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Lord Ezra: Will the Minister kindly elucidate on what he said about empowering the courts to take pensions into account? If the courts were to decide that a fair and equitable allocation of the assets in divorce involved the splitting of the pension, could that be done without jeopardising the tax position?

Lord Mackay of Ardbrecknish: I am not sure that that would be possible within the rules of pension schemes as they are currently constituted. In a way, that is the second part of the problem which we are trying to address this afternoon. The first part, as I have already explained to the Committee, is to ask the court to take such matters into account. The second part is what I am trying to persuade the Committee is a more difficult problem. The difficulty is not the valuing of the pension which, as I explained, is comparatively easy; the difficulty is how one sets about splitting it. The existing position is difficult: it depends on the kind of pension. As was mentioned, a case is currently before our noble and learned friends in their capacity as Law Lords. They are examining a case on the just division of the pension on divorce. So it depends on the pension arrangement whether the pension can be split.

Lord Harmar-Nicholls: My noble friend left vague exactly what he will do on Report, but he used a usually significant phrase at this stage in the examination of a Bill. Arguments have been made on various facets and when, from the Dispatch Box, a Minister says that he

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will do something at Report stage, it gives an indication that the point has been made. Will some action be taken on this Bill or will my noble friend talk to his noble and learned friend merely about what ought to be done in the future? The Minister said that certain things were better carried out in primary legislation. What does he mean when he says that he will give it consideration at Report stage?

Lord Mackay of Ardbrecknish: I am trying to be as clear as I can. I said that the question of dividing pension rights on divorce would be better dealt with in primary legislation because, whatever Members of the Committee might say, it is an extremely complex area.

The second point I made was in response to the argument that the position in Scotland is different. The Scottish courts are obliged to take pensions into account. I said that my noble and learned friend and I would consider whether or not the Matrimonial Causes Act 1973 could be amended so as to place greater emphasis on the need for pension rights to be taken into account by the courts in England and Wales when they are considering financial provision on divorce. We shall also give consideration as to whether or not a power should be taken to prescribe a method of valuing pensions on divorce. Those are the two points which I made. I wish to make clear, before anyone else jumps up, that we are talking about provisions during the course of the Bill.

Baroness Seear: The noble Lord has still not dealt with the point I made, which was raised by the noble Lord, Lord Boardman. What is the use of doing all those things unless we clear the matter of whether pensions can be split? One cannot value the assets, including dividing the pension, if the Minister is saying that, with the present state of the law, the pension cannot be split. Surely that is the position and the point could be dealt with in the Bill. Alternatively, is that a matter which the Minister says will be dealt with in an amendment to the Matrimonial Causes Act 1973, to which he referred?

Lord Mackay of Ardbrecknish: I thought I was being careful, I was trying to make a distinction between two different problems. In some cases, as I explained, pension rights can be split. The point about bringing forward legislation, as I was requested to do in the amendments of both noble Baronesses, is that it would be wiser, in the Government's view, to wait until we hear the detail of the research to see how it works out in practice. Then we shall see how to resolve some of the problems. I can assure the noble Baroness that it is an extremely complex area where we are dealing with the relationships between people. Whatever anyone says, that normally ends with a fairly bitter and acrimonious exchange.

As regards the difference between the law of England and that of Scotland, raised by some Members of the Committee, at the risk of repeating myself I point out that my noble and learned friend and I will look carefully at whether the Matrimonial Causes Act should be amended so as to place greater emphasis on the need for pension rights to be taken into account by the courts.

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I know that that does not answer or resolve the second part of the noble Baroness's question, but I believe that it goes some way towards resolving the first part.

Baroness Hollis of Heigham: I am still not entirely clear; I am sure it is my fault. Is the Minister saying that, although he would be willing to support consideration of strengthening the rights of the courts to take pension assets into account, if the only way those pension assets could be taken into account is by dividing them, he will not empower the courts to do so?

Lord Mackay of Ardbrecknish: I would not have put it like that. I would use much more sensible and, dare I say, neutral phraseology. We propose to ascertain whether the Matrimonial Causes Act 1973 should be amended so that greater emphasis is placed on the need for pension rights to be taken into account by the court, as well as the valuation of the pension rights, so that the court has a method of deciding what value to place on them.

The second part of the noble Baroness's question deals with how the pension right is split up. On a number of occasions I have acknowledged that this issue is extremely complex. My recommendation to the Committee is that we await the outcome of the research project to see how the issue is dealt with in the courts. When Parliament returns to the matter, as I have no doubt it will, we shall be in a far better position to make sensible law that will last for the long term.

4.30 p.m.

Baroness Lockwood: Nothing is being conceded. If the Minister agrees with his noble and learned friend to bring back an amendment at Report Stage and the courts are asked to take pension provision into account but there is no capacity to divide the pension that leads us nowhere. There may be no other assets that can be given to the spouse who has nothing to compensate her for half of the pension rights.

There is unanimity throughout the Committee. I have never known this Chamber so united on an issue. What could be established after this debate is the principle that we accept that pension rights should be divided on divorce. All of us accept that it is not an easy matter; it is complicated. But a timescale could be laid down in the Bill which would enable the Government to take into account the research that was mentioned as well as other research already carried out. The Government could take into account the experience of the Scottish courts, which are already required to take pension provision into account. Later, at a determined date, the courts could implement the principle for which the whole of this Committee asks. I do not see any need for us to wait until further research is before us. We all know that we support the principle of division on divorce. It is now a question of working out the mechanisms. That could be done between now and a commencement date which could be included in the Bill.

Lord Mackay of Ardbrecknish: I think that the noble Baroness invites me, as I said earlier, to propose to the Committee a Henry VIII clause, or clauses, of very considerable proportions to allow us to do

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something in a month or sometime next year the detail of which is at this time not very clear and which will be left to the good sense of the Secretary of State. I normally try that argument about matters which are—dare I say?—of much less importance than this. Your Lordships are very sceptical of that argument. I would be reluctant to advance it even in such a good cause.

As the noble Baroness pointed out, we are all agreed that there is a very real problem here. I should like to think that I have gone some way to alleviating people's fears that the courts in England and Wales do not take pensions into account—there is no evidence that they do not—and some way towards ensuring that they do take them into account by way of a "first step". I have little doubt that we shall have to return to the issue at some stage in the future once the research project is complete and when we see clearly how to proceed.

The noble Baroness mentioned a proportion of 50:50. It may not of course be 50:50. One has to go into much more detailed propositions—

Baroness Hollis of Heigham: The courts decide the matter.

Lord Mackay of Ardbrecknish: I am being told from a sedentary position that it is for the courts to decide. It is up to Parliament to make clear that it puts on the face of legislation what it intends should be done in circumstances such as these. This is a very difficult issue. The suggestion is that there will be two willing parties in the splitting up of pensions on divorce. I do not believe that any Members of the Committee live in such an unreal world as to believe that that is the case—

Lord Wolfson: Will the Minister keep in mind the position of a partner in the event of remarriage when deciding what recommendation the House will give to the courts on the division of the pension?

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