no problem arises with the de minims arrangement if another benefit is payable. I am not clear whether or not that includes the other part of the state pension credit. Does "another benefit" include what used to be called "MIG"? If people receive MIG, will they receive this credit, even though it is a de mininds amount?

The noble Baroness has not clarified the point that I raised regarding the regulations which enable these prescribed amounts to be made in prescribed circumstances. As I pointed out, at first I believed that the regulations were those under Clause 3(8), which comes immediately before the exclusions clause. However, that appears to apply to persons and not to amounts, whereas what is being prescribed here is an amount payable in certain circumstances. Therefore, I am still not clear which power enables the clause which we are discussing to be operated.

The power appears under Clause 4. By virtue of Clause 17, which defines terms under the Bill, "prescribed" means specified in regulations. That relates to the last point which the noble Lord has just raised.

I now return to the wider point concerning regulations. In relation to draft regulations, I had hoped to be more helpful to Members of the Committee than they may consider me to have been. We produced an extended memorandum which sought to describe how those regulations would be used. Regulations will be developed over the next four months. As soon as I have anything which I consider to be more helpful to noble Lords than the document that I have already produced, I shall of course let them know.

We are very grateful for that. We fully understand that there is no immediate obligation on the Government to produce such regulations or, indeed, such descriptions of regulations. We always very much appreciate the way in which the noble Baroness handles these matters. However, I still have a problem in relation to the technical point. I cannot see which regulatory power enables Clause 3, which we are debating, to be implemented. If, indeed, it is the one under subsection (8), which appears before the exclusions clause, then, as I say for the third time, that concerns descriptions of persons and not amounts. What is being prescribed here is not persons but amounts. Therefore, I cannot find the regulatory power that will implement Clause 3. I am sorry to persist with this matter.

We are dealing with Clause 4. Is that the source of the problem?

I am sorry; I meant to say not Clause 3 but subsection (3) of Clause 4. Perhaps I may state again that at the bottom of page 3 of the Bill is subsection (3), which we are now debating. It states that amounts may be prescribed or be payable in prescribed circumstances. I am not clear where the powers are that enable the Government to prescribe the amounts and the circumstances.

I shall write to the noble Lord if I am misleading him. However, if he looks at Clause 4(3) and then at Clause 17 at line 45 on page II of the Bill, he will see that "prescribed" means,

"specified in, or determined in accordance with regulations".

Therefore, where the amount is less than the prescribed amount—that is, less than lop—the amount payable by way of state pension credit will not be payable except in prescribed circumstances; for example, where it can be aligned with the payment of another benefit. I do not understand the problem.

Rather than delay the Committee further, I shall look at the references which the noble Baroness has given and, if need be, we can return to the matter on Report. With regard to the substance of the Bill, I am still not clear where we are with regard to whether or not the de minimis amount will be paid in relation to the other parts of the pension credit.

There is one pension credit which comes about as a result of the move from the guarantee to the savings. Therefore, we are dealing with only one sum. If, at the end of the day, a payment of less than 10p is due under the pension credit—whichever part of the pension credit it relates to—then, if it is aligned with another benefit, it will be paid. If it is not—we believe that only 500 or so people may be affected—then it seems to me inconceivable that someone for whom only the guarantee element comes into play will not also qualify for housing benefit or council tax benefit. Such a situation may apply to a few pensioners but in normal circumstances an alignment would take place. I suspect that that situation may occur when the amount tapers out at the very end.

As I said, we are dealing with a very small number of people. If, at later stages, the arrangement appears to be more problematic, it can be revisited. We have no wish to deny anyone, but when in the past government departments have sent out cheques for 2p, 3p or 50p over the course of a year, we have usually been teased by the Front Benches opposite, and rightly so.

I promise not to tease the noble Baroness. I beg leave to withdraw the amendment.

Clause 5 provides that where the claimant is a member of a married or unmarried couple, the income and capital of the other member of the couple shall, except in prescribed circumstances, be treated as income and capital of the claimant. I have some difficulty with this clause, which is why I have put down my name to oppose it. It must be remembered that this legislation extends means testing to a much wider population than hitherto; that is, if we take seriously, as I do, the Government's own predictions of the numbers likely to be eligible for pension credit—as much as 65 per cent of the future pensioner population.

Many couples regard themselves as couples within the financial sense having joint accounts and sharing incomes and savings completely, but that is not always the case. Some people guard their financial independence jealously. That is now true of many women. In such circumstances the partner may not know of the income, capital and savings of the other partner and may never have known of them completely. How will the income of such a partner be ascertained? Will there be wholesale snooping? Will people be encouraged, or feel they are being encouraged, to be dishonest, concealing income and savings? Perhaps instead of bank notes there will be piles of euros concealed under floorboards.

I know that it will be said that there are types of benefit for which this already applies. Income support is a case in point. But again I repeat that we are talking here about an extension of means testing to a far wider population. We are talking of people who hitherto had not ever thought that it would apply to them, perhaps people who now regard themselves as rather middle class and who have acquired a personal pension that over the years has not provided the pension that they thought it would eventually provide, so they are forced to look at pension credit as a way of getting enough to live on.

I cannot think of a suitable way in which to amend the clause but I am still not happy about it. I am sure that the Government must have given some thought to how this is to be applied and enforced, and how to avoid deliberate dishonesty on the part of claimants and partners. Therefore, I would welcome the views of the Government on the points I have made.

Perhaps I may add to the comments of the noble Baroness, Lady Turner, by returning to the topic of unmarried couples, which we debated on the first day of the Committee stage. Unmarried couples have few, if any, financial obligations to each other. They certainly do not have obligations to disclose their financial circumstances to each other. If they are treated as one unit for pension credit purposes, that would mean that the details of each part of a deemed unmarried couple would have to be disclosed to the other. It could not be guaranteed that privacy would remain for one because in aggregating two, it would be a relatively simple calculation for one to discover what the other had, even if the Pension Service was able to deal with them as two individuals and add up their incomes separately.

I am not an expert on human rights but I wonder what consideration the Minister gave, when she signed the customary declaration on the Bill, to the possibility that parties to the unmarried couples were being deprived of their rights to privacy. I should be interested in her comments.

My noble friend Lady Turner has long experience in social security matters. She will know, and there is a simple two-line summary, that all income-related benefits are household based. If somebody wants to enjoy an entitlement to a household benefit, we in turn must have the information on that household income. We cannot apply disaggregated or segregated tax rules to a household assessment. My noble friend knows perfectly well that if we were to follow her point, that would mean the disaggregation of social security in the concept of households into a series of individuals. Therefore, a non-working spouse of a wealthy husband, for example, would be entitled, with a very modest income, to a full pension credit. It is precisely to avoid that situation that Clause 5 makes clear that we are dealing with a household. The household is entitled to claim the benefit, subject to the discussion we have just had about who should make the claim, and so forth.

It will not come as a surprise to Members of the Committee that all income-related benefits—JSA, income support, housing benefit and council tax benefit—will all have been based on household income. It may be the case that an unmarried pensioner couple have come together as pensioners and this may be new to them. However, that would pre-suppose that neither of them has ever been in a relationship before in which they have enjoyed a household benefit. They have to make that choice. If they want to enjoy a household-based addition to their income, which is their entitlement, they have to give us the information on which to base it. That is the point of Clause 5. To receive pension credit, both members of the couple need to agree to the claim being made. Therefore, it is not unreasonable that both members of the couple should disclose the financial circumstances to each other. That is the basis of social security law.

moved Amendment No. 55:

I must inform the Committee that if Amendment No. 55 is agreed to, I cannot call Amendments Nos. 56 to 59A.

For the first time today, we are getting to the substance of the five-year period. Therefore, perhaps I may say a few words about the detail of the amendment, which is interesting and far reaching. However, again it pursues the issue of alignment with the tax system. As I understand it, it proposes to borrow from the system of five-year assessed income periods covered in Clauses 6 to 10 and the five-year assessed income period itself, but then to impose limits and new classifications.

The five-year assessed income period and the processes that support it are a key feature of pension credit which will, I hope, reassure pensioners that this is a world away from the weekly means test they are currently experiencing. We would strongly resist all attempts to fetter the purpose of a five-year assessed period, so that pensioners know where they stand.

In the future a pensioner approaching pensionable age will receive his or her invitation to claim state retirement benefits. Many pensioners will then make their claim, most by telephone—some 70 per cent tell us that is what they prefer—but others will do so in more traditional ways as they please. We will ask the pensioner about the income he or she expects in retirement. When it is clear—as in most cases it will be—that the income is settled, an award of pension credit will be made.

Perhaps crucially because—and this has been raised in your Lordships' discussion—all the research indicates that pensioners do not want the intrusion of dealing with the state when it comes to their financial affairs, or in order to reduce it to a minimum, we intend that there will be no review of these affairs for five years. We shall have safeguards. We shall automatically increase income from second pensions when these occur as part of the regular annual increases in these pensions. To do otherwise would drive up the costs of pension credits significantly. 01' course, if a pensioner's income decreases during the five-year period, then we will interrupt the award to take that into account. In other words, it is "win win" for the pensioner. The pensioner can always come to us for an uplift if his or her income falls. They do not have to come to us until we review their income, apart from certain major life changes, which will be on a five-year basis. We will also take into account the normal changes in circumstances, such as death of a partner, which already exist within retirement pension.

This is a real break with the past. It has been widely welcomed by all the relevant organisations. We are seeking to achieve a break with the old means-test attitude. Perhaps I can suggest to Members of the Committee what the amendment does to that concept. First, as I understand the amendment of the noble Baroness, there would be an obligation to base the pension credit income assessment on a past year's income. Understandably, given the irrelevance of past income for new pensioners, the amendment also allows claims to be assessed on estimated income for the next 12 months. The amendment then proposes that the life changes, such as death of a partner, should also be notifiable when they occur. We have no difficulties with that. We share the same approach.

But then we have a radical departure from where we want to go. According to the amendment of the noble Baroness, at the end of 12 months if the pensioner's income has changed by 10 per cent up or down, over what it was 12 months previously, the pensioner must tell us about it. It is unclear whether that 10 per cent accumulates so that, say, at the end of the fourth year of a five-year period the pensioner has to remember what he or she told us four years earlier and calculate whether t hat is within the 10 per cent tolerance.

However, I am not quibbling with the detail of the amendment. The noble Baroness can clarify her views on that. I am arguing as strongly as possible that we must break the weekly reporting of information or even the yearly reporting of that kind of information that ties the ownership of the pensioner's circumstances to us.

Obviously, a 12-month means test, which is what the noble Baroness proposes, is better than a weekly means test in the eyes of most pensioners. We would argue that giving people an assured level of income for 60 months is better than 12 months. We estimate that at least two-thirds of pensioners are unlikely to see their financial circumstances change within the five-year period, particularly after the first year when people are settling down and maybe giving up modest part-time earnings.

The noble Baroness can argue that a 10 per cent tolerance up or down is reasonable. But, if I lost £9 of a weekly income of £100 I would not imagine that the state was on my side if it told me not to bother it until I had lost £10. At the moment, if a pensioner loses £ 1 or £9 he or she can come to us. It is only if it goes up that they do not have to come to us. As the amendment is worded, the noble Baroness would require them not to be able to report losses.

Equally, if my income rose by more than I 0 per cent, I would be troubled that under the amendment I could keep this income for at most 12 months. I would much prefer to be told that I did not need to tell the state about it for five years, rather than 12 months.

I accept that what the noble Baroness proposes in the amendment in part advances on the present arrangements for pensioners. However, what we propose goes much further. It will free a great many pensioners to enjoy their income without constant inquiry from the state. The question before the Committee is whether a 12-month revisiting of a pensioner's income is more reasonable than a five-year revisiting of a pensioner's income, given that after the first year or so of being a pensioner incomes are fairly predictable. Further, given, that we are so anxious to break the old mentality of means test, intrusion and so on, I hope that the noble Baroness can join with us in what I believe is a generous but decent and proper concept, which is the five-year assessed period.

I thank the noble Baroness for that reply. She reminded me how difficult a job drafting is. As soon as the Minister started commenting on my suggested re-draft of the amendment, I realised that I had not drafted what I had intended. I had intended that there would indeed be a five-year prospective settlement and that it would be based on the most recent year's income, unless, looking forward, one thought that that income might vary by more than 10 per cent, particularly when one becomes a pensioner. I linked the proposal to life-changing events. So I was suggesting that there would be a five-year settlement; it would be based on the most recent year's income unless that was unlikely to be representative of the following year, in which case it would be based on something else. Then it would be left for five years. That avoids the deeming of increases and decreases in income which are included in Clause 7(4).

The Minister talked about this being "win win" for pensioners and of their being able to go back if their income turned out to be less than the assumed basis. When we come to look at how income from capital, in particular, is calculated later, we find notional calculations. I do not believe that pensioners will know how to go back and ask for a re-assessment or a redetermination of their pension credit. It will leave them confused and they may lose out. I have a number of points. First, I was not trying to turn this into an annual assessment. I was merely trying to say that when it is assessed, if the previous year's income does not look representative, use another year. I confused that in the drafting of the amendment. I apologise for confusing the Minister. Beyond that, I was trying to say, "Let us do it once and then forget it for five years". I am not accepting in this argument that five years is an appropriate period. But if that is what the Government want to do, it is the least interventionist for pensioners because it is over and done with and one does not do prospectively any fancy calculations.

The noble Baroness is suggesting that the reason for her proposal is not to change the five-year period but not to take into account any changes in pension levels and any changes in capital. On the first point, that is not reasonable because we automatically update retirement pension. Therefore it follows that we automatically update housing benefit. I do not think that one can automatically update all of that but freeze any assumptions about the income flow coming in from, for example, RPI occupational pensions. They have to be done together. My response to the noble Baroness on that issue is that I do not think that proposal is sensible; we already do it; and there is no reason on God's earth why we should not continue to do that. It is fairly simple.

On the second point, on capital, we are not looking at actual income, in which case she may have a point; we are looking at notional income drawing from capital. Capital is much more stable. Most pensioners—certainly if my parents are anything to go by—know exactly how much they have in their building society books and so on. That is the level for the most part that we are talking about. They will not know what the actual income is. The point made by the noble Baroness would be much fairer and more viable if we were trying to go for an actual income. There she might well be right. They would not know whether to come down from 4.1 to 3.7 and following calculations. But, given that it is capital, and given, as I say on the first point that retirement pensions are automatically upgraded by the computer and this follows, I hope that the noble Baroness would feel able to withdraw the amendment.

If there are other particular points about this matter, because it is a very interesting issue, I should be very happy to correspond with the noble Baroness.

I thank the Minister for that reply. I can see how she will want to make later payments of pension credit vary with other benefits. That is quite clear. The difference comes down to savers' income. I heard what the Minister said about that matter. We shall be returning to that issue several more times during Committee. I await those discussions. I beg leave to withdraw the amendment.

moved Amendment No. 56:

The amendments are grouped together because they all seek to amend Clause 7 of the Bill. Clause 7 is an integral part of our proposals for the assessed income period which we rehearsed a moment ago. I do not need to describe why we have the five-year period; we discussed that.

Amendment No. 56 would have the overall effect of removing the power to set a five-year assessed income period for pensioners aged 65 or more. Clause 7 contains the power to fix a pensioner's retirement provision for five years. It also contains the definition of "retirement provision" which is: retirement pension provision (other than under the Contributions and Benefits Act); income from annuity contracts (other than retirement pension income); and income from capital.

Subsection (3), which the amendment seeks to remove, contains the power to fix the retirement provision so that it remains the same for the duration of the assessed income period. Without subsection (3) there would be no point to the remaining clauses concerning the assessed income period because there would be no power to fix retirement provision. I know that the noble Baroness did not intend it as a wrecking amendment but it is the closest we have come to one! The very heart of the pension credit proposals will be removed because the effect would be that we would be unable to move away from the weekly means test which, as I have already explained, is a major barrier to pensioners claiming their entitlement. I hope that I have explained the purpose of subsection (3) and justified its inclusion in Clause 7.

Amendment No. 57 would remove the power to deem known regular changes in a pensioner's income during the assessed income period. Again let me clarify why subsection (4) should remain part of Clause 7. This subsection allows for exceptions to income being fixed within the assessed income period. These exceptions are in line with two principles: safeguarding public expenditure and safeguarding pensioners' overall incomes.

In terms of protecting public expenditure, we want to ensure that foreseeable and regular changes in retirement provision are taken into account during the course of an assessed income period. We know that in most cases second pensions and annuities are liable to be increased annually. Therefore, we propose taking a power to deem the amount of the increase, thus preventing the need for the pensioner to report those changes every year.

This power will be within regulations. The intention is that the regulations will provide for the amount of income from a pension or annuity to be deemed to increase from time to time in line with the terms of a pensioner's pension or annuity arrangements. If the noble Baroness wishes to press me on how we shall know in certain circumstances, I am happy to discuss it.

Accepting Amendment No. 57 would mean, for example, ignoring increases to non-state second pensions. The cost of ignoring such increases alone during the assessed income period would amount to around £1 billion at the end of the five-year period.

I know that there will be concerns about how we propose to take account of increases in claimants' retirement provision, or indeed changes in other state benefits, during the assessed income period. It may be helpful to the Committee if I spell this out. It is a key point. Our intention is automatically to uprate the pension credit award each year taking into account changes in the state and non-state pensions the pensioner normally has during the five-year assessed income period. The calculation of the retirement provision will be based on information provided by the pensioner at the start of the claim. We know that most private pensions keep pace with inflation. Ninety per cent of them are defined benefit. They are almost all retail prices indexed (RPI'd) because they are largely public sector ones. So, if the pensioner is unable to provide information about the rate at which his or her second pension will be increased, we intend to assume that it is uprated at least in line with prices.

Let me assure Members of the Committee that if doing that means that a pensioner will lose out—because we are assuming a rate of increase that is too high; in other words it is not being RPI'd—pensioners will be able to ask for their pension credit to be reassessed at any time during the assessed income period. In other words, we will notify pensioners every time there is a change in pension credit annually. Pensioners will be able to compare their actual pension with the amount on their notification. if they wish, we can make inquiries with the pension company on their behalf. We have no reason to think that this will not be an entirely Simple, straightforward and easy way of ensuring that, although we shall make RPI assumptions, where that is not the case we shall have the information to make appropriate and speedy adjustments.

Subsection (4) protects the public purse to the tune of £1 billion and supports our intention to minimise the questions we need to ask pensioners. We need to explore it further only when the pensioner is able to tell us or we know that that pensioner is not being RPI'd in ways we expect.

Amendment No. 59 seeks to remove the powers to provide continuity in treatment of income streams within the calculation of pension credit. This would mean that the flexibility of administrators to group income streams or to ignore changes of source of payment would be removed from the assessed income period within the pension credit calculation.

Paragraph (a) of subsection (7) of Clause 7 will allow regulations to provide for income of one description to be treated as income of another description. It sounds technical. The noble Baroness thought that it was fantasy land. It will apply infrequently to only a small number of pensioners. Let me give some examples 'where we would have needed the power.

Noble Lords will recall the mess—I do because I was handling a Bill from the Benches opposite—of the Maxwell affair. Pension rights which could not be met from Mirror Group Pensions were paid, at least in part, by a fund made up of donations and chanitable payments. We all hope that that situation will not recur. But under the savings credit we would want to be able to treat such payments as retirement provision for the duration of the current assessed income period and reward thent through the savings credit. This power would allow us to do just that.

The most common use of this power would be for pensioners who have a second pension paid by one employer or pensions provider who then merges with another or is taken over by another. In that situation, the pension in payment would, in effect, be the same. However, the liability may well be transferred to, and be discharged by, the new company or a third party. This provision would allow us again to continue to fix this income for the duration of the existing assessed income period and reward it as retirement provision through the savings credit.

I am sure the noble Baroness will understand this point. I do not need to labour it further. In the light of that explanation, perhaps I can ask the noble Baroness whether she would care to withdraw the amendment.

I listened carefully to the Minister's extremely helpful explanation. In her response to Amendment No. 57, she referred to those pensioners who know that their pension funds are not automatically uprated by RPI. If at the time a person retires he knows that his occupational pension will not necessarily be uprated by RPI, will there be the facility in the new system for him to flag that and thereby trigger an annual reassessment of his income?

I had hoped that I had made that clear. Absolutely: that is the whole point. If, for example, he does not, although assumptions are being made about his state retirement pension, we shall have to ensure that similar assumptions are not transferred over to his private occupational pension. Therefore, each year the adjustments will be made accordingly.

The basic assumption of pensions being RPI'd is reasonable for public sector pensions, but I cannot believe that that applies to most pensions. It is not a universal practice by any means that private sector pensions are RPI'd. It seems to me to be a potential difficulty as it requires pensioners to reapply for a determination each year just because they have an ordinary private sector pension. In that regard, can the Minister say how many pensioners are likely to be affected? I do not know and I would not know how to decide that problem. If it is a large number I may wish to press the Minister further although perhaps not today.

The latest information I can give the noble Baroness comes from the Government Actuary statistics for 1995. I shall check to see if anything later than that is available. The information I have is that public sector defined benefit pension schemes are required by scheme rules to increase pensions annually in line with the RPI and in April. The major defined benefit schemes tend to be those of the Civil Service, local government, the teaching and health professions and the like. The 1995 survey showed that 82 per cent of those holding private sector defined benefit pensions had increases of 2 per cent to 4 per cent, which are close to the RPI of that year which was 3.5 per cent. Fourteen per cent had increases greater than 4 per cent, while only 4 per cent had increases of less than 2 per cent. We do not have information about timing.

Therefore, in terms of defined benefit schemes, I believe that we are dealing with relatively small numbers. Defined contribution schemes are obviously a different output and the noble Baroness will understand that. As I said, the pensioner will receive from his or her occupational scheme a notification of what they are to receive each year. The pensioner will be able to compare that to the notification received from us saying what we are assuming to be correct. If there is a difference they refer the matter again to us. I do not see that there is a problem given that we are well aware of it. I believe that we have robust systems in place on this matter.

Can the Minister say how many pensioners are in defined contribution schemes? I understand it is 10 per cent. As regards the figure that the Minister quoted for defined benefit schemes, it is quite often the case that such schemes have an RPI of 4 per cent or 5 per cent. The point to which the statistics refer might appear to be giving RPI-type increases, but perhaps they are base level increases which just happen to coincide. It is my experience that when inflation reached high levels, this protection was included so that large increases were not paid out. We might be dealing with quite a number of pensioners. I wonder whether it is right automatically to apply RPI to all of them.

Perhaps I may make it clear again. When a pensioner first comes into the system at the age of 65, we shall go over their income with them. We shall take into account what they know about their second pensions and how they are being increased. If they say that it is 2 per cent or 4 per cent or RPI'd, we shall build that into our annual uprating for that pensioner. It is only if the pensioner cannot give us the information at that point that we shall assume an RPI increase. If we do that, and a year or so later the pensioner says that there is a disjunction between what they are told by their occupational pension scheme provider and what we assume to be the situation, the person will return to us. If the pensioner does not know and he or she authorises us to find out, we shall go to the pension provider and seek that information.

I am grateful for that information and I shall consider it further. I beg leave to withdraw the amendment.

moved Amendment No. 58:

I wish to underline some of the points which we were discussing when dealing with the last couple of amendments. These are complex matters. I believe that pensioners may well be very confused about what is happening to the pension credit that they have. It is an excellent amendment in that there is a positive duty to inform the pensioner of a change in the pension credit and at least provide an aide memoire or a reminder to pensioners that they should check that their details are correct. I hope that the notification will also inform the pensioner very clearly what he or she must do if they are concerned about any of the details. I support this amendment.

I support the noble Baroness, Lady Turner. I do so because the amendment affords an opportunity to take issue with something the Minister said at the first day of Committee stage. She indicated that it would be a source of relief to many pensioners that these complex calculations will be done by the department. I am sure that it will be given some of the examples which the Minister gave us on an earlier occasion.

However, I am not sure about that in practice. I believe that there is a danger of likening pensioners to other claimant groups and I am not sure that that is always correct. A number of pensioners worry immensely about benefits and what they receive. That worry is aggravated by the fact that most of them know that they will always be on a low income. Therefore, they worry a great deal that an over-calculation has been made and they will not have extra income to put that right. Therefore, I believe that there is an additional reason besides those already cited by the noble Baronesses for reassuring pensioners that they are receiving what they are entitled to. For that reason I support the noble Baroness, Lady Turner.

The amendment of the noble Baroness, Lady Turner, has received support from both Opposition Benches. I approve of it too because that is exactly what we are going to do and what we are already empowered to do under the decision-making Act. The only question is whether we put redundant words on the face of the Bill. There may be an argument for doing that, but it will not change anything. The parliamentary draftsman does not like adding redundant words.

Amendment No. 58 seeks to ensure that where a change in a pensioner's income from a second pension, annuity contract or capital affects their entitlement to pension credit, the Pension Service will inform the pensioner of that change and its effect.

I agree that the Pension Service must keep pensioners fully informed of their pension credit entitlement and the effect that any changes in circumstances have on that entitlement. As I said, for the vast majority of pensioners we shall set assessed income periods, usually for five years, during which only limited significant changes—for example, the death of a partner—would need to be reported.

As I said, as part of our drive and in order to reduce intrusion we will automatically take into account predictable changes such as benefit changes and the annual increase in second pensions such as we have just been discussing. Details of these will be gathered in the five-year period.

Where there is a change in the level of pension credit entitlement, the Pension Service will send a letter to the pensioner with an explanation of their entitlement prior to and following the change. This will provide—this may help the noble Baroness, Lady Barker—a detailed breakdown of the change and its effect. This should ensure that pensioners understand the change when their payment is altered. That is consistent with the arrangements for handling changes to pensioner's entitlement at present.

Obviously, we have to ensure that pensioners continue to receive their full pension credit entitlement and that if it is reduced, they can ask for it to be recalculated. That is the substance of the redundant words. Pension credit decisions will fall within the existing legislation on notifying decisions. Section 12(6) of the Social Security Act 1998, which I am sure that Members of the Committee will instantly recall, and the regulations made under it—the Social Security and Child Support (Decisions and Appeals) Regulations 1999—already provide that a person must be given a written notice of decisions which are appealable. That existing statutory obligation will be applied to pension credit by Clause 11 and Schedule 1 to the Bill. So the Pension Service is already obliged to provide what is sought through the amendment under the established legal and operational arrangements that I have outlined. For that reason, I hope that my noble friend and the Committee will agree that this entirely well-intentioned amendment is unnecessary.

I thank my noble friend for that explanation. I still think that there would be no harm in writing that provision into the Bill, but in view of her positive response, I beg leave to withdraw the amendment.

moved Amendment No. 59A:

Amendment No. 59A would severely undermine the department's ability to recover overpayments. The provision as amended would prevent the decision maker in the local office revising the original decision regarding the claimant's retirement provision if, for example, that decision was based on ignorance of a material fact caused by the fraudulent, deliberate or negligent conduct of the claimant. Under current rules, an overpayment is calculated from the date on which an incorrect award was made, or on which an award became incorrect due to a change in a person's circumstances. Where benefit has been overpaid as a consequence of a person's failure to disclose, or misrepresentation of, a material fact, the department has always sought to recover the amount overpaid. Indeed, not to do so would be contrary to government accounting procedures which require departments to try to recover debts where it is cost-effective to do so.

The Committee will be aware that a person in receipt of the minimum income guarantee has an ongoing obligation to notify the department of any change in their circumstances. However, pension credit recipients, once the five-year period has begun, will have to notify only major changes. These include when a person becomes a member of a married or unmarried couple, when a person loses their spouse, when a person attains the age of 65, or. where the claimant is a member of a married or unmarried couple, the other member attains the age of 65. The claimant is not obliged to report changes in retirement provision during the assessed income period, though he or she may report such changes if they would result in an increased entitlement to pension credit. As I have said, it is a win/win for pensioners.

That simplification will ease the burden on claimants to report every change as it happens. But—and this is where the amendment would bite—it is important that the claimant gives us accurate and full information at the start of the claim, as that will be vital to establish not only the correct level of entitlement but whether the five-year period is appropriate. If there are obviously going to be fluctuations during the next year. the five-year period will kick in only when we have a reasonably reliable income forecast. Equally, at the end of the current assessed income period, the same considerations will apply.

As drafted, the amendment would effectively curtail the department's ability to recover overpayments of pension credit where there had been an incorrect assessment of a person's retirement provision at the start of an assessed income period—where the overpayment may have arisen as a result of fraudulent omissions on the part of the pension credit recipient or their partner.

For example, Mr X might, at the start of his pension credit claim, deliberately conceal from us the fact that he has two separate occupational pensions. Let us for the sake of argument say that he told us that he had only one occupational pension, and the decision maker decided to set a five year assessed income period. Mr X would be overpaid, for obvious reasons. If the existence of his second occupational pension were discovered at the end of his assessed income period, the amendment would mean that the decision maker could reassess Mr X's entitlement only from that point in time. He could not go back to the original decision, even if it were based on a calculated deceit, revise it and seek to recover the overpayment. In effect, sanctions would be heavily undermined. Such omissions, deliberate or otherwise, do occur. I am sure that none of us would wish to encourage such behaviour.

Our proposed policy for pension credit is that where an overpayment occurred as a result of a person's failure to disclose, and therefore the entitlement decision was based on a mistake as to a material fact, the claimant would be liable for recovery from the day on which the overpayment occurred. The Government want to be consistent. Were we to accept the amendment, it would create a disparity in the way in which the department treats overpayments of pension credit that arose due to a mistake in the calculation of a person's retirement provision compared with the treatment of overpayments resulting from any other circumstance, such as a non-dependant leaving the household or the repayment of an outstanding mortgage loan. The local decision maker would be able to revise a decision where the claimant misrepresented a fact about his household composition, but not where the claimant had misrepresented a fact about his retirement provision. I am sure that the noble Baroness would accept that that would be absurd.

To put the provision in statistical context, in the current year the department has sought recovery on 25,000 overpayments from people aged 60 and over receiving MIG. If the amendment were to be accepted, we could not do so in future—or not substantially—and there would be a net loss to the department of £20 million. Depending on when the claimant reported the change, we would be able to pay any other arrears.

I hope that the noble Baroness will accept that our proposals are reasonable and that the amendment would be an invitation for people to misrepresent incomes and that we would have no means for recovery. Obviously, the vast majority of pensioners try to be as truthful as they can. Sometimes mistakes occur in error, but sometimes we know that they are deliberate. We need the currently available sanctions to continue to operate.

I am grateful to the Minister for that explanation and my enlightenment. Will she clarify one point? She spoke throughout largely in terms of fraudulent misrepresentation. The powers apply to any overpayment where the facts are incorrect, whether because of error or oversight. There is no gradation. The powers will allow the Secretary of State—or the local office—to revise whenever there is a change, for whatever circumstance.

Yes, if money has been paid in error, the department has an obligation to seek to recover it. I know from experience that where the department may in part be responsible for an error, it tries to take as sensitive an approach as possible in the circumstances, especially in the case of pensioners, disabled people, people with a mental health problem, and so on. If we do not have such a power, the problem is not so much that there may be an innocent error as that there may be deliberate cheating, which is an entirely different situation.

In the light of what the Minister said, I beg leave to withdraw the amendment.

moved Amendment No. 60:

I can give my noble friend Lady Turner of Camden a fairly full answer, and I shall return to one of her points. However, I wonder whether she really needs me to, given the discussion we have already had. What she is saying is that if at the outset of establishing a five-year claim someone deliberately misrepresents their income, and we do not learn that they have done so until five years later, we could recover only one year's worth of the payment obtained by that deliberate cheating. I am sure that that is not what my noble friend intends, but that is the implication of the amendment. I hope that she will not pursue that.

The amendment would also produce unfairness of treatment. I shall give the Committee an example. Mr A is 65. He has a partner who is 58, who has irregular and intermittent earnings, which prevents our setting an assessed income period. Mr B is 65 and has an assessed income period in force. Both misrepresent the correct amount of their second pension at the start of their respective claims. In both cases, we discover the misrepresentation, say, two years or four years into their claims. In the first case, we would take steps to recover all the overpayment, as Mr A does not have an assessed income period, because his partner's earnings are still fluctuating. However, in Mr B's case, we would be restricted in our recovery of overpaid pension credit to 12 months.

For those reasons, the advantage that claimants would gain by misrepresenting, knowing that once they were past the 12-month period only the money for 12 months could be clawed back, arid, secondly, the discrepancies that would be created between those who had partners below the age of 60—for women—who might still be in the labour market earning a regular income in which case we could recover the money, whereas, if someone had a partner of pension age and a fixed period, we could not. I hope that my noble friend will not pursue the amendment.

I thank the Minister for that explanation, but we are not talking about fraud in the amendment. We are talking about an overpayment that has arisen as a result of an error, not because of a dishonest claim. We tabled the amendment because an error could occur, and a repayment period of up to five years could be rather a heavy commitment for a pensioner. In view of what the Minister has said, I beg leave to withdraw.

moved Amendment No. 61:

We are not convinced that five years is the right period, for the reasons that my noble friend Lord Hodgson of Astley Abbotts has adduced. He made a powerful case for a shorter period, and I hope that the Minister will consider it. Whether the assessed period is three years or five years, the Government should be wholehearted about it. In speaking to Amendments Nos. 63, 64 and 65, which are grouped with Amendment No. 61, 1 would like to outline a different approach.

Amendment No. 63 would remove subsections (2) and (3). Subsection (2) allows the Secretary of State to specify a period of shorter than five years or not to specify one at all if the claimant's income is not expected to be typical. A pensioner will be given the prospect of a five-year settlement only to have it whisked away at the whim of the Secretary of State or, in fact, the local official. We cannot see that that is necessary. If the policy is five years, why not just stick with it? There are several other powers to reopen cases, to deem increases or deal with the issue in other ways.

Amendment No. 64 tackles subsection (4), which sets out the life events that lead to an assessed income period coming to an end. That is fine, but why do the Government need a power to override that in prescribed circumstances? Amendment No. 64, tabled on a probing basis, would remove that power. I shall be interested to hear from the Minister why she thinks that the Government need it. Similarly, Amendment No. 65 would take away the power in subsection (5) to regulate for yet more cases in which an assessment period comes to an end beyond the life events specified in subsection (4). If the Minister thinks that the power is necessary, I should be interested to hear about the cases in which it might be appropriate.

I shall do my best. In response to the noble Lord, Lord Hodgson of Astley Abbotts, I would say that, at the end of the day, we believe that five years is the right period. Our research shows that, after the first year or so of retirement, there is relatively little change in income that cannot be predicted or built into the retirement pension situation.

The noble Lord said that there was one thing that was unpredictable—growth in savings, given capital markets and so on. I am sure that he is right, but I must make two points. First, 85 per cent of those on pension credit have savings of less than £6,000 and need not report anything to us. As the noble Lord knows, we could have gone for a much lower deemed return from capital if we had not had that first tranche of exempt moneys. However, we listened to representations from Age Concern, Help the Aged, CABs and other organisations—I hope that I am not attributing views to them improperly—which stated that they would prefer to take out of the system the vast majority of those pensioners who do not make any claims to financial sophistication. That we have done.

The noble Lord pressed me on the question of how those pensioners holding higher capital—perhaps because their capital has grown—would know that that might lead to a higher element entitled to reward. Pensioners will be notified each year at around the time of uprating of their pension credit entitlement, how it has been worked out and how and when they should let us know about any changes. I have not consulted on this, but I would be happy to ensure that, closer to the time that the provisions come into effect in October 2003, examples of the draft letters are placed in the Library so that noble Lords can reassure themselves of their explicit, transparent and simple qualities.

It is my experience that all such communications tend to be drawn up in conjunction with the relevant organisations such as Help the Aged and Age Concern because it is in everyone's interests that the situation is made clear.

Perhaps I may turn to Amendment No. 63, spoken to by the noble Baroness, Lady Noakes, which seeks to remove the power of the Secretary of State to set and assess an income period of under five years or not to set one at all. The point of the subsection is because often, during the first year, there may be irregular earnings or an unpredictable income. The pensioner will then not be in a position to tell us what they expect their income to be. For that reason, we accept their income for one year and then we undertake the five-year assessment once their income has stabilised. That is the reason for the power and perhaps I do not need to explain it in any further detail. Amendment No. 64 would have the effect of always bringing the assessed income period to an end, with no exceptions, in circumstances where the composition of the household changed. The reason for the power is that it could be that one of the changes does not result in a change of income or the appropriate minimum guarantee—for example, where a pensioner does not receive an occupational pension on attaining the age of 65. In that case, it would be wrong to stop the assessed income period, thereby reexamining the pensioner's financial circumstances and removing them from the advantage of having their income fixed for a five-year period, when they know that basically what we are dealing with is RP rising to the £100 fulcrum figure.

We therefore intend to prescribe in regulations that such a situation should not end the assessed income period and that is the purpose of subsection (4) as drafted. I believe that, in all of these circumstances, our changes work to the advantage of the pensioner.

Amendment No. 65 would remove the power to set out in regulations the times at which or the circumstances in which an assessed income period would end. I have already described those, which cover not only changes in household composition but also include situations where pension credit entitlement ends. That could happen. for example, where the pensioner and/or their partner went to live abroad permanently. A further example could be where a partner, aged under 60, of a pensioner becomes entitled to a social security benefit which is sufficient to increase the couple's income above the pension credit upper limit. I cite here contribution-based JSA or 113. Changes could also take place which, while not ending pension credit entitlement, could produce a significant change in the pensioner's overall income stream—for example, if the younger partner of a pensioner starts work. If that were the case, it would be necessary to stop the assessed income period so that the amount of earnings could be regularly checked until a consistent pattern could be established.

At the moment, all parties are reasonably confident that, once stable incomes have been established, the five-year period can kick in. But there are circumstances above and beyond the re-formation of the household, either through a new relationship or if someone dies—one partner could go into hospital on a permanent basis, or move into long-term care—which might affect the moneys to which they would be entitled. We need powers in the regulations to meet those circumstances.

Perhaps I could enlarge on some of the examples requested by the noble Baroness, but I hope that I have now sufficiently addressed her points.

I thank the Minister for her extremely helpful response. Can she estimate roughly how many assessed income periods are likely to be under five years; namely, how often these powers of variation are likely to be used?

We expect something in the order of two-thirds of all pension assessments to run for the full five years. Within the one-third that will not will be included those which may experience a delay of a year or so. For example, if someone is 65 years old, but their partner is only 57 and has several years left to work, it may be several years before a stable income is established. There is also the possibility that some pensioners' incomes themselves may change, rising or falling, and that they would wish to report those changes.

We are expecting, more or less from day one, that two-thirds of all pensioners will be entitled to the five-year assessment period. The reasons why the remainder will not be entitled stem from a variety of causes.

I am grateful to the Minister for her full comments. I do not think that I heard her respond concerning the Questions for Written Answer tabled by the noble Baroness, Lady Greengross.

I do apologise. The Answers to those Questions were tabled yesterday.

I thank the noble Baroness. This was of course a probing amendment. As I said earlier, it covers some of the ground that we have discussed on previous occasions. I beg leave to withdraw the amendment.

moved Amendment No. 62:

I think that we should keep a score sheet to record which Member of the Committee can rise to their feet with greater speed. At present I believe that the score is two to one in favour of the noble Baroness.

In proposing this interesting amendment, the noble Baroness, Lady Barker, has suggested that housing benefit provisions might come back to haunt the Minister. Indeed, I think that they have been haunting her for some while. In March 1999, Harriet Harman said that proposals for reform would be brought forward shortly. In June 1999, the Secretary of State said,

"the present housing benefit can't continue".

On 28th June 1999, a Treasury source said that housing benefit reform would be,

"the biggest project facing the Treasury this year".

And, of course, the Labour Party manifesto had a large paragraph on this particular issue. So, in the context of trying to integrate the two systems, perhaps the Minister can give some indication of where we are in regard to housing benefit because there is fairly general agreement that a number of its aspects are not particularly good.

On an earlier amendment, the Minister passionately advocated the new five-year proposal—of which, as she knows, we are in favour as a broad principle. We shall have qualifications but, generally speaking, we are in favour of it. As the noble Baroness pointed out, in most circumstances—but not all—it may be a win/win situation for pensioners.

But, having said that, there is a considerable argument for saying that arrangements should be integrated between housing benefit and the state pension credit. As the noble Baroness who moved the amendment said, if we introduce a five-year system for state pension credit, the situation will not be the same with regard to housing benefit. If the Minister wants a system whereby pensioners know where they stand over a five-year period, there is a case for integrating the two parts of the social security system. Housing benefit and council tax benefit are among the relatively stable elements of the component parts which together make up the total benefit that any individual may receive.

However, we all know that there are real problems. Even now there are different claim forms for housing benefit among different authorities—we have been arguing for a long time that they should be uniform—and the information exchanged between the Government and local authorities is more in one direction than the other. We will need to establish to what extent the local authorities will be providing the Government with information relevant to the pensions credit, and to what extent the information the Government have on that is in turn related to housing benefit. There is a strong case for applying the five-year principle to all forms of benefit. We shall listen with interest to what the Minister has to say about that.

My understanding is that the period for housing benefit is 60 weeks as opposed to five years—there is quite a big difference—and some degree of uniformity is necessary if we are to achieve the Minister's declared objective of ensuring that people in receipt of these benefits know where they stand over a five-year period.

I am not sure whether the noble Lord is seeking to tempt me into a general debate on housing benefit and its administration. If so, that is for another time and place, but not on this Bill. He knows that we are seeking to reform administration; he knows that a major reform of housing benefit policy has to follow, or be associated with, the reform and restructuring of social housing rent—and that is a 10-year job or longer. That point has been made on previous occasions.

Is the Minister saying that, despite the statements in the manifesto, nothing will happen for 10 years?

I did not say that. I said that a major overhaul of housing benefit policy would have to follow. For example, it has been proposed to us that there should be a flat rate housing benefit incorporated into IS or JSA. Those kinds of moves, if appropriate, would have to follow a major restructuring of rents. As I have expressed on many occasions in your Lordships' House, we are engaged in significant reforms of housing benefit administration—everything from not sending on the redirect giros to bringing in fraud teams to help local authorities and so on.

As the noble Baroness explained, Amendment No. 62 seeks to introduce powers which would enable the Secretary of State to make regulations allowing the assessed income period set in pension credit to be applied to housing benefit and CTB. As the noble Lord, Lord Higgins, reminded the Committee, those payments are currently restricted to a maximum of 60 weeks. At the end of that period, local authorities require a new claim. This arrangement is intended to ensure that changes in circumstances do not go unreported. The effect of the amendment would be to allow, in pension credit cases, for the 60-week period to be replaced by the pension credit assessed income period.

I am glad that this amendment gives me the opportunity to describe in more detail the arrangements we intend to put in place for pensioners receiving pension credit and housing and council tax benefits, which affects some 8 per cent of pensioners. Our aim is to streamline the delivery of benefits to pensioners. The noble Baroness, Lady Barker, is right. There is no point in reducing the requirement for pensioners to report changes in pension credit, on the one hand, but continuing with the current system of annual claims in housing and council tax benefits on the other. There is an opportunity here to make the administration of housing and council tax benefits easier for local authorities, something which I am sure they would welcome.

We have concluded that where there is an award of pension credit there is no need for local authorities to continue to make regular inquiries about income. Where the guarantee credit is in payment, local authorities will award full housing or council tax benefit automatically. Until the Pension Service tells them otherwise, they will continue to pay benefit. In savings credit only cases, local authorities will need to carry out a full assessment, but we are making an amendment to the Social Security Contributions and Benefits Act via paragraph 3 of Schedule 2 to the Bill which will allow local authorities to use the Pension Service's assessment of the claimant's income for the duration of the assessed income period. This figure will be up-dated throughout the assessed income period to take account of the annual increase in benefits arid increases in second pensions.

I am pleased to tell the Committee that the effect of all this is that we will be doing exactly what the amendment seeks to do. Local authorities will still need to continue to review cases regularly—most tenants have a yearly rent increase and private sector tenancies are subject to the rent officer arrangements—but their inquiries will be limited to matters which concern rent, not the claimant's income. In other words, the claimant's income after the assessed period will be taken over into the housing benefit assessment.

We are discussing the shape of these new arrangements with local authority associations before finalising the detail. It is right that we should do so in order to give local authorities the opportunity to work with us on the development of those procedures.

I hope that the noble Baroness is not only satisfied but thrilled, delighted and overwhelmed. I hope she feels that we have gone well beyond her expectations in seeking to ensure that the rules in pension credit and housing and council tax benefit schemes work together. We are adopting a slightly different approach from the one in Amendment No. 62 because we consider that our approach will minimise the burden on local authorities. However, I have every confidence in saying that we believe the outcome will be the same. So, on the basis that the noble Baroness is getting the substance of precisely what she asks, I hope that she will feel able to withdraw her amendment.

Obviously I shall leave it to the noble Baroness to reply, but I wish to raise one point. What the Minister has said sounds extremely helpful—and, subject to looking at the small print, we welcome it—but does this give us an opportunity to standardise the claim forms used by local authorities and, indeed, the claim form used for the state pension credit? It is absurd that we should have this multiplicity of forms in different local authorities.

We are trying do this and we have issued model forms which we are encouraging local authorities to adopt. I cannot say how far we have reached in that regard, but I shall find out and let the noble Lord know. He is right: the more transparent, simple and similar are the arrangements, the better. We started off with every local authority having its own forms. We are now seeking to establish model forms. Let me see how far that has advanced.

I thank the noble Baroness for her extremely helpful reply. I am not sure how to characterise my emotions at this precise moment, so perhaps I should reserve my position until I have had time to read Hansard. If I said that I was mildly chuffed, would that be parliamentary language?

Joking apart, I have tried to suggest to Members of the Committee that anything that can be done to simplify housing benefit is extremely welcome. The noble Baroness is right to head me off at the pass from having an extensive debate on housing benefit. but it is a source of untold misery for thousands of people. I very much welcome the general thrust of the Minister's remarks. The five-year periods for major benefits that will have a profound effect on people's lives are to be welcomed. I shall go away and no doubt I shall be even more pleased when I read the Minister's remarks in Hansard in detail. I thank her very much I beg leave to withdraw the amendment.

moved Amendment No. 66:

Grotty.

The noble Baroness says, "grotty", but I would say downright unpleasant housing benefit offices. I welcome the measure, but some people for reasons of frailty—both physical and mental—language, and other difficulties, need to be dealt with in other ways.

I wish to raise another matter, which although it is not specific to the Bill, is related to it. I refer to the position of people in residential and nursing care homes, especially those who are self-funded in such homes, who are likely to be spending their savings at a fast rate. I raised this subject at Second Reading. By definition, they are likely to be fairly frail people. There is a raft of important issues, not least of which is the effect of pension credit on care charges, and so on. The circumstances of people in residential care are the most likely to have changed. There are also those who are not comfortable using the telephone. Perhaps that will change over time. I remember the noble Baroness saying the other day that the pension credit is very much for pensioners of the future and that current pensioners "are where they are". That may be, but circumstances change, and a system that endeavours to be fair, as this one does, should be flexible enough to cope.

It may sound mad to many people, but the absence of a local office to attend, which is likely under the proposals, may cause pensioners great concern. For all those reasons, and because I hope that the Government's aim of 100 per cent is not unrealistic, I beg to move.

This is an important amendment and refers, to a large extent, to take-up, although later amendments also refer to that issue. I shall defer some of my remarks until we reach that point.

The amendment of the noble Baroness, Lady Barker, outlines a number of ways in which additional information might be provided to pensioners, such as by telephone, home visits, and so on, but the front end of the issue is the claims form. We have discussed claims forms in previous debates on social security. One of the notable issues was that the size of the present form had been greatly reduced, but the explanatory memorandum had increased proportionately, so that the total number of pages is almost exactly the same.

At all events, we are now engaged in a vast extension of means testing, and about 5 million people who were not previously in the scheme are now likely to come into it. As has already been said, a number of these people are somewhat above the previous benefits level and have never been involved with the scheme at all, so will be joining it for the first time. It is extremely important that the form should be sensible. Perhaps the Minister will let us have a copy—I assume that it has already been drafted—to give us an idea of how it compares with the previous, difficult ones.

Given the huge increase in the number of people who will be claiming, will staff numbers increase proportionately? Otherwise, it is unlikely that the provision mentioned in the amendments will be carried out adequately. The latest report on income-related benefits estimates of take-up in 1999-2000 show that take-up is worse, if anything. The report shows that last year 500,000 eligible pensioners were not receiving income support and that this year the figure has risen. For housing benefit, the number has increased from 150,000 to 210,000. For council tax benefit, the figure has increased from just over 1 million to almost 1,250,000. The situation is becoming worse. Indeed, according to that report, the level of take-up is not improving. We have a real problem in this respect. The Government tend to announce that extra sums of money will be devoted to this or that particular benefit, but, in the event, the amount actually distributed is likely to be significantly less because of the take-up problem.

I stand open to be corrected, but I believe it is right to say that it is not the Government's target of 100 per cent: that 100 per cent is the assumption which has been made in assessing the eventual cost. We know that the costs will not be anywhere near 100 per cent. Therefore, the impression given by mention of these vast amounts of money should be somewhat modified to allow for take-up. Having said that, we must all hope that the actual arrangements made for take-up of the state pension credit will be a great deal better than what we fear could he the outcome. No doubt the Minister will wish to comment on my remarks.

The noble Lord, Lord Higgins, is entirely right to say that the 100 per cent figure is not a target. 1 t would be brilliant if that were to happen, but we all know that there is incomplete take-up on all benefits. It is a statement about the cost designed to ensure that that money is available.

However, I take issue with the noble Lord on a particular phrase that he keeps using. Each time I try to come back at him and each time he refuses to move towards my views—I believe that that is the right way to put it. He speaks about a "vast extension of means testing". It simply will not do to use that phrase when talking about pension credit. We are, for the first time, encouraging those pensioners who have made some effort to help themselves to derive some benefit by keeping the bulk of those modest, small occupational pensions, as opposed to seeing them wiped out by MIG. The noble Lord knows perfectly well that it is precisely because the level of income support, the old MIG, is sufficiently generous between retirement pension and the MIG level—that is, £77 and £100—that people with small pensions who are trapped between those two figures see no gain from it. They will now see a reward in decency and fairness for their own activity. Therefore, to talk about a "vast extension of means testing" is a Stalinist version of Orwellianism, which I hope the noble Lord will not repeat in future.

Members on this side of the Committee have accepted that a considerable amount of extra money will go to people with the same pension; we do not dispute that fact. However, the point that I am trying to make in the present context is that a large number of extra people will fall within the means testing system. That is not open to dispute. No doubt the Minister can give us the exact figure. If it is 5 million, or whatever, compared with the present number of those subject to means testing—namely, over a million or less than 2 million—allowance must be made for the number of staff engaged in the process if the take-up target is to be achieved. We are simply asking whether it is the case that the number of staff will he increased proportionately.

The number of staff will be increased by about 800 over existing staff levels during the take-up period. I ask the noble Lord not to use that vocabulary about the extension of means testing. We have just—have we not?—spent the past hour discussing the five-year assessment period. Those opposite wish to cut that down to three years, two years, or even one year. That would increase means testing. We are trying to break the link that requires a weekly means test and substitute it with a five- yearly assessed income period. To call that a "vast extension of means testing" as a reward for such saving, as though we were simply writing large the existing system to 5 million more pensioners, is both an unfair and unreasonable use of words.

There is a serious point behind this argument; indeed, I sometimes take on this point with my noble friends sitting behind me. If one uses such words, they can become a self-fulfilling prophecy, because pensioners will not claim the benefit if the language used suggests that this is about means testing, charity, invasion, and so on. We are trying to promote a language of entitlement—five-year assessments and targeting—by which we can remove stigma and increase information. In future, I trust that noble Lords will join me in seeking to achieve the same objectives.

Amendment No. 66 seeks to ensure that when customers approach the qualifying age for pension credit, initially age 60, they can get access to information—or "a benefit check", as the noble Baroness describes it in the amendment—about entitlement to pension credit. Like the noble Lord, I am grateful to the noble Baroness for raising the issue. It is a key question and reflects precisely the sort of world that we want the Pension Service to deliver.

I do not need to repeat the steps that we propose to take, but the Pension Service will play a key role in ensuring that pensioners receive the entitlement that is due to them. We intend to provide a dedicated service for pensioners using modern technology, whether by phone or through the Internet, by post or by face-to-face contact. We aim to give pensioners a better service in the future by providing accurate information to help them make decisions about their future pension provision.

Many pensioners have told us that they prefer to make contact with us by telephone; indeed. about 75 per cent seek to do so. Business will, therefore, normally be done in that way. However, we shall offer alternative ways to do business with us—for example, by post, by e-mail, by face-to-face contact through our local service, including home visits, if necessary. We shall seek to do all we can to ensure the appropriate take-up, as mentioned by the noble Baroness. Obviously, the simplest way is by telephone. Most pensioners now feel comfortable with that form of contact.

The local service will also work closely with other locally-based organisations to provide information on the full range of local services of interest to pensioners through outreach and visiting activity. This will be made up of two key elements: direct local services provided by Pension Service staff; and partnership services, where our staff will work with local authorities and voluntary sector organisations, such as Age Concern, to help them in the delivery of their roles. It will take time. The first pension centre will open for business at the beginning of February, with work continuing over the next few years. It means that pensioners will be at the heart of our service.

For customers approaching state pension age, the Pension Service will seek to establish entitlement to pension credit when we are dealing with their state retirement pension. They will be offered the choice of either telephoning the Pension Service and having an agent fill in the claim form for them, after which it will be posted to them for correction. Alternatively, they can request a claim form and complete it themselves. Exceptionally, if one of our customers is unable to use our telephone, postal or e-channels, a Pension Service visiting officer can go to his or her home to establish entitlement.

We are trying to do all we can to reach out: we are working with Age Concern and Help the Aged to ensure that they have sufficient information to promote take-up. A key element is involving them in the development stage of our information products, such as forms and leaflets. I have seen some of the early drafts of the latter. I can assure the noble Lord that they are much improved. I am rather cross with myself because I did not bring examples with me today. I could have shown them to the Committee. As I said, they are much better, but they are still not the glossy, simple and easy-to-read forms that we want to see as our final outcome. We need to test these forms with experts to ensure that they meet pensioners' needs; and that is what we propose to do.

Ensuring that everyone who might be entitled to pension credit actually receives it is a top priority of the Pension Service. We have designed the new service and the benefit to be accessible and customer friendly. For that reason, I hope that Members of the Committee will agree that the noble Baroness's amendment is unnecessary. We are working both locally and nationally with organisations and local authorities. We are devising new forms and extending the telephone service, which, where appropriate, we are backing up with a home visiting service. I believe that nothing will be left undone as a result of our activity.

In conclusion, perhaps I may bounce this with the Committee: step one will be to convert existing pensioners on MIG—the 1.7 million—over to pension credit; step two, from spring onwards until 2003, will be the general advertising for other pensioners of the benefit to be paid from October 2003; and, thirdly, step three will be writing to all pensioners directly from October 2003, with claims backdated to that date—and that will include those likely to be entitled. I am so pleased to see the noble Earl, Lord Russell, in his place. He will be pleased about the final step. Finally, we are undertaking extensive research to ascertain what obstacles there may be in the way of those who, though entitled to the benefit, are failing to claim, as well as considering any efforts that we can make to overcome the problem. All of this will be backed by local partnership services.

I hope, therefore, that Members of the Committee agree—I certainly believe it—that the department is making the most extensive efforts possible to ensure that those pensioners who are entitled to it see for the first time a reward for their own savings which would otherwise be lost in the generosity of our MIG payments. I am sure that the Committee will recognise that we are reaching out in ways that are unprecedented.

Before the Minister sits down, will she confirm the number of additional staff? Did I hear a figure of 800? Will that be sufficient to cover the 5 million people who will be entitled to this benefit and provide the service that has been referred to?

Yes. At present, the minimum income guarantee is on a weekly means-tested basis. In future, that element of pension credit will be assessed only every five years.

Before the noble Baroness, Lady Barker, decides what to do about the amendment—I am sure that the answer will be to withdraw it—perhaps I may ask the Minister a question. She said that many of the investigations and much of the "commerce" between the department, pensions offices and individual potential claimants will be by telephone. Does she realise that for many people on many occasions the use of the telephone is a very frustrating exercise? Will ringback be available?

I am delighted to welcome the noble Lord, Lord Skelmersdale, to our deliberations. I thought I was missing something. It is very nice to see him. I do not have a clue about ringback. All I can say is that it was quite a shock to me, when dealing with the Child Support Agency, that that number was among the 10 family-friendly numbers on which a discount was available. I shall see whether the same applies to the Pension Service.

Will there be toll free numbers?

I believe so. If I am wrong, I shall inform Members of the Committee when we next discuss the issue.

I begin by thanking the noble Lord, Lord Higgins, for his correction. I believe that I made an error. However, I was not alone in doing so. Others have come to the same conclusion about the Government's figures regarding take-up. I realise that an unprecedented number of noble Lords are present to hang on my every word. I shall endeavour to be as brief and succinct as possible.

I hear what the Minister says about the ways in which the Pension Service will work, and in particular the ways in which it will work at local level. I decline to say too much about the detail as I do not wish to stray into areas where I have a conflict of interest.

The Minister used the word "entitlement". Based on the Government's previous research on income support, the more a benefit is seen as an entitlement, the higher the claims are. The way in which the Pension Service operates must reflect "entitlement". If it does not, it is an expensive and wasteful exercise.

I could stray into a number of other areas, but I shall not. However, I want to raise a point about language and about black and ethnic minority elders. I should like to know whether we are talking about 800 full-time staff.

Additional full-time staff.

I trust that the composition of the additional staff will reflect the pensioner population.

I still believe that it would be helpful to have on the face of the Bill an entitlement to a benefit check. However, at this stage in the proceedings, I beg leave to withdraw the amendment.

I beg to move that the House do now resume.

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

House resumed.

My Lords, before we move to the Statement, perhaps I may remind the House that the Companion indicates that discussion on a Statement should be confined to brief comments and questions for clarification.

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend Margaret Beckett to a Private Notice Question in another place on the report of the Policy Commission on the Future of Farming and Food. The Statement is as follows:

"The independent Policy Commission on the Future of Farming and Food, chaired by Sir Don Curry, delivered its report to the Government this morning. Copies of the report have been placed in the House Libraries and in the Vote Office.

"The commission was set up in August of last year in fulfilment of a manifesto commitment. I would like to offer the Government's sincere thanks to Sir Don and each of the commission members for the very hard work they have put in over a short but effective period of consultation. Some 1,000 organisations and individuals have offered their views. To undertake an exercise of this type in live months is indeed both a tall order and a considerable achievement.

"I very much welcome the report and the very valuable ideas it contains. The commission has delivered what we asked of it: a clear vision of a sustainable, competitive and diverse farming and food sector, playing a dynamic role in the rural economy and delivering effectively and efficiently the environmental outputs that society demands. We wholeheartedly support its broad analysis a nd conclusions.

"The key themes identified in the report seem to be the right ones. The year 2001 was a desperately difficult year for farming and rural communities. Foot and mouth was a catastrophe, but as the commission's report makes clear, farming's problems are wider and of longer standing. To make farming viable again, it is vital that we improve the links between farmers, their markets and their consumers, and reinforce the relationship between farming, the countryside and the environment.

"I am sure the House will understand that having just received this report I am not in a position to give a view on each of the very many specific and detailed recommendations it contains. I shall pick out key proposals.

"Reform of the CAP is, of course, our longstanding strategic aim. I am very pleased to see that the report endorses the UK Government's strategic objectives in this area.

"As the report rightly points out, we do already have some mechanisms available in the CAP which allow us to transfer CAP moneys out of production subsidies and into broader rural land management and environmental directions. Modulation is one such means, and the report makes ambitious recommendations to step up drastically the role of modulation. The Government accept that we should explore the use of such mechanisms and endorse the need to consider such shifts very serious.

"The commission notes the vital role of farming in contributing to a healthy and attractive environment. Under the England Rural Development Programme we have many schemes in place to enhance and protect the environment and the countryside. The commission's view is that we need to go further. Its proposals for a broad and shallow agri-environment scheme are timely, as we are just embarking on a major review of such schemes.

"The report makes clear that if we are to have a profitable industry, capable of thriving without production subsidy, there is a need for industry to take action to improve its own performance—for example, by cutting costs, by adding value, and by diversification. There is a role for government as a partner in, and a facilitator of, that process. But the commission says that the impetus must come from the industry itself, working within the food chain as a whole. That is why I am pleased to see, therefore, that the report proposes the creation of a food chain centre to bring together all parts of the supply chain with the aim of monitoring and improving competitiveness.

"In other areas covered by the report, such as GMs, scrapie eradication, sheep national envelopes and animal disease insurance, the commission appears to have made recommendations which very much work with the grain of what we have been trying to achieve.

"The report is clear that its recommendations are not just for government, or, within government, just for my department. But we stand ready to work with the food and farming industries as they address the challenges that they face because we need farming to succeed.

"Mr Speaker, we all need time to consider how best to proceed and to assess the report's financial and other implications. But it is our firm intention that the kind of ideas put forward by the commission will make a substantial contribution towards a new strategy for sustainable, diverse, modern and adaptable farming, integrated with the rest of the food chain and taking into account the needs of the environment and rural economy.

"We intend to launch such a strategy in the summer, when the detailed policy measures have been developed and drawn up. We will engage stakeholders across the country in that process, beginning in March, when I hope to meet leaders of the farming and food industries and leaders of environmental, consumer and rural interests to discuss how best we should drive forward the agenda set out by the commission. I shall announce further details in due course".

My Lords, that concludes the Statement.

My Lords, I thank the Minister for bringing the Statement to the House this afternoon. I am slightly mystified because he has missed out some sections that were in my report. I hope that he will forgive me if I touch on a couple of those sections. Perhaps I may share them with the House. I also remind the House of my family's farming interests.

On the report hang the hopes of all within the farming community and of those allied businesses that supply them. As the Minister said, the past five years have been dire. Farm incomes have plummeted and on top of financial disaster came swine fever and the foot and mouth outbreak. A healthy farming industry is crucial to the well-being of our people and of our countryside. Tourism was directly affected by its demise.

I add my congratulations to Sir Don Curry and to his commission members for having produced a substantial report that comes forward with 31 pages of recommendations. I accept the Minister's comment that it is not possible for any of us to absorb it in such a short time. That is the background against which we look at the report today. I shall touch on a few of the recommendations. Running through many of them is the central tenet that subsidies and price supports must go—and the sooner the better, in the view of the commission.

Sir Donald and his colleagues are clear that CAP has to be reformed, with a move to the second pillar, and that environmental schemes are to be encouraged, but they must be standardised and their administration simplified. I am sure that the Minister is aware that some farmers are very concerned about the modulation section in the report. They are anxious for it to be phased in and for time to be given to adapt. Does the Minister agree that farmers must collaborate and co-operate in the future? Is he in a position—as he touched on briefly in his Statement—to say how the Government intend to support that?

Will DEFRA accept the recommendation to lead a study into disease insurance, which, after BSE and FMD, is both essential and likely to be impossible for individual farmers to obtain? On the subject of disease—that was the part that the Minister, by mistake I am sure, missed out—will he explain why there are so few searches for illegally imported foods? Will the Government strengthen the controls and checks as suggested in the report? The Statement said:

"We have already stepped up checks".

Will the Minister explain how, where and what?

How do the Government view the report's recommendations on regulation, particularly the suggested move to a whole-farm approach? There is concern that the proposals could lead to yet more regulatory burdens. Will the Government undertake a cost analysis before new regulatory burdens are brought in for the industry? Will the Government ensure that farmers and food producers in this country do not have to comply by themselves when producers abroad do not comply with the same regulatory burdens?

The report recommends that DEFRA should devise and implement a comprehensive animal health strategy. When that is taken in conjunction with DEFRA's letter of consultation on animal welfare, does the Minister intend to pursue the Animal Health Bill at this time? I have noticed the difference between the two.

In the light of the profitability of the horticulture sector, will the Government support the report's recommendation to increase the quota for the seasonal agricultural workers scheme to 50,000 people? Are the Government minded to allow the Horticultural Development Council to engage in promotional activities?

Does the Minister agree that the red tractor scheme should be developed to be the common standard for all food produced in England? Perhaps he might comment on the fact that the report refers a lot to England and does not tend to touch on the devolved countries. Does he further agree that the red tractor scheme could also cover environmental standards and that the Government should fund the establishment of such a brand? Will the Government also agree to the recommended extra £5 million per annum for three years for processing and marketing grants? Does the Minister further agree that the rural enterprise budget should be substantially increased at the mid-term review? The big crux question is whether the Treasury will make the necessary funds available so that many of the report's suggestions and recommendations will be possible.

From the foregoing, it will be obvious that the report is wide-ranging. On this side of the House we welcome the long-term strategy on renewables. We also welcome the section on labelling. In particular, we support the suggestion for compulsory country of origin labeffing. We welcome the accent on local farm produce. We also welcome the suggestion on educating children so that they have a better knowledge of food and of good nutrition. Does the Minister support such ideas, pointing to a profitable future for an industry that is vital to our country's survival?

I remind the Minister of the recommendation on page 109, which says:

"The key objective for public policy"—

that is government policy, not farmers' policy—

"should be to reconnect our farming and food industry: to reconnect farming with its markets and the rest of the food chain"—

and so on. Over the page there is an equally important point:

"The first question we set ourselves is how we can make farming and food production profitable again, by reconnecting it with the rest of the food chain and with consumers"

We welcome many aspects of the report, but I have raised some strong questions. Perhaps we shall have a chance to debate them further tomorrow.

My Lords, we on these Benches welcome the report. I congratulate Sir Don Curry, who had to bring together an enormous quantity of evidence and submissions in a very short time and has produced a coherent report as a result. That is very welcome.

From a quick read, the report makes many excellent points. As the Minister said at the end of his Statement, it should lead to a strategy. We hope that it will not be simply another strategy that sits on the shelf and gathers dust. I should have preferred it if he had been able to come up with a government response to the report recommendation by recommendation, saying what: the Government intend to do. There are too many government strategies that are not being implemented at the moment. We do not want this area of work to be another.

Many of the recommendations are on issues that the Liberal Democrats have been advocating for some time. I shall highlight four. The section on young entrants into farming was particularly strong. With out young entrants there will be no future for farming. We were very pleased to read that section. We were also pleased to read the many practical suggestions on the environmental side. I noticed that the Minister left out the words,

"That position I fully support"

from the Statement. I hope that that was simply an oversight and not because he does not support that part of the report.

We also welcome the sections on labelling, although the recommendations could be further developed. I look forward to the stakeholder discussions on how that might take place. We also felt that the section on reconnecting the food chain was very strong. The report referred to processing units that could be developed by collaborative ventures and the expectation that RDAs should help in that. Farmers have lacked the ability to process what they grow.

I have some concerns about whether the commission has managed to define the balance between sustainability and competitiveness. We need to grapple further with that issue. Although the report comes up with many good suggestions on how the industry can be more sustainable, it still accepts the validity of the argument for growing food cheap and shipping it far. The report challenges that notion a little when it addresses the issue of animal transport, but it does not present a long-term view. Although it describes a 30-year plan for food and nutrition, it does not say whether, in the next 30 years, it will be sustainable to ship food over long distances, thereby consuming fuel oil. We should address that issue further.

I hope that the Government will give us a debate in their own time so that we can discuss in detail the 100 recommendations. As the Minister said again in his statement, the issues go beyond DEFRA itself. I therefore particularly welcome the fact that the noble Lord, Lord Hunt of Kings Heath, is in the Chamber. Tomorrow, in our Liberal Democrat-initiated debate, I look forward to hearing his response to the report.

The need to change farming habits and the subsidy system are two major challenges. Moreover, as the report says, it will take a very long time to change the eating habits of a lifetime. Changing those habits may take even longer as they are not affected by a subsidy system.

We certainly accept that CAP reform is badly needed, and we have long called for it. However, the United Kingdom Government themselves could do much to address the issue before full reform is achieved. In view of all the report's good suggestions, is the Minister content with the speed with which the shift is being made from the first to the second pillar? Under the CAP rules, the United Kingdom could spend up to 20 per cent of subsidy on the second pillar; historically, we have spent far less. I hope that the Government will consider moving much closer towards that level. The report's suggestions, without the money to back them, will remain as just good ideas. We welcome the report, but we also look forward to the Government acting on it.

My Lords, I very much welcome the positive response from both Front Benches to the report's general tenor and main outline. As for the Statement that I made, as opposed to that which both noble Baronesses have in their hands, I read out the Statement as it was delivered in the other place by my right honourable friend. The remaining text represents the Government's position on the report, and it would have resulted in a rather longer Statement.

I should clarify one or two matters and perhaps thereby clarify the report's aegis. It is a report on farming and food in England. Although development and pursuit of policy in Europe also is a matter for the UK Government, and is touched on in the report, we shall be consulting very closely on it with the devolved administrations as they may have marginally different views. We have to take that into account. The Government also have to consider both the process and all the detailed recommendations. Additionally, we have to consider the financial implications and the timing. Later this year, we have to engage in very substantial and difficult negotiations on the mid-term review of the CAP and on the longer-term changes to the CAP. The report refers to those changes, and it broadly concurs with the UK Government's objectives in the negotiations.

One of the reasons that we gave the commission a relatively tight timetable was to ensure that we had the clarity of its recommendations, and were able to assist it, in time for the coming spending round, which will end this summer. During that round, we wanted to be able to take into account the full conclusions on the consequent financial commitment. We are therefore saying that the final strategy for English food and farming will be produced in the summer, when we have the final results on the spending side.

Like others, the noble Baroness, Lady Byford, picked up on the point that the key objectives and recommendations particularly for farming can perhaps be summarised in terms of "reconnection"—reconnection with markets and consumers; reconnection with the food chain in a positive, constructive and profitable way; reconnection with the countryside and the environment; and reconnection with the rural economy as a whole. The interconnection between farming and food was made very evident during the foot and mouth epidemic.

All those factors are part of the report and are interrelated. However, I do not think that there is, as the noble Baroness, Lady Miller suggested, a conflict between sustainability—which is the keynote of the report—and profitability. Profitability is part of sustainability. We shall not succeed as a food and farming industry unless profits can be made in the industry and unless the industry has a prosperous future. Environmental sustainability—which was a very important part of the report—economic sustainability and social sustainability, to which the noble Baroness, Lady Byford referred, are all objectives that have to be taken into account.

The noble Baroness, Lady Byford, mentioned various points of clarification. Perhaps the key issue—and the one that has proved most controversial outside this House, in contrast to the general welcome for the report—is modulation. Modulation is the mechanism that already exists in the CAP to transfer from the first to the second pillar. I appreciate that farming organisations have some concern about it and that traditional methods of subsidising farming will be reduced to the extent that we adopt the modulation proposals.

The Government have some difficulty with the modulation proposition in that, under the rules, the money can be spent on only a relatively small range of expenditure. If we are to go for the report's recommendation of 10 per cent and beyond, it will be necessary to discuss with the European Union and our colleagues the need for greater flexibility in modulation. Therefore, in principle, we support the modulation system and the type of targets outlined in the report. However, we shall need greater flexibility in order to use it effectively.

The noble Baroness, Lady Byford, also asked how the Government would support farmers during that process. Many of the report's detailed recommendations on advice, support, marketing and processing require the Government's consideration. Broadly speaking, we accept the general direction of those recommendations.

The noble Baroness also asked about disease insurance, which is a very important and complex issue. Today and later this week, the department is discussing the issue with insurance and farming representatives.

The noble Baroness asked about imports. There is clear concern about the effectiveness of import controls. I have just three things to say on the disease implications of illegal imports, and I have said them to the House before. First, I recognise that, as the report says, more needs to be done. We are addressing the issue in both European regulations and our own enforcement.

Secondly, quite a lot has been done to increase the number of checks of commercial goods in containers and of checks at airports. However, I think that more needs to be done to inform the travelling public and on checks and enforcement. There may also have to be greater co-ordination between the various agencies. I hope to make some immediate proposals on that issue.

Thirdly, in containing the spread of disease, import controls and checks are no substitute for effective biosecurity and effective restrictions and movement controls. Even countries that have very tight import checks and controls still have occasional incursions of disease. The point is that, regrettably, those countries are able to stop the spread more effectively than we were able to do in the past months.

The noble Baroness, Lady Byford, also raised the issue of regulation. Broadly speaking, the Government are very much in favour of the commission's recommendations on moving towards whole-farm forms of certification and a much broader basis for regulation, rather than a multiple and cumulative range of regulatory authorities that farmers have to deal with. It is a more holistic approach. Although it is difficult to get there from here, we agree with the objective and shall pursue it.

The noble Baroness also asked about the Animal Health Bill. I intend, for immediate purposes, to pursue the Bill in this House because we need those powers should the disease regrettably recur for one reason or another in the coming months. Although there is the longer-term issue of animal health and animal diseases, and the parallel issue of the broader rationalisation of animal welfare procedures, the Animal Health Bill is needed now—as the noble Baroness will have heard me say on Second Reacting.

The noble Baronesses, Lady Byford and Lady Miller, supported some aspects of the commission's work. Certainly the recommendations on new entrants are important and need to be developed. I fully support the general direction of recommendations on the environmental side, despite the fact that I did not read them out. Labelling is an important issue. The issue of support for the industry in terms of processing grants and so forth is also important. As regards seasonal agricultural workers, the figure of 50,000 is perhaps one we would have to consider. We have already had one increase in the seasonal agricultural workers quota and we are considering a further one. That will, of course, also be the subject of an announcement by the Home Office in relation to managed migration for non-professional jobs more generally which will be made relatively soon.

There is much that is positive in the report and there is much that we need to continue to debate. My noble friend Lord Hunt will deal with some of the issues in the broad ranging debate to be initiated by the noble Lord, Lord Clement-Jones, tomorrow. No doubt we shall return to these issues at a later stage when we have engaged with the stakeholders and during the process of coming up with our strategy for what I hope is a sustainable, prosperous, environmentally sensitive, safe and nutritionally effective policy for food and farming in general. This is a very, very good start. I again thank the commission and I thank the noble Baronesses for their broad support.

My Lords, will my noble friend, whose general approach I applaud, say something about the report's remarks on closer liaison between the farming industry and consumers and the role that the Government will play in that regard? Will he say something about the co-operation that is now envisaged with regard to the devolved areas, particularly in relation to subsidies and the environment? Finally, what role does he envisage—perhaps it is too early to comment on this—should be played by the Government as regards environmental payments?

My Lords, many recommendations in the report indicate ways in which the Government can help in bringing farmers in closer touch with consumers. One of the problems with the present subsidy process is that it distorts price signals and market signals to which farmers relate. We believe that a more direct and a more business-like approach, if you like, to farming and its output and also to relationships within the food chain is important. Suspicions and distortions result from the food chain being so extended and remote. particularl in certain sectors. The Government will help the industry to address those problems through the proposed food chain centre. We need to co-operate not only with the industry but also with the devolved administrations in our response to the report.

As regards environmental payments, clearly one of the considerations for the Government to develop in negotiation with the European Union is how exactly we can shift from pillar one to pillar two and the nature of the environmental support that we intend to give. The commission suggests that we should have a broad and shallow entrance level for agriculture to meet basic and important environmental standards. That seems to us sensible. Many current agri-environment schemes need rationalising both as regards their scope and their bureaucracy. It is a complicated matter bat I believe that the commission has it broadly right.

My Lords, I am a farmer in partnership with my elder son who is the working partner. I am grateful to the Minister for repeating the Statement but I am concerned about it. Like most noble Lords, I read it quickly and 1. am riot able to discuss points that no doubt will arise on food, retail supermarkets and the like.

However, as regards farming, I found it unhelpful. The prospects for farming, which is going through a bad time, are conditional upon making fresh terms as regards the CAP. I believe that the noble Lord referred to the year 2002 in that regard, but it is clear in the commission's report that no progress at all will be made before 2005 or 2006. Without serious alterations to the CAP, the scheme to strip farmers of more subsidies—I refer to the modulation payment and moving from one pillar to another—will only worsen their position. I find that extremely depressing.

The Minister also referred to various provisions for better business training. I do not think that farmers want to be faced with further bureaucracy. During the foot and mouth crisis they suffered immensely from the amount of form filling that was required. The form filling that was required in order to move stock about was quite terrifying. The document referred to trade associations being formed or merged. The NFU used to be feared by Labour governments. Indeed, it is still powerful. I hope that it will exercise its power well in proposing amendments to the commission's proposals.

My Lords, I am sorry that the noble Lord made those comments with regard to the NFU. I regret that the NFU has in part rejected a major part of the report. I believe that constructive discussions with the NFU and further consideration will persuade it that, at least in outline, there is much in the report that will help its members and the future of farming. We shall listen to it but it is noticeable that the NFU is the only outside organisation which has condemned a significant part of the report. I accept that it will have problems as regards modulation. I have said that the Government will also have some problems with modulation in its present form. We need to find a way of achieving what the report's objective as regards modulation attempts to achieve. I hope that we can do so in conjunction not only with the NFU but also with the other elements within the food chain.

The commission's proposals seek to put more money into farming, land management and the rural economy than is the case at the moment. I say that cautiously as that has to be considered in terms of the spending review and we must conduct our own internal negotiations. However, on the basis of the report, no farmer should fear that less money will be allocated to the economy with which they are concerned. However, the nature of it will change. Instead of having distorting production subsidies, the subsidies will increasingly be directed to man management and the delivery of environmental objectives. Over and above that, the ultimate objective is that farmers should operate as any other business. I believe that that is a desirable outcome for most farmers.

My Lords, I again declare my financial interest as an organic farmer with a dairy herd. Given our climate and our efficiency at producing grass, I find it surprising that the Statement says nothing whatever about self-sufficiency in milk and milk products and the need to balance imports and exports. I also find it strange that there is not one single solitary word in the Statement about organic farming, although it is mentioned in the report's recommendations. Are the Government aware—they must surely be—that at the present time 70 per cent of the growing consumption of organic food is imported? Would greater emphasis on that sector not help to reduce cereal surpluses, to increase biodiversity and to provide the sustainability on which everyone is so keen at the moment?

My Lords, the noble Lord will find that a substantial part of the report deals with organic farming, additional support for organic farming and other measures to increase environmentally sensitive farming. Therefore, organic farming is picked out as an area which deserves further support. As regards targets for self-sufficiency, Sir Don Curry made it clear that that was not an appropriate matter for the commission to consider. We are dealing with a global, competitive environment. However, we obviously believe that the steps that the report recommends the Government to take would lead to a high proportion of our food being produced by British—or, in this context, English—sources. It is therefore not sensible to have a Stalinist plan stating that 79.3 per cent of our production should be for our own consumption. The plan gives to the farming sector and the food chain as a whole the ability to provide good, safe, nutritious food for British consumers. Its ability to meet that is, in a sense, up to it and not a matter for government.

My Lords, I have to declare a very peripheral interest in that I am the tenant of a farmer, who farms the farm that I used to farm for 35 years. I now rent my house from him, so I have an interest in that I live in the middle of the farm.

I hope that the old politics of agriculture will not squash the report and make it impossible to move in relation to it. There is much vision in it. For the first time, it looks in the round at the whole question of the way in which we grow our food. There is much in it on which I hope we shall move forward.

I say to the Government that everything depends on their moving forward in relation to the CAP. Most of what is suggested in dependent on the CAP being changed. Modulation will help a little. We know that there are problems for everyone in that regard; that approach involves flexibility in one area. It is very important for the Government to press on in this context and to stop prevaricating when they meet our friends in Europe.

The situation with the devolved administrations is rather strange because the remit did not say that only England was involved. However, the report states on many occasions that it is talking about England. Obviously, the CAP, supermarkets, the food chain and disease relate to the whole of the United Kingdom. It is extremely important for the Government to get the devolved administrations to look very seriously and imaginatively at the report; they should do so now, rather than wait, and begin talking with the Westminster Government about what they will do. This is a UK matter. I beg noble Lords not to be so negative about the report that we do not get anywhere.

My Lords, I welcome those remarks. It is important for us to engage the devolved administrations, who have produced their own government strategies. There may be differences between our approaches because there are different types of farming in different parts of the United Kingdom.

We must have an approach to the CAP that suits all parts of the UK. Reform of the CAP is key in that regard. To be realistic, we shall probably begin to negotiate the mid-term review after the French elections later this year. In that timescale, we shall begin to address the longer-term changes in the CAP, which will come into effect after 2006. In terms of changing the direction of the CAP, this is a crucial time, in view of internal pressures and the pressures from enlargement and the World Trade Organisation agreement. The next two years will see an enormous amount of intensive negotiation on the CAP. That will very much be a government priority.

My Lords, the Minister will be aware of my interest in food and health. Chapter 5 of the report has some extremely useful recommendations. In fact, they are so good that they could form the basis of—but not the complete policy towards—a national food policy.

The report promotes one rather nice scheme in particular, which is called the "Food Dudes Programme" and which is intended for schools. The report states:

"The programme has two main elements: video adventures featuring hero figures called Food Dudes, who like fruit and vegetables and provide effective social models for the children to imitate: and small rewards (stickers, notebooks, pencils) to ensure that children begin to taste the foods".

The report contains another interesting recommendation. It states:

"We note … that the scheme will demand 1.5 million tonnes of fruit",

for the school fruits scheme,

"which English farmers are well-placed to provide. We challenge the industry to rise to this challenge".

The Government need to give the industry some help in that regard. Fruit production in this country has suffered greatly from imports from the EU and other parts of the world, and many of our orchards have now been grubbed up. The industry will need quite a lot of encouragement to replant and increase production of the sort of fruits that children like.

I appreciate that that is a question partly for the Department of Health and partly for the Departrnent for Education and Skills but what are the Minister's thoughts on how to encourage farmers to grow more fruit?

My Lords, the recommendations on health and healthy eating, particularly in schools, are an important part of this whole jigsaw. My noble friend Lord Hunt reminded me that he recently launched the "five free fruit" scheme—I believe that that is its name—in the West Midlands. It is important that part of the education commitment and the public sector commitment generally should encourage better eating. If the programme is rolled out and generalised, as the commission recommends, there will be a steady, positive and large potential market for English fruit growers. That is the biggest incentive for orchards marginal orchards—to reconsider their targeting and marketing. Perhaps more importantly for the long term, if we get children eating the amount of fruit that the Department of Health schemes intend them to eat, they will continue that habit for the rest of their lives. To plant an orchard for 40 years is a pretty good investment.

My Lords, I welcome the report, but time is not on the side of the Government or the commission. Perhaps I am influenced by my constituency experiences—my constituency in the west country contained a large number of traditional family farms. The most difficult meeting that I had last year was with a constituent farmer, who asked me to come and see him, his wife and two sons. He asked whether there was a future in farming. I could not honestly say to them—they had a 200-acre farm—that I believed that there was any future in farming.

The Government's plans and the commission's proposals depend on people. Although there is praise for the proposals about new entrants, as the Minister rightly said, sustainability means profitability, and that means a rewarding career. Unless there is an early prospect of that, there will be a rise in the number of farms that have no successor and which have not had a machine or boot on them for the past two years—I believe that the relevant figures in the report are understated. I could point to land in my constituency to which that applies; hundreds of acres have simply been abandoned because it was not worthwhile continuing. The greatest challenge that we face is that of trying to maintain the industry's morale while these sensible changes are introduced.

My Lords, I partly agree with the noble Lord—this matter is part of the challenge that we have to address and the future of relatively small farms is an important part of the jigsaw. Some people have reacted by saying that all of our schemes would prejudice small farms. In fact, the shift to environmental land management support might benefit many of the farms to which the noble Lord referred.

Having said that, there is no doubt that farming is going through a period of change and that there will be some restructuring. Some farms will merge and some will drop out. The proposals give there the prospect of a longer-term support system, which the public in general and—probably—governments of all parties would continue to support. The present system of support for such farms, which involves production subsidies, has a distorting effect on the market and on consumer prices. That does not have political support in this country or in a large part of Europe. That is why we have to negotiate our way out of the arrangements.

One of the benefits of successfully improving the CAP would be that at least some of the small farms would have a more sustainable future. I cannot guarantee, and the Government do not attempt to reassure, everybody that they will be here in four or five years' time. However, if we take a 10-year timescale there is a positive future for such farms and a real future for the industry as a whole.

My Lords, one passage in the Statement which the noble Lord did not read is:

"Where we need to regulate, we should seek to do so in better and smarter ways which take account of the burden of regulation upon those on whom they fall".

Although he did not repeat it, I am very relieved to have heard the noble Lord say to the Front Benches that that is part of government policy.

However, does he recognise that it is wholly unrealistic and, indeed, depressing and frustrating for farmers to be told that they must become competitive when the supermarkets to which they seek to sell can buy food much cheaper from places overseas which do not have the same regulatory controls and standards? What are the Government going to do to compensate farmers for the additional burdens that they have to bear by reason of regulations in this country which do not apply in countries which grow similar food and export it to us?

My Lords, I accept that much of the way in which we regulate and enforce regulation in this country presents a burden to farmers both in terms of time and, consequently, expense. On the other hand, I also believe that in the UK and in Europe as a whole there is likely to be a continued demand for regulation on safety, environmental and animal welfare issues. Our aim is to rationalise the system of enforcement and regulation.

However, to talk of compensation, except in very specific circumstances, seems to me to be looking backwards and to be an example of the problems which governments have in relation to farmers. The farming lobby has frequently come to us for money following every little jib and jab of change in circumstance when really it should be looking to the bigger picture. I believe that the leaders of the farming unions accept that.

This is a framework for a bigger picture, and we do not want to return to the situation whereby farmers look for a couple of hundred pounds here and a couple of thousand pounds there. We are looking to a longterm, constant and sustained framework within which farmers will operate and which everyone will understand. Within that, a big factor will be the reduction in the complexity of bureaucracy and in the multiplicity of the number of regulatory agencies with which farmers have to deal. That is an important objective of the Government and it is reflected in this report. I accept the implications of that.

If I mention to noble Lords that the next amendment is on the subject of polyandry, polygamy and the rest, they may be tempted to stay.

moved Amendment No. 67:

Hats off to the noble Lord. Lord Higgins, for tabling one of the most intriguing amendments in a very long time. I found it most interesting. Ever since I read the amendment, I have been racking my brains to think of a nation on earth where polyandry is a legal state. Thus far, I have not been able to find one, but no doubt the Minister has been able to because she has a crew of people who work on such matters. If I were betting, I should put my money on somewhere in Polynesia. However, I shall be interested to find out.

It is the principle that is important; one would not want to discriminate.

The noble Lord raises an interesting point. The issue appears to concern polygamous marriages which are contracted in nations other than our own by people who live here. I consider that an interesting question to have raised. I pay tribute to the noble Lord, Lord Higgins, and the noble Baroness, Lady Noakes. Throughout our discussions on the Bill they have attempted to clarify matters by drafting, and that has been extremely helpful to our debates. My understanding is that this matter is covered by existing social security law which recognises that some people who are migrants to this country were married abroad in circumstances where polygamy—by and large, it is polygamy—was acceptable and a part of their culture.

In speaking to the amendment, the noble Lord, Lord Higgins, used the word "problem". When I read the amendment, I tried to ascertain whether a problem existed. Having asked practitioners and researchers, I was interested in the fact that no one is yet sure that there is a problem or, at least, a presenting problem. That is not to say that wives in polygamous marriages do not have problems; it is that those problems are not yet being presented to authorities. It is an interesting question as to whether or not there is a problem. It would be an interesting and useful subject upon which to have some research.

Noble Lords will have heard me say before that the older population is changing, and patterns of migration to this country mean that it is becoming more diverse. There may be a problem. It is not a pressing problem yet. However, in an inadvertent way the noble Lord, Lord Higgins, has raised an interesting issue. It should not perhaps be addressed in the way in which he addressed it. None the less, it is an interesting point to raise.

I am sure that the noble Lord, Lord Higgins, would be sorry to think that his amendment was inadvertent. I am sure that he thought it was very advertent.

I am fascinated by the Committee's interest in polygamy. This is not the first time that the subject has been raised. I was looking for some help over in a certain quarter. My understanding is that Section 133 of the Social Security Benefits Act 1992, which relates to council tax benefits, also has a specific subsection relating to polygamy. Therefore, this is not entirely new. However, I understand that the noble Lord may not have that cross reference immediately to mind.

Amendment No. 67 seeks to do a reasonable thing. It looks to give equal recognition in pension credit to the custom of a woman taking several husbands as well as recognising the practice of a man having several wives. However, it is unnecessary. Polygamy includes both men having several wives and women having several husbands. The real distinction is between polyandry and polygamy. I do not know whether the noble Lord lays claim to having studied classics or Greek at school, but "polygamy" is a politically correct word, even if the practice may not be.

The noble Baroness asks where polyandry is practised, by which she understood it to mean a situation in which a woman has several husbands. She knew perfectly well that I would not be able to resist the temptation of trying to find out. Polyandry, unlike polygamy, is prohibited by law in most countries. I am told that two principal forms of polyandry exist, and they are not in Polynesia. Among the Nair people who inhabit the Malabar coast of India a woman may marry several men of equal or superior rank, known by anthropologists as the Nair family. The system also includes the matrilineal social structure, in which children are included in the mother's clan and property is inherited in the female line.

Another distinct type of polyandry is practised in areas of Tibet. In that form a woman may marry the eldest brother of a family and then take his brother also as her partner. Certainly the first form is a way of keeping property going down the female line. I thought that I would share the diffusion of useless knowledge with noble Lords.

Amendment No. 68 seeks to recognise the fact that in a polygamous marriage a person might have more than one additional spouse. Likewise, the Bill also deals with that. Under the Interpretation Act 1978, terms expressed in the singular can he taken to include the plural. So, the phrase "any additional spouse" can justifiably be read as "any additional spouses". Amendment No. 69 is more significant, however. in that it would have the effect of treating the first two members of a polygamous marriage as a married couple, with subsequent spouses treated as single people. I should like to explain to the House why we do not believe that that would be an appropriate approach to people living in such households.

We had a similar discussion on one of the other pension Bills within the memory of noble Lords, As noble Lords will know, the MIG regulations, along with those of other income-related benefits, make provision for those circumstances. Where a polygamously married household exists, a special assessment is made of the amount of benefit payable to the household. We do not know how many, but we think that we are probably talking in the order of not more than 200 households. That is based on the couple rate of benefit for the claimant and his first spouse, and the difference between the couple rate and single person rate of benefit, which is payable for each subsequent spouse. Therefore, the second wife gets the addition of what the first wife would get to the original single person's allowance, and so on clown the line. In addition, the financial resources of each member of the polygamous marriage are aggregated. I believe that that seems reasonable and provides a basis for dealing with the situation.

A glance at Clause 12, with which the amendment is grouped but to which the noble Lord did not speak, reveals that we are dealing with the same basic structure as with MIG: an unambiguous definition of what is meant by a polygamous marriage and provision to prescribe for a non- standard amount of pension credit and aggregation of the household resources. In the light of those comments, I hope that the noble Lord will feel able to withdraw the amendment.

Before the Minister sits down, can she tell the Committee how she intends to treat unmarried polygamous family units?

I suspect that that would be blasphemous. If a person has a polygamous marriage and comes to the UK, that is being incorporated into the UK from outside. If such persons come over here as a couple and then acquire a subsequent "spouse", that "spouse" is not legal under British law and would be a mistress. There is no recognition in social security law of funding for a mistress as well as a wife for a UK resident. If I have misled the noble Baroness or in any sense cramped her or anyone else's aspirations, I shall seek to ensure that my comments are correct.

On the last point, I would have said that that is bigamy. Despite the clear explanation given by the noble Baroness, I am still unclear as to why this needs to be in regulations. I am not in the least clear about why we cannot simply put it on the face of the Bill. Presumably this is something which will not change. The noble Baroness has set this out clearly. Therefore, I would have thought that she could table an amendment on Report which puts on the face of the Bill exactly what she has just said.

I turn to the amount of state pension credit which such individuals receive. I presume that they would all have become UK citizens at this point. Will they receive state pension credit—I emphasise "state"—as a result of this legislation if they arrive in this country as a polygamous household but are not UK citizens? The noble Baroness mentioned that there are 200. Presumably that is 200 households. Will they also receive widows' pensions, for example? Once we go down that particular route, I am not sure where the matter ends.

Neither am I, given the world that the noble Lord has opened up. As I understand it, for eligibility to income-related benefits, one has to establish habitual residence in this country. Therefore, persons in this situation who have come to this country in their sixties or seventies—it is hard to work out what family permutations might be possible—might well not have a complete retirement pension record; that seems probable. They would need to pass the habitual residence test and not fall foul of refugees' exceptional leave to remain, asylum status and so forth. They might be elderly relatives of someone who is already resident here. Normally, they would have to show that they would not be dependent upon public funds. However, if they were entitled for whatever reason under the habitual residence test, they would then be eligible for minimum income guarantee. In that sense, they would receive part of the state pension credit in the form of MIG. In response to the noble Lord, it seems unlikely that they would be eligible for the savings element of the pension credit.

I am told that since August 1998 immigration legislation has prevented a polygamous wife settling in Great Britain with her husband if another wife is already in the country. Given that, the number of polygamous households in Great Britain should diminish over time.

The figure of 200 was the approximate figure we have of those households eligible to claim MIG. I find it hard to envisage circumstances, other than in a handful of cases, in which someone has a complete retirement pension—that is, that he has been here for a working life of 40 years—and savings from an occupational pension, and all of his marriages occurred legitimately outside the UK. It is conceivable. I hope that answers the noble Lord.

The basic arrangement is that for one of the marriages—presumably that to the first wife—the members are treated as husband and wife. Subsequent wives are treated as dependants receiving the same moneys. The noble Lord asked why this is being done by regulation. In the light of changes perhaps in immigration law, for example, it is conceivable that legislation might need to change in future. Having a regulation power to amplify the words in the Bill seems to me to be a wise precaution.

Given the concepts of human rights and so on, it is not impossible that attitudes and conventions and the responses of government to the treatment of polygamy may change over time. Therefore, the Government might want to revisit this matter at some unspecified date in the future. It is not wise to do that through primary legislation.

I am grateful to the Minister for that further comment. I do not want to prolong proceedings unnecessarily. This subject is rather like peeling an onion—one keeps getting more and more layers that one did not expect. The noble Baroness has now suddenly said that, since 1998, if one was polygamously married quite legally in another country, one can bring in only one wife.

I did not actually say that. I said, prevented from settling in Great Britain with a husband if another wife is already in the country. In other words, going back and importing yet another one in.

I understand. Otherwise one is slap into the Human Rights Act problems. I think that we should study carefully what the noble Baroness has said to see what further complications may ensue. If anything, the matter is more complicated than I had supposed. I am grateful to the noble Baroness, as always, for her extremely clear exposition. I beg leave to withdraw the amendment.

moved Amendment No. 70:

I can well understand the noble Lord's perplexity. It is a quite technical matter. He may see the need for the words after I have explained the matter to him.

The amendment limits the power of the Secretary of State to introduce regulations that will protect pensioners who get income support—MIG—immediately prior to the introduction of state pension credit.

Clause 13 provides for the transitional powers that the Secretary of State will require in order to provide for the smooth transfer of 1.8 million pensioners from the current system of financial support in income support to state pension credit. Subsection (1) provides the power to make transitional, consequential and savings provisions. The distinction between them is quite technical. A savings provision preserves the effect of a provision that has been repealed or amended. It is normally applied in limited cases so as to preserve rights that have accrued under those provisions.

It is essential that the Secretary of State has a range of powers available to him to introduce regulations that will enable him to transfer people from MIG to pension credit without fuss and hassle. It would be unfair on these pensioners if they could lose income because the Secretary of State had not been granted the power to protect them.

No one will lose out. It is the Government's intention to ensure that a person who should qualify for protected support under the IS scheme will not lose out from the introduction of state pension credit, and that the calculation of their new entitlement will take account of the protection they receive. We do not think that there are any such people whom we would not cover by the transitional regulations. But if there are, the power to save existing provisions will ensure that if any unforeseen issues are identified before the introduction of state pension credit the Secretary of State will be able to protect the very small number of people who could be affected. Any provisions made under the savings power would then work in tandem with any of the other arrangements for transition.

Previous social security legislation has included powers that have permitted successive Secretaries of State to protect the position of people who transfer from one scheme to another. It seems unwise to depart from this principle now.

State pension credit is being introduced to improve the financial position of many pensioners. It makes little sense to penalise some of the poorer pensioners by removing these essentially protective transitional powers. With that explanation, I hope that the noble Lord will feel able to withdraw his arnendment.

I am sure that the draftsman gave careful attention to the provision. But it seems to me that if there is not a misprint, there is a word missing. If one leaves out the transition and consequential provisions and so on, Clause 13(1) reads:

"The Secretary of State may by regulations make such … savings as he considers necessary or expedient".

It may be that he can make savings provisions, but there is no way in which he makes savings in any possible normal interpretation of the word.

The noble Lord is confusing "savings" in the form of cash savings, which is not what the matter is about, and saving an existing right or entitlement. That is the point about transitional protection. I agree with the noble Lord that the provision does not bear the conventional use of the word "savings". This is a quasi-legal term. It is a power to save for a few individuals the current rights that they enjoy. Without that power, he might be able to pick up only the people not protected by conventional transitional arrangements.

Would it be helpful if the word "legislative" was inserted in front of the word "savings"?

This is a fairly conventional clause which is put into all changes as a form of belt-and-braces safety net in case there are some instances which are not caught up by the conventional regulations which offer transitional protection. Some benefits one keeps for ever and a day—for example, invalidity benefit going over to incapacity benefit. With others one takes the people out, and so on. But one needs the extra power. The word "savings" is often used to refer to savings provisions. I can understand why the noble Lord has perhaps assumed that the term relates to cash savings. But it does not. It is about keeping those powers available.

I did not suppose that "savings" related to cash savings. It simply did not make sense. It may be a technical expression. I do not know to what extent it has ever been challenged in the courts or elsewhere, but on the grounds of clear drafting and so on, it is a remarkably esoteric and unnecessarily obscure way of putting the matter. If the provision simply wants to say that the Secretary of State may preserve existing provisions as a transitional arrangement, that would be sensible. I do not want to press the point. But it is not a satisfactory way of drafting legislation. I beg leave to withdraw the amendment.

If Amendment No. 72 is agreed to, I shall not be able to call Amendments Nos. 73 to 81 inclusive on grounds of pre-emption.

moved Amendment No. 72:

The big difference is that something like 1.7 or 1.8 million pensioners currently enjoy minimum income guarantee under social security legislation. I understand that only about 70,000 or so (if that) of pensioners who will be entitled to state pension credit pay tax. Therefore, to move all those on to a tax basis would seem to be folly.

Amendment No. 72 seeks to bring the treatment of income in pension credit fully into line with the tax system. Pension credit and its new income assessment share many of the objectives of the new tax credits, both incorporating longer awards and a simpler administration process. But we designed pension credit to suit the needs of pensioners. It is more tax-like, wherever that made sense, but we are not being driven by dogma.

Pensioners themselves are not interested in the arguments about tax-like or benefit-like systems. Most do not pay tax. They will be more interested in whether we can deliver a system effectively meeting their needs without stigma—the word used by the noble Baroness, Lady Barker—which they see as an entitlement and, therefore, have no hesitation and no obstacle to claiming. That is why we have concentrated on designing a system that effectively gives extra money to pensioners who need it most as well as rewarding thrift when we come to the savings element.

Research has demonstrated concerns about the claims process and weekly means tests. We have gone to the five-year period. The tax system and the new tax credits deal with a quite different group of people from the group pension credit has been designed to help. Unlike people of working age—those are the people the tax credits deal with—pension credit has been designed to help pensioners. Few pensioners have contact with the tax system. Pensioners' income fluctuates much less than the incomes of the working age population. Pension credit is not taxable. So where a tax-like approach was not sensible, we chose a different solution for pension credit.

For instance, the new tax credits will usually assess someone on the basis of their income over the previous year. That relates back to an earlier discussion. This approach is sensible in that context because earnings do fluctuate and vary. It could not work well for pension credit.

Another example is the treatment of capital in pension credit. In the consultation document we said that we would consider the options for reforming the system to take income from capital into account:. We could follow the tax system and take actual income and savings into account but we have listened to pensioner groups which said that pensioners would find it onerous and complex to record actual income from their savings. What is gross? What is net? We decided, therefore, on the notional rather than actual rate of return, plus the £6,000 disregard. This will be simpler for pensioners who will not have to declare precisely how much interest they have received.

Not following the tax-like approach here has also allowed us to deliver on our objective of taking many pensioners out of the capital rules—by ignoring the first £6,000 of savings. I hope that the Committee agrees that this makes better sense. When I referred to 70,000 who may pay tax, I should have said that 70,000 people may come within the new tax credit framework, not necessarily paying tax.

The noble Baroness referred to the consultation document. In that document we said that we sought to simplify and raise the guaranteed minimum income level to over £100 a week by 2003. We are doing that. We said that we wanted to replace the old pound for pound withdrawal system by a much fairer system which would abolish the savings trap. We are doing that. We said that we would abolish the capital rules and replace them with an income test more in line with the income tax system. We are not doing that, as I have said, because we listened to pensioners and pensioner groups prefer the approach that we have adopted. That was riot necessarily our first thought but it is so after consultation. That is the point of a consultation paper.

We said that we would move away from the intrusive weekly means test to a system where awards are fixed over much longer time periods. We are doing that. We said that we would reduce the income tax burden on pensioners by raising the personal tax allowances available to those aged 65 or over. We are doing that.

In terms of the consultation document to which the noble Baroness referred, we have met our proposals apart from that on the treatment of capital, and there we have moved in response to pensioners' organisations and the consultation exercise. That Is, of course, what a consultation exercise is for.

In the light of this response, I hope that the noble Baroness will feel able to withdraw the amendment.

Before the Minister sits down. will she clarify her statement about the 70,000 pensioners coming within the new tax credit framework? I should find that enormously helpful.

This relates to questions about earnings: those aged between 60 and 64 who may or may not be in the labour market. I understand that 70,000 people could get pension credit and the new tax credit. I do not have figures on how many on pension credit will pay tax. The figure could be 10 or 15 per cent. None the less, compared with the fact that 1.7 million pensioners of those we are targeting are currently on minimum income guarantee, it is a substantial number.

If the figure of 70,000 relates to the 1.9 million on MIG, how many does the Minister estimate will receive the pension credit? It is a considerably higher number.

We estimate the number receiving pension credit to be between 5.5 and 6 million in the total scheme.

Of those, how many does the noble Baroness estimate will pay tax?

I cannot give the precise figure. I cannot give a breakdown between the two. It depends on the size of the family, whether one refers to singles or couples. We think that the figure may be 10 or 15 per cent.

I cannot say that I am surprised by what the Minister said. Pensioners normally come from a working environment. They learn the concepts about how their income is taxed. The Minister seeks to create a system where pensioners feel that they can claim the pension credit without stigma. Would not it be easier if the in-work treatment of income were moved to pensions?

The pension credit feels more like a core social security benefit, with means-testing and all that goes with it, and the problems of it not being taken up rather than an extension of a pension entitlement. The noble Baroness was keen to stress that factor earlier when we referred to means-tested benefit. I believe the department is missing an opportunity.

Before the noble Baroness sits down, perhaps I may point out that, given that about three-quarters of the number of pensioners do not pay tax and that the tax threshold for those aged over 75 kicks in at about £6,200 after personal allowances, she can see the point at which the provision begins. Is the noble Baroness really saying that she would wish to bring all the other pensioners into a regime which meant that they would have to have annual assessments of their income based on the tax system?

Perhaps I may clarify the situation. In moving this amendment I did not say that I was moving toward an annual assessment. It is a separate issue as to whether one can combine the tax and benefit system at some stage where one would move to assessment on an annual basis. I am simply moving an amendment which states that how one calculates income is not by any deemed rules or putting things in or out, but one would simply use whatever the income tax system used as income. It is not the same as moving to an annual basis for assessment, but using the concept of income which has no additional need for regulation put forward by the department. There is both statute and case law about what is and what is not income.

My only point was that they are a set of concepts broadly familiar to those who have been in work and who have dealt with the income tax rules in their lives, notwithstanding the fact that when they retire many of them fall out of the tax net. I beg leave to withdraw the amendment.

moved Amendment No. 73:

The provisions in Clause 15 abolish the rules that exclude pensioners with £12,000 or more of savings from any help. As we have said, we will apply a notional rate of return of 10 per cent on any capital sum over £6,000 disregard but £10,000 for people in residential care or nursing homes. This means that 85 per cent of pensioners entitled to pension credit will see any income received from their savings ignored entirely. Ignoring the first £6,000 of savings also helps better-off pensioners; for example, only pensioners with capital above £12,000 will face effective assumed rates of return greater than 5 per cent.

The noble Lord's amendments then consider the treatment of ISAs and PEPs. I believe that in tabling these amendments the noble Lord intended that actual income and capital gains from PEPs and ISAs should be disregarded in the pension credit income and capital assessments. Achieving such an aim would make the administration of pension credit extremely difficult. For example, we would have to find a way to distinguish the proportion of a person's fund made up of interest and capital growth and how we broke it down between the two.

In addition, I believe that the suggested policy would result in complex incentive effects. PEPs and ISAs would become a more attractive investment vehicle, and in addition to distorting the financial products market, it would also make it extremely difficult for financial advisers to give clear information and advice.

The fundamental difficulty with the proposed amendments is that the Bill, as drafted, already takes no account of actual income or capital gains from PEPs and ISAs, as I have mentioned. We are only proposing to apply a notional tariff sum of 10 per cent to capital sums over £6,000. Thus the only practical way to implement Amendments Nos. 73 and 82 within the structure of a pension credit would be to disregard the whole amount of capital held in a PEP or ISA; in other words, to set the notional rate of return to zero for those savings products. As a result, capital held in ISAs and PEPs would thus be treated more favourably than savings in other vehicles.

Amendments Nos. 73 and 82, therefore, have the same practical effect as the noble Lord's final amendment on this topic. Amendment No. 83 proposes a complete disregard of capital held in a PEP or ISA in the pension credit income assessment. They would all have significant effects on both the cost of the pension credit package and on wider incentives to save in various vehicles.

Any of these amendments would result in a large initial cost in the region of £300 million, with rnany pensioners with capital held in PEPs and ISAs becoming entitled to pension credit for the first time. In addition, many pensioners with capital held in different vehicles would probably respond to this policy by moving their savings into a PEP or ISA.

Eventually, the noble Lord's amendments would thus amount to a near total disregard of all capital in the pension credit income assessment at a cost of about £1 billion per year. Moreover, the incentive to save in a pension for those who expected to be eligible for pension credit would be eroded.

We developed the provisions in Clause 15 after listening to both Age Concern, which told us that pensioners did not want the hassle of recording actual income from capital and would prefer a notional rate of return, and the Financial Services Authority, which advised that a 10 per cent rate of return enables it to give clear advice to savers about the benefits of second pensions.

Therefore, I hope that Members of the Committee opposite accept that by ring-fencing ISAs and PEPs as they suggest would not only produce very substantial costs but also deform the patterns of saving in the future. In the light of what I have said, I hope that the noble Lord will not seek to pursue the amendments.

I am not sure whether the Chancellor of the Exchequer has read the speech which the noble Baroness has just made. She said that if the amendment was accepted PEPs and ISAs would be given more favourable treatment than other forms of saving. That is the whole point about PEPs and ISAs: they are given more favourable treatment than other forms of saving. That is one of the reasons why we thought it appropriate to raise this point.

The noble Baroness said that in addition people will move their savings into PEPs and ISAs. If it is worth while to do so, they would have done so anyway. There would not be any change as far as this issue is concerned. Perhaps the noble Baroness can rebut that.

I understand the point she made as regards costs. We on this side of the House must take that into account. As regards the capital value of a PEP or ISA, I am not sure whether it is going to be the original amount put into the PEP or ISA or whether it is to be their value at this moment or whenever the Act comes into operation. If someone put £3,000 into an individual company PEP five years ago, and the value of that has decreased to, say, 50p, will he still be judged under the Bill to have capital of £3,000 when the actual value of his asset is 50p? That would be grossly unfair.

If I am wrong about this I shall obviously write to the noble Lord, but my understanding is that when income is assessed, the value of PEPs, ISAs and other forms of capital will he taken at that point to produce a notional income. If there were to be a bust equivalent to that of the technology funds and the capital value fell and as a result notional income became exaggerated, pensioners would have the right to have the assumed or putative income for those purposes reconsidered. We debated that earlier. In other words, the five-year period will apply. At the end of that five-year period. we can consider what income is being deemed.

But we are starting at the beginning of the five-year period. Let me put my example simply. Five years ago, someone had invested £3,000 in a single company PEP. Let us say that the value of that PEP is now 50p. Which capital value is to be taken into account for the purposes of the Bill?

As I said, 50p. In other words, at the point at which the snapshot is taken, the income is taken into account. Then, live years later, it is revisited. If at any time pensioners feel that it is to their financial advantage to report circumstances and to have their pension recalculated, they can.