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Lord McNair: My Lords, while the Minister is considering the helpful suggestion of my noble friend Lord Taverne, will he consider also the possibility of replacing all direct taxation with unified national indirect taxation based on primary energy at the point where it first comes into the system? That enables a basic income to be paid which would solve the problem of his noble friend.

Lord McIntosh of Haringey: My Lords, of course, we will consider anything. I believe that that suggestion first came forward in the 1950s in a book by

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I. M. D. Little called The Price of Fuel. My noble friend Lord Peston will confirm whether or not I am right on that. It is therefore a suggestion which has been around for a considerable time.

Ministerial Code: Paragraph 88

3.2 p.m.

Lord Campbell of Croy asked Her Majesty's Government:

    Whether paragraph 88, on contacts with the media, in the Ministerial Code issued on 31st July 1997 applies to unattributable briefings by Ministers' special advisers and their information officers.

The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, in order to ensure the effective presentation of government policy, paragraph 88 of the Ministerial Code requires all major interviews and media appearances to be cleared with the No. 10 Press Office.

Lord Campbell of Croy: My Lords, I am grateful to the noble and learned Lord for that reply. However, as paragraph 88 requires all media contacts by both Ministers and officials to be recorded, have records been obtained for the information of the Cabinet Minister described as the "enforcer" of briefings alleged to be undermining the positions of other Ministers? Could such rival briefings have been avoided if the removal had not been secured of the chief information officers in six departments in the first six months in office of this Government?

Lord Falconer of Thoroton: My Lords, departments keep records of contacts with media for major interviews and media appearances. A record is also kept of occasions when officials provide background briefings to journalists. It would be impractical to keep a record of all contacts, whether on the record or off the record, since some would be informal. It is not appropriate for those records to be looked at in relation to the issues referred to by the noble Lord; they would deal with the sorts of records to which I have just referred. The issue concerning the six government information officers was looked into by a committee in another place and no criticism was made of the Government in relation to it.

Lord Campbell of Croy: My Lords, does that mean that the rigour of paragraph 88 has been relaxed since the debate initiated by me on 28th October 1997 to which the noble Lord, Lord McIntosh, replied most helpfully at that time? There does appear to have been a change.

Lord Falconer of Thoroton: My Lords, there has been no change to the terms of paragraph 88 in the Ministerial Code or to the extent to which it is enforced. The requirement in that paragraph is for major interviews and media to be cleared in advance by No. 10. By their nature those interviews will be on the

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record. As I indicated a moment ago, a record is also kept of occasions when officials provide background briefings to journalists. That is the scope of the rule and it is enforced.

Committee of Selection: Select Committee

3.5 p.m.

The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Lord Henley be appointed to serve as a member of the committee in the place of the Viscount Cranborne.--(The Chairman of Committees.)

On Question, Motion agreed to.

Social Security Contributions (Transfer of Functions, etc.) Bill [H.L.]

3.6 p.m.

Report received.

Lord Higgins moved Amendment No. 1:

Before Clause 1, insert the following new clause--


(" .--(1) This Act (apart from this section) shall not come into force until the conditions set out in subsections (2) and (3) are satisfied.
(2) The first condition is--
(a) that the NIRS2 computer system on which national insurance contributions are to be held is fully operational; and
(b) that all such contributions records have been successfully installed on that computer system.
(3) The second condition is that, on the day on which an order to bring this Act (or any provision of it) into force is made, no social security benefit payments which depend on national insurance contributions records shall be outstanding for more than one month.").

The noble Lord said: My Lords, this amendment seeks to deal with matters we debated to some extent at the Committee stage of the Bill and also in the uprating order debates which we had last week. The amendment, together with Amendment No. 29 to which it is linked, relates to the problems which have arisen with regard to the National Insurance Contributions Agency's computer. In particular, it raises the question of whether or not it is appropriate, under the terms of the Bill, to transfer the responsibility for contribution matters from the Department of Social Security to the Inland Revenue.

At Committee stage I raised a number of points in this context and, as I mentioned, we debated this also last Thursday. The amendment seeks to impose conditions so that the transfer should not take place from one department to another until the department from which the computer is being transferred has sorted out the substantial problems which it now emerges exist in the department. It seems clearly inappropriate to

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switch it from one department to another and from one Minister to another without the situation having been rectified. The amendment therefore suggests that it should not be done until the national insurance computer system, which is concerned with contributions, is fully operational; until all contribution records are fully installed on the computer; and until the payments as a result of those contributions are not more than one month in arrears.

Amendment No. 29 is somewhat similar but in a simpler form. It simply seeks to delay the date when the transfer takes place in order to give the Government an opportunity to put right what is obviously a serious situation.

I should begin, as on many previous occasions, by declaring an interest since some of these matters are related to pensions and I am a chairman of a company pension fund. Furthermore, I want to express our thanks to the noble Baroness, Lady Hollis of Heigham, for the courtesy she has shown in replying in correspondence to a number of points raised at Committee stage. It may be helpful to get some of those points on the record. Two in particular are quite simple.

First, confusion arose--largely as a result of my misunderstanding of the situation--as to whether the responsibility for these matters would be transferred from Department of Social Security Ministers to Inland Revenue and Treasury officials. The noble Baroness rightly pointed out that that is not so. "Treasury" in this context means the Lord Commissioners of the Treasury, which includes the Chancellor of the Exchequer and other Treasury Ministers. Incidently, it also includes the Whips. Whether they are qualified to deal with these matters I have some doubt; nevertheless that is the situation.

Secondly, the Minister gave an assurance, which I think is important, that, because the laws affecting the Inland Revenue are different from those affecting the Department of Social Security, no one will be made a criminal retrospectively as a result of these changes.

We want to clarify a number of points. Last Thursday, in Committee, I posed a series of questions. With her customary expertise, the Minister was able to reply to some of them on the spot; others remain outstanding. First, what is the situation regarding this computer in relation to others? If I understand correctly the Minister's answers so far, she is saying that this particular computer has gone down but that that does not affect the Inland Revenue's computer, or that for social security benefits. The Minister pointed out that that affects only half of the total expenditure of the Department of Social Security. If I understand the situation correctly, it follows that the other half--that is, half the social security benefits being paid--is apparently affected by the breakdown of the computer. The Minister shakes her head. I based that point of view on what she said in Committee. No doubt she will want to clarify the matter. We need to be clear about the exact relationship between the various computers.

Secondly, we need to be clear about when the computer went wrong. I understand that it was last June. However, we are not in the least clear about when the

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Government expect it to be put right. Meanwhile, there are considerable problems. People who might otherwise have expected to be paid pensions or increases in their pensions do not know where they stand. One of the reasons why we on this side of the House believe that the matter should be sorted out before the computer is transferred--indeed, before the functions of the Contributions Agency are transferred--is that we are concerned not only about whether the computer is wrong but also about what is being done to tell people what is happening. When I raised that question in Committee, the Minister said, "Well, there's a problem there: we don't know who the people are because the computer has broken down". That becomes a circular argument.

Although, as I understand it, the department has a helpline and it is possible for people to ring in, nonetheless no proactive attempt has been made to tell those affected what is going on. If I am mistaken on that, no doubt the noble Baroness will correct me. Some people are told that if they have problems, they can go on income support. Apparently, that is on a different computer. At least they will have that fall-back position, but clearly it is not satisfactory.

That brings me to the question not only of the number of people affected and the amounts, but of the particular groups. If I understand correctly, people who are already receiving their pension are not affected. However, people who are about to receive their pension but are not yet in receipt of it are not affected. Those affected also include those who asked for their pension payment to be deferred from one year to another. They receive a somewhat higher pension if that happens. However, having asked for their pension to be paid (having earlier deferred it), they may find that it is not paid for some months.

That, in turn, raises other issues. If they have not been paid, do they receive the uprating which we debated last week? In particular, are they to be compensated? I understand that they will receive a degree of compensation. It would be helpful for those people and the public at large to know what the compensation will be. How much will it amount to? Will it be taxable? To what extent will the rate of interest which will apparently be paid by way of contribution, because people have not been paid the pension to which they are entitled, compare with the rate of interest which the Inland Revenue charges those who do not pay their tax on time?

One associated problem is that people will not know whether to include on this year's tax form the increase or pension they were expecting or whether to wait until next year to include that information. Given the stringent way in which the self-assessment system has been introduced, I do not think that it is fair for people to be penalised for simply not knowing. What information has been given to the public about that?

The situation overall gives cause for concern. As far as the pure mechanics of the issue are concerned, I understand that the Public Accounts Committee in another place will probably take evidence today on the matter. However, we are concerned with a broader issue.

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Given that this situation has arisen, to what extent are the Government taking appropriate action both to compensate those affected and to ensure that they know what is going on? Until this is sorted out, there seems to be a strong argument for saying that it was not appropriate to go ahead and switch the whole system from one department to another.

Broadly speaking, that outlines the purpose of the amendments. As I have said, the alternative amendment to Amendment No. 1 is Amendment No. 29, which says, "Let's give it a year or so, by which time things will, we hope, have been resolved". It is important that the matter should be put right rather than put right fast or not put right because of the hurry. For those reasons, I beg to move.

3.15 p.m.

Lord Goodhart: My Lords, I rise to support the noble Lord, Lord Higgins. According to reports on the "Today" programme on Radio 4 this morning, people are losing up to £100 per week in SERPS. If that is remotely true, it is extremely worrying. It is clear that people are losing at least some benefits to which they are entitled. It would be useful at this point to hear from the Minister what action the Government intend to take to put right the problems with the computer. How long is that expected to take? What compensation will be paid to those who have suffered as a result of the problems?

Without suggesting that the amendment is an appropriate way of dealing with the problem because as an amendment I would not support it, it seems to me to be a useful way of raising the issue for discussion. I hope that the Minister will be able to make a statement which will, as far as possible, satisfy our concerns.

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