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Baroness Hollis of Heigham: My Lords, I shall do my best to answer the questions put to me by the noble Lord, Lord Higgins, although I may need to follow up in writing some of his more detailed points.

Why were the amendments brought forward at this stage? We were unaware that some schemes have rules which provide for different treatment for UK resident members from those who live outside the country. That did not come to light during consideration and adoption of the EU directive in 1998. We are now responding to concerns raised by the pensions industry and we need a little time to resolve the issues that have been raised.

Why did we support the directive in the first place? The directive requires that schemes across the EU comply with practices that are common and universal in the UK; the directive spreads the good practice of the UK throughout the EU.

Finally, the noble Lord asked whether the directive applies to all countries in the EU. Yes, it applies to them all. I hope that I have answered all the points. If not, I shall write to the noble Lord.

Lord Higgins: My Lords, I understand that it is difficult for the Minister to deal with these highly complicated matters from the Dispatch Box. I shall look forward to receiving her reply to the points I have made previously.

However, the Minister has said that the directive applies right across the European Union. It is clear that the departmental officials must have been very badly briefed in 1998 and it is unlikely that they were able to conduct the negotiations all that successfully if they did not know about the particular point which is covered by this clause. In any case, consultations should have taken place with the insurance industry. They would then have discovered exactly what it was that they were negotiating.

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The noble Baroness knows that I have declared an interest as the trustee of a pension fund, although not a fund affected in any way by this issue. I understand that it is not possible for this directive to apply, for example, in Germany.

Baroness Nicol: My Lords, I thank the noble Lord for allowing me to intervene. I wonder whether the noble Lord is in order given that we are debating the Bill at Third Reading.

Lord Higgins: My Lords, I am open to persuasion otherwise and I shall take into account the point made by the noble Baroness. However, in the interests of the pensions industry, it is important that we should be given clear answers to these points. I accept that the Minister will write to me.

I shall return to the point that I do not believe that it will be possible for this directive to apply to pension schemes in, for example, Germany. If it did, it would be likely to bankrupt the company. No doubt, we shall learn more.

This situation is unsatisfactory at Third Reading. However, I should point out that these amendments have been tabled only at Third Reading. No mention whatever was made of them at previous stages of the Bill.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendments Nos. 9 to 11:

    Page 59, line 12, at beginning insert ("Except so far as regulations otherwise provide,").

    Page 59, line 27, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").

    Page 59, line 35, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").

On Question, amendments agreed to.

Clause 63 [Loss of benefit for breach of community order]:

Baroness Hollis of Heigham moved Amendment No. 12:

    Page 64, line 45, after ("failed") insert ("without reasonable excuse").

The noble Baroness said: My Lords, we had two lengthy debates in Committee and on Report on the clauses that deal with the loss of benefit for breaches of community sentences. I made it clear that the Government believe that it is right that observing community sentences should be a condition of benefit entitlement. We do not believe that benefit should be awarded unconditionally, nor that those who fail to honour their obligations should receive the same levels of support from the benefit system as those who do.

However, the proposal to impose the benefit sanction before the court has decided whether there has been a breach clearly raised major concerns, and

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on Report noble Lords amended the provisions of the Bill to ensure that the benefit loss should follow, rather than precede, the court's determination.

The Government recognise the strength of feeling among noble Lords on this issue. I am pleased to say that we are willing to meet that point. In the light of the views expressed in this House by the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Lincoln, my noble friend Lady Kennedy, the noble Earl, Lord Russell, and others, the Government have responded by agreeing that no benefit should be withdrawn before the court has determined whether a breach has occurred.

In all but a tiny minority of cases--perhaps 400 out of 30,000 or so--the court does appear to uphold the judgment of the probation officer, but it is clear that for noble Lords this represents an issue of principle which the Government are willing to acknowledge. However, we believe that it is right that offenders should know that if they do not observe their community sentence, they stand to lose their benefits. Indeed, they have a right to know that that would be the case.

To make that point clear, with the agreement of the noble Lord, Lord Windlesham, we have added a further provision. The Secretary of State (in the person of the Benefits Agency) will write to the offender at the point where he is referred back to court, informing him that he will face a loss of benefit if the court finds that he has breached his community order. The offender will thus be aware, well before the court reaches its decision, that by his actions he has put his benefit at risk. He will be aware also that it is the Benefits Agency, not the court, that will be stopping his benefit if the breach is proven. In order for the Secretary of State to be able to do this, he will need to be notified by the Probation Service (or the courts in Scotland) that an information has been laid or proceedings commenced as well as when the court makes its determination.

Amendments Nos. 26, 28, 29, 30, 31 and 35 add back into the Bill the essence of the information requirement provisions at the laying of information stage. Amendment No. 33 imposes an obligation on the Secretary of State to notify the offender at that point. There are also a number of technical amendments to ensure that the Report amendments work properly.

Amendments Nos. 12 and 22 supply appropriate wording in respect of the court's determination of the breach, ensuring that the wording here is consistent with that in criminal justice legislation--that is, a breach is where the failure to comply with the conditions of a sentence is without reasonable excuse. I hope that that will reassure my noble friend Lady Kennedy that we recognise the concerns that she expressed on Report. The insertion of those words means that if, for example, a lone parent has had a childcare crisis, there is a clear discretion to count that a "reasonable excuse". I am confident that that will be welcome.

Amendments No 19, 23, 27 and 32 provide for benefit to be repaid if the offender successfully appeals the court's finding of a breach, which was overlooked

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in the amendments passed on Report. Otherwise, without the amendments, someone who was found in breach by the court and that decision was overturned on appeal, would not find himself or herself entitled to have benefits repaid. So, in good faith, we are extending the original amendment.

The rest of the amendments are technical, tidying up provisions, removing unnecessary words.

I hope that your Lordships will accept the amendments. We should seek to ensure that the fact that this is a measure about the conditions of entitlement to benefit, and not an additional criminal justice punishment, is well understood by those affected while respecting also the amendments passed on Report which ensure that there is no loss of benefit in the offender's pocket until after the court has determined that a community sentence has been breached. I commend the amendments to the House. I beg to move.

9 p.m.

Lord Windlesham: My Lords, this is the fourth and, I hope, last time that I shall speak about loss of benefit in the proceedings on the Bill. At each stage, the Government were left in no doubt about the strength of opinion in all parts of the House, objecting to the novel and misguided idea of linking the withdrawal or reduction of social security benefits to an alleged failure to comply with the conditions of a community penalty. The objections were shared by all ranks of the Probation Service--chief officers as well as line officers--the Magistrates' Association and the Justices Clerks' Society.

On Report, after a long debate, the House voted by a substantial majority of 170 to 116 to accept a cross-party amendment in the names of the noble Earl, Lord Russell, the noble Baroness, Lady Kennedy of The Shaws, the right reverend Prelate the Bishop of Lincoln, and myself. The effect of the amendment was to delay the implementation of the loss of benefit sanction until after a court had made a determination that an offender had failed to comply with the requirements of a probation order, a community service order or a combination order.

Although it is a convention of this House not to reopen at Third Reading an issue which has already been fully debated and decided on a Division, the Government have thought again and have come forward with a series of technical amendments which have been drafted by parliamentary counsel. These amendments, most unusually in my experience, are in the names both of the Minister and myself, speaking, as your Lordships will see, from the Opposition Benches. This accord indicates agreement reached at the earlier stage between the Government and my co-sponsors, if I may so describe them, on the key point; namely, that there should be no loss of benefit before a court has determined that a community sentence has been breached. That requirement is now included in the Bill as amended on Report.

The procedure that will be followed was explained by the Minister in her introduction. In effect, it means that if a probation officer has reason to believe that an

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offender has failed to comply with the terms of a community order and is referred back to the court in proceedings for breach, at that stage the local benefits office will write to the offender informing him or her that they will face a loss of benefit unless the court finds that the breach is not proven.

This is not an ideal solution. Speaking for myself, I should have preferred the entire notion of making the observance of a community penalty a condition for the receipt of a state benefit to be abandoned. I thought before, and I still think, that it is a wrong and mistaken approach and is unlikely to have the effects intended. But that is for another day. For now, I congratulate the Minister on bringing forward these changes. It is not an easy thing to do. The opinion of this House was quite clear. What was in doubt was whether or not the Government, with their substantial majority in the elected House, would be willing to accept our view. In the outcome, the Minister and the Government Chief Whip have been successful in ensuring that the decision of this House should prevail.

This is a notable concession by the Government. It will give effect to the cross-party amendment carried on Report and, thanks to the government draftsman, the Bill will be in a state in which it can be enacted if the House of Commons is willing to accept the amendments made in this House. As such, they have my applause.

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