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Earl Russell: I received this morning a vigorously expressed letter from a constituent of my honourable friend Mr Rendell. After expressing his gratitude to my honourable friend for the work that he has done on this issue--that praise was deserved--he pointed out that he does not have sufficient earning years left to be able to put right the mischief caused by this misadventure. That constituent feels strongly that he has been deprived the opportunity to make adequate provision for his spouse. He has hit the nail on the head.

Fortunately, we have an agreed body of facts. There has been misinformation under both governments. We on these Benches will not attempt to turn inferior opportunity into a claim of superior virtue. Whatever the causes may be, they are fairly deep-seated and institutional and must not be blamed on the faults of any one particular party. Therefore, I hope that, when the Minister replies, she will not suffer from an attack of the pot and kettle disease. We have a problem and we are all responsible for trying to find a solution.

We have tabled our own amendment on this point that is slightly more far reaching than that of the noble Lord, Lord Rix. However, as I am sure the Minister is about to remind the Committee, our proposal is a good deal more expensive. We naturally prefer our amendment, but, were the Minister to be minded to accept the amendment of the noble Lord, Lord Rix, we will remember that the principle that half a loaf is better than no bread is an extremely good political principle. In any event, I think that the noble Lord's amendment provides a good deal more than half a loaf.

The noble Lord referred to an opinion that he has obtained through Age Concern about the implications of the European Convention on Human Rights. That opinion is quite far reaching because it suggests that the Government do not have the option of doing nothing. If they do not take action in response to parliamentary pressure--as any responsible government should--they will find that they are forced to do so by international judicial action.

The first point of the opinion is that the entitlement to SERPS constitutes possession within the meaning of Article 1 of the first protocol. I do not think that Ministers are in a position to object to that because the European Commission has already ruled on the matter in another case.

The second question is whether the entitlement to the spouse could be seen as a possession of the contributor. We should note that that concept of possession arises from the contributory principle: an entitlement exists because contributions have been made. The Commission of the European Court of Human Rights has also ruled that, because contributions have been made, an entitlement to the spouse as well as to the contributor arises.

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The only further question that must be decided is whether the change has a legal basis and has been made sufficiently accessible. We are in no doubt that the change has a legal basis: it is definitely intra vires for an Act of Parliament to do what this legislation will do. However, it is equally clear that the change has not been made sufficiently accessible. I cannot imagine that any Minister--least of all one who pays attention to evidence, and this Minister is famous for that--could possibly be in a position to deny that. If the change has not been made sufficiently accessible, compensation is payable.

The rule is a good one: settle now or pay later. I hope that the Minister will choose the first option.

3.45 p.m.

Baroness Hollis of Heigham: Like Amendment No. 73A, which we discussed a week ago, these amendments relate to the provisions for reducing the value of inherited SERPS. We discussed this matter fully towards the end of the last Committee day, and the amendments were grouped originally because they deal with the same issue. However, your Lordships have chosen to ungroup the amendments, so I hope that I will be forgiven if, as a result, I say the same thing three times. The situation has not advanced since the previous Committee day and the last amendment that we discussed on that occasion. I must admit that I think most of the speeches made today were virtually the same as those delivered on the previous occasion. So I hope that the Committee will forgive me if I cannot advance the argument much further.

Earl Russell: I hope that the Minister will exempt me from that comment. I relied in my speech on an opinion that I had not even read the last time that we discussed this matter.

Baroness Hollis of Heigham: As always, I am happy to extend an exemption to the noble Lord.

The intention of the amendment moved by the noble Lord, Lord Rix, is to phase in the reduction over a period of time. His formula is complex and is intended to compensate fully those who paid employee contributions between 1978 and 1986 and to compensate partially those who paid contributions from 1986 onwards.

All noble Lords--including the noble Lord, Lord Higgins--accept that the changes to inherited SERPS were not handled well. The Government and I are certainly aware that many people are very concerned--and rightly so--about the reduction and the misleading information that some have received. We are considering that issue very seriously. However, as I said when we discussed the previous amendment, the costs of either delaying or phasing in the change are substantial and could run into many billions of pounds. To reverse the change or to introduce an open-ended compensation scheme would have the same early effect, but would entail a bill for expenditure in the future that would continue to increase. We are considering the matter. We shall make an announcement in due course.

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The noble Lord, Lord Rix, raised the point in relation to the nature of the legal advice he took--a point extended by the noble Earl, Lord Russell--and asked whether I was in a position to comment further on what I said in regard to the previous amendment. There is a strong argument that spouses' pensions are not possessions under Article 1 because they are based on contributions paid by another person. In addition, Article 1 gives governments the right to reassess needs in the light of changing social policy. On that argument, the reduction in SERPS strikes the necessary balance between the rights of spouses and the broader public interest. We are therefore acting in accordance with our legal obligations under the convention.

The noble Lord, Lord Higgins, raised a question relating to officials. As he knows, this Government, perfectly properly, do not have access to the papers of a previous government. Therefore, we simply cannot tell what happened. He and his previous fellow incumbents--perhaps his noble friend Lord Lamont--may be able to help with regard to what was happening at the time if they have access to their private papers. The ombudsman may be able to obtain access to those papers, in which case the situation will be brought to light and that will be helpful. We cannot tell what happened, as the noble Lord well knows; but the ombudsman may be able to do so.

Finally, the noble Earl, Lord Russell, said that all governments were equally to blame for this situation. I refuse to accept that. I am not trying to deal with this in a partisan way, but there is a difference between a government who introduced a measure and therefore in my view have a moral responsibility for diffusing correct information about it--and to do so for the following 10 years--and a government who inherited the situation and are trying to address it.

Earl Russell: I am grateful to the Minister for giving way. Perhaps I can clarify the issue. I did not attempt to apportion shares of responsibility. I said that we are all responsible to the extent of our opportunities.

Baroness Hollis of Heigham: In that sense, that would by definition be true of any situation in which anyone was placed. There is always truth in tautology and we heard that one today.

I should like to be more helpful to the Committee because the Committee knows that I like to share information as and when I have it. But I cannot advance beyond the situation in the previous amendment. It is an extremely complicated matter. We do not have all the information to which the ombudsman may have access. The financial implications are huge. We are considering the position and as soon as I am able to give the Committee any more guidance, I shall be happy to do so.

Lord Rix: Before the Minister sits down, does she recognise that my amendment provides for the Secretary of State to introduce regulations which can be reflected after the ombudsman makes his findings clear? There is no compulsion in the amendment with regard to the

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amount of compensation, when it should be paid and so forth; it simply follows the fact that in another place it has been clearly stated on several occasions that compensation is to be paid. Amendment No. 91A gives the Secretary of State the right to pay that compensation by affirmative resolution, but the amount of the compensation can be decided at some time after the ombudsman's findings or after--although one hopes that it does not go so far because it would cause many years' delay--the decision of the Court of Human Rights.

Does not the Minister recognise that the amendment is a helping hand rather than imposing a demand upon the Government and the Secretary of State to provide X amount of compensation for X number of people?

Baroness Hollis of Heigham: I am sure that the noble Lord, Lord Rix, is seeking to be helpful in this respect. If the Secretary of State decides that the appropriate way forward is compensation, I do not doubt that he will have to follow the path outlined by the noble Lord. He is absolutely right. There may be other ways of dealing with compensation but a not-unacceptable or unusual one would be to lay regulations which would allow the Secretary of State just the freedom for interpretation in the action the noble Lord describes. But there are perhaps other ways of dealing with this.

Other Members of the Committee suggested deferring the introduction of the change. So until we know what the Government believe to be the right way forward, balancing fairness to those who have been hurt by this change with the wider considerations of the finite budget and other equally pressing needs, then and only then will the Secretary of State know whether he wishes to follow the path suggested by the noble Lord or a different one.


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